Electric Vehicle Policy: Role of the Arizona Corporation Commission Patrick LaMere Executive Consultant November 5, 2018

Agenda Role of the Arizona Corporation Commission (ACC) Electric Vehicle History Utility EV Efforts 2018 EE Plans Arizona Energy Standards Modifications to the ACC’s Energy Rules The Rulemaking Process Issue/Concerns

Arizona and the ACC The ACC oversees the electric power industry in Arizona. All electric companies that fall within the jurisdiction of the Arizona Corporation Commission must abide by the rules and regulations of Title 14, Article 2 of the Arizona Administrative Code. Current AZ Policy: Offers PEV access to high-occupancy vehicle lanes and carpool parking spaces Provides tax credits for vehicle purchase and recharger installation 2017: Regional Electric Vehicle Plan for the West

Notable EV Efforts Arizona Public Service (APS) Company’s Application for approval of proposed electric vehicle readiness demonstration project (2010) The Commission decided to not approve the et-READY Study as proposed by the Company, citing uncertainty surrounding market penetration and customer adoption of EVs and the availability of federally-funded EV incentive programs. Lastly filed in 2017: APS files an annual report on the status of EV adoption (in its service territory). Plug-In Electric Vehicle (PEV) Charging Rate Incentive - Tucson Electric Power (TEP) TEP offers a discounted residential service time-of-use (TOU) rate during off-peak periods to customers who own and operate a PEV. The discount is a 5% reduction to applicable charges during the off-peak period. Eligible customers must provide documentation for a highway- approved PEV and submit a copy of the PEV's registration annually. For more information, including the application, see the TEP TOU website.

2018 Energy Efficiency Plan (EE Plan)* Tucson Electric Power, and UNS Electric filed a Supplement to its respective proposed 2018 EE Plan setting forth considerations related towards Electric Vehicle infrastructure programs. Proposed programs: The Smart City EV Buildout Plan, to promote EV and to support the electrification of fleet vehicles; The Smart Home EV Pilot Program, to install charging equipment in new and existing homes; The Smart School EV Bus Pilot Program, which would provide up to 125% of the incremental cost of EV buses, along with charging facilities at qualifying schools and/or school districts; The Regional Electric Vehicle Plan (“REV”), to support the development of EV interstate and highway infrastructure The DERMS program, which is a platform enabling TEP to control and manage EV charging stations. *Currently Pending TEP Docket No. E-01933A-17-0250 UNS Electric Docket No. E-04204A-17-0251 APS DSM Plan Docket No. E-01345A-17-0134

ACC and EV (Timeline) Docket No. E-00000Q-16-0289: Review, Modernization and Expansion of the Arizona Energy Standards and Tariff Rules and Associated Rules. January 30, 2018: The Energy Modernization Plan Proposed by Arizona Corporation Commissioner Andy Tobin Comprehensive update to Arizona’s energy policies to accomplish cleaner energy resources, lower prices for consumers, and greater grid security.  Electric Vehicles - To aid in the strategic implementation, regulated utilities shall propose electric vehicle infrastructure for Corporation Commission consideration July 20, 2018: Commissioner Dunn asks for a new rulemaking docket to explore, develop, and propose possible revisions to current Commission energy-related rules. August 2, 2018: “In the Matter of Commissioner Dunn’s Inquiry Into Electric Vehicles , Electric Vehicle Infrastructure, and the Electrification of the Transportation Sector in Arizona.” (Docket No. E-00000J-18-0266) On October 9, 2018, Staff filed a Memo to administratively close the docket. EV to be considered in Docket No. RU-00000A-18-0284, opened on August 17, 2018

Arizona Energy Standards August 2018: Commissioners voted to move forward with the informal rulemaking process on the review, modernization, and expansion of the Arizona Energy Standards. In the Matter of Possible Modifications to the Commission’s Energy Rules (Docket No. RU-00000A-18-0284) Subjects Considered: Renewable Energy Standard and Tariff Rules Electric Energy Efficiency Standards Rules Gas Utility Energy Efficiency Standards Rules Resource Planning and Procurement Rules Net Metering Rules Interconnection of Distributed Generation Facilities Electric vehicles Technological Developments in Generation and Delivery of Energy Forest Bioenergy Baseload Security The Statutory Biennial Transmission Assessment  Retail Electric Competition Rules Blockchain technology

The Rulemaking Process Action/Event Date (Standard) Date (Complex) ACC files to open a docket for possible rulemaking *Written Comments may be filed by stakeholders for review Day 1 ACC Staff develops draft of potential rules 6 Weeks 16 Weeks Informal comments request by Staff and revisions to draft incorporated: Staff may host workshops to discuss rules Administrative Law Judge (ALJ) reviews rules for technical considerations Economic Impact Statement developed Staff dockets Proposed Order with revised draft rules attached, to obtain Commission Decision authorizing Staff to file, with the Office of the Secretary of State, a Notice of Proposed Rulemaking and Notice of Rulemaking Docket Opening. Also included: Dates/Times of Oral Proceedings Summary of stakeholder comments and workshops Commission Decision Issued Open Meeting (Within 1 Month) Publication in the Arizona Administrative Register (“A.A.R.”) Staff dockets Economic Impact Statement Publication starts Formal Comment Period 3 Weeks

The Rulemaking Process (Continued) Action/Event Date (Standard) Date (Complex) Formal Comment Period Staff responds to formal comments filed: 10-15 days 30 Days 30-60 Days Oral Proceedings begin following formal comment period Held in Phoenix and Tucson Transcripts typically available within 10 days 1 day 1-2 days Staff dockets summary of all comments 20 Days 20+ Days ALJ issues Recommended Opinion and Order (“ROO”) ROO can recommend the Commission go forward with the process or terminate the rulemaking ALJ may determine need for substantial change to proposed rules 60 days 90 Days Commission considers ROO at Open Meeting. If Commission Decides to move forward, Staff files a Notice of Final Rulemaking to the Attorney General or SOS. Open Meeting (Within 1 Month) Rules become effective (Days may differ depending on constitutional ratemaking authority. 60 Days (Max) Duration of the Rulemaking Process from Docket Opening to Effective Date ~400 days ~550 days

Issues/Concerns Rate Structures to handle EV: EV charging patterns Fixed rate tariff: Energy-based residential rate structure for customers using EVs. Time-of-use (TOU) tariff: In this scenario, the utility seeks to influence customer behavior through rates that incentivize EV charging during off-peak hours, such as overnight, to help mitigate potential negative impacts on distribution systems. EV managed charging: This scenario allows a utility or third party to remotely control vehicle charging — turning a charger up, down or even off — to better correspond to the needs of the grid, much like traditional demand response programs. Cost Recovery (EV Infrastructure) Electrification and Energy Efficiency Potential impacts on the distribution system Market Penetration of new EV users Clustering, Feeder upgrades (upgrades to distribution system) Designing programs and services that meet the needs of their EV customers (Community Engagement, Stakeholder Opportunities) The need for Rules; Timeline Consideration of the Rulemaking Process

Arizona Corporation Commission THANK YOU Patrick LaMere (602)542-4382 plamere@azcc.gov @corpcommaz @corpcommaz Arizona Corporation Commission