Market Issues Subcommittee

1. Market Issues Subcommittee Report to the Market Interface Committee Philip Tice June 14, 2007 Western Electricity Coordinating Council

2. Issues MIS is Addressing • Preschedule and Market Issues • WECC ATC Methodology • WECC E-tag Energy Products • Merchant Reliability Communication • Trading Timelines

3. MIS 2007 Goals • Support the WECC Energy Product Code drafting team • Support completion of the work of the RC Generator Redispatch Compensation Task Force - Completed • Support efforts of the NERC/NAESB and WECC ATC standard drafting teams • Evaluate effects of pre-scheduling timelines and procedures on reliability and markets within the WECC

4. MIS 2007 Goals • Monitor and coordinate comments on NAESB issues • Review, determine needed action, and assist with appropriate WECC involvement with FERC OATT reform • Monitor and evaluate market implications and impacts of FRR and other proposed reserve policies on OATT’s in the WECC • Define the term “commercial Business Practice” for the WECC

5. Prescheduling Evaluation Task Force PETF Western Electricity Coordinating Council

6. PETF Purpose & Objective • Undertake a comprehensive and objective evaluation of the potential effects of prescheduling on reliability and markets in the WECC. • PETF will consider the impacts, problems and benefits of the existing timelines, calendars and procedures in the WECC versus various alternative methodologies. • PETF will not address market structures, the types of products that should be traded in the market or market trading timelines. • PETF expects to issue a report of findings by the close of 2007.

7. PETF Prescheduling Survey • Survey sent on April 6, 2007 to: • Key WECC Committees • OC, ISAS • MIC, MIS, SIS • WesTTrans members • Other Market Participants that actively schedule in the WECC • Banks • Scheduling Agents (e.g., ACES, PNGC, TEA, UAMPS) • Others • ISAS & Schedulers Meetings

8. PETF Prescheduling Survey - Continued • Survey responses due by April 26th • 17 survey responses received • Task Force summarizing information • Task Force will determine whether • Information received is adequate • Another survey is needed • To participate contact: Leesa Nayudulnayudu@semprageneration.com

9. WECC ATC Drafting Team Western Electricity Coordinating Council

10. ATC Update • Approach has been “restructured” • Must select one of three methods for calculating your ATC • New set of draft standards place all essential elements into a single “method-specific” standard • Three methods – three separate standards • First set of Standards has been posted for comment • Comments due 6/25 (COC 6/22) • WECC will likely file WECC specific comments • To engage, • email Shannon Black sblack@smud.org • conference call on 6/18

11. ATC Update • Drafting of the “Compliance” portions of these standards is being initiated this week • Thus far, the NERC ATC Team has only drafted the “Requirements.” • There is a specific NERC Staffer assigned for Compliance, separate from the Requirements drafting side of the house. • Goal is NERC Board approval by Q4 • WECC MIC MIS ATC TF was highly instrumental in crafting MOD-29 that is essentially WECC-specific

12. ATC Update • Standards Overview • MOD-01- Requires selection and implementation of an ATC Methodology • Allowed to choose from 3 • MOD-04 - CBM • Particular interest for those facing implementation of a resource adequacy plan required by a regulatory/governmental entity • This is where transmission for reserves is set aside for import/generation/emergencies will be addressed

13. ATC Update • Standards Overview • MOD-08 - TRM • For those utilizing reserve sharing groups, this is where RS is addressed • MOD-28 - Network Response Methodology • Anyone in WECC using this approach? • MOD-29 - Rated System Path Methodology • Should review this one carefully as most of WECC is impacted • As close to a WECC specific standard as we are going to get without writing our own • WECC was very instrumental in the structure and content

14. ATC Update • Standards Overview • MOD-30 - Flowgate Methodology

15. ATC Update • SAR has been drafted to retire/rewrite FAC 12 and 13 • Currently these require that a facility rating process be utilized • Goal is to import these requirements into the aforementioned standards • Affects the TTC variable of the calculation • Closely tied to how WECC does facility rating • “Specific” expertise were recruited for this next step

