MOD Customer Information Session September 10, 2010

1. MOD Customer Information Session September 10, 2010

2. AGENDA • INTRODUCTION • MOD Project Update • New Business Practices Overview • BP – Posting of Transmission Offerings • LUNCH (11:45am) • BP – Submitting a Short Term TSR • BP – Processing of Short Term TSRs • BP – Resale and Transfer of Transmission Rights • BP – Redirect of a Transmission Reservation • BREAK (2:30pm) • BP – Submitting Energy Schedules • BP – Processing of Energy Schedules • BP – Curtailment of Transmission and Energy • Q&A

3. MOD PROJECT OVERVIEW • What is the MOD Project? • The MOD System Upgrade Project will implement a full replacement of BC Hydro’s existing suite of aging and disparate transmission market systems with a single and fully integrated system • The new state-of-the-art system will enable BC Hydro to provide better market access and services for the benefit of its customers. The system will provide full redundancy for critical services, which will ensure a highly available system with minimal downtime • The new system will consolidate current MOD business functions including: • Scheduling • Settlements & Billing • Pricing • Workflow and Customer Content Management • Reporting

4. Project Overview When will it be completed? • The MOD Project will be implemented in five phases. • Below is the anticipated roll-out schedule for the MOD Project (subject to change): • The Project is nearing completion of Factory Acceptance Testing (FAT) and Site Acceptance Testing (SAT), with a targeted end date of late-September.

5. MOD PROJECT UPDATE • Released first set of draft BC Hydro OATT Business Practice’s for Customer Comment • Posted on the BC Hydro Transmission website on August 17, 2010 • Further draft Business Practice’s to be released in the upcoming weeks • BC Hydro is working on its Parallel Operations and Detailed Cutover Workplans • Parallel Operations is scheduled for late September to November 2010 • BC Hydro anticipates using the BCHA entity code for transactions effective Dec 1st, 2010 • BC Hydro will provide a detailed cutover plan to indicate which entity code will be used as we approach go-live.

6. MOD PROJECT UPDATE Important Dates • Customer Sandbox Testing • Customers will have an opportunity to conduct sandbox testing with the new model in late-September in a test version of OASIS. • The new Path Model was introduced to customers in the April 2010 Customer Information Session #2. • However, the new Path Model has not been updated to incorporate BCHA as the new entity code. Customers will be able to test the new Path Model in the Sandbox environment, but it will still show the BCTC entity code. • Sample Reports • Previously BC Hydro was to provide a set of sample reports from the new system to customers for review in September. However, these reports will now be provided in October once base system testing is complete. • Web Portal • The MOD Project intended to release a web portal to allow customers to access their information. BC Hydro will be providing an update on the portal in October, and a Sandbox environment may be made available to customers in November.

7. MOD PROJECT UPDATE Customer Sandbox Testing Feedback & Problem Resolution • Customers should submit any Questions, Help Requests, or Feedback resulting from Sandbox Testing via email to Brenda Ambrosi (brenda.ambrosi@bchydro.com) • Brenda will forward the Customer’s request to the MOD PMO team for resolution, and respond to the Customer once a solution has been provided. • BC Hydro is committed to responding to all issues in a timely and efficient manner.

8. MOD PROJECT UPDATE Follow up from Customer Session #2 • Randomizer for SSW • Question: How will BC Hydro ensure that the randomizer doesn’t show preferential treatment? • Answer: OATI will be providing an attestation to BC Hydro that a software industry recognized computer generated algorithm is used for randomization. • Competition Results • Question: Will BC Hydro post results of who was in competition and the winners? • Answer: BC Hydro currently provides and will continue to provide information on competitions through OASIS, and the TSRs on OASIS will reflect if they were involved in a competition.

