Common use of DISCUSSION OF MERIT FOR APPROVAL Clause in Contracts

DISCUSSION OF MERIT FOR APPROVAL. In Arroyo’s opinion, the 83WI 8ME contract merits CPUC approval: • The contract price (after adjustment for time-of-delivery factors) ranks low when compared to all Offers received in PG&E’s 2012 RPS solicitation, and ranked low among the shortlisted proposals that PG&E considered for execution. • PG&E’s estimate of Portfolio-Adjusted Value ranks the contract as high compared to all 2012 Offers; it ranks moderate in PAV within the short list that PG&E considered for contract execution. Arroyo’s independent analysis ranks the contract as high in net value when compared to all 2012 Offers. • In Arroyo’s opinion, the proposed Midway Solar Farm I facility ranks as moderate in project viability. Its developers do not yet have experience developing, constructing, or owning, operating, and maintaining a single solar photovoltaic facility as large as 50 MW. However, European affiliates of GASNA have considerable experience bringing smaller solar PV projects into operation, the facility has obtained its interconnection agreement from IID and its conditional use permit from Imperial County, and does not face serious impediments to obtaining required network upgrades. Xxxxxx believes that Midway I should reasonably be able to meet its guaranteed commercial operation date. • The PPA ranks moderate to high in portfolio fit when compared to all 2012 Offers when using PG&E’s metric for adjusting PAV for timing of contribution to RPS compliance needs. • The project will be sited near a community afflicted with high unemployment, high poverty rates, and high emission levels. Overall, Arroyo’s opinion is that the 83WI 8ME contract merits CPUC approval based on superior pricing, moderate to high value, and moderate project viability. PG&E Gas and Electric Advice Filing List General Order 96-B, Section IV 1st Light Energy Xxxxxxxx & Xxxxxxx OnGrid Solar AT&T Xxxxxx & Brand Pacific Gas and Electric Company Xxxxxxxx & Xxxx LLP Xxxxxxx Xxxxxxxxx & Xxxxxx LLP Praxair Xxxxxxxx & Xxxxx X. X. Xxxxxx & Xxxxx. Regulatory & Cogeneration Service, Inc. BART GenOn Energy Inc. SCD Energy Solutions Xxxxxxxxx & Xxx, Inc. GenOn Energy, Inc. SCE Xxxxxx Xxxxx Associates Goodin, MacBride, Xxxxxx, Xxxxxxx & Xxxxxxx SDG&E and SoCalGas Xxxxx Xxxxxxxx XxXxxxxxxx, X.X. Xxxxx Power Institute XXXXX CENERGY POWER Xxxxx & Xxxxxx San Francisco Public Utilities Commission California Cotton Ginners & Growers Assn In House Energy Seattle City Light California Energy Commission International Power Technology Sempra Utilities California Public Utilities Commission Intestate Gas Services, Inc. SoCalGas California State Association of Counties K&L Gates LLP Southern California Edison Company Calpine Xxxxx Group Spark Energy Xxxxxx, Xxxxx Xxxxx Sun Light & Power Center for Biological Diversity Los Angeles Dept of Water & Power Sunshine Design City of Palo Alto MRW & Associates Tecogen, Inc. City of San Xxxx Xxxxxx Xxxxxx Xxxxxxxx Xxxxx Natural Gas, Inc. Clean Power Marin Energy Authority TransCanada Coast Economic Consulting XxXxxxx Long & Xxxxxxxx LLP Utility Cost Management Commercial Energy XxXxxxxx & Associates Utility Power Solutions County of Tehama - Department of Public Works Modesto Irrigation District Utility Specialists Crossborder Energy Xxxxxx Xxxxxxx Verizon Xxxxx Xxxxxx Xxxxxxxx LLP NLine Energy, Inc. Water and Energy Consulting Day Xxxxxx Xxxxxx NRG Solar Wellhead Electric Company Defense Energy Support Center Nexant, Inc. Western Manufactured Housing Communities Association (WMA)

