1. ColumbiaGrid EIM Analysis Work Group (AWG) Meeting July 5, 2011 Methodology, Results and Benefits

2. Phase II Methodology PRODUCTION/COST MODELS Based on TEPPC PC0 Case: AVA, PSE and BPA Zones in NW model along with PGE and PACW SCL, TPWR, Grant, Chelan and Douglas included in BPA zone Hurdle rates applied between zones only Loads 2020 forecasts with 2006 load shape

3. Phase II Methodology LOADS Name:First Day:Last Day: No. Days: No. Hours: Contigu ous? No Breaks Max Value: Min Value: Ave Value: Load_AVA_2006.datSun 1/1/200612/31/20063658760TRUE021108921,385 Load_AVA_2020.datWed 1/1/202012/31/20203668784TRUE0288210601,717 Load_BCTC_2006.datSun 1/1/200612/31/20063658760TRUE01103948147,028 Load_BCTC_2020.datWed 1/1/202012/31/20203668784TRUE01139351327,200 Load_BPA_2006.datSun 1/1/200612/31/20063658760TRUE0860036445,470 Load_BPA_2020.datWed 1/1/202012/31/20203668784TRUE01037747666,582 Load_CHPD_2006.datSun 1/1/200612/31/20063658760TRUE0570272365 Load_CHPD_2020.datWed 1/1/202012/31/20203668784TRUE0719330464 Load_DOPD_2006.datSun 1/1/200612/31/20063658760TRUE033271153 Load_DOPD_2020.datWed 1/1/202012/31/20203668784TRUE0458104245 Load_GCPD_2006.datSun 1/1/200612/31/20063658760TRUE0558238360 Load_GCPD_2020.datWed 1/1/202012/31/20203668784TRUE0865365592 Load_PACW_2006.datSun 1/1/200612/31/20063658760TRUE0461618333,020 Load_PACW_2020.datWed 1/1/202012/31/20203668784TRUE0390413222,363 Load_PGN_2006.datSun 1/1/200612/31/20063658760TRUE0374615212,395 Load_PGN_2020.datWed 1/1/202012/31/20203668784TRUE0429414882,683 Load_PSE_2006.datSun 1/1/200612/31/20063658760TRUE0486817522,837 Load_PSE_2020.datWed 1/1/202012/31/20203668784TRUE0535518453,015 Load_SCL_2006.datSun 1/1/200612/31/20063658760TRUE018237351,149 Load_SCL_2020.datWed 1/1/202012/31/20203668784TRUE019247811,244 Load_SMUD_2006.datSun 1/1/200612/31/20063658760TRUE0489012662,061 Load_SMUD_2020.datWed 1/1/202012/31/20203668784TRUE0480213052,111 Load_TPWR_2006.datSun 1/1/200612/31/20063658760TRUE0962347564 Load_TPWR_2020.datWed 1/1/202012/31/20203668784TRUE01031356619

4. Phase II Methodology GENERATION 2006 hydro year (average water) Publicly available data, ie heat rate, etc. Production cost of wind, hydro and solar is zero OTC units in CA replaced with retrofits and new thermal units Future generation based on LRS and IRP submittals supplemented by renewable energy selected using WREZ Peer Analysis tool to meet full RPS. 4100 MW added in NW. Larger sites include: 1610 MW at Klondike 925 MW at Cedar Springs 120 MW at Salem 130 MW at Columbia 460 at Central Ferry 570 at McNary Renewable penetration level is 16.8%

5. Phase II Methodology RENEWABLE PENETRATION LEVEL RPS requirements by state Annual energy load is calculated by utility Renewable energy standards applied to each affected utility Sufficient renewable energy added to system to meet aggregate requirements 16.8% WECC-wide (13% without CA and AB)

6. Final - Ver. 7.0, July 22, 2010 CAISO CAISO02 Sunrise CAISO03 Blythe-Devers CAISO04 Tehachapi Upgrade SSPG SSPG02 SWIP South SSPG05 TCP Harry Allen - Northwest SSPG06 TCP Northwest – Amargosa SWAT SWAT01 PV-NG#2 SWAT06 Pinal Central – Tortolita SWAT07 Southeast Valley (SEV) SWAT08 PV - Morgan CCPG CCPG02 Pawnee – Smoky Hill CCPG03 Waterton- Midway CCPG04 San Luis Valley Hemingway NTTG01 NTTG02 Populus NTTG03 NTTG01 NTTG03 Boardman Bethel NTTG06 Wyoming Montana Idaho Oregon Washington Colorado Utah Nevada California Arizona New Mexico Comanche Waterton Midway Smoky Hill Pawnee CCPG02 CCPG03 CCPG04 Calumet Palo Verde SWAT01 North Gila II Pinal Central Midpoint Tortolita SWAT06 Browning SWAT07 FOUNDATIONAL PROJECTS BY 2020 NTTG NTTG01 Gateway South Phase 1 NTTG02 Gateway Central Phase 1 NTTG03 Gateway West Phase 1 NTTG05 Hemingway – Boardman NTTG06 Cascade Crossing CG CG01 I-5 Corridor CG02 West McNary CG03 Big Eddy – Knight CG04 Little Goose Area Reinforcement BCH BCH01 Nicola – Meridian BCH03 BC-US Intertie Alberta AESO AESO03 1202L Conversion AESO04 Heartland AESO05 West HVDC AESO06 East HVDC AESO07 Fort McMurray - East Line AESO08 Fort McMurray - West Line Mona Aeolus SSPG02 Harry Allen NTTG05 Eldorado SSPG05 Northwest Amargosa Devers CAISO03 Imperial Peňesquitos CAISO02 SSPG06 Blythe Morgan SWAT08 McNary John Day Sigurd Red Butte Bridger Castle Rock Troutdale CG01 CG02 Nicola Meridian BCH01 Oquirrh Limber Terminal Coyote Spgs Legend 500 kV Single Circuit Line 345 kV Single Circuit Line 500 kV Double Circuit Line 345 kV Double Circuit Line DC Circuit (various voltage) Termination Substations Intermediate Substations (1) Map does not reflect 230 or 240 kV lines that are included in the Foundational Transmission Project List. (2) Internal reinforcements projects not shown for clarity. (3) Lines shown are for illustrative purposes only and may not reflect final line routing. AESO04 AESO05 AESO06 AESO03 AESO08 AESO07 Langdon Alberta Heartland Ellerslie West Brooks Genesee Ingledow Custer BCH03 CG03 CG04 Big Eddy Knight Central Ferry Lower Monumental British Columbia Robinson Highwind Vincent Antelope Pardee Windhub CAISO04

