 Welcome to the California ISO. Today's presentation will provide an introduction to the organization known as the California Independent System Operator, which I will refer to as the ISO during this presentation. This is a high-level presentation. It covers a lot of ground about what the ISO does and some of its programs and processes, but if you would like to learn more, navigate to caiso.com. So let's take a look at the primary topics we'll touch on today. The first topic we will cover is what is the California ISO, where I will provide a little background in history that lays the foundation for what the ISO is today. In our next section entitled Governance Leadership and Coordination, we will discuss how the ISO is managed as an organization and how it interacts with other agencies. Following that, we will dive into what we do here at the ISO in the Reliability and Operations section. Reliability is the cornerstone of the ISO, so we'll discuss how we keep the high voltage grid up and running. The Operations section will focus on important factors that affect reliability, such as the mix and adequacy of generating resources and the analysis of changes in supply and demand. We will also talk about markets and planning, where you will learn about our day ahead and real-time markets and how the wholesale energy is priced. Planning refers to infrastructure planning and generator interconnection, which are basically the transmission wires that get the energy from where it's produced to where it's consumed. Extensive planning is needed to ensure that the grid system is not over or under built. Then we will talk about policy and some of the initiatives the ISO is leading in to help the energy industry maintain the balance between reliability, renewables and reasonable cost. The next item is how generators, transmission owners, developers and traders participate in the ISO market. Whether you own a generating resource, serve load, own a storage facility or a government representative, student or someone interested in the workings of the grid, there are ways that you can participate, provide input or get information from the ISO. The ISO is celebrating over two decades of reliability, transparency and innovations, while managing one of the world's largest electric grids. Since 1998, the ISO has been the steward of an electric system that now serves over 30 million consumers in California and millions more in a real-time market while overseeing a fair and open wholesale energy market. Our market produces about nine billion dollars in transactions each year. We are an ISO, but what does that mean? First, let's define ISO. In North America, an independent system operator or ISO is a federally regulated regional organization which coordinates, controls and monitors the operation of the high voltage electric power system. It also acts as a commodity marketplace for wholesale power. Similar to a stock exchange, ISO never actually owns or takes title to the energy that is bought and sold. The marketplace acts only as the platform to bring buyers and sellers of energy and energy services together. An ISO operates differently from the public utilities in a few key ways. We operate the high voltage transmission system that connects power plants to substations, but not the low voltage distribution lines that connects substations to homes and businesses. The distribution lines are operated by the utilities, utilities or merchants who own transmission and distribution lines are also responsible for repairing and maintaining their systems. The ISO does not own any transmission or generation assets. We are a profit-neutral, independent and we do not serve in-use retail consumers. Understand how to do business with the ISO using these materials and courses. The ISO is committed to providing our market participants and the public with a broad menu of high quality training courses on market functionality as well as individual market applications. These courses are organized into areas of focus or tracks that are designed to be an industry resource for market participants and the general public to learn about the electric grid and market and the ISO's role in the system. We are continuing to evolve our training programs and enhance our training materials to better meet the various levels of experience, technical needs and needs of our customers and to make it more user-friendly experience. We are creating more computer-based trainings and learning bursts to break down some of these complicated subjects into bite-size manageable pieces, so please keep an eye on this page to find updated content and learning opportunities. As you can see by this map in North America, there are several different energy regions and though they all have the same goal of maintaining reliability and market efficiency, they all run a little bit different. The California ISO is one of nine ISO's or regional transmission operators for multi-state grid operators in North America who participate together in the ISO RTO Council that is committed to work together to build a smarter and more efficient grid that is prepared to meet the North America market and consumer needs. Approximately two-thirds of the United States and more than half of Canada are served by independent grid operators. The California ISO resides in a regional area known as the Western Interconnection and is fifth largest of the ISO RTO's in terms of installed generation and miles of transmission lines and is third on the list in terms of population served. On the previous slide I mentioned the California ISO resides in the Western Interconnection which is represented here. The Eastern U.S. is the Eastern Interconnection. In addition to being an ISO we are a balancing authority or BA as well. A balancing authority area, BAA, is a combination or set of grid intertie points and resources while the balancing authority is responsible for matching generation and load as well as maintaining grid operation standards such as those related to electrical frequency. All electricity hums along at 60 Hertz and it is critical to maintain this frequency within narrow parameters or reliability will suffer. There are 38 