NORTHWEST POWER POOL Reliability Update

1. NORTHWEST POWER POOLReliability Update May 10, 2012 Jerry D. Rust

2. Reliability UpdateFacts and Figures Since my last visit • Lowest recoded Water Year – 1977 @50% of normal* • Highest recoded Water Year – 1997 @148% of normal* • 2nd Lowest recoded Water Year – 2001@54% of normal* • Enron is gone • August 14, 2003 East Coast Outage • US Energy Policy Act of 2005 • Major Recession • Last Western Interconnection Outage to impact the Northwest – 1996 * 30-year Average

3. Reliability UpdateUS Reliability Legislation US Energy Policy Act of 2005 • Electric Reliability Organization (ERO) Formation – FERC Jurisdictional • ERO can impose penalties on an owner, operator or user of the bulk power system who violates a reliability Standard • ERO operational January 2007 • Penalties can be as high as $1,000,000 per incident per day • Over 100 Reliability Standards with over 2,000 incidents

4. Reliability UpdateFebruary 2008 Outage - Florida Initial Findings – potential fine of $35 billion Final Findings - $25 million fine ($10 million US Treasury, $10 million to offset the cost of the Reliability Standards program, $5million into the electric system to fix the problem)

5. Reliability UpdateWhere are We today What impacts Reliability? • Load • Generation • Economy • Weather • Constraints – the ability to deliver generation to load (transmission)

6. Western Interconnection Reserve Sharing Groups NWPP RMPP CAMX AZNM Northwest Power Pool (NWPP RSG) Alberta Electric System Operator Avista Corporation Balancing Authority of Northern California Bonneville Power Administration British Columbia Hydro & Power Authority Chelan County PUD Douglas County PUD Grant County PUD Idaho Power Company NaturEner Power Watch – Wind Energy Northwestern Energy PacifiCorp-East PacifiCorp-West Portland General Electric Company Puget Sound Energy Seattle City Light Sierra Pacific Power Company Tacoma Power Turlock Irrigation District Western Area Power Administration – UGP Rocky Mountain (RMSG) Public Service Company of Colorado Western Area Power Administration – CM Desert Southwest (SRSG) Arizona Public Service Company CECD – Arlington Valley CECD – Griffith CECD – Harquahala CECD – Panda Gila River El Paso Electric Company Imperial Irrigation District Nevada Power Company Public Service Company of New Mexico Salt River Project Tucson Electric Power Company Western Area Power Administration – LCD Independent Balancing Authorities California Independent System Operator Comision Federal de Electicidad Los Angeles Department of Water and Power

7. NWPP Coincidental Peak Load

8. Reliability UpdateCOLUMBIA RIVER RUNOFF January through July volume runoff measured at The Dalles Dam 201220112010 113% (Estimated)133% (Actual) 79% (Actual) 30-year Average

9. Reliability UpdateUNKNOWN ISSUES TO WATCH • Extreme Weather Conditions, Summer Every 1F above normal increases Peak Demand by 300 MW • Precipitation – Below normal precipitation impacts the future energy availability • Economic Conditions – Recovery of the economy or further decline impacts load (~3 to 4,000 MW)

10. Participating Balancing Authority The NWPP Reserve Sharing Group includes all the Participating Balancing Authorities in the NWPP membership region: • Avista • Alberta Electric System Operator • Balancing Authority of Northern California • Bonneville Transmission • British Columbia Hydro & Power Authority • Chelan PUD • Douglas PUD • Grant PUD • Idaho Power • NaturEner Power Watch – Wind Energy • NorthWestern Energy • PacifiCorp West • PacifiCorp East • Portland General Electric • Puget Sound Energy • Seattle City Light • Sierra Pacific Power • Tacoma Power • Turlock Irrigation District • Western Area Power Administration Upper Great Plains

11. Balancing Authority Loads at NWPP Peak ~ 57,500 MW (2011) • Avista ~ 1,870 MW • Alberta Electric System Operator ~9,400 MW • Balancing Authority of Northern California • ~ 3,720 MW • Bonneville Transmission • ~ 7,240 MW • British Columbia Hydro & Power Authority ~ 7,320MW • Chelan PUD ~ 470 MW • Douglas PUD ~ 200 MW • Grant PUD ~ 680 MW • Idaho Power ~ 3,090 • NaturEner Power Watch – Wind Energy • ~ 0 MW • NorthWestern Energy ~ 1,580 MW • PacifiCorp West ~ 3,230 MW • PacifiCorp East ~ 7,820 MW • (Total ~ 11,050 MW) • Portland General Electric ~ 3,270 MW • Puget Sound Energy ~3,120 MW • Seattle City Light ~ 1,270 MW • Sierra Pacific Power ~1,860 MW • Tacoma Power ~ 470MW • Turlock Irrigation District ~ 550 MW • Western Area Power Administration Upper Great Plains ~ 100 MW

12. Reserve Sharing Zones

13. NWPP Reserve Sharing Zones • Six Zones: • AESO • BCHA • IPC • SPP/PACE • NW / Montana (AVA, BPA, CHPD, DOPD, GCPD, GWA, NWMT, PACW, PGE, PSE, SCL, TPWR, WAUW) • Northern California (BANC, TID) • Seven Monitored Paths: • AESO – BCTC (Path 1) • BCHA – NW/Montana • PACE – IPC (Path C 20) • SPP – IPC (Path 16) • IPC – NW/Montana (Most restrictive Import / Export limits of NW – Idaho (Path 14) and Brownlee East (Path 55) ) • COI (Path 66)

14. NWPP Contingency Reserve Requirement MSSC or 5% Load Responsibility served by hydro-generation plus 7% Load Responsibility served by thermal generation plus 5% Load Responsibility served by wind • MSSC range 800 to 1,500 MW • 5/5/7% on average range 2,500 to 3,600 MW

15. Reliability UpdateExtreme Weather Capacity Available Load (MW)Resources (MW) Peak MW 58,000 ~100,000 Wind MW 10,000 Extr. Weather 3,000 Op. Reserve Req. 4,000 _______ Sub-Total 65,000 91,000 Sustainability 7,000 _______ _______ Total 65,000 84,000 Excludes any contribution from wind on peak

16. NWPP Area Wind 6-1-2010 6,671 MW 1-31-2011 7,807 MW 7-31-2011 7,953 MW 1-31-2012 8,594 MW 7-31-2012 10,600 MW forecasted 1-31-2012 11,884 MW forecasted 7-31-2013 12,822 MW forecasted 1-31-2013 14,789 MW forecasted 16

17. Reliability Update TODAY’S OVERALL EXPECTATIONS The area represented by the Northwest Power Pool is estimated to be able to meet firm loads, including the required reserve, for the 2012 summer operating season

18. QUESTIONS?