LNBA Subgroup: Avoided Transmission Value July 19, 2017 Webinar drpwg.org

Overview Long-Term Refinement (June 7 ACR) and Decision 17-09-026 (September 8) IOUs are to serve proposals for modeling and/or methodological approaches to achieve the third use case (use of LNBA in cost-effectiveness evaluation) within 60 days of the Decision (Dec.6) LNBA WG would like to avoid parallel discussion and overlapping comments between the Final Long-Term Refinement Report (due Jan. 8) and comments on the IOUs’ methodology filings (separate Energy Division-led process). The WG submitted proposals and discussion that has been held here may inform the ED-process. This WG final report will also summarize discussion to date for the LNBA deferral use case; however, given upcoming projects and overlapping discussions (e.g., Oakland Chinatown case study), this is not meant to be the primary focus.

Overview Next Steps Written proposals are due Dec. 6. MTS will summarize discussion to date within the WG, and include all written proposals into the Final LTR report in full Opportunities for comments and written responses to proposals on the avoided transmission topic, including comments on the utilities’ proposals due 12/6, will be shifted to the upcoming regulatory process focused on the Track 1 Decision (rather than in the Working Group report comment process), which envisions comment periods and workshops on this LNBA topic. This avoids the need to submit overlapping sets of comments on similar issues

Incorporation of LNBA Avoided Transmission Costs into DERAC LNBA Working Group

Understanding SCE’s Transmission System Mira Loma Lugo Victor Kramer Antelope Magunden Inyokern Vincent Control Rector Big Creek Mead Gene Palo Verde Midway J. Hinds Eagle Mt Alamitos Eldorado ARIZONA NEVADA CALIFORNIA Eastern 20% Metro 51% Devers Valley 7% Whirlwind Ventura 7% Red Bluff Colorado River Big Creek 12% Outer Rural 3%

Impact and Value of DERs on SCE’s Transmission System Category Regions Load and Generation Characteristics Effect of Net Peak Load Reduction Value of Net Peak Load Reduction Import Metro Major load center with limited generation Reduce transmission constraints through reduced imports Positive Value Ventura Isolated load center with limited generation Export/Transfer Outer Rural Limited load and extensive renewable energy development Exacerbate transmission constraints through increased exports Negative Value Ambiguous Big Creek Load and generation both extremely whether dependent Highly varied from year to year Neutral   Valley Limited growth, moderate renewables development Uncertain Eastern

Estimated Avoided Cost Value Regional granularity Locational granularity cannot be specified within a region. Therefore, assume needs, and associated avoided costs, are averaged across region Estimating avoided cost of deferred projects Cannot develop “hypothetical” needs projects based on counterfactual analysis without extensive transmission planning analysis Therefore, use MTC to estimate avoided cost per kW Estimating needs Earlier years: limited deferral opportunity Planned capital dollars are primarily to completed existing projects Fewer anticipated grid needs Later years: More deferral opportunities More needs anticipated throughout the grid Calculating value: Escalating fraction Earlier years: Few needs to be deferred  small average value Assume average avoided cost to be fraction of MTC Later years: Assume needs increase over time. Eventually assume deferrable projects in all locations  larger average value Assume average avoided cost to be full MTC Apply RECC methodology to calculate present value of estimated avoided costs