separate BA's in the West each with the same core functions and preparing the system for the next day using resources within its boundaries as well as taking into account imports from neighboring BA's and matching changing supply with changing demand in real time. The California ISO is the largest of the BA's in this region handling an estimated 36% of electric load in the Western Interconnection. While all ISO's are BA's not all BA's are ISO's. And ISO typically has a competitive energy market which most BA's do not have. In fact there are only two BA's in the West that have a competitive energy market. The California ISO and the Alberta Electric System Operator in Canada. ISO's are responsible for reliably planning and operating the grid that encompasses utilities service territories. Some BA's have one or two utilities which may be investor-owned utilities or public utilities while other BA's may have many. Working within the interconnection enables us to enhance reliability by having greater situational awareness and access to larger resource pools, integrate and use renewable generation more efficiently and manage cost and maintaining continual communication between the BA's. Like many other ISO's the California ISO is a non-profit public benefit corporation. We are responsible for the constant and reliable flow of electricity for the health, safety and welfare of consumers. It is our resolve to maintain a fair, open and transparent wholesale electricity market and we accomplish that through our policies, planning and system enhancement initiatives. We have a comprehensive transmission planning process that identifies the need for system expansion or modification as well as clearing the way for zero or low carbon resources to access the grid. We are active and driving ambitious public, environmental and regional goals with more distributed and clean power resources. Distributed means resources such as battery storage and rooftop solar units that connect to the distribution grid. The ISO is a transmission and infrastructure planner and oversees a competitive wholesale power market. To be successful we must coordinate with several entities at various levels. The agencies that regulate us include the following. The Federal Energy Regulatory Commission or FERC is the independent federal entity that regulates the wholesale markets and as such as jurisdiction over interstate electricity sales, wholesale electric rates, hydroelectric licensing, natural gas pricing and oil pipeline rates among other things. Pertinent FERC rules are codified in our tariffs so any wholesale exchange of electricity in our market comes under the purview of the FERC. The regulators also ensure the reliability of the bulk power system through mandatory reliability standards. The North American Electric Reliability Corporation or NERC is the international regulatory authority whose mission is to assure the reliability and security of the bulk power system in North America. NERC's major responsibilities include working with all stakeholders to develop standards for power system operation, monitoring and enforcing compliance with those standards and providing training resources as part of an accreditation program to ensure power system operators remain qualified and proficient. The Western Electricity Coordinating Council or WECC is a non-profit corporation responsible for coordinating and promoting bulk electric system reliability in the geographic area known as the Western Interconnection, which we talked about earlier. We are governed by a five-member board and these members are appointed by the Governor of California. Members serve staggered three-year terms. Our independent internal Department of Market Monitoring analyzes market trends and works with FERC enforcement to identify potential anti-competitive market behavior or market inefficiencies. They also review ISO market design initiatives to ensure that the market remains competitive. To provide transparency, the DMN produces regular reports that are available on our website. A reliability coordinator is an entity with the highest level of authority responsible for the reliable operation of the high-voltage system, complying with federal and regional grid operation standards, has a wide geographic view of the grid and has the authority to prevent or mitigate emergency conditions that may be beyond the operational awareness of the ISO and individual transmission operators. The RC also leads efforts to restore the grid system following a major event. Here is our organizational chart. You can see where our Board of Governors resides, as well as how our Department of Market Monitoring reports directly to them. There are also a couple of Board committees. The audit committee has the oversight of the ISO budget and financial operations, while the Market Surveillance Committee provides a Board with independent counsel regarding market efficiencies and design. The Western EIM governing body is ancillary to the Board of Governors and exercises delegated authority from the Board over EIM rules. The ISO is led by a President and CEO with finance and human resources departments reporting directly to that office. The divisions are all led by Vice Presidents. The Market and Infrastructure Development Division works on market design and development of grid infrastructure. Market Quality and Renewable Integration Division monitors market performance and integrating renewables. The Technology Division manages market and internet system applications, as well as all corporate applications. Our Operations Division has grid operators that runs the grid every second of every day, supports the auction market, and manages the process from bid to settlement. The General Counsel Division is our legal group that develops ISO tariff and interacts with FERC, NERC, WEK, and other agencies when it comes to filings, compliance, and regulations. Customer and State Affairs interacts with our market participants and stakeholders on everyday questions, policies, and works to resolve policy, operational, and general business issues. Regional and federal affairs engages with utilities, regulators, and industry stakeholders throughout