# Western Area Power Administration, Sierra Nevada Region -- Acting as its Local Regulatory Authority Establishes the Following Criteria for its Resource Adequacy Plans

The Western Area Power Administration (Western), Sierra Nevada Region
(SNR), is a certified Scheduling Coordinator for a portion of loads and
resources within the California Independent System Operator (CAISO)
Control Area, and acting as its own Local Regulatory Authority (LRA),
submits the following criteria for establishing its Resource Adequacy
Plan (RA Plan). While Western has disputed its legal obligations to
submit a Resource Adequacy Plan, Western is submitting this plan as a
matter of comity and to comply with the Federal Energy Regulatory
Commission's (Commission) Order to assist the CAISO to meet its
California Public Utility Commission obligations in the development of
its requirements. This plan establishes the process for determining
Qualifying Capacity under section 40 of the CAISO tariff filed in FERC
Docket ER06-723 for Western's obligation as a Scheduling Coordinator in
the CAISO Control Area and as part of the CAISO's Interim Reliability
Requirements Program (IRRP). To assist the CAISO, Western is preparing
its criteria for determining Qualifying Capacity and then, as a
Scheduling Coordinator (SC), applying those criteria to its monthly and
annual resource plans. The classes of loads this LRA applies to are
Western's SNR's Project Use Loads (PU), First Preference and Full Load
Service (FLS) customer loads located in the CAISO area. These customer
classes are defined below. With this submission, Western does not alter
its position nor does it waive any legal rights or defenses it may have
regarding the applicability of the Tariffs to Western, including, but
not limited to, any rights and defenses raised by Western in
ER06-723-000, *et al.* and ER06-615-000, *et al.*

# Background

Western's SNR markets power in accordance with specific Federal
statutes, regulations, and policies. In contrast to other utilities and
non-jurisdictional Load Serving Entities (LSEs) in California, Western
must follow Federal directives in its marketing and operations
processes. When state or local requirements conflict with Federal
directives, Western must give deference to the Federal directives. The
following background information is included in light of this unique
requirement. The information presented below is not meant to be
exhaustive, but may be helpful to better understand this LRA document.

Western, headquartered in Lakewood, Colorado, markets hydroelectric
power from more than 50 power plants at Federal dams throughout the
western United States. The dams and powerplants are owned and operated
by the Bureau of Reclamation (Reclamation), the U.S. Army Corps of
Engineers, and the International Boundary and Water Commission. Western
also markets the United States\' 24.3 percent share (547 megawatts) from
the coal-fired Navajo Generating Station near Page, Arizona. These
powerplants have a combined maximum operating capability of more than
10,400 megawatts (MW).

Western\'s service area covers 1.3 million square miles in 15 western
states (Arizona, California, Colorado, Iowa, Kansas, Minnesota, Montana,
Nebraska, Nevada, New Mexico, North Dakota, South Dakota, Texas, Utah
and Wyoming). Within this service area, Western operates and maintains
more than 16,500 miles of transmission lines and 265 substations and
related facilities.

Western has four regional offices located in Billings, Montana;
Loveland, Colorado; Phoenix, Arizona; and Folsom, California; and a
Colorado River Storage Project Management Center in Salt Lake City,
Utah. Western's SNR Office, located in Folsom, California, markets power
from the Federal Central Valley Project (CVP) and the Washoe Project.

The body of laws applicable to CVP facilities is known collectively as
Reclamation Law, including authorizing legislation for each CVP
facility. The CVP was reauthorized in the Rivers and Harbors Act of
1937. The Act of 1937 defined the priorities for the purposes of the CVP
as: (1) navigation and flood control, (2) irrigation and municipal and
industrial water supplies, and (3) power supply. The Central Valley
Project Improvement Act (CVPIA) in 1992 modified the authorizations of
the CVP to include the fish and wildlife function as a new authorized
purpose. Along with managing several threatened and endangered species
in the CVP's service area, the net effect of CVPIA was to establish
specific mitigation objectives and to establish a CVPIA Restoration Fund
which requires payments from CVP water and power customers to fund
activities to mitigate damages caused by the construction and operation
of the CVP upon the native fish and wildlife resources.

