Resource Adequacy Central Procurement Entity (CPE) IEP Annual Meeting Fallen Leaf Lake, CA September 23-24, 2019

Most Recent CPUC RA Framework Decision: RA Track 2 Decision Indicates preference for central buyer structure; defers designation of central buyer structure to Q4 2019 Adopts a minimum 3-year forward Local RA Requirement beginning with the 2020 RA Compliance Year. Retains 1-year forward System and Flexible RA requirement for all RA Compliance Years Product Type Showing Year [year-ahead/month-ahead]   Year n-1 Year n-2 Year n-3 System RA 90%/100% Local RA 100% 50% Flex RA Confidential pursuant to commission Rule 12.6

Issues re CPE Formation The range of issues identified by parties regarding CPE formation include the following: Scope of Procurement (Full/Residual/Hybrid) Identify of CPE Cost Allocation Mechanism Market Power Mitigation Tools RA Procurement Timeline Oversight Mechanisms Resource Selection Criteria Confidential pursuant to commission Rule 12.6

Range of CPE Options/Structures Broadly speaking, the range of CPE Options/Structures include the following: Full Residual Hybrid Confidential pursuant to commission Rule 12.6

Confidential pursuant to commission Rule 12.6 High-Level Framework Concepts [* Taken from RA OIR Track 2 Workshop #1, April 22, 2019] CPE Procurement Models: Description Full Residual Hybrid Who is responsible for RAR? CPE LSEs/CPE What will the CPE procure? All capacity to meet the local RAR Deficiency above what is voluntarily “shown” to meet the local RAR Can LSEs make local procurement decisions? Yes Can LSEs offer their local resources to the CPE? If an LSE provides local RA, will they receive local compliance credit or revenues? How will costs be allocated? $ if selected by the CPE To be charged directly to customers or LSEs based on load share 1-for-1 MW credit if “shown” by LSE To be allocated to customers or LSEs based on LSEs deficiency (100%) first and excess capacity based to all LSEs on load share. Reduction in overall local RA if “shown” by LSE To be allocated to customers or LSEs based on load share. Confidential pursuant to commission Rule 12.6

Confidential pursuant to commission Rule 12.6 Next Steps? Legislative Discussion to be continued… CPUC Decision on Structure Scheduled for Q4 2019 Confidential pursuant to commission Rule 12.6

Confidential pursuant to commission Rule 12.6 Got It? Any Questions? Grab a beer…! Confidential pursuant to commission Rule 12.6