Network Operating Committee and Transmission Customer Meeting

May 8, 2008

Agenda

1:00-2:15 PM: Network Operating CommitteeIntroductions FERC Order No. 890/890-A Ongoing compliance 10 year forecastAncillary services

2:30-4:00 PM: Transmission PlanningAttachment KPlanning processColumbiaGrid Transmission projects

Network Operating Committee Meeting

FERC Order 890 & 890-AFERC Compliance

Angie Eide

FERC Order Nos. 890 and 890-A

Order No. 890: Effective July 13, 2007Many changes to network service

Additional designation requirementsAttestationAdditional OASIS posting requirements

Order No. 890-A: Effective March 17, 2008Imbalance/Unreserved Use penalty distributionReiterated Critical Energy Infrastructure Information (CEII) processes and procedures

CEII includes information about the electric system that could be useful to a person planning an attack on critical infrastructure, but that does not simply give the location

FERC Compliance

Standards of Conduct/Open Access Transmission Tariff (OATT)

Including Order Nos. 888, 889, 890, 890-A

Reliability StandardsEffect of 2003 Northeast blackout; required by Energy Policy Act (EPAct) of 2005

Mandatory and enforceable as of June 2007Impacts all users, operators, and owners of the Bulk Power System

PSE’s compliance activities are ongoingReview of processes and procedures may result in changes to

Information CollectionOASIS business practicesBilling procedures

Questions

Network Operating Committee Meeting

10 year Annual Load ForecastAncillary Services – Reserves

Bob Harshbarger

Annual Load Forecast Submission

Network customer load and resource forecast obligationsThe Network Customer shall provide the Transmission Provider

with: Annual updates of Network Load and Network Resource forecasts See Application for Network Integration Transmission Service under Part III of the OATT, specifically section 29.2

Submitted annually by November 1The Load Forecast Submittal Form is located at: http://www.oatioasis.com/psei/ in the Network Forms and Business Practices folder

Network Customer Obligations

Timely written notice of material changes in any other information provided in its Application relating to the Network Customers

Network Load,

Network Resources,

Transmission system,

Other aspects of its facilities or operations affecting the Transmission Provider’s ability to provide reliable service.

(OATT section 31.6)

Ancillary Services - Reserves

How Things Are TodayOATT Ancillary Service Schedules 5 and 6 - Spinning and Supplemental Reserves

The Transmission Customer must either: 1) Purchase these services from the Transmission Provider;

or 2) Make alternative comparable arrangements to satisfy these

obligations (self-supply).

Identify who is providing reserves in the “Responsible Entity” field on e-Tag

Letters no longer needed

e-Tag 1.8

CUSTOMER449POD449

449 ENERGY PROVIDER

449 ENERGY PROVIDER

(123) 456-7890(123) 456-0987

ENERGYPROVIDER ABC123CBA

449ENERGYPROVIDER449ENERGYPROVIDER449ENERGYPROVIDER

Responsible Entity field

Potential For Reserve Allocation Change

Today – Contingency Reserve requirements based on:5% of hydro generation 7% of thermal generation

Future – BAL-002-WECC-1 Contingency Reserves3% of load 3% of all generationBAL-002-WECC-1 is currently posted for comment at http://www.nerc.com/~filez/regional_standards/regional_ reliability_standards_under_development.html

3 & 3 Potential Scenarios

Purchase from PSERates under Schedules 5 and 6 may increase

Self-Supply‘Á la carte’

Energy and reserves unbundledSecure transmission to deliver reserves

What’s PSE Doing

Working with other Balancing Authorities to minimize cost impactsInvestigating options on a regional basis (Northwest Power Pool Reserve Sharing Group)

Questions

John Phillips

Attachment K: Transmission Planning Customer Meeting

Attachment K: Transmission Planning

Attachment KNew requirement under Order No. 890Treat all Transmission Customers equally in the transmission planning processIndependent of studies related to transmission service requests

9 PrinciplesCoordinationOpennessTransparencyInformation ExchangeComparabilityDispute ResolutionRegional ParticipationEconomic Planning StudiesCost Allocation

Data Exchange:Submittal of

Planning Input Data

PSE TransmissionCustomer Meeting

Evaluation oftransmission andnon-transmission

solutions

Update and postPSE Plan

Establish DraftPSE Plan

Puget SoundArea

TransmissionMeeting

Performassessmentstudies and

identify needs

Developtransmission

project or non-transmission

solution, to bereflected in

ColumbiaGridBiennial Plan or

Plan Update

Are othertransmission

systemsaffected?