CVP hydroelectric power is delivered to loads throughout central and
northern California. Under Reclamation Law, the first priority for CVP
power is to meet the authorized loads of the project (PU loads)
including irrigation pumping, municipal and industrial needs, authorized
fish and wildlife purposes, and station service at CVP facilities.
Approximately 25% to 30% of the CVP's power generation is typically used
to support PU loads. Under existing laws, Western markets the remaining
power to Preference Customers, which includes first preference
customers, Indian tribes, Federal agencies, military bases,
municipalities, public utilities districts, irrigation and water
districts, and state agencies. [^1]

Western provides service to its customers under federally authorized
Marketing Plans. Under SNR's Post 2004 Marketing Plan, which became
effective on January 1, 2005, customers receive the net power output of
the CVP and Washoe projects after project needs are met. Project needs
include PU, sub-control area (SCA) operational requirements and First
Preference power. The remaining power is served to preference customers
and is referred to as the "Base Resource" (BR).

Preference Customers that receive BR are generally divided in three
groups under the Post 2004 Marketing Plan: Base Resource, Variable
Resource (VR) and FLS customers. Base Resource customers are those
customers that have opted to only receive BR power from Western. VR
Customers are customers that have requested supplemental power from
Western in addition to their BR. The third category of customers, FLS
customers, are customers that have their total load at specified
delivery points met by Western through a combination of their BR and
supplemental purchases by Western on their behalf. FLS customers also
can bring their own contracts to Western for Western to manage. These
contracts are called Third Party Power Contracts.

Under the Post 2004 Marketing Plan, SNR has seventy-seven (77) CVP
Preference Power Customers. Of these customers, four are First
Preference entities. First Preference customers are a special class of
customers who are statutorily entitled to up to 25% of the generation
added to the CVP as a result of the hydro electric facilities built in
their counties. The two projects whose enabling legislation provided for
First Preference Power are the New Melones Project, which is located in
Tuolumne and Calaveras counties, and the Trinity Project, which is
located in Trinity County. As explained above, First Preference power
has priority over other types of preference power in the Post 2004
Marketing Plan.

## Current Load Obligations

As discussed above, SNR serves several types of loads. Appendix A lists
the SCIDs that Western schedules and the specific customers included
under each SCID. These loads are served from CVP and Washoe generation,
market purchases and customer energy exchange accounts. The following
describes SNR's load obligations:

### Project Use

PU loads have the highest priority to CVP generation. SNR has about 180
delivery points for the CVP PU loads, the majority of which are located
in the CAISO's Control Area. These loads are first met with CVP and
Washoe generation, and in hours when the loads exceed CVP generation,
the shortfall is met either through a customer energy exchange account
or from market purchases. Several of these loads, including the San Luis
pump-generation station and Dos Amigos Pumping Plant, are operated by
the California Department of Water Resources (CDWR) as joint
federal/state facilities. Occasionally, CVP Project water is pumped at
the State's Banks Pumping Plant which also is scheduled as PU. A
significant portion of these loads are served under an ETC on the PG&E
system for which PG&E serves as the SC. Western and PG&E have recently
agreed to transfer the SC responsibility for a number of PU loads from
PG&E to Western. This agreement has been filed at FERC and, pending
FERC's approval, Western will begin scheduling these loads under the
SCID of WSLW. Washoe PU loads are located in Sierra Pacific Power
Company's Control Area.

### First Preference Loads

Western has four First Preference customers all of which are located in
the CAISO Control Area. Under the authorizing legislation for the New
Melones and Trinity Projects, customers in Trinity, Tuolumne, and
Calaveras are entitled to have their entire load met from CVP Project
generation, up to an amount not exceed 25% of the additional energy
generated by the CVP as a result of the project facilities constructed
in those counties. In Trinity County, Trinity County Public Utility
District has an allocation of First Preference Power which currently
meets their full loads. In Tuolumne and Calaveras Counties, the Tuolumne
Public Power Agency, the Calaveras Public Power Agency, and the Sierra
Conservation Center have First Preference allocations that meet their
total loads.

