Craig Williams Market Interface Manager

1. Craig WilliamsMarket Interface Manager Board, Efficient Dispatch Toolkit Update MIS & SIS Meetings December 15, 2011

2. Agenda • Update on September Action Items • Recommendations

3. September Resolution Resolved, That the Board of Directors directs WECC staff — prior to the December 2011 Board meeting — to 1) investigate potential funding sources to develop an RFP-quality market design specification; 2) hold meetings with FERC staff concerning funding and organizational options; 3) issue an RFI to determine interest, cost, and schedule for a third-party facilitator; and 4) evaluate the feasibility of, and develop a plan for sharing operational data with a third-party Market Operator (MO).

4. FERC Meetings • November 21-22 met with: • Chairman Wellinghoff • Commissioner Moeller • Commissioner Norris • Norman Bay – Director, Office of Enforcement • Joe McClelland – Director, Office of Electric Reliability • Steve Rodgers – Director, Electric Power Regulation - West

5. FERC Meetings (cont.) • FERC wants to know how it can help but are aware that its presence may also hinder • The Commissioners and the Chair appear to be aligned in their support of a market in the West • No one dismissed the idea of Section 215 funding for further market development

6. Request for Proposals • Issued October 17, 2011 • Five responses received • Cost ranged from $480,000 – 1.33 million (average $828,000 for facilitator only) • Differences included: • Hourly rates • Number of consultant trips (meetings) • Starting point (existing market vs. open process) • Level of detail in process • With preferred vendor, WECC estimates $800,000 including meeting costs and travel to complete detailed market design

7. Data Sharing with Third-Party MO • Types of Data to Share • Real-Time Data • State Estimator Solution • Sources of Data • Real-Time Data: shared with the Reliability Coordination Office (RCO) pursuant to mandatory Reliability Standards • State Estimator Solution: two main inputs are Real-Time Data and the West-wide System Model

8. Currently Identified Options for Data Sharing with Third-Party MO • Market Participant Data • Sharing would be facilitated through the MO’s tariff and/or associated participant executed documents • Non-Market Participant Data Real-Time Data • FERC Order • NERC ORD Agreement • Non-Disclosure Agreement with associated permissions • WSM • License and Non-Disclosure Agreement modified to provide WSM to the MO

9. Data Sharing Recommendation Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors authorizes the Chief Executive Officer to seek a Declaratory Order from the Federal Energy Regulatory Commission authorizing the WECC Reliability Coordination Center to share all reliability data necessary to the reliable operation of the Western Interconnection with a market operator. Such request shall note that data will be shared with any entity only upon execution of an appropriate non-disclosure agreement with WECC that includes a prohibition against the sharing of information with any merchant function or activity.

10. Data Sharing Recommendation (2) Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors authorizes the Chief Executive Officer to seek a Declaratory Order from the Federal Energy Regulatory Commission authorizing the WECC Reliability Coordination Center to share all reliability data necessary to the reliable operation of the Western Interconnection with a Transmission Operator or Balancing Authority. Such request shall note that data will be shared with any entity only upon execution of an appropriate non-disclosure agreement with WECC that includes a prohibition against the sharing of information with any merchant function or activity.

11. Funding • Options • WECC Budget • Participants Pay • Outside of WECC

12. Funding Option 1 - WECC Budget • Description • WECC uses WECC budget to fund • WECC contracts with facilitator • Pros • Market Participants can see market design prior to commitment • May be able to speed the market creation process by not requiring a process of identifying participants • Cons • Paid by all loads, even potential non-participants • WECC assumes cost even if Market does not come into being

13. Funding Option 2 - Participants Pay • Description • WECC identifies willing participants and contracts with them for funding • WECC contracts with facilitator • Pros • Only interested parties pay • Cons • WECC must identify willing participants • Market Participants must pay prior to completion of market design • WECC assumes burden of invoicing/tracking payment

14. Funding Option 3 - Outside of WECC • Description • A group or entity outside of WECC secures funding • A group or entity outside of WECC facilitates or contracts with facilitator • Pros • No cost to WECC • Lessens potential conflict of interest if WECC chooses to bid on an RFP • Cons • WECC loses leadership over process • Market Participants must pay prior to completion of market design • WECC may lose opportunity to pair RCO with Market Operator • Options discussed thus far • Xcel-led group • Northwest group • WSPP

15. Funding Option 3 – Outside of WECC (cont.) • Xcel-led group • Has received minimal support • Northwest group • Has been discussed among Northwest entities, but no clear lead organization • Small footprint may not have net benefit for Energy Imbalance Market (EIM) • Examining options for reduced functionality and purpose • Planning conference in early 2012 to discuss previous work and range of alternatives besides EIM • WSPP • Would spin off subsidiary entity made up of interested participants • Plan to begin with governance and then move on to market design • Believe SPP would be the logical market operator, and would thus begin with SPP design • Rather than “big tent,” start with a draft and iterate with one-on-one discussions to develop consensus • No specific timeline

16. Recommendation Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors directs the WECC Chief Executive Officer to report to the Board on the progress of the WSPP and Northwest entity processes by January 31, 2012.

17. ECC Task Force • Just returned from a field trip to the Southwest Power Pool on Tuesday Dec 13th. • SPP answered a number of technical questions on how the IDC tool works in the Eastern Interconnection. • Also gave the Task Force a glimpse of the next generation of tools that will replace IDC. • That glimpse raises the question of which direction to pursue?

18. Craig L. Williams Market Interface Manager w. (801) 883-6846 c. 801-455-9812 cwilliams@wecc.biz Questions?