1 R Phase I Resource Adequacy Workshop presentation – Day 1 January 26 and 27, am to 5 pm CPUC offices 505 Van Ness Ave San Francisco, CA Auditorium and WedEx Copies of the agenda are available in the back of the room Restrooms are at the other end of the hall, and there is a cafeteria near the main lobby.

2 WebEx information Day 1:(Jan 26, 10 am to 5 pm) Meeting Number: Meeting Password: resource Go to link: &PW=NNTMzYmMwNGQ2&RT=MiM0 Day 2: (Jan 27, 10 am to 5 pm) Meeting Number: Meeting Password: resource Go to link: &PW=NZjEwMzA5ZDli&RT=MiM0 Teleconference information: Conference number: Passcode #

Purpose: Record Building –Presentations will be added to record –Court Reporter will be here for 1 hour to record workshop discussion Energy Division staff will give short (3-5 minute) summaries of workshop discussion, then parties will have short time to react/recontextualize discussion for record if needed (Can use suggested template to structure summary) 3

4 Introductions and Agenda Day 1 Introductions – 10:00 – 10:15 Update on replace rule and SCP III – (CAISO) – 10:15 – 10:30 Flexible Ramping Product (CAISO) 10:30- 12:00 noon Lunch Coincidence Adjustment (CEC/AReM) – 1:00 – 2:00 Redesign of MCC Buckets (CPUC staff) – 2:00 – 3:00 Court Reporter – 4:00 – 5:00

5 Dates, 2012Phase I proceeding Schedule Jan 13Parties file proposals on Phase 1 issues; Energy Division issues staff proposals on Phase 1 issues Jan 26-27Energy Division workshops Feb 22Energy Division workshop report Mar 7Parties file comments based on Energy Division workshop report, except for LCR study issues. Deadline for requesting evidentiary hearing. Mar 21Parties file reply comments based on Energy Division workshop report, and proposals, except for LCR study MarEnergy Division publishes 2011 Year in Review report AprCAISO publishes draft 2013 LCR report MayCAISO publishes final 2013 LCR Report May 7Comments on final 2013 LCR Report filed with Commission May 14Reply comments on final 2013 LCR Report filed MayProposed decision issued by ALJ

6 Switch to Presentation slides We will now bring up slides from other parties who will be presenting. Points to remember: Workshop discussion will be summarized for court reporter at the end of the day so please be prepared to offer short on the record comments if needed to represent your position Presentations will also be added to the record.

7 Redesign/update of the MCC buckets Default - review of current methodology and updating of percentages for current load shapes, and to add DR bucket Discussion of Energy Division Proposal - possible changes to methodology and some key points to clarify with regards definition and analysis

Review of current methodology Background and reasons for current design Update of percentages in current design 8

Current Methodology Old definitions: Broad methodology adopted in D Analysis conducted and Implemented by Energy Division staff in December 2005 Based on load duration curve made up of average ranked month specific loads from last three years Need to accommodate existing energy contracts Possibilities for revisions within current methodology: Can combine buckets No need to base buckets on outdated energy contracts Revised percentages based on more current load shapes Need to add DR bucket 9

Updated percentages Observations: Load is even more “peaky” then in previous years – percentages have increased Very little use in RA Filings of buckets 1-3 If current MCC proposal not adopted, these percentages would apply. Possibility to combine buckets MCC Limits by Category Hours per month by Category Load Shapes from Load shapes from Category DR 12 hrsN/A 5.7% Category #1 5x4 hrs = %16.2% Category #2 (Sum of 1, 2) 5x8 hrs = %21.7% Category #3 (Sum of 1, 2, 3) 6x16 hrs = %33.8% Category #4 (Sum of 1,2,3,4) 7x24 hrs = % 100.0% 10

Energy Division Proposal – Overall Redesign of MCC buckets Reasoning for redesign Proposed analysis related to daily load shapes –Daily load curve and variation from one hour to next –Load net of wind, solar, non-dispatchable hydro –Percentages set relative to maximum non- dispatchable generation before causing problems for operation –Dispatchability is used as proxy for all flexibility services Outstanding questions regarding definitions –Dispatchability –Percentages for each bucket 11

