Locational Net Benefit Analysis Working Group January 6, 2017 In-person meeting drpwg.org

Agenda Time Topic 1:00 – 1:15 1:15 – 2:00 2:00 – 3:00 3:00 – 4:00 4:00 Introduction, Overview of January Calendar, Purpose of WG Report 1:15 – 2:00 B. IOU presentations on final demo results 2:00 – 3:00 Q&A session with IOUs and WG members on results 3:00 – 4:00 D. WG recommendations and report drafting process 4:00 E. Next Steps and Conclusion

ICA and LNBA Working Group Background ICA and LNBA WG Purpose - Pursuant to the May 2, 2016, Assigned Commissioner’s Ruling (ACR) in DRP proceeding (R.14-08-013), the Joint Utilities are required to convene the ICA and LNBA WG to: Refine ICA and LNBA Methodologies and Requirements Authorize Demonstration Project A and Project B CPUC Energy Division role Oversight to ensure balance and achievement of State objective (ensure adequate stakeholder representation in consensus statements, keeping WG activities on track with Commission expectations/needs, demonstration project results review, quality control on deliverables) Coordination with both related CPUC activities and activities in other agencies (IDER CSF WG, CEC and CAISO interagency matters, interconnection/Rule 21/SIWG, other proceedings that may impact or be impacted by locational value calculation such as AB 350/IRP and LTPP/TPP/RPS) Steward WG agreements into CPUC decisions when necessary More Than Smart role Engaged by Joint Utilities to facilitate both the ICA & LBNA working groups. This leverages the previous work of MTS facilitating stakeholder discussions on ICA and LBNA topics.

CPUC Decision Points for ICA/LNBA Working Group Short-Term Final Reports ICA/LNBA Working Group January 6, 2017 Oakland, CA

Proposed Decision on Demo A&B will need to address: Compliance with May 2, 2016 ACR (and February 6, 2015 Guidance Document) ICA/LNBA Use Cases WG-recommended methodological adjustments needed to achieve Use Cases Based on prescribed Demo methodologies and Short- Term refinements Implementation requirements/schedule

Consensus Process Proposal for Discussion For each topic, the WG will characterize its recommendation as: 1. General or majority consensus (by a show of hands or absence of objecting voices) 2. Non-consensus, with alternative proposals For non-consensus positions, MTS will identify the number of parties and list party’s attribution and proposed alternative in the report A comment period after the final report is filed is considered for parties to submit final comments. MTS will work with WG members to develop text for the report. For certain sections, the WG may assign a chair and co-chair lead to coordinate development of text. For the first draft, MTS will use the recording and notes from the 1/6 meeting and any submitted written comments by 1/10*. *see next slide

Update on Timelines Date Short Term Long Term Jan. 6 In-person meeting Determine schedule for discussions up to Q2 2017 Begin LT refinement discussions Jan. 11 First draft circulated Jan. 17 First round of edits due Jan. 18-19 Second draft circulated Jan. 20 Webinar Jan. 27 Second and final round of edits due Jan. 31 Report submitted For consideration: Extend first round of writing to Jan. 12/13? * Targeted internal deadline

DRP Demo B Final Report Highlights January 6, 2017

Safety Awareness of your surroundings “Duck and Cover” First Aid and CPR Certified Contact 911 Guide Emergency Responders Exit Routes and Evacuation Procedures

Agenda Demo B Background Demo B Highlights LNBA After Demo B

Demo B Requirements per 5/2/2016 ACR (amended) Select 1 or 2 Distribution Planning Areas (DPAs) Must have at least one thermal capacity and one “other” deferral opportunity (voltage, power quality, reliability, or resiliency) Must have one near term deferral and one longer-term opportunity Identify ALL projects in DPA by location in planning horizon, regardless of deferrability Upgrade, reliability and maintenance projects Describe electrical parameters of need, equipment lists Include opportunities from smart inverters, CVR, VVO Do this under two DER growth forecast scenarios IOU’s base planning forecast DRP Very High forecast To the extent DER can provide a distribution service otherwise provided by a project, calculate LNBAs and deferral requirements Present two scenarios of LNBA results and DER forecasts in a heatmap along with ICA results Make inputs and tools public to the extent possible Engage WG in monthly meetings and coordinate with IDER

