1. WELCOME Western Area Power Administration1

2. Where did the journey begin? Western Area Power Administration2

3. FERC Order 890 Timeline Western Area Power Administration3 February 2007 FERC issues Order 890 December 2007 FERC issues Order 890 -A June 2007 FERC issues Order 890 -B March 2009 FERC issues Order 890 -C

4. FERC Order 890 Timeline Western Area Power Administration4 February 2008 Western forms an Order 890 Team June 2008 Western forms Tariff Administration Team (TAT) to implement the Tariff. June 2009 Western has public customer meeting on proposed Tariff. September 2009 Western files new Tariff with FERC December 1, 2009 Western implements new Tariff

5. FERC Order 890 Changes Western Area Power Administration5 Unreserved Use Reselling/Reassigning of Transmission Ancillary Services (Energy & Generator Imbalance) Rollover Simultaneous Submission Window LGI Procedure & Environmental Agreement Network Service Conditional Firm

6. Question: What is unreserved use of transmission service?  Use of transmission service that is not reserved or is in excess of reserved capacity  Non-secured reserved capacity or exceeded firm or non- firm reserved capacity at any point of receipt or delivery  OATT doesn’t specify all circumstances that constitute use of transmission service without a transmission service reservation  DSW will go through Rate process. Unreserved use slides are examples and may change during Rate process. Western Area Power Administration 6 Unreserved use – Schedule 10

7. 7 Unreserved Use Applies NO RESERVATION If Load > than PTP Reservation, Unreserved Use Applies Example Scenario - Point to point PTP RESERVATION Load Unreserved use Western Area Power Administration

8. 8 PTP RESERVATION If Load > than Forecast, Unreserved Use DOES NOT Apply NITS If Gen > than PTP Reservation, Unreserved Use Applies Load Unreserved use Example Scenario - Excess Generation and Network

9. Western Area Power Administration 9 Multiple hours in one day Daily Firm Point-to-Point Service rate Multiple days in one week Weekly Firm Point-to-Point Service rate Multiple weeks in one month Monthly Firm Point-to-Point Service rate Unreserved use – Frequency & Penalty

10. Western Area Power Administration Reselling of Transmission Price of reselling Transmission Pro Forma FERC 890: Allows for reselling of transmission at “market rate”. Transmission cap rate is no removed, no longer restricted the price a customer can sell transmission. Western Implementation: Western decided not to adopt this language. The cap will remain in place. 10

11. Western Area Power Administration Reselling of Transmission Western’s Role as a Financial Mediator Pro Forma FERC 890: Requires transmission provider to act as the financing wharehouse for the reseller and third party purchasing the transmission from the reseller. Western Implementation: Due to Western’s financial authority limitation, we couldn’t perform this function. 11

12. Western Area Power Administration Reselling of Transmission New Agreement for Reselling, called Attachment A- 1 Pro Forma FERC 890: New Attachment called A- 1 was created for the sole purpose of reselling/reassigning of transmission agreements. Western Implementation: Western will use the new Attachment A- 1 for writing reselling and reassignment agreements. 12

13. Western Area Power Administration Imbalance Services Energy Imbalance & Generator Imbalance Pro Forma FERC 890: Implemented new tiers for Energy Imbalance. Created new Schedule for Generator Imbalance Western Implementation: Western decided Energy Imbalance and Generator Imbalance will be handled through the each Region’s Rate process. 13

14. Western Area Power Administration Rollover Rights Change in Rollover Rights Existing requirement is a minimum term of one year to have rollover rights. New minimum requirement requires a duration of five years for customer to have the option to exercise rollover rights. The existing requirement is sixty days notice given to Western. New requirement is one year notification to Western. 14

15. Western Area Power Administration Rollover Rights Change in Rollover Rights (Continued) The change in rollover rights can be found in Section 2.2 of Western’s new Tariff. Section 2.2 is applicable when FERC accepts Western’s Attachment P (Planning Process), until then the current sixty day notice will be applied. When Western’s Attachment P is accepted by FERC a business practice will be posted explaining how Western will handle Agreements that expire within one year. 15

