1. MTS Working Group San Francisco F2F Agenda Aram Shumavon and Alan Becker Kevala Dec. 9, 2014

2. 2 2 Revisions to Valuation of DER: Walking, Jogging, Running WalkJogRun Q1, 2015 – H1 20162017- 20202020 and beyond Improved VisibilityUtility Plans and ProductsMature Markets Heatmaps, Test AreasStatewide Rollout of Proven Analytical Framework Market Integration

3. 3 3 Walking - Short Term Revisions to Valuation of DER Focus on granularity and visibility. Methodology Outline: 1) Reduce friction by leveraging existing platforms January 2015 deliverables? 2) Publicly available inputs, assumptions Preference for public prices, etc. – there is not time for anything else. 3)Geospatial quantification Ability to differentiate between the value of the same resource in two locations. 4)Circuit level granularity, where possible; substation where not Combination of feeder and busbar granularity 5)Integrate of bulk power system and end user customer market signals Opex reduction, Capex avoidance, DR benefits, reliability improvement, etc. 6)Start to include a more comprehensive set of benefits Societal, environmental, health, jobs, etc.

4. 4 4 Integrate Disparate Elements Existing Avoided Cost tool has serious limitations Static & blunt, but pervasive Inadequate, but familiar New valuation options are difficult to implement in a quickly e.g. Jobs benefits are likely to be highly contentious Policy makers need a tool to compare across alternatives e.g. Is a dollar spent avoiding a capacitor bank on one substation more valuable than load reduction elsewhere?

5. 5 5 How Then to Bring the Pieces Together? We propose to modify the RMI/E3 DERACT as the basis for AB 327 DRP evaluation by: 1)Increasing the geographic granularity 2)Adding additional benefit cost data 3)Improving ease of use, accuracy, visibility, and speed 4)Providing a framework for developing Jog and Run phase tools 5)Establishing a mechanism for signaling probable evaluation mechanisms to other PUC proceedings

6. 6 6 DRP Avoided Cost: Potential Granularity Upgrades Component Current Granularity (RMI/E3 DERACT)Potential DRP GranularityData Source E3 Framework Energy ZonalLMP NodeCAISO Losses Utility Utilities, GRC Ancillary Services Statewide CASIO Emissions Statewide RMI/E3 DERACT Capacity System value (no use of LRA values)LRA-specificCPUC RA program T&D Capacity (non-CAISO) Utility (SCE, SDGE), climate zone (PGE), (substation data was in NEM report, but not made public) Substation, LRAUtilities, GRC Avoided RPS Statewide RMI/E3 DERACT

7. 7 7 DRP Avoided Cost: Potential Analysis Expansion ComponentCurrentPotential DRP GranularityData Source For WG Consideration Transmission Capacity N/A LRA, Zone(Utility Capacity Projects 5-10 Yr Plans + CPUC assumption on >Yr 10 planning) Energy savings from transmission unloading N/ACRR path, LMP nodesIndustry assumptions (i.e. Sandia NL) Capacity savings from LRA unloadingN/ALRALRA vs. System CAISO prices Fuel Price Hedge  physical hedgeN/AUtility, TEVAR modelNREL assumptions, TEVAR model, GRCs Market-Price Suppression  reduced wholesale energy prices N/AStatewide, CAISONREL assumptions Reliability  Routine OutagesN/AUtility SAIDI statistics + Value of Service assumptions (Brattle Report, etc) Resiliency  Major Event OutagesN/AIndustry assumptions (i.e. DOE) Emissions  Health impactsN/AAir Basin, combination of air basin and LRA Industry assumptions Societal  jobs, etcN/AStatewideIndustry assumptions Additional A/S  Volt/VAr, ramp(?)N/ACircuitIndustry assumptions (i.e. NL)

8. 8 8 Low Hanging Fruit for Localized Valuation Improvements e.g. LMP Node Level analysis is currently integrated for EE avoided cost and various DER investment

9. 9 9 …And the Expansion of New Cost Categories e.g. Air quality geographies are known and market prices are transparent

10. 10 Allowing Us to Leverage Multiple Datasets into a New Avoided Cost Tool Initial incorporation of RMI/E3 DERACT completed. Next steps include sample data integration

11. 11 Leveraging the Familiar : Improved Granularity and Transparency Combining OpEx vs. CapEx breakdown, cost/benefit product, avoided cost tool (if applicable), geography and data source