Western Interconnect, LLC

1. Western Interconnect, LLC

2. Who We Are • Membership, for-profit, Delaware LLC • Goal: • Regional scale economies in RTO services • Design, supply, integrate, operate and maintain coordination services for interstate transmission • Protect and ensure reliable transmission service • Board: five independent managers now, up to 9 before first membership election

3. Process Proposed • Starting Point: independent board; independent capital • Stage One (upon certification and funding) • Foundational steps (e.g., fund consensus for common model, maintenance coordination, better visibility) • Stakeholder review of Tariff, Operating Agreement, Reliability Agreement for Stage Two • Stage Two (estimated 2009) • Reliability Agreement: many elements supporting reliability, with or without LMP • Transmission planning activities beginning on the first anniversary of service under the Tariff.

4. Stage One • Proposal does not involve an active role in planning during this time. • WI, LLC proposes to use an on-line stakeholder forum to accomplish a variety of development tasks in a transparent manner • A common transmission model is one such task • SSG-WI consensus has emerged for this task, but funding commitments for multi-year projects are difficult

5. Stage Two • Tariff provides for deference to existing regional planning process, including the role of regional bodies now working together on planning (CREPC, WGA, WECC) • Upon first anniversary of service • Operational data provided to regional planning entities to support their work • Bi-annual study cycle to integrate: (i) individual requests for interconnection with, (ii) long run plan for the region. • Tariff provisions to support merchant transmission are included. • These provisions have been triggered in areas suffering high congestion, e.g. Delmarva peninsula in PJM

6. Other Tariff Features • Standard forms for interconnection study, construction service • Costs • Interconnection: requestor pays 100% of facilities needed to interconnect • Regional plan: transmission owners pay • “Efficient” expansion of regional plan incorporating larger interconnection facility • Requestor may pay for expansion or minimum needed to interconnect • Multiple interconnection requestors: allocation methods for study costs and construction costs, including re-allocation if projects die

7. Resources • Acceptable loss of load probability: WECC determined • Capacity benefit margin: WI Operations Office sets with Reliability Committee advice. • LSE plans to meet capacity obligations may include installed generation, purchases, or active load management, and be adjusted prospectively at any time. • WI, LLC’s role is to certify deliverability and capability. • Measurement of capacity resources (“capability”) is based on historical performance. • Reliability Committee may approve adjustment to measurement parameters. • Each state provided one ex officio member on the Reliability Committee, one voting member.

8. Exports? • Regional tracking of capacity to prevent cheating, leaning, and double-counting encourages new commitments to capacity in advance of need. • Network resources to network loads identified in 10 year forecast • Bias in Tariff to use network resources for flexibility serving loads (rather than point to point service) • Those commitments will enable regional planning to incorporate related transmission needs. • Transparency of wholesale prices, and clarity about building cost responsibility, will help • States and individual regulators can effectively work with utilities to establish cost effective commitments to generation, transmission, or load management.

9. Founded the National Futures Association in 1982 NFA is the industry-wide, self-regulatory organization for the futures industry Composed of 3,000 members and 50,000 associate members The primary purpose of the organization is to assure through self-regulation, high standards of professional conduct and financial responsibility on the part of its members 1977-1982 President and CEO of the Chicago Board of Trade (CBOT), the nation’s oldest and largest commodity futures exchange. Also -- Chairman of the Self-Regulatory Organization (SRO) Consultative Committee of the International Organization of Securities Commissions (IOSCO) Serves on advisory council of Northwestern University’s Graduate School of Management Advisory Committee of Electronic Knowledge Interchange, an integrated systems solutions service firm Chair’s Experience In Enforcement & Effective Self-Regulation

10. Relevance to Western Interconnect • Leadership in creating a critical, neutral, voluntary self-regulatory organization dedicated to preserving the integrity of market systems • Effective working relationships with Congress on matters concerning market oversight and SRO to government regulatory integration • Knowledge of how to address concerns of established organizations impacted by a new oversight entity • Depth of market regulation, monitoring, compliance and enforcement experience • A principal role of NFA is ensuring fair and effective futures market operations, requiring depth of monitoring, analysis, investigations, and enforcement experience • Includes understanding of how self-regulatory entities work closely and effectively with government agencies and authorities

11. Western Interconnect, LLC Regional Transmission Operations. Implement. Enforce. Camden Collins 2269 Chestnut St., PMB#999 San Francisco, Ca 94123 clcollins@westerninterconnect.com 415.902.0856