PUC EIM Group Update

1. PUC EIM Group Update Rebecca Johnson Western Interstate Energy Board WECC Market Issues Subcommittee & Seams Issues Subcommittee Meeting October 10, 2013

2. Presentation Overview • PUC EIM Group overview • Next steps from the April 2013 EIM meeting • Recent activities • Webinars • SPSC Webinar on Flexible Resource Sufficiency (8/29/2013) • PUC EIM Group Webinar on CAISO EIM Straw Proposals and Stakeholder Responses (9/16/2013) • PUC EIM Group comments on the CAISO/PacifiCorp EIM • Comments on market design (4/23/2013) • Comments on governance (9/6/2013) • CAISO timeline • Upcoming meetings • CREPC-SPSC Meeting October 30th through November 1st in San Diego • EIM panel discussion on October 31st from 11:00 to 12:15 • PUC EIM in-person meeting is being considered for late January or early February 2014

3. What is the PUC EIM Group? • Formed in early 2012 • Purpose: • Investigate issues surrounding an EIM and the potential costs and benefits to ratepayers; and • Foster a conversation between regulators and industry in a multi-state cooperative setting

4. April 2013 PUC EIM Group/NWPP MC EIM meeting • Stakeholder meeting to follow up on “next steps” from the Sep. 2012 PUC EIM Group meeting and to spur industry action • ~ 200 participants, including substantial representation by FERC (Chairman Wellinghoff, Commissioner Norris, and nine FERC staff members) • Presentations by FERC staff, NREL, CAISO, PacifiCorp, SPP, NWPP, and SVERI

5. April 2013 PUC EIM Group/NWPP MC EIM meeting • NWPP MC’s quantitative analysis of the benefits and costs of an EIM and work on EMT measures, including the Following Reserve Assistance Program, or “FRAP” • EIM presentation| EMT presentation | FRAP presentation • The CAISO/PacifiCorp EIM MOU and EIM benefits analysis • CAISO presentation | PacifiCorp presentation • A comparison of the NREL, NWPP MC, and CAISO/PacifiCorp benefits analyses by NREL • NREL presentation • An update on the ongoing work of the Southwest Variable Energy Resource Initiative • SVERI presentation • FERC’s qualitative analysis of the reliability benefits of an EIM • FERC presentation

6. Next Steps Approved at April 2013 PUC EIM Group Meeting • Continue the PUC EIM Group’s work at least through Y/E 2013 • Express appreciation to both the CAISO/PacifiCorp EIM and the NWPP for their work; including their efforts to obtain cost and benefit data to aid in the decision-making process that the utilities will undertake. • Encourage entities to: • Make their analyses open to peer review; • To the extent permitted by confidentiality considerations, make their evaluations available to state commissions and other relevant state entities; • Hold stakeholder outreach to convey and discuss the results; and • Continue to evaluate varying governance models for any proposed EIM.

7. Next Steps Approved at April 2013 PUC EIM Group Meeting • Participate in the CAISO stakeholder process and encourage the CAISO and PacifiCorp to: • Remain open to new participants; • Explore governance models that encourage broad participation; and • Explore technical issues that merit discussion, with an eye towards their potential impacts on out-of-California potential participants. • Encourage the NWPP MC to: • Parse out, to the BA-level, results from EIM benefits studies and identify costs associated with implementing an EIM and Order 764 and, to the extent necessary, encourage commissions to request jurisdictional utilities to participate in such studies; • Continue modeling work and provide an analysis schedule and make any new results public; • To the extent financially feasible, undertake further sensitivity analyses as requested by stakeholders; and • Work further on the FRAP project and other enhanced market tools currently under consideration.

8. Next Steps Approved at April 2013 PUC EIM Group Meeting • Encourage additional entities to evaluate the costs, benefits, and obstacles for their participation in the CAISO/PacifiCorp EIM, any proposed NWPP EIM, or any market tool developed by the NWPP and others, and to: • Share the results with state commissions and other relevant agencies; and • Consider requesting assistance from DOE, NREL, the CAISO/PacifiCorp EIM, and the NWPP in interpreting these evaluations. • Work with SVERI to better understand its analysis and plans for further work. • Explore transmission connectivity through BAs absent participation by those BAs in the EIM.