### Base Resource

BR Power is served to BR Customers, VR Customers and FLS Customers.
Western has preference customers in all three categories located both in
Western's sub control area (SCA) and the CAISO Control Area. This LRA
plan is only applicable to those customers located in the CAISO Control
Area. In accordance with Federal law and Western's Post 2004 Marketing
Plan, the BR power must be made available to these customers before it
is sold to any other entity, and it cannot be resold by these customers.
If a Preference Customer has load in any hour, it must first use the BR
power it receives to meet that load before using other resources. Under
the scheduling protocols developed for the 2004 Marketing Plan, BR
energy schedules for all preference customers are firmed 2 days ahead,
and, on those days that CVP generation is modified after the final
schedules are published, the SCA is balanced through day-ahead and
active day transactions in the energy markets.

### Custom Product Power (CP) for Full Load Service Customers

Western has nineteen (19) FLS customers, of which eighteen (18) are
located in the CAISO Control Area. Western is obligated by contract to
meet the total loads of these customers at specified delivery points.
The load not met by BR energy or Third Party Contracts for these
customers is served from the market under long term CP contracts, and
the portfolio is balanced on an hourly basis by day-ahead purchases or
sales.

### Third-Party Power (TP) for Department of Energy (DOE) Laboratories

Western has four DOE Laboratory loads, three of which are located in the
CAISO Control Area. DOE has contracted with Western for Portfolio
Management service, which means Western is responsible for balancing
DOE's loads and resources. The portion of these loads not met by BR
energy is served from the market under long term TP contracts, and the
portfolio is balanced on an hourly basis by day-ahead purchases or
sales, which are booked as CP Power.

### Supplemental Power to Variable Resource Customers

Western sells supplemental power to two Preference customers located in
the SCA that is currently delivered over the Pacific Northwest-Southwest
Alternating Current Intertie (PACI). Since the loads are located in the
SCA, and the only CAISO transactions are the schedules on the PACI,
which result in an import into the SCA, the CAISO-established RA
requirements do not apply to these schedules.

## Resources

Western SNR currently meets its load obligations through generation from
CVP and Washoe hydro facilities, long term contracts, day-ahead
transactions and real time transactions.

Under the Post 2004 Marketing Plan, Western markets its generation from
the CVP and Washoe projects to first preference customers and any
remaining power is then marketed as BR to Preference Customers on an
as-available basis. The term, "as-available" reflects the fact that CVP
and Washoe energy generation is dependent on weather and water release
criteria as determined by Reclamation and, during flood control events,
the Corps of Engineers.

A few facts about the availability of CVP generation are relevant to the
determination of Qualifying Capacity in the RA process. Although the CVP
is a hydro resource, the generation that can reasonably be expected is
significantly less variable than typical hydro projects. The CVP is not
a run of the river system. The considerable storage in CVP reservoirs
enables Reclamation to meet water demands through dry and critical years
at reduced, but reasonably predictable, levels. The generation from the
CVP is, therefore, considerably less variable on an annual and seasonal
basis than most other hydro projects. Another factor which reduces
variability is the fact that the CVP is a serially operated,
multi-reservoir project. Reclamation can thus frequently meet its water
demands from several different reservoirs. As an example, if there is a
pumping requirement in the Delta for agricultural demands in the San
Joaquin Valley, these water export demands may be met from releases at
Shasta, Folsom, San Luis, or New Melones. Finally, all major CVP dams
have reregulation reservoirs, which provide considerable flexibility to
shape generation from the major power plants during the day without
effecting downstream releases. A reregulation reservoir is a secondary
smaller reservoir located adjacent to and down stream from the primary
reservoir, with sufficient storage to allow a peaking operation out of
the primary reservoir while maintaining a constant release down the
river. This increased flexibility enhances the predictability to meet
power demands. The firmness and predictability of the CVP power resource
is therefore significantly greater than most other hydro projects in
California and elsewhere.

