2026-NTFP-07 (Contingency Reserves Policy)

Lead Sponsor's (WPP) Description of the Issue:

Currently, the WRAP Loss of Load Expectation (LOLE) model includes an additional 6% of load as a proxy for the 3% load/3% generation Contingency Reserve (CR) requirement established under BAL-002-WECC-3. This additional load is modeled in the same manner as other load, meaning that a loss of contingency reserves is treated as a “loss of load.” Based on modeling experience, the Program Operator estimates that this treatment increases the Forward Showing PlanningReserve Margin (FSPRM) by approximately 4%.

FERC approved the retirement of BAL-002-WECC-3, effective April 14, 2026. Following its retirement, the Western Power Pool (WPP) Reserve Sharing Group (RSG) established a new CR methodology. Under the new methodology, the RSG footprint must carry CR equal to 200% of the previous calendar year’s average Most Severe Single Contingency (MSSC). The total RSG CR requirement is allocated to individual Balancing Authorities (BAs) based on each BA’s weighted pro rata share of generation plus load relative to total generation plus load across the RSG footprint.

The PRM Task Force reached consensus that the CR requirement reflected in the WRAP LOLEmodel should remain aligned with the CR requirement established by the RSG.

New Footprint Requirement

The previous WRAP methodology was based on the 3% load/3% generation requirement and was represented in WRAP as an additional 6% of Participant load. Under the new methodology, the CR requirement is instead based on 200% of the previous calendar year’s average MSSC for the entire RSG footprint. Because the WRAP Region is a subset of the RSG footprint, WRAP will reflect the portion of the RSG CR requirement attributable to WRAP Participants rather than the entire RSG requirement.

Allocation to WRAP Participants in Forward Showing

Within the RSG, each BA’s CR requirement is calculated as follows:

BA CR Requirement (CRO) = (200% x Previous Year’s Average MSSC) x (BA Average Hourly Gen+BA Average Hourly Load) / (RSG Average Hourly Gen+RSG Average Hourly Load).

Two adjustments are needed to translate the RSG methodology to WRAP.

First, WRAP Participants are required to bring sufficient capacity to meet their load obligations.Therefore, for purposes of allocating the CR requirement among WRAP Participants, the 3 allocation will be based on load rather than generation plus load. This is analogous to the existing WRAP methodology, which represents the 3% load/3% generation requirement as 6% of load.

Second, RSG requirements are established at the BA level, while WRAP participation occurs at the Load Responsible Entity (LRE) level. When a BA is the WRAP Participant and represents the entire BA load in WRAP, the BA CR requirement is the same as the LRE CR requirement. When a BA includes multiple LREs participating in WRAP or has only part of its load participating in WRAP, the BA’s CR requirement will therefore be allocated among those LREs based on theirrespective shares of BA load:

WRAP LRE CR Requirement = BA CR Requirement x (LRE Average Hourly Load / BA AverageHourly Load)

A few additional points apply:

• If the entirety of a BA’s load is represented in WRAP, the BA CRO and the aggregate WRAP CR requirement for all LREs within the BA are the same.

• All average hourly load values will be based on the previous calendar year.

• WRAP will coordinate with RSG leadership to obtain the data necessary to implement this methodology.

• The existing policy regarding CR adjustments will remain unchanged.

Application in the Operations Program

Unlike the previous 3% load/3% generation methodology, the new CR requirement produces a static value for the applicable period. As a result, the CR requirement used in the Operations Program will not vary from the CR requirement established for Forward Showing. Accordingly,no separate adjustment to the CR requirement will be needed in the Sharing Calculation.

Timing

The RSG establishes a new MSSC value each April using data from the previous calendar year. For each WRAP Advance Assessment, the Program Operator will use the RSG CR requirement in effect at the time the Advance Assessment is performed as an input to the LOLE modeling.

Implementation

This methodology is expected to be incorporated into WRAP modeling beginning with Binding Season Summer 2028. WPP is in discussion on the approach to address the treatment of CR requirements for seasons that have already been modeled and for which PRM values have already been approved.