16. Energy Product Code Drafting Team Western Electricity Coordinating Council

17. Drafting Team Status • Business Practice drafting in progress • Definitions for all EPCs, including NERC G-F & G-NF • WECC specific EPC for: • Unit Contingent • One hour firm • Firm for a defined period • Firm Exchange - possibly

18. Drafting Team Status • CRITF reserve codes to be included in BP • Drafting Team to move CRITF EPC through NERC IS process • Draft Business Practice to be posted by early July

19. Trading Timelines

20. Trading Timelines • Preschedule trading had historically begun at 6:00am Pacific time. • This was an understanding among Utilities and Marketers for years past. • Trading has now been seen beginning as early as 5:10am Pacific time.

21. Trading Timelines • Banks, index timeline, as well as brokers influence this earlier trading time • Should the West be concerned with this issue? • Should WECC MIC or MIS get involved? • Discussion • Next steps?

22. Merchant Reliability Communication

23. Merchant Reliability Communication Background • Merchant Communication Task Force • Task Force facilitated by Northwest Power Pool Operating Committee to address the following merchant-voiced issues: • Address the ability for merchants in the Northwest to find a collective solution to deal with energy emergency communication issues • Find a universal way for merchant entities to deal with resource limitations that includes taking into account transmission constraints and legal issues.

24. Merchant Reliability Communication Scope Explore, develop, and distribute a proposed communication plan to be used by the merchants in the event of a potential merchant problem.

25. Merchant Reliability Communication • Problems identified by Task Force • Merchants are concerned that current protocols may be insufficient for ensuring that generation can be discovered and delivered to meet firm obligations in some real time conditions, such as loss of generating units or significant forecast errors • Some generating merchants may not be able to access additional generation without sufficient documentation that a need exists • Concern that data and forecast methodologies used in daily assessments may need to be improved (not addressed in this proposal)

26. Merchant Reliability Communication • Develop a communication process that can be utilized for last-minute discovery of available generation • Concurrently communicate to merchant and reliability entities need for additional resource to avoid NERC Energy Emergency Alert • Utilize e-mail list server • WECC-net system

27. Merchant Reliability Communication • Establish a WECC wide Load Serving Entity (LSE)/Merchant energy alert e-mail list server. • This provides a direct list server that anyone can subscribe to that allows LSE/Merchant to broadcast a need to find resources to avoid a NERC Energy Emergency Alert • When LSE/Merchant is unable to acquire sufficient resources to meet obligations, they post a need on the list server with the following attributes: • Subject: Merchant Alert • Declaration that merchant has exhausted all available resource flexibility, has explored the market to the best of their ability and needs to acquire energy for hour(s) ___ to avoid a NERC Energy Emergency Alert • Name and phone number of merchant point of contact • Quantity and price information must not be included to adhere to FERC market behavior rules • Potential resource providers contact the party in need with offers • Decision needs to be made on who should host the server

28. Merchant Reliability Communication • Establish a protocol for using the WECC-net system to notify WECC Balancing Authorities WECC wide when LSE/Merchant needs energy to avoid a NERC Energy Emergency Alert. • When LSE/Merchant is unable to acquire sufficient resources to meet obligations: • LSE/Merchant requests that their Balancing Authority issue a Merchant Alert message on the WECC-net. • Balancing Authority posts an e-mail via the WECC-net using the format on the previous page: • Other Balancing Authorities monitoring the WECC-net contact merchants within their area and inform them of the Merchant Alert • Potential resource providers contact the party in need

29. Merchant Reliability Communication • WECC-net system message recently used to communicate resource shortage by merchant in Northwest • Task Force believes protocol should be adopted in WECC for Summer 2007 • Longer term objective of developing a WECC approved procedure or Business Practice • Presentation also being made to OC • Next steps by MIC or MIS?

30. MIS Moving Forward • The MIS success has been attributable to hard work and dedication of its members • We don’t want to burn out members • Subcommittee work is a good training ground for employees • Please consider sending additional members to populate the MIS to be able to continue present level of effectiveness.

31. MIS Meetings • August 6-7  Boise • Nov 13-14 Las Vegas • Dec 13-14   (alternate date)

32. Market Issues Subcommittee QUESTIONS????