9. MOD PROJECT UPDATE Follow up from Customer Session #2 • Impact from MOD Project on neighboring Balancing Authorities and WECC entities • BC Hydro will be following up in the upcoming months with WECC entities that will be affected by BC Hydro’s entity code change from “BCTC” to “BCHA.” • Counteroffers • Question: If a counteroffer is issued during SSW are subsequent TSRs refused? • Answer: Counteroffers must be completed (RETRACTED or CONFIRMED) before subsequent requests can be processed. • Displacements • Question: If customer submits TSR that is greater than ATC, will BC Hydro accept the TSR as a valid challenger? • Answer: No, the challenger TSR will be REFUSED before initiating competition.

10. Business Practices (BP) Overview

11. WHY NEW BUSINESS PRACTICES (BP’s) • Implement the OATT Amendments approved in October 21, 2009 • Document process changes with the implementation of MODS • Define procedures for items in the OATT • Clarify and make transparent the processes for doing business with BC Hydro with respect to wholesale transmission service • Improve navigation and access to information

12. NEW BUSINESS PRACTICES • August 17, 2010 • Posting of Transmission Service Offerings • Submitting a Short Term Transmission Service Request • Processing of Short Term Transmission Service Requests • Redirect of a Transmission Reservation • Resale and Transfer of Transmission Rights • Submitting Energy Schedules • Processing of Energy Schedules • Curtailment of Transmission and Energy • Draft Business Practices to be Posted in September 2010 • Becoming a BC Hydro Transmission Customer • Submitting a Long Term Firm Point-to-Point Transmission Service Request • Processing of a Long Term Firm Transmission Service Request • Rollover of a Long Term Transmission Reservation • Conditional Firm Service • Ancillary Services • Settlements and Billing

13. INDUSTRY REFERENCES • NAESB – Serves as an industry forum for the development and promotion of standards which will lead to a seamless marketplace. • Produces Business Practices that streamline transactional processes as well as communication protocols (eg. OASIS Standards and Communication Protocols) and related standards designed to improve efficiency and decrease seams. • WECC – Regional entity responsible for coordinating and promoting bulk electric system reliability in the Western Interconnection. • Pre-schedule calendar • Regional Criteria (formerly BPs) on WECC scheduling practices for Transmission and Energy • NERC – Develops and enforces reliability standards. • eTag specifications • NERC holidays

14. BP - POSTING OF TRANSMISSION OFFERINGS

15. BP - POSTING OF TRANSMISSION OFFERINGS (Overview) • Describes how BC Hydro posts and makes available its Transmission Offerings • Provides the valid Path Names and POR/POD combinations on the BC Hydro system • Pricing for Transmission Service • Discounted Pricing for certain paths (not changed) • Outlines the Posting of TTC and ATC

16. BP - POSTING OF TRANSMISSION OFFERINGS (Removed) • Pre-schedule market will not be closed between 07:30:00 & 08:00:00 and 17:00:00 – 17:30:00 for the upload of TTC/ATC/Pricing to OASIS • Updates to TTC and ATC will be uploaded immediately • TSRs will be subject to the scheduling submission timelines • 5 Minute delay for ATC to updated in OASIS • Changes to ATC will be posted immediately to OASIS

17. BP - POSTING OF TRANSMISSION OFFERINGS (Modified)

18. BP - SUBMITTING A SHORT TERM TSR

19. BP - SUBMITTING A SHORT TERM TSR (Overview) • Summarizes some of the key TSR attributes for the submission of a Short Term (ST) TSR on OASIS • Provides the Submission Timelines for each ST Firm and Non-Firm service increment • The Conditional Until time is defined for each ST Firm and Non-Firm service increment • BC Hydro follows the WECC Pre-scheduling Calendar • Outlines the procedures for submitting a ST Firm and Non-Firm TSR with an earliest time at which requests can be requested. • 5 Minute Simultaneous Submission Window – for Midnight Bidding