DISCUSSION OF MERIT FOR APPROVAL. In Arroyo’s Xxxxxx’x opinion, the 83WI 8ME RE Astoria contract merits CPUC approval: • The contract price (both before and after adjustment for time-of-delivery factors) ranks low when compared to all Offers received in PG&E’s 2012 RPS solicitation, and ranked low among solicitation or to the shortlisted proposals that PG&E considered selected for executionits short list. • PG&E’s estimate of Portfolio-Adjusted Value ranks the contract as high compared to all 2012 Offers; it ranks moderate in PAV within the short list that PG&E considered for contract execution. Arroyo’s Xxxxxx’x independent analysis ranks the contract as quite high in net value when compared to all 2012 Offers. • In Arroyo’s Xxxxxx’x opinion, the proposed Midway Solar Farm I RE Astoria facility ranks as moderate in project viability. Its developers do developer does not yet have experience developing, constructing, or owning, operating, operating and maintaining a single solar photovoltaic facility as large as 50 100 MW, and the project has not yet obtained its conditional use permit from Kern County. However, European affiliates of GASNA have the developer has considerable experience bringing smaller solar PV projects into operation, the facility has obtained its made progress towards an interconnection agreement from IID and its conditional use permit from Imperial County, and does not face serious impediments to obtaining required network upgrades. , and Xxxxxx believes that Midway I RE Astoria should reasonably be able to meet its guaranteed commercial operation date. • The PPA ranks moderate to high in portfolio fit when compared to all 2012 Offers when using PG&E’s metric for adjusting PAV for timing of contribution to RPS compliance needs. • The project will be sited near Xxxxxx believes that the project-specific negotiations between the parties were handled in a community afflicted with high unemployment, high poverty rates, manner fair to both competitors and high emission levelsratepayers. Overall, Arroyo’s Xxxxxx’x opinion is that the 83WI 8ME RE Astoria contract merits CPUC approval based on superior pricing, pricing and value coupled with moderate to high value, viability and moderate project viabilityportfolio fit. PG&E Gas and Electric Advice Filing List General Order 96-B, Section IV 1st Light Energy Xxxxxxxx & Xxxxxxx OnGrid Solar AT&T Xxxxxx & Brand Pacific Gas and Electric Company Xxxxxxxx & Xxxx LLP Xxxxxxx Xxxxxxxxx & Xxxxxx LLP Praxair Xxxxxxxx & Xxxxx X. X. Xxxxxx & Xxxxx. Regulatory & Cogeneration Service, Inc. BART GenOn Energy Inc. SCD Energy Solutions Xxxxxxxxx & Xxx, Inc. GenOn Energy, Inc. SCE Xxxxxx Xxxxx Associates Goodin, MacBride, Xxxxxx, Xxxxxxx & Xxxxxxx SDG&E and SoCalGas Xxxxx Xxxxxxxx XxXxxxxxxx, X.X. Xxxxx Power Institute XXXXX CENERGY POWER Xxxxx & Xxxxxx San Francisco Public Utilities Commission California Cotton Ginners & Growers Assn In House Energy Seattle City Light California Energy Commission International Power Technology Sempra Utilities California Public Utilities Commission Intestate Gas Services, Inc. SoCalGas California State Association of Counties K&L Gates LLP Southern California Edison Company Calpine Xxxxx Group Spark Energy Xxxxxx, Xxxxx Xxxxx Sun Light & Power Center for Biological Diversity Los Angeles Dept of Water & Power Sunshine Design City of Palo Alto MRW & Associates Tecogen, Inc. City of San Xxxx Xxxxxx Xxxxxx Xxxxxxxx Xxxxx Natural Gas, Inc. Clean Power Marin Energy Authority TransCanada Coast Economic Consulting XxXxxxx Long & Xxxxxxxx LLP Utility Cost Management Commercial Energy XxXxxxxx & Associates Utility Power Solutions County of Tehama - Department of Public Works Modesto Irrigation District Utility Specialists Crossborder Energy Xxxxxx Xxxxxxx Verizon Xxxxx Xxxxxx Xxxxxxxx LLP NLine Energy, Inc. Water and Energy Consulting Day Xxxxxx Xxxxxx NRG Solar Wellhead Electric Company Defense Energy Support Center Nexant, Inc. Western Manufactured Housing Communities Association (WMA)

