Common use of EVALUATION OF BIDS’ TRANSMISSION COSTS Clause in Contracts

EVALUATION OF BIDS’ TRANSMISSION COSTS. The valuation methodology assigns estimated transmission costs to the contract price of generation in order to compare Offers fairly, taking into account the full cost of generating power including upgrades required to achieve reliable deliverability for new generation. Many features of the transmission cost methodology are specified by regulatory decisions. The methodology has a few strengths: • It provides a means to level the playing field between Offers that deliver directly into PG&E’s service territory at uncongested locations and those whose proposed facilities will require expensive new transmission upgrades and new substation facilities to maintain grid reliability. • It provides a view of full costs of the project rather than only the energy procurement cost. The transmission cost methodology also has some drawbacks: • The process of estimating transmission adders is analytically burdensome. It requires checking of Participant’s information by transmission experts and consumes a considerable portion of the total time for valuation analysis. • TRCR adders are a generalized, regional proxy for the actual cost of a particular- sized project at a particular interconnection point. There can be rather large deviations between the final cost of network upgrades written into an interconnection agreement and an early TRCR estimate. • In those cases where the TRCR adder turns out to be an underestimate of actual network upgrade cost, PG&E’s prior practice of only performing the full LCBF valuation including transmission adders during solicitations impedes the transparency of decision-making. • TRCR adders are available only for California IOUs, and only for specific transmission clusters that the IOUs have analyzed. They are not available for other balancing authorities in California or outside the state. It would be challenging for the PG&E team to estimate a proxy for network upgrade cost for projects interconnecting, for example, in the Sacramento Municipal Utility District’s or IID’s grid unless the project had obtained a system impact study or facilities study or interconnection agreement from that balancing area authority. Given the focus on new renewables in Imperial Valley, this shortage of information is inconvenient. • CAISO Phase I studies have been known to provide gross early overestimates of the actual network upgrade costs. In some transmission clusters, excessive numbers of new projects have applied for interconnections; their aggregate new capacity is so large that Phase I estimates of work required to accommodate such a large new build are massive. When posed with the obligation to finance hundreds of millions of dollars of network upgrades for their projects, many developers choose to drop out of the CAISO queue, leaving sufficiently fewer new projects moving through the Phase II study to result in much smaller estimates of network upgrade costs. In these situations, the methodology disadvantages projects that have received a Phase I study but not yet a Phase II study, even though the analysis in hand is the best currently available estimate of project-specific upgrade requirements. This seems less than fully fair to some projects caught in that early stage of analysis. Whether the transmission adder methodology relies more on TRCR proxy adders or on interconnection studies or interconnection agreement data depends entirely on what projects Participants submit. In the case of PG&E’s 2011 RPS solicitation, roughly half the Offers had not applied for an interconnection or had not yet completed a Phase I study or system impact study. This illustrates how reliant the methodology is on the accuracy of the IOUs’ Transmission Ranking Cost Reports. Most Phase I and Phase II interconnection studies provide estimates of both reliability network upgrades and deliverability network upgrades. In situations in which the project has not yet been studied as a full capacity resource, the studies lack an analysis of required deliverability upgrades. In many cases projects apply for an energy-only resource and later request a deliverability assessment (such as for projects that initiated their application under the Small Generator Interconnection Process). PG&E’s methodology is designed to be internally consistent; either it treats a project as energy-only and takes into account the estimated reliability network upgrades only and doesn’t attribute Resource Adequacy value to the facility, or it treats it as full-capacity, takes into account costs of both reliability and deliverability network upgrades, and attributes RA value. In some cases projects were analyzed both ways and the approach that provided the higher valuation was selected, giving the project the benefit of the doubt that of the two the higher-valued approach would be chosen. This would be consistent with the logic of PG&E choosing to contract with a new project as an energy-only resource if the deliverability network upgrade costs would exceed the value of Resource Adequacy the project can provide. Conformance checks of transmission study results were performed. Xxxxxx notes that some Offers misstated the estimated network upgrade costs provided by CAISO or PTO studies. Xxxxxx believes that PG&E did a thorough job of checking the original source materials when conducting its analysis of transmission adders. Part of the challenge was that many Participants omitted the requested copy of the latest interconnection study, requiring the utility team to seek this information for deficient Offer packages.

