2010 Long-Term Procurement Plan 33% RPS Calculator Training California Public Utilities Commission January 7, 2011

Proceeding status and scope of today’s training Scenario creation methodology and role of Calculator Significant changes since June draft Updated results Introduction to Model –Control Panel –Results –Selected_byYear and DeliveredAndNQC_byYear –Inputs – where they are and how to adjust –TxInputs –Output Module Examples: “How do I…?” Agenda 2

3 Proceeding Status December 3 Scoping Memo requires IOUs to file long- term procurement plans that accommodate seven RPS scenarios: –Trajectory: 20%, 33%; 33% High Load; 33% Low Load –33% Environmentally-constrained –33% Cost-constrained –33% Time-constrained Next step: Utilities file required scenarios with plans; utilities and parties file alternative scenarios Schedule for Phase 1 will change; stay tuned

4 Scope of Today’s Training Today: a training on the 33% RSP Calculator used to create the 7 required scenarios, to help parties: –Understand the inputs and methodology that resulted in the required scenarios –Identify inputs and assumptions that drive the Calculator’s results –Learn how to use the Calculator to test the impact of different inputs, assumptions, and methodologies and create alternative scenarios Not in scope: why the Commission adopted particular standardized planning assumptions, or how party comments on the draft assumptions were considered

5 Proceeding status and scope of today’s training Scenario creation methodology and role of Calculator Significant changes since June draft Updated results Introduction to Model –Control Panel –Results –Selected_byYear and DeliveredAndNQC_byYear –Inputs – where they are and how to adjust –TxInputs –Output Module Examples: “How do I…?” Agenda

General Approach Determine renewable resource gap (GWh) in 2020 Compile database of resources available to meet RPS target Rank available resources based on cost, commercial interest, environmental sensitivity and timeline Select resources to fill renewable resource gap 6

Renewable Net Short , 20% RPS2020, 33% RPS Renewable Generation (TWh) Existing ResourcesRPS Net Short 7

8 Approach to Scenario Development RPS generation under contract or negotiation w/ CA by Q Discounted Core Cost- constrained Scenario Time- constrained Scenario Environmentally- constrained Scenario Trajectory Scenario Balanced Scenario? RPS generation delivering to CA by Q % of 2020 Retail Sales

Sources of New Resources to Fill Net Short 1.Commercial Projects –ED Database of IOU projects –POU procurement plan data obtained from CARB 2.Additional “Theoretical” Projects –RETI pre-identified and proxy projects for California –WREZ projects for the rest of the WECC 3.Original Renewable DG resource potential estimates –Developed as part of 2010 LTPP 9

Transmission and Geographic Classification of Resources Each resource is assigned one of three classifications: 1.CREZ: resources located within one of the 48 Competitive Renewable Energy Zones (either in California or in other states) 2.Non-CREZ: resources in California or directly across the border that are not located within a CREZ and can be delivered with minor transmission upgrades 3.Out-of-State REC: out-of-state resources that would deliver energy to the local market 10

Out-of-State RECs Default assumption is no limitation on OOS RECs RECs are unbundled –Energy and Capacity (if applicable) are sold into the local market –Reflects the economic reality of a variety of proposed REC treatments REC Resources are assumed to be lower quality, near existing transmission Even without restriction, REC penetration tops out at 31.5% (in the Timeline Case) 11

Existing/Planned Transmission Capacity CAISO identified existing and planned transmission that could deliver renewables to load 12

Project Scoring Methodology Each project is scored on a scale based on four metrics (0 is better): –Net Cost Score –Environmental Score –Commercial Interest Score –Timing Score Final score used to rank a project for any one scenario is a weighted average of the four individual metrics –Weights are user-defined and vary by scenario 13

Resource Selection Methodology 1.Calculate project score for each resource 2.Allocate lowest cost out-of-state theoretical projects to other states until all non-CA WECC RPS targets for 2020 are satisfied 3.Rank remaining CREZ projects and select to fill transmission bundles 4.Calculate aggregate score for each transmission bundle 5.Rank transmission bundles against individual non-CREZ and REC resources 6.Select resources and bundles to meet 33% RPS target in

Sort for Local Use Potential CREZ Resources Potential Non-CREZ and REC Resources Sort for CA Use as RECs Sort for CA Use Towards RPS Resources Remaining After Local Sort Sort for Existing Tx Resources on Existing Transmission Resources Remaining After Existing Tx Sort Sort for New Tx New Transmission Bundles Resources Remaining After Local Sort Non-CREZ and REC Resource Rankings Resources Selected for Local Use Resources Selected for CA RPS Portfolio 15

Cost score is based on a modified version of the RETI Ranking Cost Includes integration and T&D avoided costs Scores are converted to 0 – 100 scale, bounded by the model’s lowest and highest net cost resources Modified RETI Ranking Cost +Levelized cost of energy +Interconnection (gen-tie) costs +Deemed integration costs +Levelized, per-MWh incremental transmission costs –T&D avoided costs –Energy value –Capacity value =Final project ranking cost Net Cost Score 16

17 Handicaps resources in areas where environmental issues might hinder development Considers a variety of factors: –Disturbed lands –Right-of-Way –Significant species –Air quality –Others Weights scores by land use per GWh generated Environmental Score

