Northwest Power Pool Reliability Update May 10, 2012

NORTHWEST POWER POOL Reliability Update May 10, 2012 Jerry D. Rust

Reliability Update Facts 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 2

Reliability Update US 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 3

Reliability Update February 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) 4

Reliability Update Where are We today What impacts Reliability? Load Generation Economy Weather Constraints the ability to deliver generation to load (transmission) 5

Western Interconnection Reserve Sharing Groups 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 RMPP Independent Balancing Authorities California Independent System Operator Comision Federal de Electicidad Los Angeles Department of Water and Power AZNM

NWPP Coincidental Peak Load 61,000 60,000 Temperature Adjusted Load Actual Load 59,000 58,000 57,000 A U G U S T F O R E C A S T J U L Y 56,000 A U G U S T J U L Y 55,000 54,000 A U G U S 53,000 52,000 51,000 2007 2008 2009 2010 2011 2012 7

Reliability Update COLUMBIA RIVER RUNOFF January through July volume runoff measured at The Dalles Dam 2011 2010 2012 113% (Estimated)133% (Actual) 79% (Actual) 30-year Average 8

Reliability Update UNKNOWN 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) 9

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 10

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 11

Reserve Sharing Zones 12

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) 13

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 14

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

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 16

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 17

QUESTIONS?