City Council April 30, 2018 Item 13 Amend Regulation 23 to Require New Self-Generation Interconnections to Utilize Only Renewable Fuel Sources City Council April 30, 2018 Item 13

Recommendation Adopt Resolution to Amend Interconnection Requirements - Regulation 23 Require New or Modified Customer-Owned Self-Generation to be Renewable Resource CEC “Renewable electrical generation facility” definition Initial and annual certifications required for biofuels Would apply to capacity increase or replacement of existing self-generation Would not apply to “as-is” existing self-generation - renewable or emergency back-up resources Other technical and language changes CAP - Prohibit fossil fueled generation at customer’s premises Effective May 1, 2018 (Day after City Council adoption) Recommendation endorsed by EAC on April 10th Interconnection Agreements cover technical requirements, liability provisions, and other terms and conditions related to the physical connection and operation of distributed resources that connect to PWP’s electrical grid. There is no purchase or sale of goods or services under such interconnection agreements, and they do not provide for delivery of electricity to or from the interconnected resource or customer. The terms and charges associated with delivery of electricity to or from the interconnected resource (“pricing provisions”) are defined in the applicable section of the Light and Power Rate Ordinance described above. As the role of distributed resources expands in the future, additional rate schedules or separate power purchase agreements may be authorized by the City Council to establish new pricing provisions.

Outreach Met With Large Customers Large Customer Group meeting February 21 Chamber of Commerce Individual customer meetings February through April MSC Information Item – January 9, 2018 EAC Action Item - April 10, 2018

What is Distributed Generation? Power Generated at the Point of Consumption Customer Side of Meter (Self-Generation) Primarily serves on site customer load Net metered rate (qualifying renewables) Self-generation rate (other resources) Utility Side of Meter (none currently): PWP-owned small generators Feed-in-tariff, community solar Proposed Amendment

Regulation 23 Applies to All Customer-Owned Generation Facilities Technical Requirements and Conditions to Interconnect with PWP Distribution Grid Standards Ensure that Safe and Reliable Electric Operation Can Be Accomplished Requires Customer-Generator to Sign Interconnection Agreement with PWP Both Reg 23 and Ordinance require customers to sign an interconnection and metering agreement.

Typical Types of Self-Generation Renewables as Defined by State No Change Examples Photovoltaic Solar Systems Wind Biogas fueled fuel Cell, micro turbine Emergency Backup Generation Diesel or gasoline fueled engines Fossil-Fueled Propose to Discontinue Examples: Diesel, gasoline or natural gas  Self-Generation Engine Types Internal combustion Microturbines Steam turbines Combustion turbines Cogeneration CT/SG Fuel Cells

Fossil Fueled Self-Generation Issues Environmental Impacts Operates and emits continuously GHG emissions Local air pollution NOx, VOCs, CO Cost Shift to Other Customers PWP obligated to maintain infrastructure and back-up capacity to provide power “On-Demand” Insufficient cost recovery under current rates Grid infrastructure and distribution services Backup generation, RA capacity, Load balancing Rate restructuring is next step so as to have fair and equitable rates for services and products provided or received by PWP.

Typical GHG Emission Rates DG can have lower emissions per MWh produced DG runs continuously Local plant runs about 5% of the time Far less total GHG Generator Type Tonnes* per MWH DG - Fuel Cells 0.41 - 0.47 DG - Microturbines 0.6 - 1.7 Large Combined Cycle Plant 0.36 - 0.40 PWP Local Generation Avg 0.60  Tonnes = Metric Tons 1,000 kg ~2,205 pounds

2017 Local Generation (MW) 173 MW PWP Generation 76,375 MWh 20 MW DG Produces ~167,000 MWh

GHG Emissions - 2017 (tons)

Policy Change / Benefits Prohibit Interconnection of Customer-Owned Fossil-Fueled Self-Generation Resources Require Self-Generation to Maintain Good Power Factor for Customer Load Benefits - Will Reduce Future Increases In: Natural gas demand GHG emissions (supports CAP goals) Local air pollution Rates for customers without self-generation As the City currently processes 200-300 Interconnection Agreements a year, the recommended actions are intended to streamline the contracting process to reduce administrative burden and cost, improve the customer experience.

Change in Application Process Regulation 23 to Include Application Expiration Application will remain active for 12 months after it is accepted by PWP as “completed” Application will expire if project has not received authorization to operate in 12 months General Manager may authorize a twelve month extension if construction is substantially advanced

Backup slides follow

Daily Generation – 2017 (MWh)

20 MW Customer-DG Produces ~167,000 MWh DG Runs When Not Needed 76,375 MWh 173 MW PWP Generation (2017) 20 MW Customer-DG Produces ~167,000 MWh Offsets ~40,000 MWh PWP Generation Produces ~127,000 MWh Excess Generation

Rate Treatment Net Energy Metering (NEM)- Renewable generating facilities such as PV and wind Self-Generation Service (Schedule SG) Non-renewable generating facilities Both Reg 23 and Ordinance require customers to sign an interconnection and metering agreement.