April 5, 2016 CPUC

JDRP Proposal  Flexible RA Attributes and requirements should be unbundled from the underlying system RA and Local RA attributes  Proposed for Demand Response and Storage  Open to, but not proposing for other resource types.  Would allow:  A resource to have an EFC (Effective Qualifying Capacity) without having a NQC (Net Qualifying Capacity)  Goal – to allow these resources to achieve their best and highest grid functions as we move to a grid needing more flexibility for intermittent resource integration.

Category 1Category 2Category 3System Must-offer obligation 17 Hours 5 Hours 5 Hours 5 Hours 5 AM- 10 PM Daily For the whole year 12 PM to 5 PM for May – September 12 PM to 5 PM for May – September 1-6 PM April - Oct 5 AM- 10 PM Daily For the whole year 3 PM- 8 PM for January- April and October-December 3 PM- 8 PM for January- April and October-December 4-9 PM November - March Daily Non-holiday weekdays Energy limitations At least 6 HoursAt least 3 Hours At least 4 hours, 24 hours month Starts The minimum of two starts per day or the number of starts feasible with minimum up and down time At least one start per day Minimum 5 starts a month Daily, minimum 3 days in a row Percentage of LSE portfolio of flexible resources At least 68 % for May – September Up to 32% for categories 2 and 3 combined Up to 5% At least 74 % for January- April and October- December Up to 26% for categories 2 and 3 combined Up to 5%

 Mismatch of MOO hours can limit participation ◦ Past RA cycles would have created 10+ hour daily MOO for flexible resources ◦ DR Resource designed or peak needs or ramping  EFC is capped at a resources NQC ◦ Limits bidirectional resources like DR and storage from providing full flexibility ◦ EFC is usually higher for storage and DR resources than NQC Benefits that could accrue to the system are left on the table under current structure

 Change could be accommodated in current RA compliance system ◦ Update EFC and NQC lists to utilize the unbundled and uncapped EFCs ◦ Compliance form calculations updates ◦ Limited resource pool avoids unwieldy compliance issues

6 Resource Adequacy: PG&E’s Perspective RA Workshop April 5, 2016

7 Background D adopted rules regarding the counting and sale and purchase of flexible capacity SDG&E unbundling proposal submitted into R in 2014 and R in In 2014 TURN, Shell, CAISO, ORA, GPI support proposal SCE, AReM does not support proposal In 2015 TURN, ORA, CAISO, IEP, WPTF, NRG, Shell, CESA, Joint DR Parties, GPI support SCE, PG&E oppose, AReM and CLECA believes more discussion needed. The CPUC deferred the issue both in 2014 and in 2015

8 PG&E’s Previous Comments on EFC and NQC PG&E agreed that DR resources should not need an NQC to receive an EFC in its February 2014 Comments PG&E asked for the CPUC to allow an EFC greater than NQC in its March 2014 Comments. In 2015, PG&E supported the SCE proposal to allow EFC-only and NQC-only resources and opposed SDG&E proposal for complete unbundling. PG&E indicated support for all resource types to be able to provide EFC-only and NQC-only.

9 PG&E’s View on Unbundling Previously stated concerns: Supplier Market Power Administrative Burden and Complexity Implications on Existing Contracts need to be considered. CAM Implications are not clear. No Clear Need Methods to balance portfolios already exist.

10 PG&E’s Areas of Focus PG&E believes existing and ongoing work to understand Flexible Need should inform CPUC’s priorities. Wholesale review of Flexible RA Requirements is needed. Focus in on areas of complexity PG&E’s key question is: Would unbundling reduce complexity or increase complexity? Initial Area of Complexity to target: Resource Counting Rules

Unbundling to Improve Interconnections and Participation Approaches April 5, 2016 ©2016 California Energy Storage Alliance

RA Rules Drive Storage Resources to Obtain NQC to Get an EFC 12 Due to bundling of System and Flex requirements, storage developers are studied by CAISO to establish a NQC in order to get an EFC. To get an NQC, resource must go through a peak-deliverability study. This NQC step can force deliverability and interconnection goals unintended by a Flex-only resource. Potential unbundling actions at the CPUC will inform CAISO steps, allowing an EFC without a NQC. Outcome: less expensive interconnections for storage (or other) developments seeking to only provide flex.