Gary StephensonPresident and CEO

Seattle, WA.

CEO UpdateJune 5, 2014

Peak Reliability Board of Directors

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• Operational Update• Financial Update• Performance Metrics o 2014 Goals Progresso Performance Reporting Project

• Data Sharing • Northwest Power Pool• Hiring Progress

Agenda

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• Summer Outlooko Droughts Helms Pumps not operational much of time due to

lack of water, impacting SOLs and SOL mitigation

Operational Update

4 http://www.cpc.ncep.noaa.gov/products/expert_assessment/season_drought.png

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• Summer Outlooko Wildfires Open loop operation always a risk due to fires

Operational Update

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• Summer Outlooko IROL modifications being developed to account

for: SDGE+CFE+IV Imports RAS settings Coachella Valley transformer trip setting changes

Operational Update

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Peak specific changes• Sub-regional approach implemented May 24

(per RCTF)• RAS modeling ~150 more RAS modeled

than start of summer last year• Outage studies being performed 1-2 weeks

in advance of major outages

Operational Update

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2014 Financial Update

34.4

YTD 2014 YTD 2014 $ 2014 2014 $ %

(in thousands) Actual Budget Change Forecast Budget Change Change

Funding

Assessments* 29,568$ 29,568$ (0)$ 29,568$ 29,568$ -$

Other Funding 9 84 (75) 567 156 411 263 %

Total Funding 29,577 29,652 (75) 30,135 29,724 411 1 %

Expenses

Personnel Expenses 7,158 6,321 837 21,666 19,398 2,268 12 %

Meeting Expenses 244 379 (135) 1,001 1,155 (155) (13)%

Operating Expenses 2,801 3,614 (813) 10,840 10,194 646 6 %

Other Non-operating Expenses 0 0 0 0

Total Expenses 10,203 10,313 (110) 33,506 30,747 2,759 9 %

Capital Expenditures 337 743 (406) 2,238 2,212 26 1 %

Total Expenditures 10,541 11,057 (516) 35,744 32,959 2,785 8 %

Funding less Expenditures 19,036$ 18,595$ 441$ ( 5,610 )$ ( 3,235 )$ ( 2,374 )$ (73)%

* Assumes collection of all billings - Peak w ill be exposed to uncollectibles

Category/Goal # Objective Metric Target Status

1.1 Minimize occurrences of system disturbances that may degrade grid reliability

A Category 3 (or above) event pursuant to the ERO Event Analysis Process (The uncontrolled loss of load or generation of 2,000 MW or more or uncontrolled system separation that results in an island of 5,000 MW to 10,000 MW)

2014 Category 3 (or above) Events = 0

1.2 Minimize threats to reliability from exceedances of operating limits

Minimize number and duration of exceedances of: a) SOLs on TOP-007-WECC-1 Paths; and b) pre-defined IROLs in the Peak RC Area

2014 Total IROL and SOL Exceedances on TOP-007-WECC-1 Paths: > 30 min – 0; 20 - 30 min – < 5; 10 - 20 mins – <60

1.3Minimize conditions whereby LSE may no longer be able to provide service to firm customers Minimize Energy Emergency Alert conditions 2014 Total EEA2 and EEA3 < 10

1.4State Estimator provides close estimates of actual system conditions

State Estimator accurately calculates actual MW flow on major TOP-007-WECC-1 Paths and any IROL interfaces.

2014 average deviation on monitored paths < 50 MW or 10% of SOL, whichever measure is smaller.

1.5State Estimator provides close estimates of actual system conditions

State Estimator accurately models actual bus voltages for pre-identified critical busses

2014 average deviation for pre-identified critical busses is <5kV for sub-300-kV busses, and <7kV for 345kV and 500kV busses.

1.6State Estimator provides close estimates of actual system conditions

Maximize frequency of time State Estimator reaches a valid solution

2014 total frequency of converged solutions > 99.8%

1.7Operations Planning Analysis/Next-day Study Accuracy

Next-day study of expected Peak load condition accurately models actual MW flow on TOP-007-WECC-1 Paths.

2014 average MW deviation (absolute value of real time MW - study MW) within 10% of Path Rating; minimum error of 100 MW; maximum error of 500 MW.

