Challenges in Building Transmission in California Power Association of Northern California P.J. Martinez VP, Engineering Pacific Gas & Electric Company September 8,

2 Pacific Gas and Electric Company - Overview Headquarters Location San Francisco, CA Service Area 70,000 square miles in northern and central California Service Area Population 15 million people (or about 1 of every 20 Americans) Distribution Customer Accounts 5.1 million electric, 4.3 million gas Employees Approximately 20,000 System  159,364 miles of electric transmission and distribution lines  48,198 miles of natural gas T&D pipelines  6,900 megawatts of generation, including Diablo Canyon nuclear power plant, Helms pumped storage plant, and one of the largest hydroelectric systems in the country

Challenges and Drivers  Challenges to Building Transmission –Permitting and Siting –Multiple Planning Processes –Construction  Main Drivers for Transmission –Reliability –Renewable Portfolio Standards 3

Reliability PG&E continues to strengthen and modernize its electric transmission grid. - Two-fold increase since Replace aging Infrastructure -Improve service reliability -Automate operation, SCADA and improve system protection -Modernize design and configurations -Connect new generation and accommodate aging generation retirement -Meet demand increase PG&E Capital Spend on Reliability Projects Forecasted 4

Renewable Portfolio Standard - CA State Impacts -Increased Import Capability -Lower System Losses -Access to new renewable resources -Improved Reliability -CA State Challenges -Concentration of SoCal resources -Intermittency Issues -Resource Planning – LGIP -Transmission permitting -Regional Challenges -Increase of out of state transfers -Need for broader coordinated planning process -Treatment of economics, reliability, operational benefits 5

Large Generator Interconnection Process (LGIP)  Transition to improved interconnection process is ongoing  Results of Phase 1 of LGIP –Assessed needed network upgrades –108 projects evaluated totaling 39,000 MW –Billion in system upgrades  Key Issues –Number of projects in the process –Security postings – CAISO stakeholders working on improvements –Recommendations to CAISO Board on Sept. 11 6

Process Challenges  Industry ability to plan, approve, and build necessary transmission.  Multiple Jurisdictions and Processes –CAISO –MUNIs –CPUC Permits –CEC Permits –WECC TEPPC –FERC  Meeting Challenges by –Understand limitations of existing process –Streamline process to minimize duplication –Objective on results that facilitate project progress 7

Oregon Malin Captain Jack California Gates Diablo Midway Tracy Vincent Tesla Moss LandingLos Banos Vaca Dixon Round Mt Metcalf Olinda Table Mt Gregg Bellota  PG&E collaborating on planning to develop a statewide transmission plan. Near and long term efforts include: –RETI –CTPG –CAISO –TEPPC  PG&E proactively focused on transmission line projects to meet renewables targets. –Canada – Northern California –C3ETP –Carrizo Plains –SCE projects in SoCal PG&E Plan & Vision To British Columbia Canada - NorCal C3ETP Carrizo Plains 8

Conclusion PG&E is optimistic that together with the State and all stakeholders California will both: - Build the necessary transmission for the States future and - Develop an effective planning process 9