California ISO Update

1
California ISO Update

• CPUC Business MeetingMarch 1, 2007
• Robin Smutny-Jones
• Director of Regulatory Affairs

2
Overview of Hot Topics at the ISO

• Market Redesign and Technology Upgrade (MRTU)
• Renewable Initiatives
• Transmission Planning Process
• Long-Term Congestion Revenue Rights (CRRs)
• Demand Response

3
Market Redesign and Technology Upgrade (MRTU)

• MRTU Go Live February 1, 2008 Trade Date CAISO
  tracking to this date within approved budget
• Comprises Integrated Forward Market (IFM)
  including wholesale Day Ahead and Real Time
  Energy markets Full Network Model (optimizes
  bids according to least cost given grid
  configuration) Locational Marginal Pricing
  (pricing at locations) Technology Upgrades of
  basic ISO hardware and software systems
• Readiness work with market participants is an
  increasing priority, as of January 31, 2007 80
  of the 75 participants had completed their
  initial assessment
• Market simulation 1 completed Market simulation
  2 began January 22, 2007 and will go through
  March 23rd
• Full Bid-to-bill process will run in next market
  simulation scheduled for May

4
ISO Renewable Initiatives

• ISO Board approved the Tehachapi Transmission
  Project on January 24th.
• Petition for FERC Declaratory Order on financing
  renewable resource interconnections filed on
  January 25th comments due to FERC February 22,
  2007
• Preparing a renewable resource integration study
  in cooperation with CPUC, CEC, and others for
  release in July
• Participating Intermittent Resource Program
  continuing focus on program improvements.

5
Improved Transmission Planning Process

• Proactive planning with focus on clarity of
  process and commitment to transparency
• Provide early alert to PTOs and stakeholders on
  transmission needs and issues across the CAISO
  Controlled Grid over a 15 year horizon
• Coordination with CPUC (Resource Adequacy), CEC
  (IEPR), IOUs and stakeholders
• Integrated planning taking holistic view of the
  grid, anticipating resource projects, renewables
  integration and optimal sizing of transmission
• Most recent annual plan (submitted in January
  2007) highlights 160 different transmission
  projects in the ISO controlled grid53 scheduled
  to go online in 2007

6
Long-Term Congestion Revenue Rights (CRR)

• Approved by ISO Board on January 24th and filed
  with FERC (to meet FERC January 29 deadline)
• Allows entities to align long-term power
  contracts with long-term transmission rights
• Makes long-term rights available upon the start
  of MRTU
• Balances the allocation of ten-year rights with
  the allocation of one-year rights, to provide
  flexibility for load serving entities
• Proposal developed with stakeholder consultation

7
Demand Response

• CAISO will be working with IOUs to assess DR
  programs and understand how they can integrate
  into CAISO operations for Summer 2007
• CAISO working on a plan with the CPUC to
  understand and prepare for demand response
  capability in Summer 2007
• CAISO, CPUC, and CEC will be working to remedy
  disconnects and barriers between MRTU and IOU
  retail programs/tariffs
• CAISO looking forward to upcoming OIR on DR