Briefing on California ISO Dynamic Transfers Stakeholder Process

1. Briefing on California ISODynamic Transfers Stakeholder Process For WECC Seams Issues Subcommittee Meeting May 4, 2010 Jim Price, Lead Engineering Specialist California ISO, Market Analysis & Development

2. Background:Dynamic Transfer Functionality Uses of Dynamic Scheduling Functionality • Load Following / Real Time Balancing Energy Dispatch • Split Unit Share (Jointly Owned Units) • Ancillary Services / Regulation Imports • “Intermittent” Generation Import Scheduling • Facilitate Implementation of Pseudo-Ties Pseudo-Tie • Transfer of BA Jurisdiction (Scheduling, Balancing Energy, Regulation, Outage Coordination) • Pseudo-Tie Generator treated as internal Participating Generator by Attaining BA

3. Dynamic Schedules Native Balancing Authority CAISO Balancing Authority Import @ designated Physical Tie Dynamically Scheduled Generating Facility Physical Ties between CAISO and Native BA 500 MW Generator or logical determined output is telemetered directly to the CAISO EMS Ties between the ISO and other BAs

4. Pseudo Ties

5. Outline of Dynamic Transfers Stakeholder Process • Straw Proposal clarifies ISO tariff supporting dynamic imports, facilitates imports of renewable resources, and adds pseudo-tie imports to tariff • Proposals apply to both dynamic scheduling and pseudo-ties • Few exceptions: allocation of dynamic schedules’ deviations, pseudo-tie layoffs • Key dates (stakeholder meetings 7 days after documents): • Issue Paper published 11/30/2009 • Straw Proposal published 3/10/2010 • Supplement to Straw Proposal published 4/29/2010 • Stakeholder meeting 5/6/2010 • (http://www.caiso.com/2779/2779b9ca24600.html for details) • Draft Final Proposal to be published 5/20/2010 • ISO Board of Governors meeting 7/26-27/2010 • FERC filing in August

6. Current ISO tariff supports dynamic scheduling • Allows imports of energy and AS, provided that: • Such dynamic scheduling is technically feasible and consistent with NERC and WECC reliability standards, • All operating, technical, and business requirements for dynamic scheduling functionality of ISO’s Dynamic Scheduling Protocol, or standards on ISO website, are satisfied, • Scheduling Coordinator executes a Dynamic Scheduling Agreement, and • All affected native and intermediary BAAs each execute an operating agreement with the ISO related to the operation of dynamic functionality. • Issue for intermittent resources is how to meet standards and requirements.

7. Scope of Dynamic Transfers Stakeholder Process • Issues addressed in Stakeholder Process: • Congestion management within ISO markets: • Curtailment rules • Dispatchability requirements • Transmission reservations and utilization • Data and forecasting requirements • Locational modeling and pricing • Aggregation of conventional and/or renewable resources • Scope of studies of intertie transfer limits for dynamic imports • Pro rata allocation of deviations among BAAs • Layoffs from pseudo-ties • Dynamic exports • Generator-only BAAs

8. Other issues are being addressed in other ways or being deferred to other general policy forums

9. Meeting standards and requirements • ISO dispatches dynamic resources for congestion management and energy balance (and other requirements), and needs prompt response • Current tariff measures dynamic resources’ response as tolerance band around schedules & dispatches • Meaningful “dispatch” of intermittent resources requires updates of real-time conditions • “Dispatching” to current delivery is workable but provides no knowledge of future delivery. • Option will allow 5-minute updates of availability for 2-hour look-ahead. (Note: can be seen as intra-hour schedule changes) • Meaningful compliance will be for operating orders

10. Locational modeling for dynamic transfers • ISO’s Full Network Model places generation at actual location, and includes external transmission • Dynamic scheduling and pseudo-tie agreements establish actual location of resource-specific system resources • Modeling dynamic resources at actual location provides accurate congestion management, based on value of resource in ISO markets • Constraints enforced only within ISO, • Marginal losses only computed within ISO • To avoid disparities between ISO’s dispatch and resources’ response, ISO will use locational price (LMP) • Same price applies to layoffs from pseudo-ties

11. Aggregation of “electrically close” conventional and/or renewable resources • Both the native and attaining BAs have roles in approving aggregations. • ISO will use WECC’s USF zones, within BAA boundaries, to determine what external resources are “electrically close” from ISO perspective.

12. Dynamic import study objectives • ISO tariff allows the ISO to establish limits to the amount of ancillary services and/or energy imported into the ISO BAA, whether delivered dynamically or statically. • Study will determine any limitations on dynamic transfer of variable resources into ISO BAA while shaping and firming energy within the ISO BAA due to: • Impacts to existing path limits that accommodate planned hourly variations from 20 minute ramping period • Voltage control issues • Risk to stability or excitation of low frequency modes of oscillation • ISO will coordinate studies with our neighboring BAs