20. BP - SUBMITTING A SHORT TERM TSR (Modified) • Changed Normal Pre-schedule Day to Working Day • Any day in the week excluding weekends, NERC holidays and Statutory Holidays as posted in the WECC Pre-scheduling Calendar • Reservation Profile does not have to be flat • Daily TSR must have a flat MW profile for all hours in a calendar day but each day may have a different MW profile • Weekly TSR must have a flat MW profile for all hours in a 7 day period but each week may have a different MW profile • Latest Request times for each Short Term service increment is now 1 minute. • Note, BC Hydro is evaluating and testing Intra-hour scheduling and further revisions to business practices may be forthcoming • Bid Price must reflect MW/increment – i.e. $ per MW-H, MW-D, MW-W, MW-M, MW-Y

21. BP - SUBMITTING A SHORT TERM TSR (Modified) • 5 Minutes Simultaneous Submission Window for Short Term Firm and Non-Firm TSRs with an earliest time at which requests may be submitted • Replaces current midnight bidding practice • Sections 3.3 and 3.4 define earliest submission time for Firm and Non-Firm • Example: between 00:00:00 and 00:05:00, Monday, January 31st (assuming no leap year), Transmission Customers may submit TSRs as follow: • Hourly Firm and Non-Firm for Tuesday, February 1st • Daily Firm and Non-Firm for Wednesday, February 2nd • Weekly Firm and Non-Firm for Monday, February 14th • Monthly Firm and Non-Firm for April 1st

22. BP - PROCESSING OF SHORT TERM TSRs

23. BP - PROCESSING of SHORT TERM TSRs (Overview) • TSRs are received and processed according to the path and the chronological order in which they are queued in BC Hydro’s OASIS • Table 1 provides the timelines for Confirmation (when Transmission Customer submits a TSR Pre-confirmed = No) • Table 2 provides the timelines for Counteroffer • Outlines how BC Hydro processes TSRs submitted during the 5 Minute Simultaneous Submission Window with reservation priority determined by Duration, Pre-confirmation and Bid Price • Defines Reservation Priority and Pre-emption/Competition • Duration • ROFR • Simultaneous Matching Window BC Hydro does not contact the Transmission Customer; they must monitor OASIS

24. BP - PROCESSING of SHORT TERM TSRs (Removed) • BC Hydro no longer offers Price ROFR (Right of First Refusal) for Short Term Non-Firm transmission Service • Consistent with NAESB • Procedures detailing the previous Pre-emption and Competition process

25. BP - PROCESSING of SHORT TERM TSRs (Modified) • Current definition of Duration: the number of consecutive, same MW service increments within the Start and Stop Time. Only consecutive service increments with constant MW amounts between the Start and Stop Time are counted to measure the duration of the transmission request. • New Definition of Duration – the number of transmission increments with non-zero MW profile between Start Time and Stop Time Example: Hourly TSR

26. BP - PROCESSING of SHORT TERM TSRs (Modified) • 5 Minute Simultaneous Submission Window (Midnight Bidding) 00:00:00 – 00:05:00 • TSRs submitted within the 5 minute window will not be publicly available until the window has closed • TSRs sorted into separate & equal priority groupings based on: • Duration • Pre-confirmation • Bid Price • Randomly assign customer pick-order that is used for repeated draws from each grouping, beginning with the highest priority grouping • Conduct iterative picks from each priority grouping and grant ATC requested until no TSR remain in that priority grouping or ATC is exhausted • Proceed to the next highest priority grouping and repeat iterative picks using the same pick-order sequence, from point left off in the prior grouping • BC Hydro will Counteroffer if any remaining ATC exists and cannot meet the requested capacity of the TSR