Forecasts of CVP generation are published every month on Western's Web
site. Western, in coordination with Reclamation, prepares an estimate of
a rolling 12-month forecast of generation for the CVP on a monthly
basis. Two forecasts are normally provided, one at 50% and one at 90%
inflow excedence levels. The 50% forecast assumes average inflows into
CVP reservoirs for the upcoming water year, while the 90% forecast
assumes critically dry year inflows. The 50% and 90% forecasts are very
similar for the summer and fall periods when water releases from the CVP
are provided primarily from reservoir storage. This is also true for the
first few months of the winter season before rainfall starts to
influence release schedules. The biggest difference between the two
forecasts occurs in the January through April period when weather is a
direct factor in determining water release schedules. The difference in
energy generation from the CVP available for delivery to Preference
Customers is about 20% between an average year and a dry year based on
long term studies of CVP operations. In contrast, the difference in
energy generation between the 50% and 90% rolling 12 month forecasts
that are published for Preference Customers every month is usually about
10%. This relatively small difference is explained by the fact that the
rolling 12-month forecasts take current reservoir storage levels into
account as the starting point, whereas long term studies calculate
reservoir storage levels based on sequential historical years. For
purposes of RA forecasts of qualifying capacity for the CVP, Western has
determined that it will utilize the 50% rolling 12-month forecast as the
basis for forecasting qualifying and net qualifying capacity from the
CVP for its monthly and annual forecasts.

# Criteria for Western's Resource Adequacy Plan

## 

## Qualifying Capacity

SNR has several generation projects in the Sacramento Municipal Utility
District's (SMUD) Control Area, which comprise the bulk of the CVP
generation facilities. With the exceptions of the New Melones power
plant and the San Luis and O'Neill pump/generation plants, which are
addressed separately below, all CVP generation plants reside in the SMUD
Control Area. Western operates its SCA, which includes the Modesto
Irrigation District's facilities and the California-Oregon Transmission
Project (COTP), within SMUD's Control Area. In addition to being
adjacent to the CAISO Control Area, SNR's SCA is adjacent to the Turlock
Irrigation District's Control Area and included in SMUD's Control Area.
Western also has a direct tie to the Bonneville Power Administration's
Control Area through its firm transmission rights on the COTP, and
additional access to the northwest through its firm transmission rights
on the Pacific AC Intertie.

### CVP Hydroelectric Facilities in the SMUD Control Area -- [Designation of Qualifying Capacity]{.underline}

Western designates its hydroelectric facilities in the SMUD Control Area
as a system resource with 100% of its forecast capacity as qualifying
capacity. Western will determine its forecasted capacity by utilizing
Western's 50% rolling 12 months forecast for the appropriate month. The
rolling 12-month forecast is discussed in detail above. This import into
the CAISO Control Area is backed with reserves as required under Western
Electric Coordinating Council standards from the CVP resources in SMUD's
Control Area.

In designating the CVP facilities as a system resource, Western notes
that these facilities appear to be consistent with the definition of a
system resource set forth in the CAISO Tariff filed on February 9, 2006,
in FERC Docket ER06-615:

"A group of resources, single resource, or a portion of a resource
located outside of the CAISO Control Area, or an allocated portion of a
Control Area\'s portfolio of generating resources that are directly
responsive to that Control Area\'s Automatic Generation Control (AGC)
capable of providing Energy and/or Ancillary Services to the ISO."

As noted above, Western's resources, by law, must first be utilized to
serve PU load and then preference customers. To the extent there is
surplus energy Western markets such surplus at its discretion.