LNBA as defined for Demo B in 5/2 ACR LNBA for Demo B: Focus is on T&D deferral opportunity LNBA combines T&D with many other components DER cost is not one of the components (would be determined through a sourcing process) Each component can be positive or negative Components over multiple years are expressed as a net present value DERAC = E3 DER Avoided Cost model

Demo B Highlights Select 1 or 2 Distribution Planning Areas (DPAs) PG&E used Chico and Chowchilla Planning Areas SC&E used Rector Planning Area SDG&E used Northeast District Identify ALL projects in DPA by location in planning horizon, regardless of deferrability Projects providing the following services are considered deferrable: Distribution Capacity Voltage Support Reliability (Back-Tie) Resiliency (Microgrid) In addition, we have many projects not considered deferrable under the following categories: Reliability (non-back tie) Compliance / Maintenance Tasks Do this under two DER growth forecast scenarios Using latest versions of load forecasting tools that enables scenario analysis with different “DER Adjustment Portfolios” IOU’s base planning forecast DRP Very High forecast – Very High/Scenario 3 from 2015 DRP Certain DER types were excluded from distribution planning DER Scenarios for Demo B Report includes high-level description of load and DER forecasting process

Demo B Highlights To the extent DER can provide a distribution service otherwise provided by a project, calculate LNBAs and deferral requirements Financial inputs based on public or confidential information Load reduction requirements developed in consultation with Distribution Engineers Present two scenarios of LNBA results and DER forecasts in a heat map along with ICA results Joint utilities’ heat map specifications Common color schemes – 4 levels, based on three year deferral benefit per kW DER forecasts all presented in MW coincident with local peak, not installed MW Only location with distribution deferral show up on heat map (since the other LNBA components don’t vary within a DPA, everywhere else is the same) Clicking on a deferral opportunity will lead to a downloadable dataset with Overload description, wires solution description and associated services, public cost of wires solution Hourly load reduction requirements Benchmark deferral value (three-year deferral value per kW of required load reduction - $/kW)

Demo B Highlights Make inputs and tools public to the extent possible Joint IOUs hired E3 to develop joint IOU Demo B LNBA tool; Final version is complete and available for download Tool is technology agnostic – user puts in any hourly DER profile Tool uses hourly DER profile input to calculate: System-level avoided costs (e.g. energy and generation capacity) per ACR Distribution benefit per ACR Verifies that DER profile achieves hourly DER load reduction requirement Uses wires project cost and financial inputs to calculate deferral value Engage WG in monthly meetings and coordinate with IDER Adopted T&D Services Definitions from IDER Competitive Solicitation Framework WG Final Report (Distribution Capacity, Voltage Support, Reliability-Back Tie, Resiliency-microgrid) Worked with WG to recommend DER growth Scenario 1 be the planning scenario Worked with WG to develop heatmap specifications

Demo B Long-Term Refinements - 1 There is a long list of long-term refinements, including the four below – need a process to prioritize for June LNBA WG Report after Q1 LNBA Decision. Transmission and Sub-transmission The LNBA tool can calculate a Tx deferral in the same way it does for Distribution Requires financial inputs, including project cost, as well as hourly load reduction requirement Per ACR, supposed to use 2015-16 CAISO Transmission Plan; however the plan lacks Specific projects that would be deferred by DERs Cost of those projects Requirements to defer those projects Tool has a generic system-level Tx avoided cost input defaulted to zero, per the default in the NEM Public Tool (consistent with the ACR “Plan B”) Deferring upgrades on network systems may require DERs at multiple locations Current tools don’t enable iterative, system-wide load flow analyses required to determine DER requirements

