SDG&E Procurement Perspective IEPA 35th Annual Meeting September 21st, 2016 Dan Skopec Vice President, Regulatory Affairs Sempra Energy Utilities

SDG&E’s RPS Position Aug 2015 SDG&E announced it was the first utility in California to have delivered 33% renewable power to its customers over the previous year Source: As filed in SDG&E’s 2016 RPS Plan. Numbers pending review from the CPUC as part of SDG&E’s RPS Compliance Report. 2

SDG&E’s Service Area Peak Load Forecast Mid Case Energy Efficiency SB 350 Energy Efficiency Source: CEC 2015 IEPR data and CPUC 2016 LTPP Planning Assumptions 3

Current Siloed Energy Supply Mandates In addition to RPS, carve-outs require ~800 MW of preferred resources Though small relative to the size of the total portfolio, carve-out costs are material Program pricing exhibits premiums to current solar market pricing of ~$40/MWh and RA pricing of ~$40/kW-year Program Target (MW) Contracted (MW) Resource Pricing Notes RAM 165 63 ~$75/MWh(1) BioRAM 22 5 year contract; reverts to ReMAT price if high hazard fuel target isn’t met ReMAT/FIT 49 17 $105/MWh(2) BioMAT 25 $127-$170/MWh(2) CHP 211 134 ~$200/kW-year(3) DRAM 40(4) 7 ~$100/kW-year(5) Track IV 200-300 38.5 Includes all preferred. Average renewable price in SDG&E portfolio is $102/MWh(1) Based on SDG&E’s 2015 Padilla Report. Based on market adjusting tariffs adjusted by factors such as TOD rates and production profile. Based on E Three’s latest cost avoidance model for turbine technology. Based on California IOU filings regarding 2017 DRAM contract megawatts procured and amount of budgets utilized. Estimated based on maximizing the annual budget for the 3-year pilot, new proposed decision would increase the maximum annual procurement limit to 200 MW. 4

Net Energy Metering Cost Shift 5

Leveraging the IRP IRP could and should move us from a siloed to a holistic planning approach Better for determining “resource need” with all-source RFO determining “optimal mix” Better for accommodating differences in service areas and customers Better for considering reality of decreasing sales and peaks IRP could and should focus planning on achieving goals of SB 350 IRP should provide guidance on resource needs and characteristics and provide a cost- effectiveness benchmark based on economy-wide cost of carbon GHG targets, cost and reliability are inputs and individual resource targets are outputs Siloed resource goals exclude analysis of relative resource values or what combination of resources is best IRP includes principle for cost-shifting protection and equity between LSEs IRP must consider impacts of large load departure and long-term risks associated with procurement portfolio obligations 6

CA GHG Progress Toward Goals Source: www.arb.ca.gov/cc/inventory/data/data.htm Note: Char t shows that from 2008 to 2020, statewide emissions decline by 50% and electric sector emissions decline by 44%.