27. BP - PROCESSING of SHORT TERM TSRs (Modified) • Pre-emption and Competition – occur only in Pre-schedule and only up until the conditional time period of a Short Term TSR • No change in Pre-emption (Displacements) • Competition occurs when a TSR has the Right of First Refusal (ROFR) • Competition Window starts at 06:00:00 every working day as required and remains open until 17:00:00 • Challengers for next working day must be submitted prior to 9am • Compeition for next working day must be completed by 10am • Challenger must be Pre-confirmed and have a fixed capacity over the term of the request; it cannot have varying MW over the duration of the request • Two types of competition: • One-to-One Competition: one Challenger and one Defender • One Challenger and multiple Defenders • Simultaneous Matching Submission Window: when a subsequent Pre-confirmed Short Term TSR (Challenger) of higher priority attempts to displace multiple Confirmed Short Term TSRs (Defenders) during the conditional period to obtain limited ATC, the Defenders will have a simultaneous opportunity to exercise ROFR

28. BP - PROCESSING of SHORT TERM TSRs (Modified) • Pre-emption and Competition – Cont’d • When competition process is initiated, BC Hydro will, for each affected Confirmed TSR (Defender): • RECALL the capacity amount that is in competition or DISPLACE the TSR if the recall is for the entire capacity; • Set the Competing flag to “Yes”; • Update the Seller Comments to indicate the OASIS ID (ARef) of the Challenger; • ATC Offerings will be updated to reflect the recall or displacement • BC Hydro will not contact the Defender through phone, email or fax to notify that a competition has been initiated. Notification shall occur through OASIS. • Defenders must submit a MATCHING request according to the timelines outlined in Table 5 of the Business Practice. Defender can only submit one (1) MATCHING request.

29. BP - PROCESSING of SHORT TERM TSRs (Modified) • Pre-emption and Competition – Cont’d • MATCHING requests submitted during Simultaneous Matching Submission Window are not masked. Once the matching submission timeline closes, BC Hydro will determine the order of which Defender will be granted according to: • Duration • Bid Price • Queue Time • BC Hydro will counteroffer the Defender or the Challenger if any remaining ATC exists, and cannot meet the requested capacity of the MATCHING or Challenger TSR

30. BP - REDIRECT of a TRANSMISSION RESERVATION

31. BP – REDIRECT of a TRANSMISSION RESERVATION (Overview) • Transmission Customer can request to modify the POR and/or POD of a Firm PTP transmission reservation • Redirects may be on a Firm or Non-Firm basis • Redirect on a Firm Basis – once Redirect is Confirmed, BC Hydro will release and offer the sale, the portion of the capacity of the Parent Reservation that was redirected • Redirect on a Non-Firm Basis – Transmission Customer may release (Relinquish) the Redirected capacity back to the Parent Reservation • Redirects can be for the same or lower service increment as the original reservation (Parent Reservation) • Can redirect only the unused (unallocated) capacity of a CONFIRMED Firm TSR provided ATC exists on the redirected path • BC Hydro will Counteroffer if there is insufficient ATC on the Redirected path

32. BP – REDIRECT of a TRANSMISSION RESERVATION (Modified) • Redirect on a Firm Basis of Long Term Firm with Rollover Rights • Redirect for less than the full remaining term of the transmission reservation, the rollover right remains with the Parent Reservation • Redirect to the end of the term of the Parent Reservation: • Redirect TSR is a Yearly service increment (duration can be less than 1 year) results in Rollover rights (subject to ATC and established through studies, if required) on the redirected path • Redirect TSR is a Short Term service increment results in the Rollover rights remaining on the Parent path • Redirect TSR does not have to be Pre-confirmed Yes • A Redirect can be from a Discounted Path to Non-Discounted path • Transmission Customer will pay the “higher of” • Redirect can occur in Pre-schedule or Real Time

33. BP - RESALE and TRANSFER of TRANSMISSION RIGHTS

34. BP – RESALE and TRANSFER of TRANSMISSION RIGHTS • Resale – Reseller sells all or portion of its scheduling rights associated with the POR and POD of a CONFIRMED Long Term or Short Term Firm or Non-Firm transmission service • Between 2 registered BC Hydro Transmission Customers • Must be conducted or posted on OASIS • Retain all same service attributes, service priority, POR/POD of Parent • Bid Price = mutually agreed rate in $/MW-hour • Reseller has the right to aggregate multiple reservations into a single Resale provided they are of the exact same service attribute, priority, product and POR/POD (exception is CFS) • Resale is equal to or less than the Granted Capacity of Parent less reductions and allocated capacity

