1. STATION POWER California Independent System Operator CAISO – CPUC Energy Storage Workshop May 2, 2016 Bill Weaver, CAISO Counsel

2. Agenda Agenda ItemSpeaker Introduction and Terms CAISO Modern History of Station Power CAISO Tariff on Station Power Retail Tariffs on Station Power SCE Station Power for Common Generation Station Power for Energy Storage Page 2

3. What is Station Power? Page 3 Station Power

4. Terms Station Power Energy used by the generator to produce energy and incidental heating/lighting/offices –E.g., start-up, synchronization, thermal regulation, offices, coffee pots –Excludes: Energy used to power synchronous condensers; used for pumping at a pumped storage facility; or provided during a Black Start procedure Would exclude energy to charge a battery for resale Page 4

5. Terms Auxiliary Load Industry term used to isolate the energy used to produce energy only (i.e., without offices and coffee pots) –Not a tariff term because the distinction is not practical Station Power Protocol/Portfolio (“SPP”) “Anachronistic” CAISO program to allow generation owners to pool their generators to net supply and load monthly –Analogous to a fantasy baseball team of generators –Appendix I to the CAISO tariff Page 5

6. Terms On-site/local self-supply Energy transmitted and consumed without using the transmission or distribution grid Remote self-supply Energy provided to one generator from another owned by the same company in the SPP Third-party supply Energy provided by a separate entity (e.g., the UDC) Page 6

7. Modern History of Station Power 2001: FERC approves PJM’s proposal to allow generators to net consumption and generation over a month –Net generators settled at wholesale; net consumers settled at retail 2003: NYISO and MISO follow suit 2004: Generators sue CAISO for same (CAISO had only allowed simultaneous netting). FERC grants complaint 2005: CAISO institutes SPP to comply with FERC 2010: Five years of litigation result in D.C. Circuit reversing FERC Page 7

8. Modern History of Station Power D.C. Circuit: “We do not understand why FERC is empowered to conclude that a retail sale has not taken place unless it can claim the transaction is, instead, a wholesale sale or a transmission. To simply declare that the state lacks jurisdiction because FERC believes no retail sale has taken place really begs the jurisdictional question.” FERC: “In light of the D.C. Circuit’s remand order, the Commission here concludes that states need not use the same methodology the Commission uses to determine the amount of station power that is transmitted in interstate commerce to determine the amount of station power that is sold at retail.... State-jurisdictional retail sales of station power are properly the subject of state tariffs.” Page 8

9. CAISO Tariff on Station Power Federal Power Act Gives FERC jurisdiction over transmission of electric energy in interstate commerce and the “sale of electric energy at wholesale” –Defined as “a sale of electric energy to any person for resale.” Ergo, if someone draws electrons with the intent of reselling them, they are subject to a FERC- jurisdictional/wholesale rate –E.g., energy to charge a battery Page 9

10. CAISO Tariff on Station Power CAISO Tariff Definition Energy for operating electric equipment, or portions thereof, located on the Generating Unit site owned by the same entity that owns the Generating Unit, which electrical equipment is used exclusively for the production of Energy and any useful thermal energy associated with the production of Energy by the Generating Unit; and for the incidental heating, lighting, air conditioning and office equipment needs of buildings, or portions thereof, that are owned by the same entity that owns the Generating Unit; located on the Generating Unit site; and used exclusively in connection with the production of Energy and any useful thermal energy associated with the production of Energy by the Generating Unit Page 10

11. CAISO Tariff on Station Power The CAISO generally requires and settles generation meter data in 5-minute intervals In an interval, the CAISO allows “permitted netting” for “auxiliary Load equipment electrically connected to that Generating Unit at the same point provided that the Generating Unit is on-line and is producing sufficient output to serve all of that auxiliary Load equipment” All other netting is prohibited Page 11