DISCUSSION OF MERIT FOR APPROVAL. In Arroyo’s Xxxxxx’x opinion, the 83WI 8ME RE Astoria contract merits CPUC approval: • The contract price (both before and after adjustment for time-of-delivery factors) ranks low when compared to all Offers received in PG&E’s 2012 RPS solicitation, and ranked low among solicitation or to the shortlisted proposals that PG&E considered selected for executionits short list. • PG&E’s estimate of Portfolio-Adjusted Value ranks the contract as high compared to all 2012 Offers; it ranks moderate in PAV within the short list that PG&E considered for contract execution. Arroyo’s Xxxxxx’x independent analysis ranks the contract as quite high in net value when compared to all 2012 Offers. • In Arroyo’s Xxxxxx’x opinion, the proposed Midway Solar Farm I RE Astoria facility ranks as moderate in project viability. Its developers do developer does not yet have experience developing, constructing, or owning, operating, operating and maintaining a single solar photovoltaic facility as large as 50 100 MW, and the project has not yet obtained its conditional use permit from Xxxx County. However, European affiliates of GASNA have the developer has considerable experience bringing smaller solar PV projects into operation, the facility has obtained its made progress towards an interconnection agreement from IID and its conditional use permit from Imperial County, and does not face serious impediments to obtaining required network upgrades. , and Xxxxxx believes that Midway I RE Astoria should reasonably be able to meet its guaranteed commercial operation date. • The PPA ranks moderate to high in portfolio fit when compared to all 2012 Offers when using PG&E’s metric for adjusting PAV for timing of contribution to RPS compliance needs. • The project will be sited near Xxxxxx believes that the project-specific negotiations between the parties were handled in a community afflicted with high unemployment, high poverty rates, manner fair to both competitors and high emission levelsratepayers. Overall, Arroyo’s Xxxxxx’x opinion is that the 83WI 8ME RE Astoria contract merits CPUC approval based on superior pricing, pricing and value coupled with moderate to high value, viability and moderate project viabilityportfolio fit. PG&E Gas and Electric Advice Filing List General Order 96-B, Section IV 1st Light Energy Xxxxxxxx & Xxxxxxx OnGrid Solar AT&T Xxxxxx & Brand Pacific Gas and Electric Company Xxxxxxxx & Xxxx LLP Xxxxxxx Xxxxxxxxx & Xxxxxx LLP Praxair Xxxxxxxx & Xxxxx X. X. G. A. Xxxxxx & XxxxxAssoc. Regulatory & Cogeneration Service, Inc. BART GenOn Energy Inc. SCD Energy Solutions Xxxxxxxxx & Xxx, Inc. GenOn Energy, Inc. SCE Xxxxxx Xxxxx Associates Goodin, MacBride, Xxxxxx, Xxxxxxx & Xxxxxxx SDG&E and SoCalGas Xxxxx Xxxxxxxx XxXxxxxxxx, X.X. Xxxxx P.C. Green Power Institute XXXXX CENERGY POWER Xxxxx & Xxxxxx San Francisco Public Utilities Commission California Cotton Ginners & Growers Assn In House Energy Seattle City Light California Energy Commission International Power Technology Sempra Utilities California Public Utilities Commission Intestate Gas Services, Inc. SoCalGas California State Association of Counties K&L Gates LLP Southern California Edison Company Calpine Xxxxx Group Spark Energy Xxxxxx, Xxxxx Xxxxx Sun Light & Power Center for Biological Diversity Los Angeles Dept of Water & Power Sunshine Design City of Palo Alto MRW & Associates Tecogen, Inc. City of San Xxxx Xxxxxx Xxxxxx Xxxxxxxx Xxxxx Natural Gas, Inc. Clean Power Marin Energy Authority TransCanada Coast Economic Consulting XxXxxxx Long & Xxxxxxxx LLP Utility Cost Management Commercial Energy XxXxxxxx & Associates Utility Power Solutions County of Tehama - Department of Public Works Modesto Irrigation District Utility Specialists Crossborder Energy Xxxxxx Xxxxxxx Verizon Xxxxx Xxxxxx Xxxxxxxx LLP NLine Energy, Inc. Water and Energy Consulting Day Xxxxxx Xxxxxx NRG Solar Wellhead Electric Company Defense Energy Support Center Nexant, Inc. Western Manufactured Housing Communities Association (WMA)