35. BP – RESALE and TRANSFER of TRANSMISSION RIGHTS • Pursuant to a Resale: • Does not convey service renewal rights per Section 2 of the OATT • Assignee is obligated to BC Hydro for all arrangements required for scheduling transactions under its SA including, but not limited to, submission of schedules and provision of losses • Assignee can Redirect its transmission rights acquired from a Resale • Reseller loses its scheduling rights for the time and capacity of the Resale

36. BP – RESALE and TRANSFER of TRANSMISSION RIGHTS • Transfer – Reseller transfers all of the rights and obligations under an existing CONFIRMED Firm Yearly or CONFIRMED Firm and Non-Firm Monthly transmission service • Between 2 registered BC Hydro Transmission Customers • Must be conducted or posted on OASIS • Partial Transfer is limited to the capacity available for scheduling (i.e. less Redirects, Resales, energy schedules, etc) • Bid Price of Transfer is equal to the Bid Price of Original TSR • Full Transfer includes all encumbrances (i.e. Redirects, Resales, etc.) • All parties – Reseller, Assigned and BC Hydro – must agree to the Transfer • Any renewal rights held by the Parent is conveyed from Reseller to Assignee on the path and in the capacity transferred • Assignee has right to redirect and resell the transferred capacity in accordance with BC Hydro’s OATT

37. BP - SUBMITTING ENERGY SCHEDULES

38. BP – SUBMITTING ENERGY SCHEDULES (Overview) • Few changes to existing Business Practice • Designation of Transmission • PSE Assigned Cut Priority • Outlines requirements for the submission of eTags • Capacity • Dynamic, Contingency and Regulation Reserve • Interruptible Energy • Correcting and Modifying eTags • Supplying Losses

39. BP – SUBMITTING ENERGY SCHEDULES (Modified) • Designating Transmission • Valid: OASIS ID Approach, Blanket Approach and Stacked Transmission Approach • Removed SuperBlanket Approach • PSE Assigned Cut Priority • PSE can assign a numeric “Cut_Priority” to each eTag to indicate to BC Hydro the curtailment order of eTags • “1” is the highest priority and will be curtailed last; “2” is the second highest; etc.

40. BP - PROCESSING OF ENERGY SCHEDULES

41. BP – PROCESSING OF ENERGY SCHEDULES (Overview) • eTags are received and processed by BC Hydro according to the chronological order they are queued in ETS • If an eTag fails a validation, BC Hydro will set the eTag to DENIED and enter an appropriate message in the eTag to advise the PSE

42. BP – PROCESSING OF ENERGY SCHEDULES (Modified) • If an eTag causes an infringement upon SOL, BC Hydro will set the eTag to DENIED and enter an appropriate message • SOL = System Operating Limit • An infringement upon SOL can occur when the amount of energy scheduled is greater than the SOL for a path and cannot be accommodated while including counterflow energy. Explained further in BP – Curtailments of Transmission and Energy • Updated Timing Requirements for WECC table – as posted in NAESB

43. BP - CURTAILMENT of TRANSMISSION and ENERGY

44. BP – CURTAILMENT of TRANSMISSION and ENERGY (Overview) • Outlines how BC Curtailment of transmission occurs when an emergency or other unforeseen condition and/or commercial activity threatens to impair or degrade the reliability of the transmission system • Curtailments are made on a non-discriminatory basis to relieve the constraint • Economic Interruption occurs when: • A valid, higher class transmission reservation interrupts a lower-class transmission reservation; or • A Non-Firm transmission reservation purchased from unused capacity of Firm transmission and the Firm transmission owner schedules on its rights