### New Melones Power Plant Area -- [Designation of Qualifying Capacity]{.underline}

The New Melones power plant physically resides in the CAISO Control
Area. Western and the CAISO have agreed to pseudo-tie the generation
from New Melones into the SMUD Control Area. For all intents and
purposes, this allows New Melones to be electronically and operationally
included as part of the SMUD Control Area. It is anticipated that this
pseudo-tie arrangement will be implemented and operational on or before
November 30, 2006. For purposes of qualifying capacity, after execution
of the pseudo-tie agreement, Western will designate the New Melones
power plant as part of the CVP resource in the SMUD Control Area. Prior
to the execution of the pseudo-tie agreement, Western designates the
forecasted capacity of New Melones as qualifying capacity.

Under Federal Reclamation Law, the capacity of New Melones, as well as
the energy generated from the plant, must be made available to meet PU,
First Preference and Federal preference loads. Therefore, the capacity
of the plant is not available as must offer capacity in the Pre-MRTU RA
tariff prior to or after the pseudo-tie arrangement becoming effective.
The Existing Transmission Contract (ETC) for delivery of New Melones
generation into Western's SCA is noted below.

### San Luis and O'Neill Pump/Generating Plants -- [Designation of Qualifying Capacity]{.underline}

The San Luis Pump/generating Plant is operated by CDWR. The O'Neill
Pump/Generating Plant is owned and operated by Reclamation. Both plants
are operated to meet both Federal PU loads and to comply with
State/Federal guidelines for the coordination of the Federal and State
water projects. By contract and operation of law, project operations for
the CVP and State Water Project (SWP) are coordinated in order to assure
that water quality standards in the San Francisco Bay/Sacramento-San
Joaquin Delta and Estuary, as well as other applicable environmental
operating criteria, are achieved. *See* the Coordinated Operations
Agreement Amendments Act, Act of October 27, 1986, Public Law 99-546,
100 Stat. 3050.

For the San Luis Pump/Generating Plant, Western is deferring designation
of qualifying capacity pending CDWR's submittal on how its capacity in
this facility will be determined. Once that submittal is made, Western,
in consultation with Reclamation, will determine if the methodology is
consistent with Reclamation's contractual framework with CDWR and also
if the designation is consistent with Federal laws and Western's
policies. If CDWR's LRA determinations are acceptable to Western, the
capacity associated with the Federal share of this facility will be
treated in the same manner as the State's share. If CDWR's LRA
determinations are not consistent with Federal law or the contractual
framework, Western will submit alternate criteria in an addendum to this
document to address Qualifying Capacity at San Luis.

Prior to Western's determination as to whether CDWR's LRA designation
criteria is consistent with Federal law, Western designates the
forecasted capacity of San Luis as Qualifying Capacity.

For O'Neill, Western designates 100% of the forecasted capacity as
Qualifying Capacity.

Under Federal Reclamation Law, the capacity as well as the energy
generated from these plants must be made available to meet PU and
Federal preference loads. The capacity of these plants are therefore not
available for must offer capacity requirements in the Pre-MRTU RA
tariff. The ETC for delivery of generation from these plants is noted
below.

### Existing Western Contracts -- [Designation of Qualifying Capacity]{.underline}

As noted above, Western has several classes of customers on the
CAISO-controlled grid. These customers include FLS customers comprised
primarily of municipal utility districts and Federal end-use Preference
Customers, and PU loads. Many of these customers and loads receive their
power at transmission and distribution levels via the Pacific Gas and
Electric Company's (PG&E) transmission and distribution facilities.
Transmission level delivery to these loads is over the CAISO-controlled
grid.

To meet its statutory and contractual obligations to serve the above
customers and loads, Western has entered into a number of long-term
contracts. These are firm energy contracts as generally reflected in
Service Schedule C of the Western Systems Power Pool Agreement. The
terms of current Western contracts range from 1 month to 5 years. The
contract with the longest term was entered into in late 2004 on behalf
of one of Western's preference customers, the DOE Laboratories, and
extends through 2009. In total, for the period from January 2006 through
2009, to meet FLS customer obligations, Western has entered into forty
contracts with varying terms. In addition, Western has entered into four
contracts to meet PU obligations. To the extent that these contracts are
used to serve loads in the CAISO area, the designation in this section
shall be applicable. The energy schedules from these contracts that meet
SCA loads are not addressed here. It is important to note that Western
has developed its budgets for the next three years under the assumption
that these contracts are firm and meet the firm capacity and energy
requirements of Western's customers consistent with their respective
delivery levels.

