Energy Imbalance Market EIM Implementation Public Generating Pool

Energy Imbalance Market (EIM) – Implementation Public Generating Pool August 13, 2018 Powering forward. Together.

Agenda • • • Background & Benefits Staffing Change Management Gap Analysis Outage Management Testing & Training Schedule Lessons Learned Q&A 2

Background-What is the EIM? • Automated, real-time energy wholesale market that matches the lowest cost electricity supply with demand every 15 minutes and dispatches every 5 minutes. • Benefits: – Reliability – Renewable integration (Wind or solar may be produced in one area but needed in another) – Economic – Policy • Current and planned participants: – – – – – CAISO (also Market Operator) Pacifi. Corp NV Energy Puget Sound Energy Arizona Public Service Portland General Electric Powerex Idaho Power Company BANC / SMUD (2019) (Initially SMUD will be the only – – – Salt River Project (2020) Seattle City Light (2020) LADWP (2020) Participating Resource) 3

EIM Economic Benefits - SMUD $7. 6 M Annual Benefits -$3. 51 M Annual O&M = $4. 09 M Annual Net Benefits Payback in 1. 7 Yrs. 4

CAISO 2018 Q 2 EIM Benefits 5

Staffing Considerations • 5 new Power System Operators for the EIM desk, staffed 24/7 • Using existing SMUD resources and tracking costs • Ongoing CAISO stakeholder activities • Future market enhancements • Post-market analytics *Utilicast hired as the Project Manager 6

Business Units Participating in EIM • – – • • Workforce & Enterprise Services – Energy Trading & Contracts – Grid Operations Supply Chain Human Resources Organization & Workforce Development Facilities & Security Operations • Information Technology – Applications – Operations – Information Security Customer & Community Services – Marketing & Corporate Communication • Grid Strategy & Operations • Finance & Enterprise Planning Generation & Grid Assets – Power Generation – Commodity Risk & Settlements – Accounting – Budget & Enterprise Performance • 7 General Counsel

Change Management • Start early and continue after go-live • • Organizational Capability and Effectiveness has been actively engaged since May 2017 24 Outreaches / Roadshows to-date • EIM Site Visits • • • PAC – June 2016 NV Energy – January 2017 • Lessons Learned Idaho Power – July 2017 • Energy Trading, Grid Operations • Hydro operations LADWP – October 2017 • BANC / SMUD Staff • Introduce LADWP to EIM Implementation NV Energy – Feb 2018 • Settlements, Energy Trading, Grid Operations • EIM organizational functionality, implementation, ongoing EIM activities Puget Sound Energy – May 2018 • Settlements, Energy Trading, Grid Operations • Implementation • Table-Top Discussions • Energy Trading and Power System Operators 8

System Integration • I. T. Support • This is a big lift! • CAISO provides training for their applications only 9

System & Process Gap Analysis 1. Outage Management 2. EIM Desk 3. Interchange Management with CAISO 4. Full Network Model 5. EMS/Automatic Dispatch System 6. Settlements 7. Metering 8. SMUD Tariff 10

System Gap Analysis • The gap analysis identified 6 SMUD applications that will be impacted by EIM • • • PCI Power Settlements Energy Accounting i. TOA OATI EMS (EIM capability) • SMUD’s applications will interface with 12 CAISO applications • Over 40 new/upgraded system interfaces will be required for EIM participation: • • • The system interfaces will support 136 different types of data exchange between applications. The number of interfaces may expand if SMUD determines that more data is needed for different business reasons. The number of interfaces is not atypical for EIM participation. • The outage management system was identified as the largest gap during the review • SMUD was fortunate that existing applications could be extended, as opposed to new systems being acquired. 11

Outage Management • Identified as the largest gap since the vendor had no existing CAISO or EIM market interfaces in production • In EIM, Outage Management is more of an art than a science • Ambient derates • Hydro constraints 12

Software Testing & Training • August 8 -9, 2018 – CAISO Train-the-Trainer with PSOT • August 15, 2018 – Testing Seminar with CAISO • September 1, 2018 – Begin CAISO Connectivity Testing • October 1, 2018 – Begin Day-In-The-Life Testing • October 9 -10, 2018 – EIM Operator training with CAISO • November 6 -7, 2018 – EIM Operator training with CAISO • December 1, 2018 – Begin Market Simulation Testing • February 1, 2019 – Begin CAISO Parallel Operations • April 3, 2019 – Go-Live 13

Schedule • Go-Live April 3, 2019 14

Lessons Learned To-Date • Change Management • You can’t start too early • Roles and responsibilities • Energy Trading / Power System Operators • Personnel Resource Constraints • Minimize simultaneous projects to maintain resource pool • Headcount / Hiring • This can take longer than expected • Accurately identifying generation constraints / limitations and costs • EIM is an iterative process • Example: Hydro resource – aggregation or not? 15

Functional Roles EIM FUNCTIONAL ROLES T + 7 Days Through RT Flow Hour TRADING Economics Develop Base Schedules Update power, fuel and carbon prices Update hydro assumptions Input bilateral trades and HASP awards Receive CAISO load forecast from OASIS Receive outage information from i. OMS Receive transmission ratings Receive VER forecasts Receive reserve requirements Verify nomogram limits and COI mitigation values Optimize resource dispatch using PCI DA Traders develop Base Schedules for T+1 through T+7 Create and submit economic PR energy bid ranges to CAISO PSO Reliability Develop Base Schedules Review Base Sched / offer feedback to DA Traders GRID EIM DESK Reliability Analysis Develop Base Schedules Maintain PCI data inputs Review Base Sched / offer feedback to DA Traders Submit Base Schedules to CAISO Use PCI to submit/modify Base Schedules to BSAP by t 75 Submit Base Schedules to CAISO Adjust Base Schedules RT Traders adjust DA base schedules t- 75 to t-50 RT adjustment via PCI t- 50 to t-40 RT calls Grid to change schedule < t- 40 RT calls Grid and assumes financial risk Adjust Base Schedules EIM desk submits Base Schedule adjustments t-75 to t-50 Grid approves change t- 50 to t-40 Grid submits change to ISO Inside t-40 Grid uses BAAOP tool to make changes. Adjust load bias Adjust Base Schedules PSO concurs with adjustments (? ) OPTIMIZATION Economic Analysis and Optimization Submit Base Schedules to CAISO Review Base Sched / offer feedback to DA Traders Adjust Base Schedules Outage Coordination Accommodate outages when possible Receive outage information from asset owners Confirming i. TOA and OMS outages in synch. Coordinate / review / approve outages Cancel outages causing use of non-firm energy to serve load Submit outage Information to CAISO in OMS Review "Ambient Derate" outage from ISO OMS to i. TOA. Create/Submit "Ambient Derate" outage to ISO OMS. Responsible for meeting reliability standards Enter transmission outages Enter generator outages Retrieve + review "Ambient Derate" outage from ISO OMS to i. TOA. Contingency Events RT Traders provides economic recovery solutions After Flow Analysis Review input from Optimization and Grid Adjust future bids accordingly Contingency Events PSO confers with RT on recovery options After Flow Analysis Contingency Events EIM desk may exit EIM market until the contingency is resolved Contingency Events After Flow Analysis Provide reliability analysis to Trading After Flow Analysis Provide economic optimization analysis to Trading 16

Questions?