EVALUATION OF BIDS’ TRANSMISSION COSTS. The valuation methodology assigns estimated has a complex set of algorithms and steps to assign proxies for actual transmission costs cost to the contract price of generation in order to compare Offers fairly, taking into account the full cost of generating moving power including from the delivery point to customers. These include estimates of the cost of moving power from non-CAISO delivery points to PG&E customers, and of the allocated cost of transmission network upgrades required to achieve reliable deliverability for new generationgeneration facilities that propose to interconnect in congested locations. Many of the features of the transmission cost methodology are specified by regulatory decisions. The methodology has a few strengths: • It provides a means to level the playing field between Offers that deliver directly into PG&E’s service territory at uncongested locations and those whose proposed facilities will require expensive new transmission upgrades and new substation facilities to maintain grid reliability. • It provides a view means to level the playing field between projects located within the CAISO and those delivering outside the CAISO for whom the cost of moving power to PG&E customers requires wheeling across foreign control areas, tariff payments to other transmission owners, and/or shaping and firming services needed to achieve firm scheduled deliveries into the CAISO in order to quality as eligible renewable resources under CEC guidelines. Some of these distant projects may enjoy benefits of lesser permitting requirements, weaker environmental protections, less expensive land, easier and speedier procedures for interconnection, but the contract price offered for busbar delivery in a distant service territory does not reflect the full costs cost of moving the project rather than only the energy procurement costpower to PG&E customers. The transmission cost methodology also has some obvious drawbacks: • The two-step process of estimating calculating adders from the Transmission Cost Ranking Reports is so analytically burdensome that it slows the turnaround time of the valuation ranking. Combined with the rather large response to this year’s solicitation, the burden of the TRCR methodology prevented the PG&E team from completing a short list that takes into account the transmission adders is analytically burdensomebefore it met with the Procurement Review Group for discussion and guidance on the draft 2009 short list. It requires checking The transmission analysis takes up valuable team time that could have been used for quality control and error checking, and it would be better to present the PRG with a draft short list for discussion that incorporates both the transmission analysis and a degree of Participant’s information by transmission experts and consumes a considerable portion of the total time for valuation analysisadditional quality control. • TRCR adders are a generalized, regional proxy The use of proxies such as published transmission tariffs or estimated costs for alternative commercial arrangements may understate the actual cost of a particular- sized project at a particular interconnection point. There can be rather large deviations between the final cost of network upgrades written into an interconnection agreement and an early TRCR estimate. • In those cases where the TRCR adder turns out moving power to be an underestimate of actual network upgrade cost, PG&E’s prior practice of only performing the full LCBF valuation including transmission adders during solicitations impedes the transparency of decision-making. • TRCR adders are available only for California IOUs, and only for specific transmission clusters that the IOUs have analyzed. They are not available for PG&E customers from other balancing authorities in California or outside the state. It would be challenging for the PG&E team to estimate a proxy for network upgrade cost for projects interconnecting, for example, in the Sacramento Municipal Utility District’s or IID’s grid unless the project had obtained a system impact study or facilities study or interconnection agreement from that balancing area authority. Given the focus on new renewables in Imperial Valley, this shortage of information is inconvenient. • CAISO Phase I studies have been known to provide gross early overestimates of the actual network upgrade costs. In some transmission clusters, excessive numbers of new projects have applied for interconnections; their aggregate new capacity is so large that Phase I estimates of work required to accommodate such a large new build are massive. When posed with the obligation to finance hundreds of millions of dollars of network upgrades for their projects, many developers choose to drop out of the CAISO queue, leaving sufficiently fewer