7. Phase II Methodology CONFIDENCE LEVEL OF STUDIES Prod/cost models assume transmission is available to cheapest resource Models do not respect contractual ownership of generation Hurdle Rate Methodology Used to impede flows to match 2006 historical operation 2006 hurdle rates applied to different generation fleet in 2020. In Benchmark case, hurdle rates reduce Colstrip in favor of Montana wind and westside CTs In EIM case without hurdle, Colstrip is cheaper than westside CTs Relying on comparison of studies rather than individual study results helps mitigate impact of these weaknesses

8. EIM Analysis Work Group - July 5, 20118

9. Phase II Results Cases Posted 2006 Benchmark 2006 EIM 2020 Benchmark 2020 EIM Our focus is on the 2020 cases

10. Phase II Results Data Provided (hourly) Generation by bus Production Cost by Generator Load by bus LMP by Bus Generator LMP by zone Production Cost by zone Load LMP by zone Power flow by path Spilled Generation

11. Phase II Results Data issues Full Gridview data set is enormous ACCESS files are not very stable Posted data files are incomplete and/or inconsistently reported Many results are not posted Intermediate cases Sensitivity cases, especially reduced BA participation We are requesting additional data from E3

12. Phase II Results To break down benefits, we need intermediate cases from WECC/E3: 1.2020BM: Benchmark 2.Hurdle rates removed ($57M) 3.Reduced Flex Reserve Requirement ($101M) 4.2020EIM: EIM-wide procurement of reserves ($17M) Only data for #1 and #4 are available now

13. EIM Analysis Work Group - July 5, 201113

14. Phase II BA Benefits Analysis WECC/E3 plans to provide more information on individual BA Benefits: 1.Modified Generation Cost Approach 2.Roadmap for participants to adjust calculation to account for remote generation ownership Results expected on July 15

15. Phase II BA Benefits Analysis WECC Modified Generation Cost Approach Total cost = Sum of Production Cost + Net imports priced at load LMP - Net exports priced at Gen LMP Does not account for remote generation ownership or multiple ownership within zone Roadmap will help utilities to account for remote generation and multiple ownership Current runs do not have import/exports for utilities embedded in zones

16. Phase II BA Benefits Analysis ColumbiaGrid Analysis to determine Individual BA Benefits: Zonal analysis to calculate load cost and net revenue Load cost = Load X LMP Net revenue = Gen X LMP – Prod/Cost Need better accounting of generation output ownership and remote generation to improve results

17. 2020 Benchmark Case2020 EIM Case Group Annual Load Cost Annual Net Generation Revenue Annual Load Cost Annual Net Generation Revenue Δ Load Cost Δ Generation RevenueΔ Total AVA615257596252-19-514 BPA226043482357455197204106 CHPD1593301663467169 DOPD8515289160484 GCPD2043242133389156 PSE11322211096162-37-59-22 SCL4282244472361912-7 TPWR21312622213296-3 NW Total701369417042708430143114 * All values listed are million $. Total includes PACW and PGN. Note: 1) All generation revenue flows to generation owner regardless of contract. 2) All independent generation is assigned to BPA (Big Hanaford, Centralia, Grays Harbor, HPP and independent wind) 3) Only generation in the Northwest footprint was included (e.g. no Colstrip). D R A F T

18. 2020 Benchmark Case2020 EIM Case Generation Project Annual Net Generation Revenue Δ Generation Revenue Colstrip315589274 Chelan14151 Wells1521608 Rock Island91964 Rocky Reach22323411 Priest Rapids1511577 Wanapum1721808 Big Hanaford891 Centralia4384528 HPP25 0 Mint Farm17 1 Grays Harbor24283 Independent Wind47249523 * All values listed are million $. D R A F T Examples of Generation “accounting issues”

19. Phase II BA Benefits Analysis Data that ColumbiaGrid needs to improve Benefit Analysis: Ownership of generation Correct errors Provide ownership shares Account for IPPs =>spreadsheet Can compare ColumbiaGrid results with WECC Roadmap analysis when available

20. Phase II: BA Benefits Analysis Comments on proposed ColumbiaGrid Benefits Analysis? What other data and analysis do participants want from ColumbiaGrid?