the West on such topics as EIM and regional integration. Though we are not a state agency, we work with state agencies to support state policies, perform studies, facilitate a fair and transparent wholesale electricity market, and drive innovation. The Air Resources Board mission is to promote and protect public health, welfare, and ecological resources through the effective and efficient reduction of air pollutants. One of their main duties is limiting greenhouse gas emissions through programs that use renewable energy credits or REX. Generators can purchase these REX to offset their air emissions and continue to operate their generation units. These emission limits can impact generators and may affect bid cost recovery. We consider all these requirements as we structure market design proposals. One focus of the Energy Commission is on Renewables Portfolio Standard. The agency also provides data, such as demand forecasts, that are used as inputs into the ISO's transmission planning process. The Water Resources Control Board is the lead on implementing once-through cooling rules. A number of generators in California use water, mostly seawater, to aid in the conversion process of condensing steam back into water. This process can have a detrimental effect on marine habitats and power plants must either retrofit or retire to reduce their water use by the end of 2029. The ISO works with the Public Utilities Commission on Resource Adequacy and Generation Procurement. Resource adequacy requires utilities to buy supply a year in advance that covers 100% of their demand forecast plus a 15% margin. Generation procurement is a longer-term process that looks at energy needs 10 years into the future. But we just don't work with regulatory agencies, oversight board, and state agencies. Critical to our success are stakeholders. Stakeholder input is essential to ISO planning processes and for the success of new initiatives from policy development to implementation. On our website under the Stay Informed tab, you will find information on our stakeholder processes. This page lists all of the initiatives we're working on and provides all of the papers and meeting schedules for those initiatives. We are committed to providing ample chances for stakeholder input into our market design, implementation, and infrastructure planning activities. The process shapes market design and policies through a series of proposals, meetings, and comment periods, including any changes to our tariff. A great deal of the documentation that we adhere to is defined by federal and regulatory standards. Our primary document is the tariff which outlines the rates, terms, and conditions under which the ISO operates. The tariff is modified and updated in collaboration with our stakeholders and approved by the Federal Energy Regulatory Commission. We also have business practice manuals or BPMs. BPMs provide detailed rules, procedures, and examples for the administration, operation, planning, and accounting requirements of the California ISO and the market that are consistent with the tariff. Adherence to the manuals is important for orderly operation of the ISO market. To view our tariff and associated filings in a more user-friendly way, you can visit our e-tariff viewer that offers convenient access to all ISO-related files that are part of the FERC's e-tariff system. So far, we've explained a little about who the ISO is and our history. So now, over the next few slides, we'll discuss what we do. The ISO is registered with NERC, has a BA, a transmission operator, transmission service provider, planning coordinator, and a market operator. Together, these roles are grouped into our core functions, which are infrastructure planning, reliability, and market operations. Let's take a look at each of these in a little more depth. As our industry moves into the future, we face challenges in competing priorities. Reliability is the foremost grid consideration, but it's not the only one. As more renewables are added into the power mix, as we expand our horizons, we face challenges related to electricity oversupply, that is having more electricity on the grid than what demand can use it. We also have a challenge as to the need for more technology flexibility. We must also be careful of not having enough resource fuel diversity to avoid under supply. The bottom line is that there are a lot of things we want to do, but there are cost, time, and impact considerations. Therefore, it's critical that we coordinate with several entities and stakeholders to plan the transmission needs of the ISO BA. At this time, our transmission planning process has the grid ready to support a 33% renewables portfolio standard by 2020. However, as a leader in the use of renewable resources, California has set the bar higher in Senate Bill 100, that is to achieve the goal of 60% RPS by 2030 and an additional 40% from zero carbon resources such as nuclear and large hydroelectric resources due by 2045. The ISO helps lead this effort by performing studies and approving projects. However, these plans may change and projects canceled or modified since the planning is done far in advance and may be affected by unforeseen factors. This holistic process allows for changes needed based on reliability, economics, and policy drivers. To keep an eye on how renewables progress, you can click on the monthly stats link on our website about us under news. There are about 26,000 circum miles of transmission in California that the ISO controls. Keeping up with political and technological advances requires a constant need to evaluate grid reliability needs and ensure that diverse areas are being provided an adequate supply of electricity. Transmission planning at the ISO actively engages stakeholder and public input and uses the best engineering analysis possible to determine short and long-term infrastructure needs. The transmission planning process has always used reliability and economic criteria for approving project needs and upgrades, but our process also now includes approving projects based on public policy such as the Renewables Portfolio Standard. In addition, the process is conducted in collaboration with