new projects moving through the Phase II study to result in much smaller estimates of network upgrade costs. In these situations, the methodology disadvantages projects that have received a Phase I study but not yet a Phase II study, even though the analysis in hand is the best currently available estimate of project-specific upgrade requirements. This seems less than fully fair to some projects caught in that early stage of analysis. Whether the transmission adder methodology relies more on TRCR proxy adders or on interconnection studies or interconnection agreement data depends entirely on what projects Participants submit. In the case of PG&E’s 2011 RPS solicitation, roughly half the Offers had not applied for an interconnection or had not yet completed a Phase I study or system impact study. This illustrates how reliant the methodology is on the accuracy of the IOUs’ Transmission Ranking Cost Reports. Most Phase I and Phase II interconnection studies provide estimates of both reliability network upgrades and deliverability network upgrades. In situations in which the project has not yet been studied as a full capacity resource, the studies lack an analysis of required deliverability upgrades. In many cases projects apply for an energy-only resource and later request a deliverability assessment (such as for projects that initiated their application under the Small Generator Interconnection Process). PG&E’s methodology is designed to be internally consistent; either it treats a project as energy-only and takes into account the estimated reliability network upgrades only and doesn’t attribute Resource Adequacy value to the facility, or it treats it as full-capacity, takes into account costs of both reliability and deliverability network upgrades, and attributes RA value. In some cases projects were analyzed both ways and the approach that provided the higher valuation was selected, giving the project the benefit of the doubt that of the two the higher-valued approach would be chosen. This would be consistent with the logic of PG&E choosing to contract with a new project as an energy-only resource if the deliverability network upgrade costs would exceed the value of Resource Adequacy the project can provide. Conformance checks of transmission study results were performedcontrol areas. Xxxxxx notes that some Offers misstated the estimated network upgrade costs provided by market price of shaping and firming services (that would be required to render out-of-state intermittent power RPS-eligible) has escalated substantially from past years, reflecting the risk associated with providing such services and the increasing cost of doing so. Also, the cost of non-CAISO or PTO studiescontrol area operators providing operating reserves, imbalance services, and wind integration services do not appear to be fully reflected in the proxies. Xxxxxx believes is concerned that the use of proxies that do not fully reflect the ultimate cost of delivering power to PG&E did customers might create an unfair bias in the valuation methodology that favors out-of-state projects and those in-state projects that deliver into non-CAISO territories. This concern is mitigated somewhat by the PG&E team’s use of its stated preference for deliveries into the PG&E service territory over deliveries into non-CAISO control areas when making a thorough job short list. • It is difficult to explain to Participants how the transmission analysis affects the valuation of checking their Offers. Despite the original source fact that the solicitation materials provided a discussion of TRCR adders, it was clear that some Participants proceeded to propose new facilities sited in highly congested transmission clusters. Because these new facilities would likely require major capital expenditures to effect grid upgrades, and because the expenditures would be allocated to very few new generation projects (most experienced developers or those with knowledgeable transmission consultants seemed to avoid the most congested clusters), the proxy costs for transmission were quite high and when conducting its analysis of transmission addersadded to contract costs tended to disqualify these proposals from the short list. Part It was clear from debriefing sessions that some of the challenge was developers, particularly those less knowledgeable about grid issues, were completely unaware that many Participants omitted their proposed project sites are very unattractive from a transmission point of view. Xxxxxx considers the requested copy of solicitation materials to be fairly transparent in describing the latest interconnection studytransmission methodology, requiring and is at a loss as to how PG&E could help the utility team to seek this information for deficient Offer packagesdeveloper community become better informed about the subject.

