Pacific Gas & Electric (PCG)

5.1.  Control Area Operator.

        5.1.1    Membership of WSCC and RTGs.    The ISO shall be the designated Control Area operator for the ISO Controlled Grid and shall be a member of the WSCC and the relevant Regional Transmission Groups (RTGs) in that capacity. No Party shall take any position before the WSCC or an RTG that is inconsistent with a binding decision reached through the dispute resolution process referenced in Section 15, provided that the scope of the decision was no greater than the issues set forth in the statement of claims published by the ISO pursuant to Section 13.2.2 of the ISO Tariff.

        5.1.2    Operational Control.    The ISO shall exercise Operational Control over the ISO Controlled Grid for the purpose of:

            i.  providing a framework for the efficient transmission of electricity across the ISO Controlled Grid in accordance with the ISO Tariff;

           ii.  securing compliance with all Applicable Reliability Criteria;

          iii.  scheduling transactions for Market Participants to provide open and non-discriminatory access to the ISO Controlled Grid in accordance with the ISO Tariff;

          iv.  relieving Congestion; and

           v.  to the extent provided in this Agreement, assisting Market Participants to comply with other operating criteria, contractual obligations and legal requirements binding on them.

        5.1.3    Duty of Care.    The ISO shall have the exclusive right and responsibility to exercise Operational Control over the ISO Controlled Grid, subject to and in accordance with Applicable Reliability Criteria and the operating criteria established by the NRC operating licenses for nuclear generating units as provided in Appendix E pursuant to Section 6.4.2. The ISO shall take proper care to ensure the safety of personnel and the general public. It shall act in accordance with Good Utility Practice, applicable law, Existing Contracts, the ISO Tariff and the Operating Procedures. The ISO shall not direct a Participating TO to take any action which would require a Participating TO to operate its transmission facilities in excess of their applicable rating as established or modified from time to time by the Participating TO pursuant to Section 6.4 except in a System Emergency where such a direction is consistent with Applicable Reliability Criteria.

        5.1.4    Operating Procedures.    The ISO shall, in consultation with the Participating TOs and other Market Participants, promulgate Operating Procedures governing its exercise of Operational Control over the ISO Controlled Grid in accordance with this Agreement. The ISO shall provide copies of the Operating Procedures and all amendments, revisions and updates to the Participating TOs and shall make them available to the public through WEnet or the ISO internet website.

        5.1.5    Applicable Reliability Criteria.    The ISO shall, in consultation with Participating TOs and other Market Participants, develop and promulgate Applicable Reliability Criteria for the ISO Controlled Grid, which shall be in compliance with the reliability standards promulgated by NERC, WSCC, Local Reliability Criteria and NRC grid criteria related to operating licenses for nuclear generating units. The ISO shall provide copies of the Applicable Reliability Criteria and all amendments, revisions and updates to the Participating TOs and shall make them available to the public through WEnet or the ISO internet website.

        5.1.6    Waivers.    The ISO may grant to any Participating TO whose transmission facilities do not meet the Applicable Reliability Criteria when it becomes a party to this Agreement such waivers from the Applicable Reliability Criteria as the Participating TO reasonably requires to prevent it from being in breach of this Agreement while it brings its transmission facilities into full compliance. Such waivers shall be effective for such period as the ISO shall determine. A Participating TO who has been granted

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a waiver made under this Section 5.1.6 shall bring its transmission facilities into compliance with the Applicable Reliability Criteria before the expiration of the relevant waivers and in any event as soon as reasonably practical.

        5.1.7    Operational Protocols.    In exercising Operational Control over the ISO Controlled Grid, the ISO shall comply with the operational protocols to be provided in accordance with Section 6.4.2, as they may be amended from time to time to take account of the removal and relaxation of any Encumbrances to which the ISO Controlled Grid is subject. Participating TOs whose transmission lines and associated facilities are subject to Encumbrances shall make all reasonable efforts to remove or relax those Encumbrances in order to permit the operational protocols to be amended in such manner as the ISO may reasonably require, to the extent permitted by Existing Contracts and applicable interconnection, integration, exchange, operating, joint ownership and joint participation agreements.

        5.1.8    System Emergencies.    In the event of a System Emergency, the ISO shall have the authority and responsibility to take all actions necessary and shall direct the restoration of the ISO Controlled Grid to service following any interruption associated with a System Emergency. The ISO shall also have the authority and responsibility, consistent with Section 4 and Section 9, to act to prevent System Emergencies. Actions and directions by the ISO pursuant to this Section 5.1.8 shall be consistent with Section 5.1.3, Duty of Care.

        5.1.9    Reporting Criteria.    The ISO shall comply with the reporting requirements of the WSCC, NERC, NRC and regulatory bodies having jurisdiction over it. Participating TOs shall provide the ISO with information that the ISO may require to meet this obligation.