9. Activities since April 2013 Meeting • 4-25-13: PUC EIM Group submits letter to Ed Beck, thanking him for his presentation on behalf of SVERI at the Boise meeting and requesting that SVERI hold a follow-up webinar for the PUC EIM Group and its stakeholders. • 4-26-13: PUC EIM Group submits letter to Pat Reiten and Bill Drummond, co-chairs of the NWPP MC, thanking them for co-hosting the EIM meeting in Boise and providing the following specific advice: • Urges the NWPP to continue its EIM benefits sensitivity analyses, parse out the BA-level benefits of an EIM, and further refine the cost estimates of an EIM. • Asks that the NWPP consider, in its ongoing analyses, the impacts of joining the CAISO/PacifiCorp EIM. • Requests that these views be conveyed at the May 7 closed-door meeting of the NWPP MC Executive Committee.

10. Activities since April 2013 Meeting • 4-26-13: PUC EIM Group submits letter to Steve Berberich, President and CEO of the CAISO: • Thanks both the CAISO and PacifiCorp for their joint work in explore the costs and benefits associated with an EIM. • Requests that certain technical issues that impact outside-of-California participants in an EIM be further clarified in subsequent drafts of the EIM straw proposal. • Requests that the CAISO further analyze and consider alternative governance options. • Requests that CAISO and PacifiCorp continue the active engagement of outside-of-California parties in the stakeholder process.

11. Activities since April 2013 Meeting • Closely following activities related to the developing CAISO/Pacificorp EIM • Monitoring stakeholder processes and planning to evaluate analysis/reports (once released) from: • NWPP • Pacificorp • BPA • SVERI • NV Energy • Evaluating IRP requirements to consider options to achieve needed system flexibility, including participation in an EIM

12. Webinars SPSC Webinar on Flexible Resource Sufficiency (8/29/2013) • The Oregon PUC has adopted flexible capacity guidelines for their Integrated Resource Planning processes. Every two years, the state’s IOUs are required to: • Forecast the supply and demand for flexible capacity • Evaluate both supply and demand-side resources (i.e., DR) on a consistent and comparable basis • Additionally, the OR PUC expects its regulated electric utilities to evaluate the costs and benefits of business practices and market mechanisms designed to improve system flexibility. These include: • Energy Imbalance Markets • Power Pool Reserve Sharing Practices; • Dynamic Transfer Agreements; and • Improved Forecasting of Wind and Solar Resources

13. Webinars PUC EIM Group Webinar on CAISO EIM Straw Proposals and Stakeholder Responses (9/16/2013) • CAISO • Market design/operations • Transmission access • Governance • Stakeholder Perspectives on the CAISO Straw Proposals • Southern California Edison • Xcel Energy • BPA • PacifiCorp

14. CAISO/Pacificorp EIM Stakeholder Process - PUC EIM Group Comments • Market design – Comments submitted April 23, 2013 • PUC EIM Group comments encourage: • Scalable approach • Flexible on-ramps for additional participants • Further clarification of technical issues that may affect entities outside of CA • Governance stakeholder processes • Include review of relevant CA statues, federal law, and FERC precedent • Continued active engagement with non-CAISO entities • Continued participation of PacifiCorp with NWPP activities • Development of transmission access paradigm • In general • Utilization of transmission rights that tie together EIM entities across potentially non-participating BAs

15. CAISO/Pacificorp EIM Stakeholder Process - PUC EIM Group Comments • Governance – Comments submitted September 6, 2013 • PUC EIM Group comments support : • Concept of a transitional committee with broad geographic and sector diversity that will evolve into an independent EIM governing entity • Sector designations that are clear, non-duplicative, and include separate categories for government agencies and public interest groups • Consideration of a member-organization governance model similar to WECC’s in order to provide familiarity to a broad range of Western entities • Further exploration of state/federal statutes and FERC precedent regarding Section 205 delegations • The role of state regulators in advising and intervening on EIM matters of state and regulatory interest

16. CAISO/Pacificorp EIM Stakeholder Process – Timeline Timeline from September 30th CAISO prs , page 47

17. Upcoming Meetings • CREPC-SPSC Meeting October 30th through November 1st in San Diego • EIM panel discussion October 31st from 11:00 to 12:15 • PUC EIM in-person meeting is being considered for late January or early February 2014

18. Comments?Questions? Contacts: Commissioner Travis Kavulla (MT), PUC EIM Group Chair tkavulla@mt.gov Rebecca Johnson, Western Interstate Energy Board rjohnson@westgov.org