PacifiCorp Stakeholder Meeting on Regional Independent System Operator Integration June 24, 2016 1
Housekeeping matters Welcome Logistics and safety moment Introductions Agenda 2
Agenda Time Subject Presenter 10:00 – 10:10 Introduction/Safety/Overview Sarah Edmonds 10:10 – 10:20 Regional ISO Process and SB350 Studies Phil Pettingill 10:20 – 10:30 PacifiCorp Contracts and Framework for Sarah Edmonds the day 10:30 – 11:00 Terminology and Agreements PacifiCorp Deb Le Vine will continue to administer 11:00 – 11:30 Agreements transitioning to ISO tariff Deb Le Vine service 11:30 – 12:30 Lunch Break 12:30 – 1:30 Existing transmission contracts under Deb Le Vine ISO’s tariff 1:45 – 2:00 Break 2:00 – 2:45 Examples Deb Le Vine 2:45 – 3:00 Wrap-up and Next Steps Sarah Edmonds 3
Regional ISO Stakeholder Process 4
Regional ISO drivers and overview PacifiCorp and the California ISO entered into a Memorandum of Understanding in April 2015 to explore potential benefits and costs of creating a regional ISO (“R - ISO”). Regional market integration efforts are aimed at: Reducing customer costs Enhancing coordination and reliability of western electric networks Facilitating renewable energy resource integration Reducing emissions Enhancing regional planning and expansion 5
2015 Gross benefits study overview The October 2015 study of integrating PacifiCorp and ISO systems results in significant benefits for both PacifiCorp and ISO customers over 20-year period of 2020-2039: Area Low High PacifiCorp $1.6B $2.3B ISO $1.8B $6.8B Combined Benefit: $3.4B $9.1B Savings in 2015$ Billions and incremental to EIM benefits The study quantifies benefits in four areas: 1. More efficient dispatch and commitment 2. Lower peak capacity savings 3. More efficient oversupply management 4. Renewable procurement savings 6
Regional ISO next steps Senate Bill 350 requires the California ISO to conduct studies to determine if becoming a regional entity is a benefit to California ratepayers. The California ISO will conduct stakeholder initiatives over the next two years to determine policy changes and cost allocation for integration Tariff changes developed through stakeholder processes and will require ISO Board and FERC approval PacifiCorp will seek regulatory approvals from all six states where its serves retail customers, as well as from FERC Full integration by combining the balancing authority areas into Regional ISO is not targeted to occur prior to 2019 7
Regional market analysis for California Ratepayers Annual California Ratepayer Benefits ISO will conduct studies of the impacts of in 2020 & 2030 a regional market, including: Overall benefits to California ratepayers Emissions of greenhouse gases and other air pollutants Creation or retention of jobs and other benefits to the California economyy Environmental impacts in California and elsewhere Impacts in disadvantaged communities Reliability and integration of renewable energy resources 6 8
ISO stakeholder initiatives timeline Planned start to Initiative process Regional Transmission Access Charge Structure In progress Resource Adequacy Rules In progress Metering Rules Update In progress Regional Integration - CA GHG Compliance August 2016 Grid Management Charge Transitional Principles September 2016 See Stakeholder Initiative Catalog for 2016 and Roadmap See also ISO Stakeholder Processes 9
PacifiCorp contracts PacifiCorp Contract Share - Affiliate vs. 3 rd Party 89% - Total 3 rd Party Contracts 11% - Total PacifiCorp Affiliate Contracts PacifiCorp Affiliate Contracts 98% - Service Agreements (SA) 2% - Rate Schedules (RS) PacifiCorp 3 rd Party Contracts 69% - OATT Contracts 31% - Non OATT Contracts Contract data based on the PacifiCorp Q4 2015 EQR 10
PacifiCorp’s transmission system 11
Framework for the day – three agreement categories Agreements PacifiCorp will continue to administer Construction, engineering, O&M, agreements 3 Power purchase and energy exchange agreements Contract Paths Transitioning to ISO Service OATT agreements with internal and external resources/load Forward Generator interconnection agreements For R-ISO Qualifying facility agreements Existing transmission contracts Transmission service legacy agreements with internal and external resources/load Operations agreements Emergency service Wheeling and transfers Interconnections Joint ownership 12
Today’s customer contracts discussion overview This is a general discussion and specific discussions with each customer will need to take place later in the integration process Review existing contracts rights - what are they? and how does ISO treat them? Translating existing contracts into instructions – PacifiCorp has some different types of agreement versus the California utilities, but we believe all agreements can be transitioned and we just need to work through the details Examples 13
Existing transmission contract terminology Encumbrance - A legal restriction or covenant binding on a Participating TO that affects the operation of any transmission lines or associated facilities and which the ISO needs to take into account in exercising Operational Control over such transmission lines or associated facilities if the Participating TO is not to risk incurring significant liability. Entitlement - The right of a Participating TO obtained through contract or other means to use another entity’s transmission facilities for the transmission of Energy. Existing Contracts (ETC) - The contracts which grant transmission service rights (including any contracts entered into pursuant to such contracts) as may be amended in accordance with their terms or by agreement between the parties thereto from time to time. Existing Rights - The transmission service rights and obligations of non-Participating TOs under Existing Contracts, including all terms, conditions, and rates of the Existing Contracts, as they may change from time to time under the terms of the Existing Contracts. Non-Participating TO – A transmission owner in the ISO balancing area that does not turn over operational control of their transmission to the ISO. 14
Non-Participating Transmission Owner PacifiCorp and the ISO anticipate that some transmission owners within the expanded balancing area will not become a Participating Transmission Owner The Non-PTO will continue to operate their transmission system as they do today, however the operation will need to be coordinated with the balancing area operator Transaction at the interface of the Non- PTO’s service area would be in accordance with the ISO market absent existing contract rights Transmission Interconnection Non-PTO Service Area Transmission Interconnection 15
ISO tariff requirements for existing contracts Existing Contracts will continue to be honored for the duration of those contracts scheduling, curtailment, assignment and other aspects of transmission system usage PacifiCorp is required to attempt to negotiate changes to Existing Contracts to align the contract’s scheduling and operating provisions with the ISO’s scheduling and operational procedures, rules and protocols, and minimize costs of administering the contract while preserving their financial rights and obligations PacifiCorp is required to ensure that Existing Contracts do not pay twice for transmission services All revenue received from Existing Contracts is a credit to the ISO transmission access charge 16
ISO tariff requirements for existing contracts (continued) PacifiCorp shall provide valid ETC Self-Schedules for holders of Existing Rights, or a holder of Existing Rights may obtain their own Scheduling Coordinator Non-Participating TO right to use and ownership of its facilities shall remain unchanged ETC Self-Schedules need to meet the scheduling and operational requirements to received special payment provisions The ISO will have no role in interpreting Existing Contracts. Disputes are resolved in accordance with the existing contract Existing Contracts will terminate on the first available date in accordance with the agreement and transition to ISO service 17
PAC/ISO OATT contract correlation PacifiCorp ISO Provided OATT Service Scheduling Coordinator Agreement (SCA) Network / Point-to-Point - All service is firm / network Provided Non-OATT Service (e.g., TSOA) Encumbrance until agreement terminated Entitlement – provides scheduling rights Taken OATT Service in another BA for ISO market transactions Taken Non-OATT Service in another BA – Entitlement – provides scheduling rights includes resource specific lines (i.e. for ISO market transactions Colstrip) and stranded load service needed from other BA 18
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