Common use of CONSISTENCY WITH 2012 RPS PROCUREMENT PLAN Clause in Contracts

CONSISTENCY WITH 2012 RPS PROCUREMENT PLAN. This section discusses whether PG&E’s evaluation and selection methodology is consistent with its final 2012 renewable energy procurement plan. The finding is that, overall, the methodology as documented in the 2012 RPS solicitation protocol is consistent with the approved plan. • The procurement goal for the 2012 solicitation is consistent with that stated in the plan of adding 1,000 GWh/year through new long-term contracts; • The solicitation accepts Offers both from new projects and from existing, operating facilities, and does not apply an explicit preference to either. (An existing, operating facility that does not propose major modifications will score higher than a proposed new resource using the Project Viability Calculator, but that is a natural attribute of the project as opposed to an intentional selection bias.) As stated in the approved plan, PG&E is not seeking short-term transactions that will fail to contribute to RPS needs beyond 2020. The RFO protocol states a minimum contract term of ten years and used an adjustment to valuation that advantaged proposals with delivery terms of ten to fifteen years. Also, as stated in the plan, PG&E envisaged long-term Offers from existing contracted RPS facilities whose PPAs do not expire in the near term; a portion of the outreach for the solicitation targeted such existing projects. • The plan indicates that the 2012 RFO would seek products that enable PG&E to comply with its Resource Adequacy requirements. The public protocol states PG&E’s preference for projects that are fully deliverable (as opposed to energy-only or partially deliverable). The valuation methodology rewards fully deliverable projects with higher values, as long as the delivery network upgrade cost to achieve full capacity deliverability status does not exceed the estimated value of RA capacity. • The plan expresses a preference for long-term contracts that begin deliveries in 2019-2020, which is when PG&E current anticipates a need to augment its existing RPS portfolio. The valuation methodology has an adjustment which discounts the benefit of projects that commence deliveries earlier than the beginning of 2019. • The plan also states that PG&E will be procuring long-term volumes with initial delivery dates “no later than the latter part of the third compliance period.” This element of the plan is intended to help ensure RPS compliance both within the third compliance period and after 2020. However, there is no specific element of PG&E’s methodology that xxxxxx selection of or discounts the value of Offers whose delivery starts after the end of the third compliance period. To the contrary, Xxxxxx believes that the tendency of the valuation methodology, with the inputs that PG&E has chosen, is to assign higher values to long-term Offers with even later on-line dates, all else being equal. In the actual event, as described in a later chapter, ' and PG&E chose not to shortlist such Offers. • The plan also states a preferences for projects sited within PG&E’s service territory. The valuation methodology has adjustments which discount the value of Offers from projects sited outside the service territory. • New in 2012, the plan calls for an adjustment to the value of contracts whose projects provide intermittent generation that varies over time. The valuation methodology now applies a discount for intermittent resources such as wind and solar photovoltaic generation. The effect is to assign a premium to firm resources that more reliably match their stated daily delivery profile. In prior RFOs this was addressed within a standalone metric for portfolio fit. That metric has been eliminated and replaced with adjustments to calculate Portfolio-Adjusted Value. Xxxxxx believes that the new approach adequately takes into account a project’s characteristics related to portfolio fit preferences regarding RPS compliance needs, energy firmness, and geographical location. • The plan states a preference for Offers from projects with characteristics meriting a higher viability score. The solicitation protocol indicates that Project Viability Calculator score will serve as one of the criteria for evaluation and selection and that the utility will evaluate the viability of each Offer using the Calculator. • The final procurement plan identifies the integration cost assumption as zero as directed by the CPUC; the methodology assumes a zero integration cost adder. • The plan states a preference for Category 1 product over Category 2 product and that over Category 3 product. This preference is stated in the solicitation protocol; the valuation methodology itself does not specifically distinguish Offers by category so the PG&E team must consciously make separate decisions about selections within each category. • The plan states PG&E’s preference for projects that have less uncertainty about their cost impact, such as new generators that have a completed Phase II interconnection study. The evaluation methodology assigns projects with an executed SGIA or completed Phase II study a higher project viability score than those with only a completed Phase I study or equivalent, and this year PG&E required all Offers for new projects to have at least a Phase I study. The solicitation protocol states that project viability has the greatest qualitative impact on Offer ranking (among non- quantitative criteria). • Both the plan and the solicitation protocol convey PG&E’s expectation that the team will use project-specific cost estimates drawn from interconnection studies to estimate transmission adders in the valuation process, but that PG&E reserves the possibility of using Transmission Cost Ranking Report estimates if appropriate. In summary, PG&E’s methodology aligns very closely with its 2012 RPS procurement plan, and is overall consistent with the plan’s stated needs and preferences, requested products, and specification of portfolio fit. The one exception noted above is the plan’s suggestion that initial delivery dates for long-term contracts would not be allowed beyond 2020, which is not explicitly stated in the solicitation protocol or addressed specifically in the methodology. In implementing its methodology, PG&E dealt with this by omitting from its final short list any proposals with initial delivery after 2020.

