California Independent System Operator Corporation Overview of ISO Renewable Resource Program Karen Edson Vice-President of External Affairs October 9, 2006

California Independent System Operator Corporation ISO Renewable Resource Program  2006 Corporate Goal to support State renewable resource policy objectives  Implementing by integrating renewable resource considerations into the CAISO’s transmission planning, markets, and operations

California Independent System Operator Corporation

Status of Major Renewable Initiatives Q1Q2Q3Q4Q1Q2 Tehachapi Transmission Plan 12/13 Board Petition for FERC Declaratory Order To Remove Barriers to Efficient Transmission Investment 12/13 Board Participating Intermittent Resource Program (PIRP) Ongoing Automate and integrate PIRP into ISO systems Funding approved and work underway Analyze and adjust forecasting, as appropriate Underway Tariff filing regarding PIRP exports 10/18 Board Study integration issues and propose mitigation Ongoing

California Independent System Operator Corporation Removing Barriers To Efficient Transmission Investment  Problem: –Renewable Generation is Different –Current Interconnection Policies Create Barrier  ISO Proposal –Financing Mechanism Allows Appropriate Sizing –Risk of Stranded Costs Systematically Mitigated

California Independent System Operator Corporation Intermittent Resource Integration  Challenge –Mismatch between output and load curve –On-peak capacity highly variable depending on the day  Increasing ISO attention to integration issues –Challenge can be overcome –Improving technology –Mitigation strategies –Better forecasts and operating systems  ISO Role to Facilitate State Policy Objectives  ISO Success Tied to State Success