all of our neighbors. This process has two phases for a project definition and evaluation, and if needed we hold a competitive solicitation for selected projects. In phase one, we are developing forward-looking assumptions. In phase two, we are performing analysis and identifying transmission needs. If approved by the ISO board, in phase three, we select proposals to build needed transmission projects. The ISO works closely with the public utilities and energy commissions in this process. We also have a robust generator interconnection process to help resources interconnect to the ISO grid. Our process provides compliance information as well as an assigned interconnection specialist to walk the developers through the entire process from beginning through commercial operations within seven years. Let's take a high-level look at this process. The generator interconnection process starts when a developer submits a request to interconnect. The desired commercial operation data is determined by the interconnection customer and later confirmed or not confirmed by our studies. The generator interconnection study process can take up to two years and developers need to follow the guidelines and keep track of the milestones that are required in order to get into our full network model build, which is typically six to nine months prior to the actual interconnection. As part of this process, participating transmission owners perform studies to identify reliability network upgrades while the ISO identifies deliverability network upgrades. After gaining approval to move forward, interconnection agreements are signed and then the new resource implementation process begins. Once this process is complete, the resource can begin participating in the market. The ISO has little to no leeway regarding timelines and it's important to keep all projects moving forward as many processes are linked and feed into one another. The ISO is responsible for the constant and reliable flow of electricity for the health, safety and welfare of consumers. Maintaining reliability is a balancing act that requires a lot of expertise and controlling many moving parts. What is reliability? In short, it is all about keeping the lights on. The major way to keep the lights on is through system operations. Our system operators are responsible for maintaining the reliability of the grid by balancing supply and demand using various resource types. Operators are located in our Folsom control room, but we have a completely redundant backup facility as well and the entire operation of the grid can be transferred between control rooms at any time. There are multiple redundancies on all systems, providing one of the highest levels of dependability in computer system operations. Electricity is produced, delivered and consumed nearly instantaneously and nearly the speed of light and operators must maintain grid frequency at 60 hertz as power can vibrate at different frequencies. In the US, electricity is generated and transmitted at 60 cycles per second. If it drifts outside a very narrow band of tolerance, it can damage all manner of electrical equipment. This is similar to driving down a highway and keeping your car at 60 miles per hour. Like a gas pedal on a car, to maintain 60 hertz, you either increase or decrease system generation as changes in load on the system lowers or increases the frequency. Because of its instantaneous nature, the ISO uses technology that takes the pulse of electric system every second and our highly skilled and trained system operators constantly monitor multiple bits of data so they can instantly react to fluctuating conditions such as weather changes and sudden supply shortfalls or surpluses. Greater diversity of resource type strengthens our ability to meet demand, however that creates another set of challenges when it comes to forecasting supply availability of variable energy resources such as wind and solar. So how do we know how much energy will be needed tomorrow, next week, next year? Through demand forecast, which are done in advance, sometimes up to two years in advance. The ISO wholesale market is comprised of distinct day ahead and real-time processes. The day ahead market enables parties with bilateral agreements to schedule their contracted supply and demand into the market at a minimum of 24 hours in advance. It also enables suppliers to offer excess supply in the form of energy or ancillary services such as reserves. The day ahead market includes several processes, one of them being an integrated forward market that provides a one-stop shop for trading and analyzing electricity bids, transmission capacity, and reserves. The real-time energy market has the hour ahead scheduling process which enables import and export resources to schedule their megawatts hourly. ISO market offers a full network model that analyzes generation and transmission schedules submitted a day in advance to better manage or avoid real-time bottlenecks. The full network model is a representation of the generation and transmission in the entire western interconnection. With this model, we are able to see where there might be constraints on the electric grid. The full network model automatically runs every 15 minutes to reevaluate the impacts of actual or potential system changes. The 15-minute market supports, among other things, renewable integration. This market allows variable energy resources to submit bids closer to the time it's needed for delivery. As an example, there may be an unexpected cloud cover that impacts solar generation or the wind may start to pick up earlier than anticipated and tweaks have to be made to the delivery schedules. The spot market, also known as the five-minute market, dispatches plants every five minutes. Only a scheduling coordinator is authorized to transact business directly with the ISO. A scheduling coordinator is an entity authorized by the ISO to buy and sell power in the ISO markets. Scheduling coordinators bid and schedule supply into the market or submit demand bids, and then based on the awards, energy flows across the transmission system and is distributed to the customers by local utilities. If an entity chooses