OVERVIEW OF RPS CALCULATOR FUNCTIONALITY 1

Model Specification Model developed to provide plausible portfolios to CPUC LTPP and CAISO TPP to facilitate planning efforts under future RPS goals Three types of projects are included in the portfolios: – Existing: resources currently in operations – Commercial: planned resources under contract to utilities that have not yet come online – Generic: possible future renewable projects identified through an assessment of statewide renewable potential The RPS Calculator selects generic projects to fill the renewable net short: the difference between the utilities’ compliance obligation and existing/commercial resources 2

Renewable Valuation Module LCOE Transmission Cost Energy Value Capacity Value Curtailment Cost Integration Cost Model Flow Chart 3 Renewable Resource Assessment Biogas Biomass Geothermal Solar PV Solar Thermal Wind RNS Calculation Load forecast Policy assumption Existing projects Commercial projects Renewable Supply Curve Generic projects, ranked by net cost Renewable Portfolio Existing projects Commercial projects Generic projects

Developing a Cost-Based Supply Curve Framework used to develop order of resources in the supply curve closely mirrors Net Market Value calculation used in Least Cost, Best Fit – Intended to capture all cost impacts on utility ratepayers Net resource cost is calculated for all possible generic resources in the model to enable the choice of the least cost resources for the portfolio RPS Calculator Valuation Framework Levelized Cost of Energy Transmission Cost Capacity Value Energy Value Net Resource Cost Integration Cost* − = − Curtailment Cost + 4

Dynamic Valuation Cost & value of renewable generation changes over time due to: – Technological innovation – Financing and tax policies – Portfolio saturation effects – Avoided costs of energy & capacity Unlike prior versions of the RPS Calculator, v.6.0 considers how each of these factors will impact the supply curve of renewables over time 5 Charts are generic and are shown for illustrative purposes

In each year, least-cost resources are selected from the supply curve to fill the renewable net short Resource Selection Supply Curve Renewable Portfolio Least Cost Most Cost Least-Cost Resources Added in First Year RPS Obligation RNS 6

The order of resources in the supply curve adjusts each year as a function of the changing resource mix in the portfolio Iterative Framework Supply Curve Renewable Portfolio Least Cost Most Cost Least-Cost Resources Added in First Year RPS Obligation RNS Added in Second Year 7

Model Control User may select a number of inputs to specify preferences for portfolio development: – RPS policy – In-state/OOS availability – Load forecast – Deliverability type (v.6.1) – Land use exclusions (v.6.1) – Analysis horizon Functionality to save and re- load model runs will be integrated in v Main Model Controls

Illustrative Model Results Model identifies locations and types of resources that can be used to meet RPS policy goals Portfolios developed to achieve compliance in each year of analysis horizon Generic Resources Selected by SuperCREZ Aggregate Renewable Portfolio 9

RENEWABLE NET SHORT 10

Updates to RNS Methodology RNS methodology has been updated for the following purposes: – Eliminate the practice of “discounting” individual projects; all projects with CPUC-approved PPAs now included in portfolio – Use a contractual, rather than physical, accounting in order to better align with IOU procurement – Align with geographic scope used in CAISO TPP – Incorporate system-wide failure rates consistent with current IOU practice – Incorporate year-by-year RNS calculations – Allow for consideration of banked credits in the assessment of need for compliance 11

The Renewable Net Short (RNS) calculation has been revised to better reflect the RNS calculated for RPS procurement Version 6.0  “Net Short” is the difference between the compliance requirement and risk-adjusted generation from all procurement, inclusive of both projects online and in development  Forecast generation from projects in development is adjusted for the risk of project failure Version 6.0  “Net Short” is the difference between the compliance requirement and risk-adjusted generation from all procurement, inclusive of both projects online and in development  Forecast generation from projects in development is adjusted for the risk of project failure Versions  “Net Short” is the difference between the IOU’s RPS compliance requirement and generation from online RPS resources  The “Discounted Core” is a subset of future projects that fill a fraction of the net short Versions  “Net Short” is the difference between the IOU’s RPS compliance requirement and generation from online RPS resources  The “Discounted Core” is a subset of future projects that fill a fraction of the net short Update to Calculation of the RNS Net Short 12

Prior versions of the RPS Calculator specified a subset of commercial projects as a “discounted core” Resource bundling & selection logic in the prior calculator had the potential to create “transmission orphans”: projects deemed by the CPUC to be in the public interest but excluded from portfolios modeled by CAISO in the TPP, creating an obstacle in their development Creation of Transmission Orphans in RPS Calculator v CREZ “Transmission Orphans” in Prior Versions O O O O X X X X Load X Alterative #1: “All” Alterative #2: “Nothing” Transmission Orphan Discounted Core Generic Project 13

Avoiding Transmission Orphans In RPS Calculator v.6.0, the threshold for inclusion in the portfolio has been changed: all projects with a CPUC- approved contract are included in the portfolio This choice prevents the RPS Calculator from acting as an obstacle to project development through exclusion from the TPP’s policy-preferred portfolio This choice reemphasizes the importance of the Least-Cost, Best-Fit and the CPUC approval processes to identify and select resources appropriate for development 14

CALIFORNIA Geographic Scope Geographic scope of RPS Calculator has been altered from the state as a whole to the CAISO to better align with planning processes in which it is used (LTPP, TPP) CAISO PG&E SCE SDG&E BANC Embedded Munis Munis LADWP Munis CALIFORNIA CAISO PG&E SCE SDG&E BANC Embedded Munis Munis LADWP Munis Version 2.0 – 5.0 Geographic Scope TIDC IID Version 6.0 Geographic Scope 15