EVALUATION OF BIDS’ TRANSMISSION COSTS. The valuation methodology assigns estimated has a complex set of algorithms and steps to assign proxies for actual transmission costs cost to the contract price of generation in order to compare Offers proposals fairly, taking into account the full cost of generating moving power including from the delivery point to customers. These include estimates of the cost of moving power from non-CAISO delivery points to PG&E customers, and of the allocated cost of transmission network upgrades required to achieve reliable deliverability for new generationgeneration facilities that propose to interconnect in congested locations. Many of the features of the transmission cost methodology are specified by regulatory decisions. The methodology has a few strengths: • It provides a means to level the playing field between Offers that deliver directly into PG&E’s service territory at uncongested locations and those whose proposed 15 This is a feature of the inputs rather than the algorithm; with a modest discount rate and power market forwards that are extrapolated beyond a few decades, proposed renewable contract prices tend to fall below brown power market prices in the most distant years so that the longer the contract term is, the more valuable the overall contract is. facilities will require expensive new transmission upgrades and new substation facilities to maintain grid reliability. • It provides a view means to level the playing field between projects located within the CAISO and those delivering outside the CAISO for whom the cost of full costs of moving power to PG&E customers requires wheeling across foreign control areas, tariff payments to other transmission owners, and/or shaping and firming services needed to achieve firm scheduled deliveries into the project rather than only the energy procurement costCAISO in order to quality as eligible renewable resources under CEC guidelines. The transmission cost methodology also has some obvious drawbacks: • The two-step process of estimating transmission calculating Transmission Cost Ranking Report adders is so analytically burdensome. It requires checking of Participant’s information by transmission experts and consumes a considerable portion burdensome that it slows the turnaround time of the total time for valuation analysisranking. • TRCR adders are a generalized, regional proxy The use of proxies such as published transmission tariffs or estimated costs for alternative commercial arrangements may understate the actual cost of a particular- sized project at a particular interconnection pointmoving power to PG&E customers from other control areas. There can The price of shaping and firming services (that would be rather large deviations between required to render out-of-state intermittent power RPS-eligible) has escalated substantially from past years, reflecting the final risk associated with providing such services and the increasing cost of network upgrades written into an interconnection agreement doing so. Also, the cost of non-CAISO control area operators providing operating reserves, imbalance services, and an early TRCR estimatewind integration services do not appear to be fully reflected in the proxies. • In those cases where It is difficult to explain to counterparties how the TRCR adder turns out to be an underestimate transmission analysis affects the valuation of actual network upgrade cost, PG&E’s prior practice of only performing their Offers. Despite the full LCBF valuation including transmission adders during solicitations impedes the transparency of decision-making. • TRCR adders are available only for California IOUs, and only for specific transmission clusters fact that the IOUs have analyzed. They are not available for other balancing authorities solicitation materials provided a discussion of TRCR adders, it was clear that some counterparties proceeded to propose new facilities sited in California or outside the state. It would be challenging for the PG&E team to estimate a proxy for network upgrade cost for projects interconnecting, for example, in the Sacramento Municipal Utility District’s or IID’s grid unless the project had obtained a system impact study or facilities study or interconnection agreement from that balancing area authority. Given the focus on new renewables in Imperial Valley, this shortage of information is inconvenient. • CAISO Phase I studies have been known to provide gross early overestimates of the actual network upgrade costs. In some highly congested transmission clusters, excessive numbers of . Because these new projects have applied for interconnections; their aggregate new capacity is so large that Phase I estimates of work required facilities would likely require major capital expenditures to accommodate such a large new build are massive. When posed with the obligation to finance hundreds of millions of dollars of network upgrades for their projects, many developers choose to drop out of the CAISO queue, leaving sufficiently fewer new projects moving through the Phase II study to result in much smaller estimates of network upgrade costs. In these situations, the methodology disadvantages projects that have received a Phase I study but not yet a Phase II study, even though the analysis in hand is the best currently available estimate of project-specific upgrade requirements. This seems less than fully fair to some projects caught in that early stage of analysis. Whether the transmission adder methodology relies more on TRCR proxy adders or on interconnection studies or interconnection agreement data depends entirely on what projects Participants submit. In the case of PG&E’s 