RTO West Overview

1
RTO West Overview

• EBA Western Chapter Annual Meeting
• September 27-28, 2002

2
What is an RTO?

• RTO (Regional Transmission Organization) Order
  2000 (O2K)
• Federal Energy Regulatory Commission (FERC) term
  for transmission organizations (e.g. ISO,
  Transco)
• To enable competitive wholesale power markets
  (through open access and related transmission
  services)
• FERC believes RTOs will
• Increase reliability
• Foster competition and markets
• Lower cost to consumer
• Promote transmission investment
• Improve efficiency of delivering power

3
RTO West, Filing Utilities

• RTO West formed
• NW utilities began working together in fall 1999
• Created consensus principles to guide development
  of proposal
• Hired independent consultants and launched
  extensive public process to foster regional
  participation
• RTO West Coordinating Team
• www.rtowest.org
• RTO Filing Utilities
• One federal Power Marketing Agency (BPA), one
  Canadian Power Authority, and eight
  Investor-Owned Utilities

• Avista Corp.
• British Columbia Hydro Authority
• Montana Power
• Portland General Electric
• Nevada Power, Sierra Pacific Resources

• Bonneville Power
• Idaho Power Company
• PacifiCorp
• Puget Sound Energy

4
FERC 0rder 2000 Characteristics

• Independence from market participants
• Appropriate scope geographical configuration
• Possesses operational authority for all
  transmission facilities under the RTOs control
• Exclusive authority to maintain short-term
  reliability

5
FERC 0rder 2000 Minimum Functions

• Tariff administration and design
• Congestion management
• Parallel path flow
• Ancillary services
• OASIS and TTC ATC
• (Open-access same-time information system, total
  available transfer capability)
• Market monitoring
• Planning and expansion
• Interregional Coordination

6
Consensus RTO West Model

• Geographic Scope Most of U.S. Portion of the
  NW Power Pool
• Asset Use Flexible ISO Model
  Operation through a TOA with the RTO. All tx
  assets stay as owned. ITC will be for profit.
• Legal Structure Private, Corporation --
  Independent system operator to start.
• Tax Structure Non-profit looking at 501c.3.
  Status
• Governance 9 member Board of Trustees 3 yr.
  terms
• Five member classes in advisory com.
• Seams Working to develop MOU with neighbor
  RTOs WestConnect and California ISO

7
GEOGRAPHIC SCOPE

• Most of U.S. Portion of the NW Power Pool.
• Includes
• Avista, BPA, BCHydro, PGE, PacifiCorp, Idaho
  Power, Energy NorthWest (formerly Montana Power),
  Sierra Resources, Nevada Power and Puget Sound
  Energy facilities.

8
RTO West Governance

• Board of Trustees
• Independent
• Nine members, three-year term
• Advisory Committee
• Stakeholders
• Membership 1000. States, provinces, tribes
  free.
• Five classes
• Major Transmission Owners
• Transmission Dependent Utilities
• Non-Utility Entities
• Retail Customers
• State and Provincial Energy Authorities/Tribal
  Utility Regulatory Authorities/Unaligned Entities
• Trustee Selection Committee
• Six members in each class
• Trustee candidates selected by search firm

9
Stage 1 Filing

• Most of Stage 1 filing submitted to FERC on
  October 23, 2000
• Stage 1 filing asked FERC to act on O2K
  characteristics 1 and 2 independence and scope
  and regional configuration
• FERC issued order on April 26, 2001, indicating
  that, with minor changes, the proposal for RTO
  West met the independence and scope and regional
  configuration characteristics of O2K.

10
Stage 2 Filing

• Stage 2 Filing was submitted to FERC on March 29,
  2002
• Stage 2 Filing builds on Stage 1 filing, seeking
  affirmation of FERCs previous action on the
  Stage 1 Filing
• Stage 2 Filing seeks declaratory action on all of
  the remaining O2K characteristics and functions
  (operational authority short-term reliability
  tariff administration and design congestion
  management parallel path flow ancillary
  services OASIS, ATC, and TTC, market monitoring
  planning and expansion and interregional
  coordination

11
RTO West Public Process

• Creation of extensive public process that
  encouraged feedback and advice on all key issues
  of the filing documents from stakeholders public
  power, marketers, environmental community,
  states, Tribes, Canadian representatives, filing
  utilities
• Includes Regional Representatives Group (RRG
  formed in May, 2000), technical work groups and
  Filing Utility Meetings
• Website is primary communications source
  www.rtowest.org

12
Regional Priorities Identified in Public Process

• Protection for rights to serve load obligations
• Benefit-Cost analysis that produces useable
  information
• No west-wide RTO
• Ensuring stakeholder needs are met through
  collaboration in region
• Ensuring NW Delegation and state representatives
  have ample opportunity to engage on issues and
  RTO West development, prior to BPA joining an RTO
• Regional flexibility to develop an RTO to meet
  regional needs and avoid mandated standardization
  by the FERC

13
Pertinent Case

• New York, et al v. FERC, 535 U.S. ____ (2002)
• Rejecting New Yorks (and others) assertion that
  FERC exceeded its jurisdiction by including
  retail unbundled transmissions within scope of
  Order 888, Supreme Court held Federal Power Acts
  plain language supports FERCs jurisdiction.
  Based on Section 201(b) of FPA that gives FERC
  authority over electric energy in interstate
  commerce.
• Court accepted FERCs decision not to regulate
  bundled retail transmission sales as a
  permissible policy choice. So FERC not required
  to assert such jurisdiction as contended by
  ENRON.
• If FERC were to investigate and find undue
  discrimination in retail electricity market,
  section 206 of FPA would require FERC to provide
  a remedy.
• FERC found such structural discrimination in the
  Standard Market Design NOPR and provided the
  remedy in the NOPR by asserting jurisdiction over
  bundled retail transmission.
• Some states argue FERC required to show evidence
  and make a behavioral finding of discrimination
  before asserting jurisdiction over bundled
  retail.
• Will probably be litigated

14
RTO West Whats Next?

• Complete additional filing documents GIA, LIA,
  SC Agreement, Paying Agent Agreement, Tariff
• Respond to FERC order when released (September 18
  expected)
• Initiate State filings to create RTO West (IOUs)
• BPA to complete NEPA process, tribal
  consultations and Congressional delegation
  consultations
• Complete seams discussions may result in
  coordination agreement at the seams
• Initial organizational and operational
  development plans implementation plan to be
  filed with FERC by end of May