45. BP – CURTAILMENT of TRANSMISSION and ENERGY (Modified) • Determinant for Curtailment is not Negative ATC but Infringement upon SOL • SOL = TTC – TRM • Infringement upon SOL can occur when the amount of energy scheduled is greater than the SOL for the path and cannot be accommodated while including counterflow energy • TransmissionCurtailment Priority • At xx:40, BC Hydro will first recall all unscheduled Network Economy and then determine if there is an infringement upon SOL for the next scheduling hour or there is a condition that degrades the reliability of the transmission system and causes an infringement upon SOL • BC Hydro will issue a Reliability Limit to the appropriate transmission reservations to alleviate the infringement • BC Hydro will assign each transmission reservation a NERC curtailment priority code (0 – 7), which determines the order of Reliability Limits

46. BP – CURTAILMENT of TRANSMISSION and ENERGY (Modified) • Transmission Curtailment Priority – Cont’d • Within each priority group, Reliability Limit will be issued according to LIFO or Pro-rata as applicable • Transmission Customer can selected Impacted MW on its Confirmed TSR to view the details of the Reliability Limit • 0NX – Next Hour Market • 1NS – Non-Firm Secondary • 2NH – Non-Firm Hourly • 6NN – Network (Type 2) • 3ND – Non-Firm Daily • 4NW – Non-Firm Weekly • 5NM – Non-Firm Monthly • 6NN – Network (Type 1) • 7F – CFS (Conditional Period) • 7F – Firm including CFS (Non conditional period) LIFO Pro-Rata Pro-Rata

47. BP – CURTAILMENT of TRANSMISSION and ENERGY (Modified) • Energy Curtailment Priority • eTags with Reliability Limit issued on transmission may be curtailed LIFO according to the Product Code and Cut_Priority set by the PSE on each eTag • eTags with no assigned Cut_Priority or eTags of like assigned priority order will be curtailed LIFO in the following order • If energy curtailments results in an infringement upon SOL on the counterflow path, BC Hydro will issue a Reliability Limit to the appropriate transmission on the counterflow path Interruptible / Recallable Normal / Uninterruptible Reserves / Capacity Dynamic Lowest Priority Highest Priority

48. BP – CURTAILMENT of TRANSMISSION and ENERGY (Modified) • At xx:40, if BC Hydro determines there is an infringement upon SOL, then: • BC Hydro will issue Reliability Limits on transmission reservation according to NERC priority • Within each transmission priority group, Reliability Limits will be issued to transmission reservations according to LIFO or Pro-rata as applicable • Reliability Limits will be issued until the infringement upon SOL is resolved (total capacity of transmission reservations is equal to or less than SOL) • If total energy scheduled exceeds the SOL, BC Hydro will curtail eTags to the Reliability limits issued to transmission reservation according to the Product Code and PSE defined Cut_Priority • If the total energy curtailed is below the SOL, BC Hydro will reallocate, on a pro-rata basis, the unscheduled capacity of transmission reservation(s) to energy schedules that were to be curtailed; allowing total energy schedules to equal the SOL and in some instances, eTags to be above the Reliability Limit of the transmission

49. Important Notes from the Presentation BC Hydro strongly encourages all customers to review the updated Business Practices to familiarize themselves with some of the significant changes to be implemented in the upcoming months. • BC Hydro anticipates using the BCHA entity code for transactions effective Dec 1st, 2010 (p.5) • Sample Reports will now be provided in October once base system testing is complete. (p.6) • BCH to provide an update on the Customer Web Portal in October (p.6) • Sandbox Session will be offered to customers after completion of base testing • Customers should submit any Questions, Help Requests, or Feedback resulting from Sandbox Testing or this Info Session via email to Brenda Ambrosi (brenda.ambrosi@bchydro.com)

50. Questions?