Reasoning for redesign Lack of clarity in rules for several factors –Emissions limits –Intermittence –Hydro availability Changing nature of demand and supply sides –CAISO overgen situations highlight how system reliability conditions can be stressed in offpeak times 12

May –average, median, 90 th percentile 13

May – interhour load change 14

May – interhour load change – median, mean, 90 th percentile 15

August –average, median, 90 th percentile 16

August –interhour load change 17

August – interhour load change – median, mean, 90 th percentile 18

Matrix from Proposal – percentages for discussion purposes Hours of operation Maximum Cumulative percentage of resources Operation Characteristics All hours100%Dispatchable All hours TBD Non-dispatchable Limited hours TBD Dispatchable Limited hours TBD Non-dispatchable 19

Definitions – Dispatchability Key needs to address Ramping/ Flexibility How to differentiate resources according to operational characteristics Possible criteria Contractually bound to be dispatchable / curtailable Technologically capable of ramping up or down Can start after day ahead market (No long start units) 20

Definitions - Percentages Based on daily load variability, not load duration curve Qualitative distinctions, not quantitative distinctions Flexibility needed from one hour to the next in a real day, not to cover several disconnected hours of a month in ranked order. MCC percentage limit set relative to role each type of resource plays in meeting load reliably Key questions – Different percentage each month? How to define typical day? Other statistical methods such as mode, median, exceedence Max ramp over a day or max ramp from one hour to next? Load net of wind, solar, non- dispatchable hydro Wind variability and load variability are additive, hydro variability concentrated in spring What resources go into what buckets and why? 21

Bucket 1 – discussion purposes only Bucket 1 – consistent performance hours limited and also non- dispatchable Wind, non- dispatchable hydro MCC percentage – based on incremental flexibility need just to manage them? 22

Bucket 2 – discussion purposes only Bucket 2 – consistent performance hours limited and also dispatchable Peakers, Demand Response, Dispatchable Hydro, energy storage 13% MCC restriction 23

Bucket 3 – discussion purposes only Bucket 3 – Long hours consistent performance hours unlimited but non- dispatchable Steam units, nuclear plants Some flexibility to account for contracts MCC percentage – about 65% 24

Bucket 4 – discussion purposes only Bucket 4 – consistent performance hours limited and also dispatchable CCGT, some large pumped storage MCC percentage – 100% 25

26 Thank you! For Additional Information: Donald Brooks Procurement and Resource Adequacy Phone: (415) Megha Lakhchaura Procurement and Resource Adequacy Phone: (415)

27 R Phase I Resource Adequacy Workshop presentation – Day 2 January 26 and 27, am to 5 pm CPUC offices 505 Van Ness Ave San Francisco, CA Auditorium and WedEx Copies of the agenda are available in the back of the room Restrooms are at the other end of the hall, and there is a cafeteria near the main lobby.

28 WebEx information Day 1:(Jan 26, 10 am to 5 pm) Meeting Number: Meeting Password: resource Go to link: &PW=NNTMzYmMwNGQ2&RT=MiM0 Day 2: (Jan 27, 10 am to 5 pm) Meeting Number: Meeting Password: resource Go to link: &PW=NZjEwMzA5ZDli&RT=MiM0 Teleconference information: Conference number: Passcode #

Purpose: Record Building –Presentations will be added to record –Court Reporter will be here for 1 hour to record workshop discussion Energy Division staff will give short (3-5 minute) summaries of workshop discussion, then parties will have short time to react/recontextualize discussion for record if needed (Can use suggested template to structure summary) 29

30 Introductions and Agenda Day 2 Introductions and announcements – 10:00 – 10:15 Deliverability for Distributed Generation (CPUC staff) - 10:15 – 12:00 Lunch 12:00 to 1:00 Qualifying Capacity for Dynamically Scheduled Resources(CPUC staff) 1:00 – 1:15 Rounding Convention (CPUC staff)1:15 – 1:45 Modification to QC of CHP – weekends and holidays (CPUC staff) 1:45 – 2:00 Court Reporter 2:00 – 3:00 Time for parties to have additional discussion 3:00-5:00