1.8 Peak reliability coordinators effectively communicate with registered entities

Communications grade assigned to all directives and a random sample of all other communications (RCSO only)

2014 average communication grade (1-10 scale) > 7.5

1.9 BAs/TOPs provide accurate and timely information to Peak

Minimize variance between day ahead load and supply forecasts provided by registered entity (actual vs. forecast)

Mean Average Percentage Error (MAPE) of day ahead load forecasts received by Peak < 3.0%

1.10BAs/TOPs provide accurate and timely information to Peak

Scheduled transmission and generation outages are properly submitted to Peak RC

99.9 % of scheduled outages are properly submitted to COS

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y Peak Reliability: 2014 Corporate Goals, Objectives and Metrics

GRID EXTERNAL MEASURES

INTERNAL MEASURES

REGISTERED ENTITY MEASURES

Category/Goal # Objective Metric Target Status

2.1 Peak exhibits a culture of compliance Number of NERC Standard Confirmed Violations is minimized Confirmed Violations with a VSL of High or Severe and a VRF of High = 0

2.2 Peak exhibits a culture of safety OSHA Total Recordable Case Rate (TRCR) is minimized 2014 TRCR <= 1.9

2.3 Peak exhibits a culture of financial prudence and high quality budget planning

Deviation of actual expenditures to budgeted expenditures is minimized

2014 total budget variance <+/-5%

2.4Peak effectively solidifies operational parameters through contracts with all BAs/TOPs/RCs in footprint and adjacent territories

All necessary international agreements are executed. Agreements with BC Hydro, AESO, and CFE are executed prior to July 2014.

2.5 Peak maximizes employee development and engagement

Baseline employee engagement survey is conducted. Peak conducts an employee engagement survey prior to June 2014.

2.6September 8, 2011 remaining milestones assigned to Peak

Complete remaining milestones assigned to Peak in the September 8, 2011 Monthly Progress dashboard as revised.

Complete remaining milestones in alignment with the milestones assigned to Peak in the September 8, 2011 Monthly Progress dashboard as revised.

3.1 Peak consistently creates value for its stakeholders

Conduct baseline membership survey. Conduct and report out on, baseline membership survey prior to December 2014.

3.2 Peak is creating a sustainable business Develop Strategic Plan and Budget Develop Strategic Plan and post prior to January 2015.

3.3 Peak is creating a sustainable businessSustainable alternative funding arrangements are fully explored and presented to the BOD for consideration

Sustainable alternative funding arrangements are fully explored and presented to the BOD for consideration prior to January 2015.

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• Performance Dashboards of structured sets of performance metrics and key performance indicators (KPIs) strengthening Peak’s capabilities in measuring, reporting and managing performance of the organization,

• Annual BA & TOP Reliability Scorecard for Peak to share with the senior leadership of BAs and TOPs, to communicate their performance and progress in supporting Peak’s mission.

Performance Metrics Project

Performance Management Dashboard • Design and implementation of

internal and external, public facing dashboards.

• Line-of-sight architecture to establish strategic alignment between Peak’s goals and objectives, organizational KPIs, leading/lagging indicators and performance targets.

• Web-enabled performance dashboard accessible

• Interactive drill down capabilities into performance of the organization

• Scheduled to be fully implemented in early September 2014.

BA & TOPs Annual Reliability Scorecards

BA and TOPAnnual

Reliability Scorecard

• Individual reliability performance scorecards for the senior leadership of each BA and TOP in Peak’s RC area.

• Scorecard will contain approximately 20 metrics and performance charts.

• Prototype to be built for BAs and TOPs.

• Input sought from each of those groups.

(Entity

Next Steps and Schedule Deliverable Time

Workstream 1. Performance Dashboards

Finalize Dashboard designs June 6

Complete RC interviews June 14

Documentation for each metric - source of data & requirements June 14

Integration / automation of internal and external dashboards into SharePoint platform August 1

Dashboard testing and validation August 1

Workstream 2. BA & TOP Annual Reliability Scorecards

Research entity reports provided by other RCs June 14

Build prototype report (s) June 27

Validate reports with Peak’s team and panel from selected BAs & TOPs July 11

Prepare draft reports for selected TOPs and BAs August 1

Finalize BA & TOP Annual Reliability Scorecards September 26

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• Existing UDSA expires March 31, 2015• Peak is Chairing the WECC/Peak Joint Task

Force on Data Sharing • Peak will have a revised Synchrophasor

and Operating Reliability Data Sharing Agreement (“UDSA”) for entity review and input by September.

Data Sharing

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NWPP MC reliability improvement project• Two primary application functional

requirements are complete• June 2nd meeting in Seattle to start

developing statement of work• Aggressive schedule continues to be a

concern for Peak

NWPP Update

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31 positions filled – (23 External, 8 Internal)o IT – 4 external, 1 Internalo Operations – 5 External, 6 Internalo Engineering – 10 External (3 interns), 1 Internalo Corporate Services – 4 External

17 open positions (recruitment staggered over the balance of the year to align with budget)

o IT – 3o Operations – 10o Engineering – 1o Corporate Service – 3

2014 – Peak Talent Acquisition

Gary StephensonPresident and CEO gstephenson@peakrc.com