Western notes that these contracts are considered firm under current
industry standards and are backed by reserves in the control area where
the generation originates. As noted below, Western has existing firm
transmission rights on the COTP and PACI for the contracts originating
in the northwest, and the remaining contracts have delivery points in
NP15, which are firmed by the CAISO or self provided by the supplier
under CAISO tariff guidelines.

Consistent with the Commission's Order in Docket ER06-723, for purposes
of this RA Plan, Western designates the contracted capacity from these
existing contracts as Qualifying Capacity. Unless otherwise specified in
a subsequent LRA Plan filing by Western, Western also designates as
Qualifying Capacity the contracted capacity from any future firm power
contracts.

### Deliverability Considerations -- Designation of Net Qualifying Capacity

Under Section 40.5.2 of the Tariff, Net Qualifying Capacity is
Qualifying Capacity, determined under the criteria provided by an LRA,
based upon (1) testing and verification and (2) deliverability
restrictions.

For imports into the CAISO Control Area, which include both CVP
generation and contract imports, Western notes that it has sufficient
Existing Transmission Contracts (ETCs) and/or Transmission Ownership
Rights, reserved on its and other Parties systems, to deliver all
imports under this RA process to loads in the CAISO Control Area. In
light of these rights, all imports into the CAISO Control Area and NP 15
delivery contracts should qualify as Net Qualifying Capacity under the
CAISO's criteria. If any portion of the energy from Western's imports or
NP 15 delivery contracts are determined to not qualify as Net Qualifying
Capacity, Western is willing to meet with CAISO to discuss relevant
considerations.

Specifically, Western has the following rights to deliver imports into
the CAISO Control Area:

1.  Western has a priority scheduling right on the Pacific AC Intertie
    of 400 MW, which is not curtailable unless the COI is derated below
    3,000 of its 4,800 MW of capacity. Please see Contract No.
    04-SNR-00788-A.

2.  Western owns and operates its own transmission system in its SCA
    consisting of 230, 115 and 69 kilovolt (kV) facilities. Western has
    determined that the following amounts of capacity are available on a
    firm basis at its interconnection points with the CAISO-controlled
    grid:

+--------------+---------+--------+----------+-----------+-----------+
| **[Line]{.   | **[     | **[Nor | **[Norma | **[Emerge | **[Emerge |
| underline}** | Connect | mal]{. | l]{.unde | ncy]{.und | ncy]{.und |
|              | Point]  | underl | rline}** | erline}** | erline}** |
|              | {.under | ine}** |          |           |           |
|              | line}** |        | Amps     | MVA       | Amps      |
|              |         | MVA    |          |           |           |
+--------------+---------+--------+----------+-----------+-----------+
| **           | PCB 472 | 797    | 2000     |           |           |
| Cottonwood** | Disc    |        |          |           |           |
| 230 kV Bus 1 | 475     |        |          |           |           |
+--------------+---------+--------+----------+-----------+-----------+
| **           | PCB 482 | 797    | 2000     |           |           |
| Cottonwood** | Disc    |        |          |           |           |
| 230 kV Bus 2 | 485     |        |          |           |           |
+--------------+---------+--------+----------+-----------+-----------+
| **Lawrence   | PCB 752 | 164    | 825      | 194       | 975       |
| Livermore    | PCB 852 |        |          |           |           |
| National     |         |        |          |           |           |
| Laboritory** |         |        |          |           |           |
| 115kV Tesla  |         |        |          |           |           |
| #1           |         |        |          |           |           |
+--------------+---------+--------+----------+-----------+-----------+
| **Round      | PCB 242 | 320    | 800      | 320       | 800       |
| Mountain**   | Disc    |        |          |           |           |
| 230 kV       | 245     |        |          |           |           |
| Cottonwood   |         |        |          |           |           |
+--------------+---------+--------+----------+-----------+-----------+
| **Tracy**    | PCB 382 | 683    | 1714     | 746       | 1874      |
| 230 kV Tesla |         |        |          |           |           |
| #1           |         |        |          |           |           |
+--------------+---------+--------+----------+-----------+-----------+
| **Tracy**    | PCB 582 | 683    | 1714     | 746       | 1874      |
| 230 kV Tesla |         |        |          |           |           |
| #2           |         |        |          |           |           |
+--------------+---------+--------+----------+-----------+-----------+
| **Tracy** 69 | PCB     | 72     | 600      | 72        | 600       |
| kV Herdlyn   | 2452    |        |          |           |           |
+--------------+---------+--------+----------+-----------+-----------+

