1 Distribution Resources Plan [R ] Locational Net Benefit Analysis (LNBA) and Demonstration Project A (Demo B) Workshop California Public Utilities Commission February 1, 2016 Rulemaking R Pursuant to Public Utilities Code Section 769 Assigned Commissioner: CPUC President Michael Picker Administrative Law Judge: Julie Fitch Energy Division Staff Lead: J. David Erickson

Safety and Emergency Information In event of an emergency calmly proceed out the exits Four exits: Two in the rear and one on either side of the speakers In the event that we need to evacuate building: (For Rear Exits) - Head out through the courtyard, down the front steps, and continue east on McAllister Street. Turn south onto Polk Street/Carlton B. Goodlett Place. (For Side Exits) - Go out of exits and you will be on Golden Gate Avenue. Proceed east pass Van Ness Avenue to Polk Street, turn south and continue to Civic Center Plaza Our assembly point is Civic Center Plaza on McAllister and Polk Streets [Dr. Carlton B. Goodlett Place]. 2

Other Information Call-in: (866) Participant Passcode: WebEx : MTID=mc5e aa46fb9575 8f645876e32 MTID=mc5e aa46fb9575 8f645876e32 Meeting Number: Meeting Password: !Energy1 3 3 WiFi Access: login: guest password: password Restrooms: Exit Auditorium doors and proceed tothe far end of the hallway DRP Website: All presentations will be posted on the DRP website

4 Workshop Agenda 10:00 AM – 10:30 AM:“Introduction to LNBA and Demo B,” Dave Erickson, Sr. Regulatory Analyst, CPUC Energy Division 10:30 AM – 12:00 PM:Panel and Moderated Discussion on Utility Proposals on LNBA and Demo B | Moderator: David Erickson, Sr. Regulatory Analyst, CPUC Energy Division “LNBA and Demo B: Basic Methodology and Possible Improvements,” PG&E, SCE, and SDG&E 12:00 PM – 1:00 PM: Lunch 1:00 PM – 2:00 PM: Panel and Moderated Discussion on System and Location-Specific Value Components for LNBA | Moderator: Gabe Petlin, Supervisor, Grid Planning and Reliability Section, CPUC Energy Division “From Cost-Effectiveness to Valuation,” Joy Morgenstern, Sr. Regulatory Analyst, CPUC Energy Division “Categorizing Distribution-Level Avoided Costs Due to Utilization of Smart Inverter Phase 3 Functions,” Marc Monbouquette, Regulatory Analyst, CPUC Energy Division 2:00 PM – 3:30 PM:Panel and Moderated Discussion on Alternative Proposals | Moderator: Dave Erickson, Sr. Regulatory Analyst, CPUC Energy Division “A Comparison of Utility Approaches, Assumptions, and Technical Issues,” Jim Baak, Program Dir., Grid Integration, Vote Solar | Curt Volkmann, President, New Energy Advisors, LLC “Integrating ICA and LNBA into Distribution Planning,” Ryan Hanley, Sr. Director, Grid Engineering Solutions, SolarCity “LNBA to Integrate and Optimize DERs for Maximum Value,” Dr. Eric Woychik, Executive Consultant, Strategy Integration, LLC 3:30 PM – 4:00 PM: Final Questions and Comments

DRP Process DRP Roadmap and ICA workshops conducted November 9 and 10, 2015 Comments on DRP Roadmap Staff Proposal submitted ICA workshop report circulated Comments on ICA workshop report will be solicited with LNBA comments after this workshop Ruling on ICA, LNBA, Demo A & B expected end of Q DRP Scoping Memo released January 27,

Workshop Purpose and Goal This workshop is being held pursuant to ALJ Julie Fitch’s ruling of January 8, The purpose and objective of the workshop are to: ruling Examine in detail utility proposals for Locational Net Benefits Analysis (LNBA) methodology and Demonstration Project B (Demo B) that were set forth in their Distribution Resources Plans (DRP) filings of July 1, 2015; Provide an opportunity for parties to present alternatives, modifications, or improvements to the proposals; To inform Commission consideration of utility LNBA methodology and Demo B proposals. 6

What is the Locational Net Benefits Analysis (LNBA)? Quantifies the avoided cost of integration of DER Specifies a set of “value components” that capture avoided cost either at the bulk system level, or locally within the distribution system and a method for calculating each of those costs Resulting Information to be made available in online maps 7

Why are we doing it? (One of) a set of tools that quantify the benefits of DER that can be deployed at a particular location. Moving toward building the capability to compare portfolios of DERs as alternatives to traditional grid infrastructure. Improve the distribution planning process to enable higher penetration of DER, and provision of grid services by DER, as an alternative to traditional utility infrastructure investments. 8

From Guidance (Optimal Location Benefit Analysis aka Locational Net Benefit Analysis) Specifies the net benefit that DERs can provide in a given location. Net benefits methodology based on the Commission approved E3 Cost- Effectiveness Calculator, but enhanced to explicitly include location-specific values Consistent across all three Utilities 9

Value Components from Guidance Avoided Sub-transmission, Substation and Feeder Capital and Operating Expenditures: Avoided Distribution Voltage and Power Quality Capital and Operating Expenditures: Avoided Distribution Reliability and Resiliency Capital and Operating Expenditures: Avoided Transmission Capital and Operating Expenditures: Avoided Flexible Resource Adequacy (RA) Procurement: Avoided Renewables Integration Costs: Any societal avoided costs which can be clearly linked to the deployment of DERs Any avoided public safety costs which can be clearly linked to the deployment of DERs 10

Demo Project B (Guidance) Commission-approved Optimal Location Benefit Analysis (aka LNBA) methodology is performed for one distribution planning area (DPA) Include a detailed implementation schedule. DPA to study shall include, at minimum, –one near term (0-3 year project lead time) and –one longer term (3 or more year lead time) distribution infrastructure project for possible deferral. 11

E3 Distributed Energy Resource Avoided Cost Calculator (DERAC) 12

DERAC Cost Definitions

} Not in DERAC DERAC vs IOU proposal Not included in IOU proposal

Questions For Utilities and Parties Please refer to handout 15

16 Thank you! For Additional Information: Dave Erickson