1. Reliability Challenges White Paper Victoria L. Ravenscroft Senior Policy Analyst W ESTERN E LECTRICITY C OORDINATING C OUNCIL

2. Conclusions/Results Outreach Efforts Policy briefs/white papers Training Standards/SARs CUG/CIPUG Industry/policy forums Work Plan Priorities Changing resource mix Retirement of conventional generation Integration of VER Natural gas/electric interdependency Changing load composition Protection system reliability Physical/Cyber security Human performance High impact-low frequency events Business Plan and Budget WECC staff white paper Membership input WIRAB input Violations /Impact Trends/Priorities Annual meeting dialogue Other input Registered Entity Oversight Registration Certification Applicable standards CMEP scoping Interconnection-wide models and data sets Near- and long-term planning studies Stability analysis Reliability Planning Event Analysis Independent BES assessments Operating Practices survey(s) Performance Analysis Integrated Reliability Assurance Model Conclusions/Results Outreach Efforts Policy briefs/white papers Training Standards/SARs CUG/CIPUG Industry/policy forums Work Plan Priorities Changing resource mix Retirement of conventional generation Integration of VER Natural gas/electric interdependency Changing load composition Protection system reliability Physical/Cyber security Human performance High impact-low frequency events Business Plan and Budget WECC staff white paper Membership input WIRAB input Violations /Impact Trends/Priorities Annual meeting dialogue Other input Registered Entity Oversight Registration Certification Applicable standards CMEP scoping Interconnection-wide models and data sets Near- and long-term planning studies Stability analysis Reliability Planning Event Analysis Independent BES assessments Operating Practices survey(s) Performance Analysis

3. Reliability Challenges White Paper First step in operationalizing the Integrated Reliability Assurance Model Culmination of conversations over last 4 months Staff developed, now seeking stakeholder feedback Feeds development of Work Plan Priorities 3 W ESTERN E LECTRICITY C OORDINATING C OUNCIL

4. Changing Resource Mix Potential challenges … Ensuring resource adequacy Considering a wide range of drivers Accounting for system composition, e.g., resource location 2013 Capacity and Energy Production Western Interconnection (U.S. only)

5. Retirement of Conventional Generation Potential challenges … Planning for hydro limitations Re-evaluating nuclear’s role Maintaining Essential Reliability Services Accounting for local, state, and federal policies 2013 Added and Retired Capacity (MW)

6. Natural Gas-Electric Interdependencies Potential challenges … Understanding supply issues Reconciling differences in scheduling practices Planning for and operating during severe weather events 2012 Natural Gas Consumption by Sector

7. Changing Load Composition Potential challenges … Managing high levels of new types of demand, e.g., PHEV Accounting for demand- related policies, e.g., energy efficiency Leveraging demand control and reduction mechanisms, e.g., demand-side management 2012 Electricity Consumption by Sector (Western Interconnection U.S. only)

8. Effects of Changing Climate Potential challenges … Managing the operational impacts from changes in – Temperature – Extreme weather events – Wildfires Planning for resource adequacy impacts Coping with immediate and long- term effects of drought Responding to policies addressing climate change Western Climate Regions

9. Integration of Variable Generation Potential challenges … Understanding the drivers Managing uncertainty Balancing variability Wind and Solar Capacity Additions (MW)

10. Balancing Variability Potential challenges … Planning for flexibility Holding Operating Reserves Diversifying variability Implementing scheduling changes Example Wind and Solar Base-Load Ramping Scenario 34 30 26 22 18 14 10 8642086420 Load & Net Load (1,000 MW) Wind & Solar (1,000 MW) 0:006:0012:0018:0024:00

11. Distributed Generation Potential challenges … Managing variability Improving visibility of DG resources Coordinating control of DG resources Reconciling practices and standards on response to faults

12. Situational Awareness Potential challenges … Increasing use of real-time tools Coordinating information and data exchange Expanding external visibility in models Improving consistency and quality of next-day studies Use of Situational Awareness Tools (% Entities Surveyed in 2014)

13. Equipment Failure Potential challenges … Reducing outages caused by equipment failure Minimizing the impact of equipment failures Automatic Transmission Outages Caused by Equipment Failure

14. Protection System Reliability Potential challenges … Evaluating and managing the interaction of RAS Ensuring proper relay settings Reducing relay misoperations 2013 Misoperations by Cause