3.  Western is the operator and is also a participant in the COTP and
    has 177 MW of firm transmission rights into its SCA from the
    northwest (North to South) and 136 MW from its SCA to the northwest
    (South to North) over this 500 kV line. The COTP is interconnected
    to CAISO grid near Tesla Substation.

4.  Western's ETC with PG&E for delivery of New Melones generation to
    its SCA is Contract 8-07-200-P0004. It provides firm transmission
    capacity for the delivery of New Melones power until 2032.

5.  Western's ETC for delivery of San Luis and O'Neill generation to its
    loads or SCA is Contract 14-06-200-2207A. This contract provides
    transmission and delivery service from PG&E for the San Luis Unit
    generation and loads. This agreement expires in 2016.

6.  Western's ETC on Path 15 is 150 MW. Western has turned over the
    operational control of Path 15 to the CAISO. Please see Contract
    03-SNR-00605. Unless otherwise determined in a subsequent addendum
    to this LRA plan, Western will not be subject to any limit on
    imports that may be designated as Qualifying Capacity.

7.  Unless otherwise determined in a subsequent addendum to this LRA
    plan, as its own independent LRA, Western has administratively
    determined it will not be subject to any limit on imports that may
    be designated as Qualifying Capacity.

## 

## Demand Forecasts and Protocols

### Loads in the SCA

Western does not have any statutory or contractual obligation to meet
most of the preference customer's loads that are located in the SCA,
except for BR and/or future CP and supplemental power requirements.
These loads are not within the scope of this LRA plan for the CAISO
Control Area, Western will not be furnishing any demand forecasts or
resource information for these loads to the CAISO.

Western also has an obligation to meet the PU loads in its SCA and the
loads of three FLS customers. Western will not supply demand forecasts
or resource information for these loads because these loads are not
within the scope of this LRA plan for the CAISO Control Area.

**Loads in the CAISO Control Area**

For Its loads in the CAISO Control Area, Western will determine its
demand forecasts as follows:

1.  For its PU Loads in the CAISO Control Area that it acts as SC for,
    Western will determine their demand forecasts based on their
    projected coincident peak monthly demand. The SCID for these loads
    is WPUL. As noted above, an agreement between Western and PG&E is
    pending at FERC, which will add PU loads Western is SC for under the
    WSLW SCID.

2.  For its FLS customers in the CAISO Control Area, Western will
    determine their demand forecasts based on their projected coincident
    peak monthly demand. The SCID for these loads is WFLS. Beginning on
    November 1, 2006, the DOE Laboratory loads in the CAISO area,
    consisting of the Stanford Linear Accelerator Center, The Lawrence
    Berkeley National Laboratory and Site 300, will split out of WFLS
    and be scheduled under the SCID of WDOE.

3.  For Trinity County Public Utility District, which resides in the
    CAISO Control Area, Western will determine its demand forecast based
    on its projected coincident peak monthly demand. The SCID for these
    loads is WTRN.

4.  For the loads of the NASA Ames Research Center Western will
    determine the average demand for a month consistent with current
    arrangements with the CAISO for forecasting this very unique load.
    The SCID for this load is WNAS.

5.  For Eastside Power Authority, Western will determine its demand
    forecast based upon their monthly coincident peak demand. The SCID
    for this load is WEPA.