not to become a scheduling coordinator, it would need to contract the services of a certified coordinator to participate on their behalf. There are a number of ways to participate in the market. Depending on resource capabilities, market participants can elect to bid into the energy and ancillary services market or sell other electricity products. Convergence bids, bids for virtual supply or virtual demand, are purely financial positions taken in the day-ahead market and liquidated in the real-time market. Acillary services help maintain the reliability of the grid. Regulation up and regulation down are capacity products designed to meet short-term changes in load, spinning reserve as potential energy that must be synchronized to the grid and available for dispatch within a 10-minute period, non-spinning reserve as potential energy that is not synchronized to the grid but whose energy can be synchronized and used within 10 minutes. Unit commitment is a way to ensure that the ISO procures enough capacity to meet the day-ahead forecast. Flexible ramping products provide additional upward and downward flexible ramping capability to account for uncertainty from demand and renewable forecasting errors in the real-time market. It ensures that some unloaded capacity is reserved for dispatch if needed. Transmission line capacity is kind of like a water pipe. It could only hold so much. Energy is like the water flowing through the pipes, but it flows through transmission lines instead. Let's walk through how energy procurement makes it to the market. Load-serving entities, which include investor-owned utilities and community choice associations, plan their own service territory needs several years ahead to lock in an reliable and cost-effective electricity supply to serve their customers. In the year prior to the actual date the energy is to flow, entities under the Public Utilities Commission jurisdiction must demonstrate that they have secured adequate supplies of energy, which now stands at 100% of demand plus a 15% margin. As the date gets closer and resource conditions become clearer and the months and days leading up to the actual energy delivery date, additional bilaterally contracted energy is procured as needed. The additional energy may be needed in real-time and is bought in our real-time market. So we've just touched on our day ahead and real-time markets. Now let's take a little deeper look. Let's look at the market timelines. We've just talked about both the day ahead and real-time markets and this diagram shows the relationship between the two. As you can see they're very similar. In the day ahead market bids are submitted, the market processes run, bids clear the market, and market results are published. There are a number of market applications involved in this process. When the day ahead market is published this triggers the opening of the real-time market. Bids are once again submitted along with base schedules from our Western Energy imbalance or EIM participants. Market processes run, bids clear, and dispatch orders are sent to generators. The market is then settled in our post-market processes. The Western Energy imbalance market or EIM is an extension of the ISO's real-time market to any balancing authority in the western area of North America. It provides a low-cost, low-risk option that balances load and resources automatically and economically. Full day ahead market members already participate in both the day ahead and real-time markets while energy imbalance market entities only participate in the real-time market. Participants are able to interact with other EIM members or with the ISO in both 15 and 5-minute increments. The ISO operates the only EIM in the west and uses advanced market systems to automatically award low-cost resources to reliably meet customer demand. We have several participants in the EIM market with more planned to join in the coming years. The blue balancing areas on the map are future participants. The grid management charge or GMC is the vehicle through which the ISO recovers all of its administrative operating and capital cost from the entities that use ISO services. The current GMC rate structure includes seven cost categories or buckets consisting of 17 separate charge codes. We follow up with a meeting in October to review and discuss our draft budget before finalizing it and requesting the Board of Governors approval in December. On the ISO's webpage at www.caiso.com there are a number of tabs along the top of the homepage that cover the gamut of ISO operations as well as reports, fact sheets, and other reader-friendly documents. Also on the homepage you can see that we published the current system demand as well as today's forecasted peak and if you select click for more it will take you to a page with graphs of the current days load and available resources as well as a myriad of other helpful and useful graphs and charts. On the today's outlook pages you can monitor real-time power conditions, see resources in use, emissions, prices, as well as real-time demand curves. For instance information under the supply tab shows the current use of resources by fuel type with renewables broken out into its fuel types such as wind, solar, and batteries. The data is pooled from multiple ISO platforms and is automatically updated every five minutes. Hovering over the line curves show the value at that data point. Much of this information is also available on our smartphone app ISO Today which is available from your favorite app store and is free. Besides grid and system conditions the app will automatically present alerts and warnings and also provides a calendar of all the events and meetings happening at the ISO. Today's outlook is the ISO's most visited public web page. With California in the vanguard and the transition to renewable energy many around the world are tracking the ISO's innovation, technology, and strategies for greening the grid. Transparency and engagement are at the heart of the ISO mission to inform, educate, and promote the clean, reliable electric system and efficient market of the future. This concludes our presentation. Thanks for your time. Have a great day.