2011 RPS solicitation, roughly half the Offers had not applied for an interconnection or had not yet completed a Phase I study or system impact study. This illustrates how reliant the methodology is on the accuracy of the IOUs’ Transmission Ranking Cost Reports. Most Phase I and Phase II interconnection studies provide estimates of both reliability network upgrades and deliverability network upgrades. In situations in which the project has not yet been studied as a full capacity resource, the studies lack an analysis of required deliverability upgrades. In many cases projects apply for an energy-only resource and later request a deliverability assessment (such as for projects that initiated their application under the Small Generator Interconnection Process). PG&E’s methodology is designed to be internally consistent; either it treats a project as energy-only and takes into account the estimated reliability network upgrades only and doesn’t attribute Resource Adequacy value to the facility, or it treats it as full-capacity, takes into account costs of both reliability and deliverability network effect grid upgrades, and attributes RA valuebecause the expenditures would be allocated to very few new generation projects (most experienced developers or those with knowledgeable transmission consultants seemed to avoid the most congested clusters), the proxy costs for transmission were quite high and when added to contract costs tended to disqualify these proposals from the short list. In It was clear from debriefing sessions that some cases projects were analyzed both ways and the approach that provided the higher valuation was selected, giving the project the benefit of the doubt developers, particularly those less knowledgeable about grid issues, were completely unaware that their proposed project sites are very unattractive from a transmission point of the two the higher-valued approach would be chosen. This would be consistent with the logic of PG&E choosing to contract with a new project as an energy-only resource if the deliverability network upgrade costs would exceed the value of Resource Adequacy the project can provide. Conformance checks of transmission study results were performed. Xxxxxx notes that some Offers misstated the estimated network upgrade costs provided by CAISO or PTO studies. Xxxxxx believes that PG&E did a thorough job of checking the original source materials when conducting its analysis of transmission adders. Part of the challenge was that many Participants omitted the requested copy of the latest interconnection study, requiring the utility team to seek this information for deficient Offer packagesview.

EVALUATION OF BIDS’ TRANSMISSION COSTS. The valuation methodology assigns estimated has a complex set of algorithms and steps to assign proxies for actual transmission costs cost to the contract price of generation in order to compare Offers proposals fairly, taking into account the full cost of generating moving power including from the delivery point to customers. These include estimates of the cost of moving power from non-CAISO delivery points to PG&E customers, and of the allocated cost of transmission network upgrades required to achieve reliable deliverability for new generationgeneration facilities that propose to interconnect in congested locations. Many of the features of the transmission cost methodology are specified by regulatory decisions. The methodology has a few strengths: • It provides a means to level the playing field between Offers that deliver directly into PG&E’s service territory at uncongested locations and those whose proposed facilities will require expensive new transmission upgrades and new substation facilities to maintain grid reliability. • It provides a view means to level the playing field between projects located within the CAISO and those delivering outside the CAISO for whom the cost of full costs moving power to PG&E customers requires wheeling across foreign control areas, tariff payments to other transmission owners, and/or shaping and firming services needed to achieve firm scheduled deliveries into the CAISO in order to quality as eligible renewable resources under CEC guidelines. 15 This is a feature of the project inputs rather than only the energy procurement costalgorithm; with a modest discount rate and power market forwards that are extrapolated beyond a few decades, proposed renewable contract prices tend to fall below brown power market prices in the most distant years so that the longer the contract term is, the more valuable the overall contract is. The transmission cost methodology also has some obvious drawbacks: • The two-step process of estimating transmission calculating Transmission Cost Ranking Report adders is so analytically burdensome. It requires checking of Participant’s information by transmission experts and consumes a considerable portion burdensome that it slows the turnaround time of the total time for valuation analysisranking. • TRCR adders are a generalized, regional proxy The use of proxies such as published transmission tariffs or estimated costs for alternative commercial arrangements may understate the actual cost of a particular- sized project at a particular interconnection pointmoving power to PG&E customers from other control areas. There can The price of shaping and firming services (that would be rather large deviations between required to render out-of-state intermittent power RPS-eligible) has escalated substantially from past years, reflecting the final risk associated with providing such services and the increasing cost of network upgrades written into an interconnection agreement doing so. Also, the