Yes

No

Coordinated PSE and ColumbiaGrid Planning Activities

A B

C D E

F G H I

PSE Plan Development Flow Chart

Initial PSE Plan Development Milestones

Data Exchange Transmission Customer MeetingDevelop Planning Base cases and Perform Assessment Studies (jointly with ColumbiaGrid) – 2nd quarter 2008Coordinate with Customers, Stakeholders and ColumbiaGrid in developing solutions – 2nd and 3rd

quarters 2008Develop Draft PSE Plan and hold Puget Sound Area Transmission Meeting – 4th quarter 2008Update and post on OASIS Final PSE Plan December 2008

Purpose -Coordinate the use and expansion of participating transmission systems through transparent processes

ColumbiaGrid

Incorporated March 2006

Benefits of ColumbiaGrid

Independent facilitation and approval of regional transmission planningCoordinated, open planning processTransparency of data and methodologiesEnhanced ability to integrate resources across multiple transmission systemsMechanism to strongly encourage construction of needed projects

Avista

Bonneville Power Administration

Chelan County PUD

Cowlitz County PUD

Grant County PUD

Puget Sound Energy

Seattle City Light

Snohomish County PUD

Tacoma Power

Standing invitation to other Northwest entities

ColumbiaGrid Planning Signatories

ColumbiaGrid Footprint

Develop Biennial Plan (posted ColumbiaGrid Initial Transmission Plan)West of McNary Generation Integration ProjectI-5 Corridor Reinforcement Project (Southwest Washington)Puget Sound Area Study Team (PSAST)

Study Team to develop transmission expansion plan for Puget Sound area including possible interim solutions for operating problems, including redispatchTo date, have held several meetings with up to 20 participants, representing 8 or more different entities, including BPA, Puget Sound Energy, Seattle City Light, Snohomish PUD, City of Tacoma, Powerex, Northwest Power Pool, and othersNext meeting May 20, 2008 at ColumbiaGrid offices in Portland, Or

Current ColumbiaGrid Planning Activities

Current PSE Planning Activities

Factors driving PSE planning activitiesLoad growthGeneration dispatchRegional powerflows

West of Cascades NorthNorthern IntertieMonroe – Echo LakeRaver – Paul

BPA’s 500 kV

Monroe – Echo Lake

Winter/Spring Power Flow

BPA’s 500 kV

Monroe – Echo Lake

Summer/Fall Power Flow

Raver - Paul

Current PSE Planning Activities

PSE specific areasNorth Puget Sound AreaCentral Puget Sound AreaCross – CascadesSouth Puget Sound AreaAdditional 115kV projects

North Puget Sound Area

New service needsNew resources being proposed in U.S. and Canada

Changing generation and industrial loads

Increase capacity

Transmission owners include BPA and Snohomish PUD

Sedro-Horseranch #2

Central Puget Sound Area

Service needsOperational limitationsGrowing load service needs

Increase transmission capacityTransmission owners include BPA, SCL, and Snohomish PUD

Covington-Berrydale 230kV

Cross - Cascades

Service needsNew wind generation in Eastern WashingtonMore eastern renewables expected as part of state initiative (I-937)Growing Puget Sound loadChanges to regional generation dispatch

Increase transmission capacity Transmission owners include BPA

IP Line Conversion

South Puget Sound Area

Service needsHeavy load growth pushing 230/115kV transformation capacity

Increase transformer capacity Transmission owners include BPA and Tacoma Power

Alderton

St Clair

Additional 115kV Projects

Reconductor Bellingham-Sedro Woolley 115kV lines

Ties between Whatcom and Skagit countiesLarger conductors provide increased capacity and reliability

Novelty 230/115kV transformerIncreases load service to north King County

Woodland-St Clair 115kV projectAdds 3rd 115kV line between Pierce and Thurston Counties Provides increased capacity and reliability

Alderton

Sedro-Horseranch #2

IP Line Conversion

St Clair

Covington-Berrydale 230kV

Questions