DISCUSSION OF MERIT FOR APPROVAL. In Arroyo’s Xxxxxx’x opinion, the 83WI 8ME Diablo Winds contract merits CPUC approval: • The contract price (both before and after adjustment for time-of-delivery factors) ranks quite low when compared to all Offers received in PG&E’s 2012 RPS solicitation, and ranked low among solicitation or to the shortlisted proposals that PG&E considered selected for executionits short list. • PG&E’s estimate of Portfolio-Adjusted Value ranks the contract as high compared to all 2012 Offers and to shortlisted Offers; it ranks moderate in PAV within the short list that PG&E considered for contract execution. Arroyo’s Xxxxxx’x independent analysis ranks the contract as high moderate in net market value when compared to all 2012 Offers. • In Arroyo’s opinion, the proposed Midway Solar Farm I The Diablo Winds facility ranks as moderate quite high in project viability. Its developers do not yet have experience developing, constructing, or owningviability given that it is already constructed, operating, and maintaining a single solar photovoltaic facility as large as 50 MW. However, European affiliates of GASNA have considerable experience bringing smaller solar PV projects into operation, delivering renewable energy to PG&E. • While the facility has obtained its interconnection agreement from IID and its conditional use permit from Imperial County, and does not face serious impediments to obtaining required network upgrades. Xxxxxx believes that Midway I should reasonably be able to meet its guaranteed commercial operation date. • The PPA ranks moderate to high low in portfolio fit when compared to all 2012 Offers when using PG&E’s metric for adjusting PAV for timing of contribution to RPS compliance needs, this mismatch is mitigated by the expectation that contract deliveries in the early years of the contract will contribute to a build-up of PG&E’s bank of RECs that will used for RPS compliance in later years. • Strictly as a matter of opinion, Xxxxxx considers the outcome of contract negotiations to be somewhat less than fully fair to PG&E’s ratepayers and XXXX’x competitors. PG&E granted Diablo Winds a concession that was not granted to other wind generators in its 2012 RPS solicitation; the utility previously established a precedent in granting the same concession to another project subsidiary of NextEra’s in bilateral negotiations. The project effect of the concession is to shift a narrowly defined category of risk of performance failure to ratepayers from the project. While Xxxxxx views XXXX’x competitors as having been disadvantaged by receiving disparate, unequal treatment, the likelihood that this contract provision will be sited near a community afflicted with high unemploymentactually benefit Diablo Winds and disadvantage ratepayers at some point in the delivery term seems small enough that Xxxxxx does not consider the fairness issue sufficient for the PPA to merit rejection, high poverty rates, and high emission levelsin the context of the contract’s other attractive attributes. Overall, Arroyo’s Xxxxxx’x opinion is that the 83WI 8ME Diablo Winds contract merits CPUC approval based on superior pricing, moderate to high value, and moderate project viability. PG&E Gas and Electric Advice Filing List General Order 96-B, Section IV 1st Light Energy Xxxxxxxx & Xxxxxxx OnGrid Solar AT&T Xxxxxx & Brand Pacific Gas and Electric Company Xxxxxxxx & Xxxx LLP Xxxxxxx Xxxxxxxxx & Xxxxxx LLP Praxair Xxxxxxxx & Xxxxx X. X. G. A. Xxxxxx & XxxxxAssoc. Regulatory & Cogeneration Service, Inc. BART GenOn Energy Inc. SCD Energy Solutions Xxxxxxxxx & Xxx, Inc. GenOn Energy, Inc. SCE Xxxxxx Xxxxx Associates Goodin, MacBride, Xxxxxx, Xxxxxxx & Xxxxxxx SDG&E and SoCalGas Xxxxx Xxxxxxxx XxXxxxxxxx, X.X. Xxxxx P.C. Green Power Institute XXXXX CENERGY POWER Xxxxx & Xxxxxx San Francisco Public Utilities Commission California Cotton Ginners & Growers Assn In House Energy Seattle City Light California Energy Commission International Power Technology Sempra Utilities California Public Utilities Commission Intestate Gas Services, Inc. SoCalGas California State Association of Counties K&L Gates LLP Southern California Edison Company Calpine Xxxxx Group Spark Energy Xxxxxx, Xxxxx Xxxxx Sun Light & Power Center for Biological Diversity Los Angeles Dept of Water & Power Sunshine Design City of Palo Alto MRW & Associates Tecogen, Inc. City of San Xxxx Xxxxxx Xxxxxx Xxxxxxxx Xxxxx Natural Gas, Inc. Clean Power Marin Energy Authority TransCanada Coast Economic Consulting XxXxxxx Long & Xxxxxxxx LLP Utility Cost Management Commercial Energy XxXxxxxx & Associates Utility Power Solutions County of Tehama - Department of Public Works Modesto Irrigation District Utility Specialists Crossborder Energy Xxxxxx Xxxxxxx Verizon Xxxxx Xxxxxx Xxxxxxxx LLP NLine Energy, Inc. Water and Energy Consulting Day Xxxxxx Xxxxxx NRG Solar Wellhead Electric Company Defense Energy Support Center Nexant, Inc. Western Manufactured Housing Communities Association (WMA)