16. Western Area Power Administration Simultaneous Submission Window What is Simultaneous Submission Window? FERC Order 890 required TPs who set a “no earlier than” time limit for TSRs to treat all received within a specified period of time as having been received simultaneously. New provision can be found in Section 13.2. 16

17. Western Area Power Administration Simultaneous Submission Window Western implementation of Simultaneous Submission Window Only applicable to short term firm point-to-point. Non- Firm, Hourly-Secondary, and long-term requests will have the same evaluation process. Western will treat all applicable requests received within five minutes of window opening as having the same queue time. If there’s not enough capacity to accommodate the requests, Western will implement a lottery to allocate the capacity. 17

18. Western Area Power Administration Simultaneous Submission Window Lottery implementation Western will implement the lottery giving priority to requests in the following order: A. Service Increment In order Monthly, Weekly, Daily, and Hourly B. Duration of the request C. Pre-Confirmation Request that are preconfirmed will have priority over non-preconfirmed requests. Pre-Confirmation D. Price 18

19. Western Area Power Administration Large Generation Interconnection Procedure & Environmental Studies Changes to Large Generation Interconnection Procedure Within 15 calendar days of providing a system impact study report, an environmental review agreement will be provided to the customer. Environmental review agreement must be executed and funded by the customer within 30 calendar days. If agreement isn’t executed and funded with the required time, the interconnection request will be deemed withdrawn. 19

20. Western Area Power Administration Network Transmission Service Changes to Network Transmission Service. Attestation of resources is required. Minimum term of designating a network resource (DNR). Requirements of DNR If agreement isn’t executed and funded with the required time, the interconnection request will be deemed withdrawn. 20

21. Western Area Power Administration Network Transmission Service Requirements of Designated Network Resources. Resource must be owned, leased, or customer purchases non-interruptible power under executed contracts. DSW, CRSP, RMR, and SNR will not require purchases from a specific generating unit. For off-system resources, Customer is required to obtain and demonstrate to Western it either has or is in the process of obtaining firm transmission from the point where the Customer takes delivery. 21

22. Western Area Power Administration Network Transmission Service Requirements of Designated Network Resources For Day-Ahead and Real-Time purchases, Western will reserve the capacity for the length of those purchases. Network Resources currently listed in Network Agreements will remain “Grandfathered”, until expiration of the Network Resource, expiration of the Network Agreement, or Resource is undesignated. 22

23. Western Area Power Administration Conditional Firm Transmission Service 23 What is Conditional Firm? Modified form of long-term firm PtP service that includes less-than-firm service in a defined number of hours of the year or during defined system conditions. (OATT Section 15.4) No separate queue The service can be curtailed solely for reliability reasons during the defined system conditions or defined number of hours. Western will offer either option (considerations) NERC Priority 6 during “conditional” periods

24. Western Area Power Administration Conditional Firm Transmission Service 24 Conditional Firm Bridge Product bridge For customers supporting the construction of upgrades, the planning redispatch or conditional firm options will serve as a bridge until upgrades are constructed to remedy the congested transmission facilities. For these customers, the TP must offer planning redispatch or conditional firm service until the time when the upgrades are constructed. The conditions or redispatch applicable to this period must be specified in the service agreement and are not subject to change.

25. Western Area Power Administration Conditional Firm Transmission Service 25 Conditional Firm Western retains the right to perform a biennial assessment of the conditions to reassess the conditions. A customer taking conditional firm service will be first in the queue for transmission service if a non-conditional firm service stops taking service.

26. Western Area Power Administration Contact Information 26 For questions regarding implementation of Order 890, please contact the TAT member for your Region: CRSP: Dave Shelton – (801) 524-4012 DSWR: John Steward – (602) 605-2774 RMR: Raymond Vojdani – (970) 461-7379 SNR: Ira Witherspoon – (916) 353-4659 UGPR: Steve Sanders – (406) 247-7436