IID Energy’s Road to Renewable Energy: The Green Path Coordinated Projects

1. IID Energy’s Road to Renewable Energy: The Green Path Coordinated Projects Charles Hosken, General Manager Imperial Irrigation District APPA Engineering & Operations Technical Conference, Sacramento, CA April 11, 2006

2. Interesting facts about IID Energy: • Almost 6500 square-mile service area in Southern California that borders Arizona and Mexico • 1300 miles of transmission infrastructure • 130,000 customers • 6th largest electric utility in California • One of five control areas in the state • Over 7% growth system-wide--almost 9% in Coachella Valley and 6% in Imperial Valley • 900 MW peak load in 2005; 950 MW projected demand in 2006

3. Where We’re Located

4. The Green Path Coordinated Projects Strategic Partnerships IID Energy proposes to forge a public/private partnership with Citizens Energy and the Los Angeles Department of Water & Power (LADWP) to develop the Green Path Coordinated Projects to achieve three important goals: • Provide interconnection to LADWP control area and another interconnection with the CAISO at San Felipe substation to increase import/export capability to the Los Angeles and San Diego areas • To facilitate delivery of renewable energy from the Imperial Valley to Southern California, Arizona and elsewhere • Address the growing needs of IID Energy customers

5. What are the Green Path Coordinated Projects? • The Green Path Coordinated Projects consist of three major transmission projects: • IID Energy’s Transmission Expansion Plan • Proposed IID Energy – Citizens: “Green Path Southwest” • Proposed IID Energy – LADWP – Citizens: “Green Path Los Angeles Connection”

6. IID Energy’s Transmission Expansion Plan

7. 1. IID Energy’s Transmission Expansion Plan Benefits • Increase the reliability and voltage support of IID’s transmission system by upgrading the 161 kV system to 230 kV, optimizing the use of existing utility corridors • Promotes renewable resources (geothermal, solar, bio-waste, etc.) development in IID Energy’s service area, boosting economic development for the whole region • Increase the deliverability of existing and potential renewable resources across the IID Energy’s service area to multiple delivery points and markets • Increase the access to low cost energy resources into IID Energy’s service area including CAISO/SP15 region • Allows IID Energy to provide service to growing customer base • Revenues from transmission wheeling can be self-funded investments, promoting low rates

8. 1. IID Energy’s Transmission Expansion Plan MEXICO

9. IID Energy’s Transmission Expansion Plan • Status • MWA for IID Energy’s Transmission Expansion Plan Development Phase was approved by the IID Board on November 15, 2005 • The board will review plans for the construction of each phase of the expansion plan in incrementally • Expansion plan is expected to fully constructed and operational by December 2010 to meet California’s Renewable Portfolio Standard

10. The Green Path Coordinated Projects: Strategic Partnerships 2. Proposed IID Energy–Citizens “Green Path Southwest”

11. The Green Path Coordinated Projects Strategic Partnerships IID Energy and Citizens Energy are currently negotiating a Development Agreement for the Green Path Southwest Project. The following are highlights: • IID Energy will build and own the Green Path Southwest Project • IID to finance 5% of the Project (approximately $5 million) • Citizens to finance 95% of the Project and obtain reimbursement from CAISO by filing as a Participant Transmission Owner (PTO) • Citizens will transfer 95% of Project’s capacity entitlements to the CAISO during the deal term. Citizens entitlements will revert to IID after expiration of deal term • Important issues such as Project’s Control Area, Operation and Maintenance are still under discussion with Citizens and the CAISO

12. 2. Proposed IID-Citizens “Green Path Southwest” • Partnership Objectives • Protect the interest of IID Energy customers • Citizens Energy proposes low-income assistance for IID Energy customers and an environmental mitigation offset program

13. 2. Proposed IID-Citizens “Green Path Southwest” • Project Description • New 500 kV Bay at Existing Imperial Valley Substation • New IV-to San Felipe 500 kV line (38 Miles) • New 500 kV substation to be built in the vicinity of existing IID Energy’s San Felipe substation with a 500/230 kV 600 MVA transformer • New 13 mile stub line from proposed San Felipe 500 kV substation toward existing SDGE’s Narrows 69 kV substation • SDGE is expected to construct the 500 kV line from Central San Diego to interconnect with stub line in the vicinity of SDGE’s Narrows substation

14. 2. Proposed Green Path Southwest Project Green Path Southwest (IV-San Felipe 500 KV) MEXICO

15. 2. Proposed IID-Citizens “Green Path Southwest” Benefits • Increase the reliability and import/export capability of the IID Energy transmission system using existing utility right-of-way • Provide reliable connection at San Felipe substation for renewable resources deliverability to CAISO/SP15 • New San Felipe Interconnection will provide at least 600 MW of Import/ Export Capability • Significantly improve the Imperial Valley Study Group identified reliability issues for critical contingencies, primarily for the loss of Imperial Valley to Miguel 500 kV line

16. 2. Proposed IID-Citizens “Green Path Southwest” Green Path and Sunrise Projects coming together: • SDG&E proposes to build the Sunrise Project, a 500 kV transmission line from San Diego Central Substation to Narrows Substation, to access renewable energy from IID Energy’s Green Path Southwest Project • An MOA was recently signed by IID Energy, Citizens Energy and SDGE that: • Ensures ongoing cooperation between the utilities as they work together on respective projects, guaranteeing no duplication of work • Defines each utility’s responsibility • Protects the interest of IID Energy and SDG&E customers • The MOA is subject to approval by the Boards of each utility

17. The Green Path Coordinated Projects: Strategic Partnerships 3. Proposed IID – LADWP – Citizens “Green Path Los Angeles Connection”

18. The Green Path Coordinated Projects Strategic Partnerships IID Energy, LADWP and Citizens Energy have not yet started negotiating a Development Agreement for the Indian Hills--Upland 500 kV Project. The following has been considered: • LADWP to build, own, operate and construct the Indian Hills-Upland Project • Citizens Energy will finance a portion of the Project (TBD), and obtain reimbursement from CAISO by filing as a Participating Transmission Organization • IID is considering a small share ownership in the Indian Hills 500/230 station and Indian Hills-Upland 500 kV line only (~5%) • The Indian Hills-Upland 500 kV Project will be in LADWP’s Control Area, except Indian Hills Substation that will be in IID’s Control Area

19. 3.Proposed IID-LADWP-Citizens “Green Path Los Angeles Connection” Partnership Objectives • Provide access to LADWP to geothermal and other renewable resources in IID Energy’s service area • • Enhance IID Energy’s transmission import/export capacity and system reliability with LADWP Connection • • Provide Interconnection to LADWP Control Area

20. 3. Proposed IID-LADWP-Citizens “Green Path Los Angeles Connection” • Project Description • New 100 miles 500kV line from Indian-Hills to Upland substations with 60% series compensation • New Indian Hills 500/230kV substation • New Upland 500/287kV substation • LADWP will upgrade 43 miles of one single-circuit line from Upland to Victorville • Project expected to interconnect Devers-Palo Verde 2 at Indian Hills

21. 3. Proposed IID-LADWP-Citizens “Green Path Los Angeles Connection” MEXICO

22. Green Path’s Many Benefits • Utilizes existing infrastructure • Expands use of renewable energy significantly; creates new markets for geothermal, solar and biomass producers • Provides positive local impacts to populations in Imperial County, Riverside County, San Diego County, LADWP and CAISO’s SCE territory • Boosts economic development through new geothermal, solar and biomass development within Imperial County • Provides congestion relief for region; • Improves reliability for IID Energy and So. California; and • Enables projects to be achievable sooner and at lower cost to energy users.