MRTU Readiness Program and Cutover/Reversion Plan Overview

1. MRTU Readiness Program and Cutover/Reversion Plan Overview Steve Greenleaf Director of Regional Market Initiatives California ISO Presentation to WECC Market Interface Committee Portland, Oregon June 14-15, 2007

2. MRTU Readiness Effort overview Readiness Effort • The MRTU Readiness effort is a set activities that ensures people, processes, and technologies are ready for the implementation of the MRTU program Value Proposition • Communication vehicle to gain awareness and understanding of the changes, identify gaps and make required process adjustments • Provides detailed plans incorporating assessments, knowledge transfer, and training • Utilize a tracking mechanisms to assess progress • Minimize surprises, provide early warning of required mitigation measures Key Areas • Internal Readiness • External Readiness

3. Internal Readiness Incorporating Five Activities Outreach Assessments Planning/Development Implementation Training External Readiness Incorporating Four Activities Stakeholder Interaction Outreach Assessments Training Key Focus Areas

4. Build/Implement Plan/Analyze/Design Bus Unit Readiness Project Plan Mkt Sim – Long Cycle Mkt Sim – Bus Struct ETE Staging ETE Detailed Process Design/Update • Business Unit • Readiness Plan: • Functions • Roles • Resources • Work Plan • Knowledge • Transfer Plan • Training Plan • Communication • Plan • Etc. Process Refinement Job Transition Updated Job Descriptions Task Analysis & Job Design Updated Procedures Knowledge Transfer Organizational Analysis & Design Job Specific Training Dev (as needed) Technical & Job-Specific Training Communication Planning On-Going Internal Communications Baseline Change Readiness Survey Change Readiness Survey Change Readiness Survey General Readiness Approach

5. MRTU Internal Readiness Key Activities • Outreach • Assessments • Planning/Development • Implementation • Training Outreach • Developing Outreach Campaign Design (Kick-off meetings, periodic assessments, progress communication) • Conducted Business Unit Readiness planning Kick-off meetings with ISO departments Personnel Assessment • Deployed initial readiness assessment through company-wide survey, results received • Scheduling focused follow-up assessments

6. Key Activities • Outreach • Assessments • Planning/Development • Implementation • Training MRTU Internal Readiness Planning and Development • Business Unit Readiness Plan - Identifying six key elements • New or modified business functions • Roles and responsibilities to perform functions • Resource (people/technology) requirements and work Plan • Knowledge transfer Plan • Training Plan • Communication Plan • Under development for all ISO departments

7. Key Activities • Outreach • Assessments • Planning/Development • Implementation • Training MRTU Internal Readiness Business Unit Readiness Plan Implementation • Detailed tasks implementation over the next 8 months • Refined as knowledge is gained through training, Market Simulations and Business testing • Periodic progress reporting Training • Introductory courses developed, completed • Intermediate courses developed, completed in 2006 - 2007 • Advanced level courses under development, completed • in 2006- 2007 • Additional courses as required

8. Key Activities • Stakeholder Interaction • Outreach • Assessments • Training MRTU External Readiness Stakeholder Interaction • Established monthly Participant Readiness Advisory Group (PRAG) • Established monthly MRTU Implementation Workshop • Developing Stakeholder Action Items & Issues Report Outreach • Developing Outreach Campaign Design (phone campaigns, periodic surveys, etc.) • Supporting MRTU Bulletin Board content

9. Key Activities • Stakeholder Interaction • Outreach • Assessments • Training MRTU External Readiness Participant Assessment • Finalized initial market participant assessment • 15 On-site assessment candidates • 25 Assisted self-assessment sample candidates • 30 Self-assessment sample candidates • Initial assessment action plans completed • Second Assessment scheduled for July 2007 Training • Introductory course developed, posted on CAISO web • Intermediate courses developed, 9 sessions completed, 2 additional sessions scheduled in 2007 • Sector based bid-to-bill training developed, 4 sessions conducted 3 additional sessions scheduled in 2007

10. Readiness Metrics • 33 categories incorporating 125 measures within 4 functional areas • Organization • Technology • Business Operation • Participant • Reporting • Roll-up of categories indicating readiness, risks and actions • Dashboards provided to the Business Unit owners, MRTU Steering Committee, Officers, Board and Market Participants

11. Operating Procedures Current Operations Procedure review • 352 grid operations, market and transmission operating procedures have been reviewed for MRTU impacts and training requirements • 73 have been identified for revisions • Process & scenario walkthroughs currently underway to determine additional procedure modification and development • Market Participant meeting to discuss procedure changes will be scheduled for late summer / early fall 2007

12. Summary • Readiness efforts benefit the successful implementation of MRTU • Ensures that the ISO’s and Market Participant’s people, processes and technology are prepared for the changing Markets • 2 key focus area – Internal and External Readiness • 6 key activities – Stakeholder Interaction, Outreach, Assessment, Planning/Development, Implementation and Training • Measurement – 33 Metric Categories, 125 measures, 4 functional areas • Operating Procedures review underway

13. MRTU Cutover and Reversion Plan

14. What is in the Plan? • Provides direction for an orderly transition from the existing market systems to the new MRTU systems. Minimizes risks to grid reliability. • Phases of Cutover and Reversion Planning • Planning phase (March-November 2007) • Pre-production phase (December-January 2007) • Transition phase (Late January-February 1 2008) • Settlements and post-production phase (February-March 2008)

15. Development and Review Process • ISO initiated discussions with the Participant Readiness Advisory Group (PRAG) on June 7th. • ISO will present initial thoughts and solicit stakeholder involvement for Cutover and Reversion Plan at the MRTU Implementation Workshop scheduled for June 19th. • ISO will present draft outline of plan and process to ISO Board in July. • ISO will receive input from stakeholders over summer with initial draft in September. • A table top exercise will be conducted in November. Final document to be released in December.

16. Notable Activities During Cutover • Potentially Operate Production Systems in Advance • Run DAM a day early with bids to be used on first day • Run RTM starting 12-18 hours ahead • No binding instructions, intended to reduce risk • Potentially have Additional Resources On-Line • As many resources as possible • Alternatively, procure additional A/S • Potentially request Outages to a Minimum Level • Potentially Request 80% Self-Scheduling of A/S • Ensure Additional Support Staff Available

17. Potential Reversion Plan • Proposed Criteria A reversion may be called for as a result of an event that could compromise the CAISO’s ability to reliably and accurately dispatch and settle the market in accordance with the CAISO tariff and BPMs, AND there is no viable work-around that can be implemented until the underlying system functionality issue is resolved. • Potential Effective Dates: • Beginning: day of MRTU implementation • Ending: two months after MRTU implementation

18. Reversion Intended as Last Resort • In general, the ISO will take the following steps before initiating a reversion. • Assess problem and determine root cause and severity of the issue. • Determine impact to Market Participants and/or other Balancing Authorities and solicit information. • Inform and work with Regulators and WECC. • Troubleshoot and resolve. • If time allows, develop code modifications, test, and implement. • Develop automated workarounds. • Develop interim/manual workarounds (e.g., new operating procedures). • Develop/propose rule changes.

19. Follow Up Questions or Comments Please direct follow-up questions or comments to Steve Greenleaf sgreenleaf@caiso.com