DISCUSSION OF MERIT FOR APPROVAL. In Arroyo’s Xxxxxx’x opinion, the 83WI 8ME contract merits CPUC approval: • The contract price (after adjustment for time-of-delivery factors) ranks low when compared to all Offers received in PG&E’s 2012 RPS solicitation, and ranked low among the shortlisted proposals that PG&E considered for execution. • PG&E’s estimate of Portfolio-Adjusted Value ranks the contract as high compared to all 2012 Offers; it ranks moderate in PAV within the short list that PG&E considered for contract execution. Arroyo’s Xxxxxx’x independent analysis ranks the contract as high in net value when compared to all 2012 Offers. • In Arroyo’s Xxxxxx’x opinion, the proposed Midway Solar Farm I facility ranks as moderate in project viability. Its developers do not yet have experience developing, constructing, or owning, operating, and maintaining a single solar photovoltaic facility as large as 50 MW. However, European affiliates of GASNA have considerable experience bringing smaller solar PV projects into operation, the facility has obtained its interconnection agreement from IID and its conditional use permit from Imperial County, and does not face serious impediments to obtaining required network upgrades. Xxxxxx believes that Midway I should reasonably be able to meet its guaranteed commercial operation date. • The PPA ranks moderate to high in portfolio fit when compared to all 2012 Offers when using PG&E’s metric for adjusting PAV for timing of contribution to RPS compliance needs. • The project will be sited near a community afflicted with high unemployment, high poverty rates, and high emission levels. Overall, Arroyo’s Xxxxxx’x opinion is that the 83WI 8ME contract merits CPUC approval based on superior pricing, moderate to high value, and moderate project viability. PG&E Gas and Electric Advice Filing List General Order 96-B, Section IV 1st Light Energy Xxxxxxxx & Xxxxxxx OnGrid Solar AT&T Xxxxxx & Brand Pacific Gas and Electric Company Xxxxxxxx & Xxxx LLP Xxxxxxx Xxxxxxxxx & Xxxxxx LLP Praxair Xxxxxxxx & Xxxxx X. X. G. A. Xxxxxx & XxxxxAssoc. Regulatory & Cogeneration Service, Inc. BART GenOn Energy Inc. SCD Energy Solutions Xxxxxxxxx & Xxx, Inc. GenOn Energy, Inc. SCE Xxxxxx Xxxxx Associates Goodin, MacBride, Xxxxxx, Xxxxxxx & Xxxxxxx SDG&E and SoCalGas Xxxxx Xxxxxxxx XxXxxxxxxx, X.X. Xxxxx P.C. Green Power Institute XXXXX CENERGY POWER Xxxxx & Xxxxxx San Francisco Public Utilities Commission California Cotton Ginners & Growers Assn In House Energy Seattle City Light California Energy Commission International Power Technology Sempra Utilities California Public Utilities Commission Intestate Gas Services, Inc. SoCalGas California State Association of Counties K&L Gates LLP Southern California Edison Company Calpine Xxxxx Group Spark Energy Xxxxxx, Xxxxx Xxxxx Sun Light & Power Center for Biological Diversity Los Angeles Dept of Water & Power Sunshine Design City of Palo Alto MRW & Associates Tecogen, Inc. City of San Xxxx Xxxxxx Xxxxxx Xxxxxxxx Xxxxx Natural Gas, Inc. Clean Power Marin Energy Authority TransCanada Coast Economic Consulting XxXxxxx Long & Xxxxxxxx LLP Utility Cost Management Commercial Energy XxXxxxxx & Associates Utility Power Solutions County of Tehama - Department of Public Works Modesto Irrigation District Utility Specialists Crossborder Energy Xxxxxx Xxxxxxx Verizon Xxxxx Xxxxxx Xxxxxxxx LLP NLine Energy, Inc. Water and Energy Consulting Day Xxxxxx Xxxxxx NRG Solar Wellhead Electric Company Defense Energy Support Center Nexant, Inc. Western Manufactured Housing Communities Association (WMA)