1. Briefing on California ISO Dynamic Transfers Stakeholder Process For WECC Seams Issues Subcommittee Meeting May 4, 2010 Jim Price, Lead Engineering Specialist California ISO, Market Analysis & Development

2. 2 Background: Dynamic Transfer Functionality Uses of Dynamic Scheduling Functionality Load Following / Real Time Balancing Energy Dispatch Split Unit Share (Jointly Owned Units) Ancillary Services / Regulation Imports Intermittent Generation Import Scheduling Facilitate Implementation of Pseudo-Ties Pseudo-Tie Transfer of BA Jurisdiction (Scheduling, Balancing Energy, Regulation, Outage Coordination) Pseudo-Tie Generator treated as internal Participating Generator by Attaining BA

3. CAISO Balancing Authority Import @ designated Physical Tie 500 MW Native Balancing Authority Generator or logical determined output is telemetered directly to the CAISO EMS Dynamically Scheduled Generating Facility Physical Ties between CAISO and Native BA Ties between the ISO and other BAs Dynamic Schedules

4. Pseudo Ties

5. Slide 5 Outline of Dynamic Transfers Stakeholder Process Straw Proposal clarifies ISO tariff supporting dynamic imports, facilitates imports of renewable resources, and adds pseudo-tie imports to tariff Proposals apply to both dynamic scheduling and pseudo-ties Few exceptions: allocation of dynamic schedules deviations, pseudo-tie layoffs Key dates (stakeholder meetings 7 days after documents): Issue Paper published 11/30/2009 Straw Proposal published 3/10/2010 Supplement to Straw Proposal published 4/29/2010 Stakeholder meeting 5/6/2010 (http://www.caiso.com/2779/2779b9ca24600.html for details) Draft Final Proposal to be published 5/20/2010 ISO Board of Governors meeting 7/26-27/2010 FERC filing in August

6. Current ISO tariff supports dynamic scheduling Allows imports of energy and AS, provided that: a)Such dynamic scheduling is technically feasible and consistent with NERC and WECC reliability standards, b)All operating, technical, and business requirements for dynamic scheduling functionality of ISOs Dynamic Scheduling Protocol, or standards on ISO website, are satisfied, c)Scheduling Coordinator executes a Dynamic Scheduling Agreement, and d)All affected native and intermediary BAAs each execute an operating agreement with the ISO related to the operation of dynamic functionality. Issue for intermittent resources is how to meet standards and requirements. Slide 6

7. Slide 7 Scope of Dynamic Transfers Stakeholder Process Issues addressed in Stakeholder Process: Congestion management within ISO markets: Curtailment rules Dispatchability requirements Transmission reservations and utilization Data and forecasting requirements Locational modeling and pricing Aggregation of conventional and/or renewable resources Scope of studies of intertie transfer limits for dynamic imports Pro rata allocation of deviations among BAAs Layoffs from pseudo-ties Dynamic exports Generator-only BAAs

8. Other issues are being addressed in other ways or being deferred to other general policy forums IssueForum for consideration of issue Management of increased load following and regulation requirements Stakeholder processes starting in Q2: AS Market Product Review, Scheduling & Dispatch Enhancements for Intermittent Resources Responsibility for operating reserveNo tariff change needed Extension or modification of Participating Intermittent Resource Program Stakeholder process starting in Q2: Scheduling & Dispatch Enhancements for Intermittent Resources Pseudo-tie loadsDevelop using pilots before tariff change Interconnection standards and system operations Current stakeholder process: Interconnection Standards Review for Renewable Integration Transmission planningCurrent stakeholder processes: e.g., Renewable Energy Transmission Planning Process (RETPP) Uninstructed deviation penaltyExisting tariff enables ISO to obtain needed compliance Certification of ancillary servicesExisting tariff enables ISO to certify performance Slide 8

9. Meeting standards and requirements ISO dispatches dynamic resources for congestion management and energy balance (and other requirements), and needs prompt response Current tariff measures dynamic resources response as tolerance band around schedules & dispatches Meaningful dispatch of intermittent resources requires updates of real-time conditions Dispatching to current delivery is workable but provides no knowledge of future delivery. Option will allow 5-minute updates of availability for 2-hour look- ahead. (Note: can be seen as intra-hour schedule changes) Meaningful compliance will be for operating orders

10. Locational modeling for dynamic transfers ISOs Full Network Model places generation at actual location, and includes external transmission Dynamic scheduling and pseudo-tie agreements establish actual location of resource-specific system resources Modeling dynamic resources at actual location provides accurate congestion management, based on value of resource in ISO markets Constraints enforced only within ISO, Marginal losses only computed within ISO To avoid disparities between ISOs dispatch and resources response, ISO will use locational price (LMP) Same price applies to layoffs from pseudo-ties

11. Slide 11 Aggregation of electrically close conventional and/or renewable resources Both the native and attaining BAs have roles in approving aggregations. ISO will use WECCs USF zones, within BAA boundaries, to determine what external resources are electrically close from ISO perspective.

12. Dynamic import study objectives Slide 12 ISO tariff allows the ISO to establish limits to the amount of ancillary services and/or energy imported into the ISO BAA, whether delivered dynamically or statically. Study will determine any limitations on dynamic transfer of variable resources into ISO BAA while shaping and firming energy within the ISO BAA due to: Impacts to existing path limits that accommodate planned hourly variations from 20 minute ramping period Voltage control issues Risk to stability or excitation of low frequency modes of oscillation ISO will coordinate studies with our neighboring BAs