California Independent System Operator Corporation

Overview of

ISO Renewable Resource Program

Karen Edson

Vice-President of External Affairs

October 9, 2006

California Independent System Operator Corporation

ISO Renewable Resource Program

2006 Corporate Goal to support State renewable resource policy objectives

Implementing by integrating renewable resource considerations into the CAISO’s transmission planning, markets, and operations

California Independent System Operator Corporation

Existing California Renewable Generationand Possible Additions to meet the 20% RPS Goal by 2010*

1,977

765

2513

465

1,214

228

4,577

1,300

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Geothermal Biomass Wind Solar

MW

Additional

Existing

3,191 MW

993 MW

7,090 MW

1,765 MW

* Data on additional renewable resource based on pending CEC studies. Potential retirements and repowering projects not included.

California Independent System Operator Corporation

Status of Major Renewable Initiatives

2006 2007

Q1 Q2 Q3 Q4 Q1 Q2

Tehachapi Transmission Plan 12/13 Board

Petition for FERC Declaratory Order To Remove Barriers to Efficient Transmission Investment

12/13 Board

Participating Intermittent Resource Program (PIRP) Ongoing

Automate and integrate PIRP into ISO systems Funding approved and work underway

Analyze and adjust forecasting, as appropriate Underway

Tariff filing regarding PIRP exports 10/18 Board

Study integration issues and propose mitigation Ongoing

California Independent System Operator Corporation

Removing Barriers To Efficient Transmission Investment

Problem:– Renewable Generation is Different – Current Interconnection Policies Create Barrier

ISO Proposal

– Financing Mechanism Allows Appropriate Sizing

– Risk of Stranded Costs Systematically Mitigated

California Independent System Operator Corporation

Intermittent Resource Integration

Challenge

– Mismatch between output and load curve

– On-peak capacity highly variable depending on the day

Increasing ISO attention to integration issues – Challenge can be overcome – Improving technology– Mitigation strategies– Better forecasts and operating systems

ISO Role to Facilitate State Policy Objectives

ISO Success Tied to State Success