15. Operational Practices Potential challenges … Evaluating trends in operational practices Identifying best practices Promoting adoption of practices across diverse entities

16. Cybersecurity Potential challenges … Securing assets and managing access Detecting potential threats Balancing benefits of technology with increased exposure to cyber risks Identifying significant vulnerabilities on regional/Interconnection-wide basis

17. Physical Security Potential challenges … Ensuring proactive approach to physical security Securing grid against a range of threats Implementing CIP-014-1 Managing costs Addressing accessibility of assets 201120122013Total Physical Attack1269 Physical Attack – Vandalism 38112574 Suspected Physical Attack 1222539 Suspicious Activity21 Total533537125 Physical Security Electric Disturbances (DOE Form OE-417)

18. High-Impact Low-Frequency Events Potential challenges … Preventing coordinated cyber and/or physical attack Mitigating potential impacts of geomagnetic disturbances Identifying potential impacts of a pandemic Predicting and mitigating impacts of large-scale disasters Balancing probability v. risk in investment decisions

19. Impacts of State Policy and Regulation Potential challenges … Identifying policy and regulatory drivers Ensuring policies and regulations consider reliability concerns Emphasizing interconnected nature of the grid Western Climate Regions

20. EPA 111(d) Clean Power Plan Potential challenges … Evaluating the reliability impacts Accounting for flexibility in implementation EPA 111(d) Compliance Building Blocks Building Block 1: Coal Plant Efficiency Improve the heat rate of coal-fired power plants by 6%. Building Block 2: Increased Gas Use Increase utilization of gas plants up to 70% capacity factor. Building Block 3: Renewables and Nuclear Increase renewable and nuclear generation. Delay or cancel nuclear retirements. Building Block 4: Energy Efficiency Increase energy efficiency to reduce demand by 1.5% per year.

21. Functional Model Potential challenges … Aligning registration with the Functional Model Addressing gaps in Planning Coordinator registration Evaluating role of the Path Operator Coordinating seams issues between registered functions Count of Selected Registered Entities in the Western Interconnection Registered Entities# Balancing Authority (BA)37 Generation Operator (GOP)241 Generation Owner (GO)247 Load Serving Entity (LSE)121 Planning Authority (PA)31 Reserve Sharing Group (RSG)3 Resource Planner (RP)56 Transmission Operator (TOP)65 Transmission Owner (TO)97 Transmission Planner (TP)47 Transmission Service Provider (TSP)37

22. Workforce Potential challenges … Managing the workforce retirement transition Addressing the reduction in knowledge capital Managing cognitive overload created by increasing volume of tools, information, etc.

23. Feedback Seeking feedback on Challenges Actions In-Progress and Planned Work NOT seeking Redline or editorial changes Website www.wecc.biz (link on front page) Email feedback to reliabilitychallenge@wecc.biz Feedback Deadline October 31, 2014 23 W ESTERN E LECTRICITY C OORDINATING C OUNCIL

24. Integrated Reliability Assurance Model Conclusions/Results Work Plan Priorities Changing resource mix Retirement of conventional generation Integration of VER Natural gas/electric interdependency Changing load composition Protection system reliability Physical/Cyber security Human performance High impact-low frequency events Business Plan and Budget WECC staff white paper Membership input WIRAB input Violations /Impact Trends/Priorities Annual meeting dialogue Other input Registered Entity Oversight Registration Certification Applicable standards CMEP scoping Interconnection-wide models and data sets Near- and long-term planning studies Stability analysis Reliability Planning Event Analysis Independent BES assessments Operating Practices survey(s) Performance Analysis Outreach Efforts Policy briefs/white papers Training Standards/SARs CUG/CIPUG Industry/policy forums Performance Analysis Reliability Planning Stakeholder Outreach

25. Adequacy Assessments Contingency Analyses Event Analysis Policy Impact Studies Congestion Analyses Stability Studies Reliability Issue Integrated Approach to Addressing Key Reliability Issues What are the potential impacts to RELIABILITY? Reliability Issue

26. White Paper Feedback Website www.wecc.biz (link on front page) Email feedback to reliabilitychallenge@wecc.biz Feedback Deadline October 31, 2014 26 W ESTERN E LECTRICITY C OORDINATING C OUNCIL