6.  For The Power and Water Resources Pooling Authority (PWRPA) Western
    will defer to PWRPA's LRA. As PWRPA's SC, Western will submit the
    required demand and resource data received from PWRPA to the CAISO.
    The SCID for these loads is WPWR.

7.  For VR and BR customers in the CAISO Control Area, Western will
    defer to the customer's SC to provide demand forecasts for their
    loads. The BR energy to these customers will be scheduled as noted
    above.

## Planning Reserve Margins

Under this LRA plan, Western has designated its hydroelectric facilities
in the SMUD Control Area as a system resource that meets its definition
of Qualifying Capacity, 100% of forecasted capacity. The forecasted
capacity is determined utilizing Western's 50% rolling 12 months
forecast for the appropriate month. The rolling 12 month forecast and
the designation of the capacity level is discussed in detail above. This
import into the CAISO Control Area comes with operating reserves
consistent with WECC and NERC standards, backed by the CVP resources in
SMUD's Control Area.

Similarly, Western has designated 100% of its contract deliveries as
Qualifying Capacity. These contracts are backed by reserves in the
originating control area and are therefore considered firm. For its
reserve requirements in its SCA, Western will ensure its operations are
also consistent with Western's Interconnected Operations Agreement with
SMUD.

Consistent with the CAISO tariff, Western will make a year-ahead showing
that it has a minimum of 90% of the capacity required to meet its
forecasted monthly coincident peak load in the CAISO Control Area, as
determined by Western, plus its Planning Reserve Margin. Under the CAISO
IRRP approach, the Planning Reserve Margin is a percentage of firm
capacity over the demand forecast available to the CAISO to meet reserve
requirements. Western has determined that for the purposes of this LRA
Plan it will provide capacity to the CAISO consistent with the CAISO's
planning reserve criteria as follows:

[Operative Months]{.underline} [Planning Reserve Capacity]{.underline}

January -- May & October - December 5%

June - September 10%

Western has further determined that it will conduct a public process to
provide its customers and other interested parties the opportunity to
provide input to Western with regard to the amount and character of RA
capacity it will provide in the future.

For its month-ahead showing, Western will demonstrate that it is
prepared to meet 100% of its forecasted monthly coincident peak load.

# Appendix A

# Western Customers Included Under this LRA Plan

## SCID - WFLS

Ca. Medical Facility, Vacaville

Ca. Deuel Vocation Institution

Calaveras Public Power Agency

City and County of San Francisco

City of Avenal

East Bay Municipal Utility District

East Contra Costa Irrigation District

Lassen Municipal Utility District

Northern California Youth Correctional Center

Reclamation District 2035

Sierra Conservation Center

Shelter Cove

Tuolumne Public Power Agency

Pittsburg Power Company

University of California at Davis

Beale Air Force Base

DLA Sharpe and Tracy

Moffett Air Field

Onizuka Air Force Base

Travis Air Force Base

U.S. Navy -- Lemore

U.S. Navy -- Dixon

## SCID -- WDOE (Currently under WFLS -- Effective November 1, 2006)

U.S. DOE -- Stanford Linear Accelerator Center

U.S. DOE -- Lawrence Berkeley Laboratory

U.S. DOE -- Site 300

## SCIDs -- WPUL and WSLW (WSLW will become effective upon FERC approval of agreement between Western and PG&E)

U.S. Bureau of Reclamation, Mid Pacific Region

## 

## SCID -- WEPA

Eastside Power Authority

## SCID -- WPWR

The Power and Water Resources Pooling Authority has notified Western
that it will act as its own LRA. Please refer to their filing for loads
included in this SCID.

## 

## SCID -- WNAS

NASA Ames Research Center

## SCID -- WTRN

Trinity County Public Utility District

[^1]: It is important to note that the CAISO's definition of Load
    Serving Entity at Section 40.1 of the Tariff filed in ER06-723-000
    does not apply to Western because Western does not serve "retail
    load."