Commercial and Timing Scores Commercial Score: Scale of reflecting contracting activity of California utilities –Commercial projects receive a score of 0, while generic projects receive a score of 100 –POU-planned projects considered “Commercial” and receive score of 0 Timing Score: Gives better score to resources that can be developed on a relatively short time scale –Online date 2021 gets 100 –For ED database projects with contracts filed at Commission, dates based on expected Commercial Online Date in contract; if date has passed, assigned 2014 –For other resources, dates based on size and type of project 18

Selection of RPS Portfolio Each transmission bundle is assigned an aggregate score based on an average of the constituent resources and compared against individual non- CREZ and RECs resources Discounted Core Projects are selected first unless in New Transmission bundle After Discounted Core, resources & bundles with the lowest score are selected to fill the 2020 RPS gap 19

20 Scenario Score Weightings 20 Scenario Cost Weight Commercial Weight Environmental Weight Timing Weight Trajectory20%60%20%0% Cost-Constrained100%0% Environmentally- Constrained 0% 100%0% Time-Constrained0% 5%95%

21 Proceeding status and scope of today’s training Scenario creation methodology and role of Calculator Significant changes since June draft Updated results Introduction to Model –Control Panel –Results –Selected_byYear and DeliveredandNQC_byYear –Inputs – where they are and how to adjust –TxInputs –Output Module Examples: “How do I…?” Agenda

22 Significant Changes since June Draft Three additional scenarios: Trajectory Low and High Load; 20% RPS by 2020 Trajectory New net short calculation to reflect levels of EE, CHP, customer-side DG adopted in Scoping Memo Resource and cost assumptions: Updated NQC values for small generators, biomass, wind, geothermal Reduced biomass potential in NW and CA Added NOx Permit Costs for relevant biomass resources. Fixed discrepancies in modeled amounts of small solar potential Fixed pro forma to calculate CA averages rather than U.S. averages Updated average cost of transmission line upgrades in CA to reflect new line costs in the model.

23 Significant Changes since June Draft (cont’d) Local RPS builds now based on cost only, rather than criteria used to sort in California Model capabilities: Addition of switch between thin-film and conventional tracking PV as default for utility scale solar installations Inclusion of Solar Pro Forma costing tool – recognizes financing differences between solar and non-solar resources Added DC line configurations to Wyoming and Montana Timing assumptions updated to generally reflect longer development timeframes; 18 month lag added between transmission completion and generation availability Environmentally scoring significantly revised: additional RETI criteria re-instated, and land use more directly considered

Known Issues with Model Model does not account for all “committed” transmission capacity –Sunrise is not assumed to be filled in all cases Model does not correctly consider renewable resource degradation –Model does not select enough resources to meet 33% in 2020 –Assigns too much NQC value to renewables Pro forma models for solar PV and other renewables are not consistent –State tax assumptions, financing, ITC, debt tenor –Undue cost advantage (~10%) for PV relative to other resources 24

25 Proceeding status and scope of today’s training Scenario creation methodology and role of Calculator Significant changes since June draft Updated results Introduction to Model –Control Panel –Results –Selected_byYear and DeliveredandNQC_byYear –Inputs – where they are and how to adjust –TxInputs –Output Module Examples: “How do I…?” Agenda

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Environmentally- Constrained Scenario Trajectory Scenario 29

Time-Constrained Scenario Cost-Constrained Scenario 30

31 Proceeding status and scope of today’s training Scenario creation methodology and role of Calculator Significant changes since June draft Updated results Introduction to Model –Control Panel –Results –Selected_byYear and DeliveredandNQC_byYear –Inputs – where they are and how to adjust –TxInputs –Output Module Examples: “How do I…?” Agenda

32 Model Schematic a – Control Panel b - Controls c – Financing Inputs d – General Inputs a – ProForma a – ProFormaCalc a – ProFormaCalcPV z - Results u – SupplyCurve_byBundle v – SelectedAllResources w – SelectedCommProj x – SelectedDiscCore y – Selected_byYear y – DeliveredAndNQC_byYear s – BundleBuildup_NoTx t – BundleSupplySortCalcs i – CommProjData j – GenericProjData f – RPSNetShortCalc e – LoadsAndResources h – EnviroScores g – TxInputs zz – Cost Impacts Input Data and Parameters Resource Sorts Results

Resource Sorts n – ProjRanks_ExistingTx l – GenericProjRanksk – CommProjRanks o – ProjRanks_NewTxn – ProjRanks_non-CA_USE All eligible resources Remaining for CA All eligible resources Remaining for New Tx q – SupplySortCalcsp – BundleBuildup_TxLines Remaining Non-REC Resources All Remaining Resources REC Resources Delivered over Existing Tx r – SupplyCurve_byProject Minor Upgrades New Tx Model Flow

34 Proceeding status and scope of today’s training Scenario creation methodology and role of Calculator Significant changes since June draft Updated results Introduction to Model –Control Panel –Results –Selected_byYear and DeliveredandNQC_byYear –Inputs – where they are and how to adjust –TxInputs –Output Module Examples: “How do I…?” Agenda

35 Staff contact on RPS inputs to the Long-Term Procurement Plan: Anne Mills Energy Division, CPUC LTPP website: Contact Information