Separation of functions

Utilities across the nation have changed the way they operate to comply with Federal requirements designed to provide open access to the interconnected transmission grid to all potential buyers and sellers of bulk electricity. Western made these changes, too. We are developing a plan to voluntarily comply with the Federal Energy Regulatory Commission requirements (FERC Order No. 889/18 CFR 37.4) to separate our power marketing and transmission functions. Under this rule, transmission owners must not favor any entity's efforts to market power, even if the marketing is being done by a different function in the same company.

The goal of the functional separation is to prevent the use of inside information to gain market advantage. To comply, Western is making transmission availability and price information accessible to all market participants, both Western marketing staff and others, at the same time through a web-based information system on the Internet. Transmission providers use this Open Access Same-Time Information System, or OASIS, is used by transmission providers to post the availability of transmission services and provide other information as required by FERC. Under these new operating procedures, Western will restrict internal access to transmission information.

We filed Standards of Conduct for power marketing and transmission employees with FERC to fully implement Western's Open Access Tariff. They include:

For all employees:

• Transmission employees must function independently from Power Marketing employees.
• Transmission providers must notify FERC, and post on an OASIS within 24 hours, any emergency that causes a deviation from the Standards of Conduct.
• Transmission providers must record in a log if they use discretion under terms of a tariff.
• Transmission providers may not give preference to sales for resale by a power marketing affiliate over other wholesale customers.
• Transmission providers must keep separate records from a power marketing affiliate.
• Transmission providers must maintain a public file of procedures used to implement Standards of Conduct.

For Transmission and Operations employees:

• Notices of employee transfers to or from Transmission operations must be posted on an OASIS.
• Transmission employees may not disclose information about the transmission system that is not available on an OASIS or otherwise publicly available.
• If a Transmission employee does disclose such information, it must immediately be posted on an OASIS.
• Transmission employees may not share market information acquired from other customers with Power Marketing employees, except information posted on an OASIS due to a request for service.
• Transmission employees must apply all transmission service tariffs impartially.
• In emergency situations, take whatever actions are necessary to keep the system operating.

For Power Marketing employees:

• Power Marketing employees may not have access to transmission operations facilities that are not available to other open access transmission customers.
• Power Marketing employees will have access only to information available to other open access customers.
• Power Marketing employees may not obtain transmission information that is not posted on an OASIS or otherwise publicly available.