1. Utility Procurement: What’s Next? IEP 2015 Annual Conference
September 29, 2015
Colin Cushnie
V.P., Energy Procurement & Management
Southern California Edison Company

2. SCE’s Procurement Objectives
SCE’s mission is to safely deliver reliable, affordable and clean energy to our customers
Reliability
Resource Adequacy (RA) – Conducted on behalf of bundled customers
System & Local Area Reliability – “New Generation” contracting conducted on behalf of all wires customers (CAM)
Policy and Compliance
Renewables Portfolio Standard (RPS)
Combined Heat and Power (CHP)
Energy Storage (ES)
Distributed Energy Resources (DERs)
Demand Side is experiencing new developments
Supply Side is just beginning to be developed
Net short financial exposure
SCE’s procurement programs and competitive solicitations are the mechanisms used to ensure we meet the reliability and compliance objectives as defined by the various regulatory entities (i.e. CPUC and CAISO)
Other compliance and policy programs with specific MW targets (to be discussed later in the presentation) include: ReMAT, BioMAT, RAM, SPVP DRAM, Energy Storage

3. SCE Energy Procurement Programs
Recently Completed
LCR RFO
Energy Storage
2013 RPS
CHP 3
PRP 1
SPVP 4
RAM 5
In-Flight
RAM 6
SPVP 5
2014 RPS RFO
Re-MAT
All-Source RA (annual)
PRP 2
Upcoming
2015 RPS RFO
CHP RFO
DRAM
BioMAT
Green Rate*
Enhanced* Community Renewables
Upcoming procurement dates:
2015 RPS RFO Launch: Q4 2015/Q1 2016
CHP 4 RFO Launch Date: Q1 2016
DRAM Launch Date: Q3 2015
Bio-MAT Launch Date: Q4 2015
Green Rate: 50 MW advance procurement via RAM 6. Ongoing procurement is driven by subscription level and procured via annual RPS plan.
Enhance Community Renewables projects will be procured via ReMAT procurement mechanism (i.e. ECR ReMAT PPA rider to take into consideration the differences of the requirements for ECR projects)
* Green Tariff Shared Renewables

4. Significant Recent Procurement Activities
Local Capacity Reliability (LCR) Solicitations
Contracted 1,883 MW of new resources in West LA Basin
Contracted 328 MW of new and refurbished resources in Moorpark
RPS Solicitations
Contracted over 1,500 MW in the 2013 RPS solicitation
2014 RPS procurement is concluding; Advice Letters seeking approval of PPAs underway
2014 Energy Storage (ES) Solicitation
SCE procured approximately 260 MW of ES in its LCR RFO, some of which counted towards SCE’s 2014 CPUC ES procurement target of 90 MW
Contracted 16.3 MW of ES resources to meet the balance of the target
LCR resources were procured per the authorization included in the LTPP (Track 1 and Track 4)
SCE did not procure any resources from the 2011 and 2012 RPS Plan because of our solid position meeting the RPS compliance targets at that time.
The 2013 RPS solicitation resulted in SCE procuring 7 new solar projects and 1 geothermal project representing ~1,539 MW of renewable capacity. All of these contracts have been approved by the CPUC
The 2014 RPS solicitation was very robust and competitive and will help fill our need in the 3rd compliance period and beyond. Total executed so far is 976 MW and 11 PPAs. [TF comment: this number is public because we include it in the executed PPA section of the AL below]
4 Advice letters have been filed: Mesquite (Sempra), Blythe II (NextEra), TKO Enel (small hydro), RE Garland (Recurrent)
Recently announced on September 22nd, SCE selected two energy storage projects totaling 16.3 MW from W Power and Western Grid Development

5. Procurement Targets & Status Prescribed Target/Mandate
Procurement Mechanism
Prescribed Target/Mandate
SCE Procured
Balance Remaining
RAM
787.4 MW
713.6 MW
73.8 MW
CHP
Capacity Target = 1,402 MW
GHG Target = 1,220,000 MT¹
1,400 MW
602,550 MT¹
2 MW
617,450 MT
SPVP
125 MW
98.1 MW
26.9 MW
Energy Storage
580 MW
90 MW1
490 MW
LCR RFO2
West LA Basin = 1,900 – 2,500
Moorpark = 215 – 290
West LA = 1,889 MW
Moorpark = 274 MW
~100 MW3
0 MW
Re-MAT
99.29 MW MW
MW4
¹ SCE has procured approximately 275 MW of Energy Storage through its LCR and 2014 ES RFOs, but the table only reflects the 2014 MW target
² SCE’s LCR RFO consisted of technology targets for Preferred Resources, ES, gas-fired generation and “all source” products
³ SCE’s residual LCR procurement will target Preferred Resources and Energy Storage
⁴ MW balance remaining has increased from the original target due to terminations in the CREST Program

6. SB 350 Provides Additional Market Opportunities
50% RPS by 2030
More contracting options (e.g., use of short-term products across all portfolio content categories)
Establishes a new Integrated Resources Plan process for retail sellers and publicly owned utilities
Beginning 2017, requires comprehensive plans that coordinate renewable procurement with supply side and demand side procurement to reliably integrate renewables and further the achievement of the State’s broader GHG goals of reductions of 40% from 1990 levels by 2030
CAISO Governance
Establishes a process to provide for the evolution of CAISO into a regional organization to promote the development of regional electricity transmission markets in the western states and to improve the access of consumers served by CAISO to those markets

7. Challenges in Meeting Procurement Objectives
Number of procurement programs is increasing
Increased procurement activity for smaller resources
Uncertainty around future market design and rules
Procuring Preferred Resources in specific geographic regions
Distribution and transmission infrastructure and associated interconnection process
Regulatory oversight and timing does not always align with commercial opportunities
Balance sheet and capital lease implications
Special interests
A significant amount of procurement activity includes executing contracts with smaller projects which significantly increases the workload associated with Contract Management, operations, and settlements.
Procuring preferred resources per the loading order in specific geographic regions has proven to be challenging.
Permit requirements are significant for developers to manage and introduce challenges depending on the location/site of the project
Distribution and transmission infrastructure capabilities and build out timing
Regulatory PPA approval delays: Critical to developer and the project milestones; specifically, financing. Also critical for the IOU for cost recovery certainty
The on-going potential for capital lease treatment of resources in SCE procurement portfolio (Assessments are conducted as provisions of new and existing contracts are executed or amended)
Evolving regulatory and legislative actions create opportunities and risk associated with serving SCE’s customers (i.e. CCA migration, ensuring equal rules for all load serving entities, increasing of RPS to 50 %, electric transportation adoption, etc)

8. Regulatory Oversight Regulation
Demand-side Resources
Renewables
Conventional Resources
Regulation
Regulatory oversight becomes more, rather than less, restrictive for higher loading order resources

9. Questions & Answers?