Demo B Long-Term Refinements - 2 Uncertainty in Planning has impact on LNBA All 3 IOUs observed changes in planned projects due to forecast updates How to capture uncertainty in planned projects and in places without a current project but with some probability of requiring an emergent upgrade Smart Inverter, CVR and VVO These functions rely upon lots of other things happening and require more detailed analysis to evaluate potential, requirements and benefits HOWEVER, since the tool is technology agnostic, these can be incorporated into the DER profile tool input LNBA modeling Enhancements Refine LNBA tool to address situations where one project mitigates overloads at multiple locations “Need” profiles may or may not be “additive”. Improve relationships between profiles and locations

Recommendations WG Final Report should focus on Demo A and B Reports IOUs should have flexibility to choose DER sensitivities to evaluate, if any Sub-transmission should be addressed as a long-term refinement along with transmission LNBA should include only deferrable projects. The Deferral Screens should be applied so that deferral value calculations are performed for relevant projects only Further expansion of LNBA tool should be discussed after the Deferral Screens are approved in Track 3 of the DRP OIR

Appendix

Helpful Acronyms and Definitions DRP = Distribution Resources Plan Name for a 2015 filing & CPUC proceeding (R.14-08-013) DER = Distributed Energy Resource AB 327 defines as distribution-connected EE, ES, DR, EV, DG IDER = Integrated Distributed Energy Resources CPUC Proceeding (R.14-10-003) Formerly IDSR/IDSM LNBA = Locational Net Benefit Analysis Method to identify optimal locations from a benefit perspective ICA = Integration Capacity Analysis Method to identify optimal locations from a hosting capacity perspective

AB 327 added Public Utilities Code Section 769 769. (a) For purposes of this section, “distributed resources” means distributed renewable generation resources, energy efficiency, energy storage, electric vehicles, and demand response technologies. (b) Not later than July 1, 2015, each electrical corporation shall submit to the commission a distribution resources plan proposal to identify optimal locations for the deployment of distributed resources. Each proposal shall do all of the following: (1) Evaluate locational benefits and costs of distributed resources located on the distribution system. This evaluation shall be based on reductions or increases in local generation capacity needs, avoided or increased investments in distribution infrastructure, safety benefits, reliability benefits, and any other savings the distributed resources provides to the electric grid or costs to ratepayers of the electrical corporation. (2) Propose or identify standard tariffs, contracts, or other mechanisms for the deployment of cost-effective distributed resources that satisfy distribution planning objectives. (3) Propose cost-effective methods of effectively coordinating existing commission-approved programs, incentives, and tariffs to maximize the locational benefits and minimize the incremental costs of distributed resources. (4) Identify any additional utility spending necessary to integrate cost-effective distributed resources into distribution planning consistent with the goal of yielding net benefits to ratepayers. (5) Identify barriers to the deployment of distributed resources, including, but not limited to, safety standards related to technology or operation of the distribution circuit in a manner that ensures reliable service. (c) The commission shall review each distribution resources plan proposal submitted by an electrical corporation and approve, or modify and approve, a distribution resources plan for the corporation. The commission may modify any plan as appropriate to minimize overall system costs and maximize ratepayer benefit from investments in distributed resources (d) Any electrical corporation spending on distribution infrastructure necessary to accomplish the distribution resources plan shall be proposed and considered as part of the next general rate case for the corporation. The commission may approve proposed spending if it concludes that ratepayers would realize net benefits and the associated costs are just and reasonable. The commission may also adopt criteria, benchmarks, and accountability mechanisms to evaluate the success of any investment authorized pursuant to a distribution resources plan. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB327

How do DERs Defer T&D Projects and Avoid Cost? Need-based (tied to deferral or elimination of a specific T&D project) DERs push an investment into the future, which reduces cost to ratepayers.

WG Report Recommendations: Proposed Outline Executive Summary Key Takeaways: Use cases Methodology Implementation schedule and requirements Use Cases Methodology Recommendations Evaluation of Results LNBA Implementation Requirements and Time Frame (timing/frequency of updates) Others? Use cases: what improvements needed to achieve these use cases? Make recommendation on by Q2 2017 or further long-term issue? Proposed method by IOUs sufficient? Methodology for ICA translator tool sufficient (For portfolios)