CONSISTENCY WITH 2012 RPS PROCUREMENT PLAN. This section discusses whether PG&E’s evaluation and selection methodology is consistent with its final 2012 renewable energy procurement plan. The finding is that, overall, the methodology as documented in the 2012 RPS solicitation protocol is consistent with the approved plan. • The procurement goal for the 2012 solicitation is consistent with that stated in the plan of adding 1,000 GWh/year through new long-term contracts; • The solicitation accepts Offers both from new projects and from existing, operating facilities, and does not apply an explicit preference to either. (An existing, operating facility that does not propose major modifications will score higher than a proposed new resource using the Project Viability Calculator, but that is a natural attribute of the project as opposed to an intentional selection bias.) As stated in the approved plan, PG&E is not seeking short-term transactions that will fail to contribute to RPS needs beyond 2020. The RFO protocol states a minimum contract term of ten years and used an adjustment to valuation that advantaged proposals with delivery terms of ten to fifteen years. Also, as stated in the plan, PG&E envisaged long-term Offers from existing contracted RPS facilities whose PPAs do not expire in the near term; a portion of the outreach for the solicitation targeted such existing projects. • The plan indicates that the 2012 RFO would seek products that enable PG&E to comply with its Resource Adequacy requirements. The public protocol states PG&E’s preference for projects that are fully deliverable (as opposed to energy-only or partially deliverable). The valuation methodology rewards fully deliverable projects with higher values, as long as the delivery network upgrade cost to achieve full capacity deliverability status does not exceed the estimated value of RA capacity. • The plan expresses a preference for long-term contracts that begin deliveries in 2019-2020, which is when PG&E current anticipates a need to augment its existing RPS portfolio. The valuation methodology has an adjustment which discounts the benefit of projects that commence deliveries earlier than the beginning of 2019. • The plan also states that PG&E will be procuring long-term volumes with initial delivery dates “no later than the latter part of the third compliance period.” This element of the plan is intended to help ensure RPS compliance both within the third compliance period and after 2020. However, there is no specific element of PG&E’s methodology that xxxxxx selection of or discounts the value of Offers whose delivery starts after the end of the third compliance period. To the contrary, Xxxxxx believes that the tendency of the valuation methodology, with the inputs that PG&E has chosen, is to assign higher values to long-term Offers with even later on-line dates, all else being equal. In the actual event, as described in a later chapter, ' and PG&E chose not to shortlist such Offers. ' • The plan also states a preferences for projects sited within PG&E’s service territory. The valuation methodology has adjustments which discount the value of Offers from projects sited outside the service territory. • New in 2012, the plan calls for an adjustment to the value of contracts whose projects provide intermittent generation that varies over time. The valuation methodology now applies a discount for intermittent resources such as wind and solar photovoltaic generation. The effect is to assign a premium to firm resources that more reliably match their stated daily delivery profile. In prior RFOs this was addressed within a standalone metric for portfolio fit. That metric has been eliminated and replaced with adjustments to calculate Portfolio-Adjusted Value. Xxxxxx believes that the new approach adequately takes into account a project’s characteristics related to portfolio fit preferences regarding RPS compliance needs, energy firmness, and geographical location. • The plan states a preference for Offers from projects with characteristics meriting a higher viability score. The solicitation protocol indicates that Project Viability Calculator score will serve as one of the criteria for evaluation and selection and that the utility will evaluate the viability of each Offer using the Calculator. • The final procurement plan identifies the integration cost assumption as zero as directed by the CPUC; the methodology assumes a zero integration cost adder. • The plan states a preference for Category 1 product over Category 2 product and that over Category 3 product. This preference is stated in the solicitation protocol; the valuation methodology itself does not specifically distinguish Offers by category so the PG&E team must consciously make separate decisions about selections within each category. • The plan states PG&E’s preference for projects that have less uncertainty about their cost impact, such as new generators that have a completed Phase II interconnection study. The evaluation methodology assigns projects with an executed SGIA or completed Phase II study a higher project viability score than those with only a completed Phase I study or equivalent, and this year PG&E required all Offers for new projects to have at least a Phase I study. The solicitation protocol states that project viability has the greatest qualitative impact on Offer ranking (among non- quantitative criteria). • Both the plan and the solicitation protocol convey PG&E’s expectation that the team will use project-specific cost estimates drawn from interconnection studies to estimate transmission adders in the valuation process, but that PG&E reserves the possibility of using Transmission Cost Ranking Report estimates if appropriate. In summary, PG&E’s methodology aligns very closely with its 2012 RPS procurement plan, and is overall consistent with the plan’s stated needs and preferences, requested products, and specification of portfolio fit. The one exception noted above is the plan’s suggestion that initial delivery dates for long-term contracts would not be allowed beyond 2020, which is not explicitly stated in the solicitation protocol or addressed specifically in the methodology. In implementing its methodology, PG&E dealt with this by omitting from its final short list any proposals with initial delivery after 2020.