31 Dates, 2012Phase I proceeding Schedule Jan 13Parties file proposals on Phase 1 issues; Energy Division issues staff proposals on Phase 1 issues Jan 26-27Energy Division workshops Feb 22Energy Division workshop report Mar 7Parties file comments based on Energy Division workshop report, except for LCR study issues. Deadline for requesting evidentiary hearing. Mar 21Parties file reply comments based on Energy Division workshop report, and proposals, except for LCR study MarEnergy Division publishes 2011 Year in Review report AprCAISO publishes draft 2013 LCR report MayCAISO publishes final 2013 LCR Report May 7Comments on final 2013 LCR Report filed with Commission May 14Reply comments on final 2013 LCR Report filed MayProposed decision issued by ALJ

32 Switch to Presentation slides We will now bring up slides from other parties who will be presenting. Points to remember: Workshop discussion will be summarized for court reporter at the end of the day so please be prepared to offer short on the record comments if needed to represent your position Presentations will also be added to the record.

Rounding Convention Rounding Convention adopted in D for Local RA and widened to System RA in D Currently round to whole MW level for system and Local RA obligations Obligations are rounded net of adjustments (DR, CAM, RMR) After rounding, total of Local RA obligations allocated to LSEs may not equal total of Local RA obligations required by CAISO. Total may be higher or lower due to rounding. If total is lower, CAISO may not meet WECC reliability requirements 33

Rounding Convention Proposal Round obligations (net of adjustments) to half MW instead of whole MW This applies to System and Local RA equally 34

Dynamically Scheduled and Pseudo tie Resources Dynamically Scheduled resources are external to the CAISO, but enter into an arrangement with CAISO whereby they are optimized in the market and dispatched as if they were internal resources. Pseudo tie resources are special arrangements similar to dynamic scheduling CAISO developed a tariff and filed it with FERC in June 2010 that expanded the use of dynamic scheduling. Benefits included ability to manage resources better in CAISO markets, ability to minimize imbalance charges, and ability to avoid balancing and reserve requirements applicable to other external resources. There is no explicit rule related to qualifying capacity for dynamic scheduled or pseudo tie resources, or how these resources would be the same or different than other resources 35

Dynamically Scheduled and Pseudo Tie resources – Energy Division proposal Energy Division proposed to treat dynamically scheduled resources and pseudo tie resources as if they were located in the CAISO for purposes of qualifying capacity rules CPUC would issue subpoena to CAISO for settlement data from non- dispatchable dynamically scheduled or pseudo tie resources, and use the settlement data in a similar manner to the way CPUC uses data for resources inside the CAISO. Dispatchable dynamically scheduled resources or pseudo tie resources would receive QC based on dependable capacity and deliverability amounts, as if they were located within CAISO. Non-dispatchable dynamically scheduled or pseudo tie resources would receive QC based on settlement data and technology type as if they were internal to CAISO Dynamically scheduled and pseudo tie resources, being external resources, would still need to secure import allocations to make them able to count for RA, for their NQC would be computed as if they were internal resources. 36

Cogeneration Association of California PTM regarding QC for CHP CAC filed a PTM to D in R CAC petitioned that production from weekends and holidays ought to be excluded for CHP facilities in determining the qualifying capacity for CHP. No discussion of similar treatment for wind, solar, or other non-dispatchable resources Energy Division proposes to reject this PTM based on the need to maintain consistent treatment for all resources, and since reliability stress can occur on weekends or holidays. Energy Division does not agree with reasoning provided by CAC which states that weekends and holidays ought to be excluded since thermal host is not operational on weekends and holidays 37

38 Thank you! For Additional Information: Donald Brooks Procurement and Resource Adequacy Phone: (415) Megha Lakhchaura Procurement and Resource Adequacy Phone: (415)