cost of non-CAISO control area operators providing operating reserves, imbalance services, and an early TRCR estimatewind integration services do not appear to be fully reflected in the proxies. • In those cases where It is difficult to explain to counterparties how the TRCR adder turns out to be an underestimate transmission analysis affects the valuation of actual network upgrade cost, PG&E’s prior practice of only performing their Offers. Despite the full LCBF valuation including transmission adders during solicitations impedes the transparency of decision-making. • TRCR adders are available only for California IOUs, and only for specific transmission clusters fact that the IOUs have analyzed. They are not available for other balancing authorities solicitation materials provided a discussion of TRCR adders, it was clear that some counterparties proceeded to propose new facilities sited in California or outside the state. It would be challenging for the PG&E team to estimate a proxy for network upgrade cost for projects interconnecting, for example, in the Sacramento Municipal Utility District’s or IID’s grid unless the project had obtained a system impact study or facilities study or interconnection agreement from that balancing area authority. Given the focus on new renewables in Imperial Valley, this shortage of information is inconvenient. • CAISO Phase I studies have been known to provide gross early overestimates of the actual network upgrade costs. In some highly congested transmission clusters, excessive numbers of . Because these new projects have applied for interconnections; their aggregate new capacity is so large that Phase I estimates of work required facilities would likely require major capital expenditures to accommodate such a large new build are massive. When posed with the obligation to finance hundreds of millions of dollars of network upgrades for their projects, many developers choose to drop out of the CAISO queue, leaving sufficiently fewer new projects moving through the Phase II study to result in much smaller estimates of network upgrade costs. In these situations, the methodology disadvantages projects that have received a Phase I study but not yet a Phase II study, even though the analysis in hand is the best currently available estimate of project-specific upgrade requirements. This seems less than fully fair to some projects caught in that early stage of analysis. Whether the transmission adder methodology relies more on TRCR proxy adders or on interconnection studies or interconnection agreement data depends entirely on what projects Participants submit. In the case of PG&E’s 2011 RPS solicitation, roughly half the Offers had not applied for an interconnection or had not yet completed a Phase I study or system impact study. This illustrates how reliant the methodology is on the accuracy of the IOUs’ Transmission Ranking Cost Reports. Most Phase I and Phase II interconnection studies provide estimates of both reliability network upgrades and deliverability network upgrades. In situations in which the project has not yet been studied as a full capacity resource, the studies lack an analysis of required deliverability upgrades. In many cases projects apply for an energy-only resource and later request a deliverability assessment (such as for projects that initiated their application under the Small Generator Interconnection Process). PG&E’s methodology is designed to be internally consistent; either it treats a project as energy-only and takes into account the estimated reliability network upgrades only and doesn’t attribute Resource Adequacy value to the facility, or it treats it as full-capacity, takes into account costs of both reliability and deliverability network effect grid upgrades, and attributes RA valuebecause the expenditures would be allocated to very few new generation projects (most experienced developers or those with knowledgeable transmission consultants seemed to avoid the most congested clusters), the proxy costs for transmission were quite high and when added to contract costs tended to disqualify these proposals from the short list. In It was clear from debriefing sessions that some cases projects were analyzed both ways and the approach that provided the higher valuation was selected, giving the project the benefit of the doubt developers, particularly those less knowledgeable about grid issues, were completely unaware that their proposed project sites are very unattractive from a transmission point of the two the higher-valued approach would be chosen. This would be consistent with the logic of PG&E choosing to contract with a new project as an energy-only resource if the deliverability network upgrade costs would exceed the value of Resource Adequacy the project can provide. Conformance checks of transmission study results were performed. Xxxxxx notes that some Offers misstated the estimated network upgrade costs provided by CAISO or PTO studies. Xxxxxx believes that PG&E did a thorough job of checking the original source materials when conducting its analysis of transmission adders. Part of the challenge was that many Participants omitted the requested copy of the latest interconnection study, requiring the utility team to seek this information for deficient Offer packagesview.

EVALUATION OF BIDS’ TRANSMISSION COSTS. The valuation methodology assigns estimated transmission costs to the contract price of generation in order to compare Offers fairly, taking into account the full cost of generating power including upgrades required to achieve reliable deliverability for new generation. Many features of the transmission cost methodology are specified by regulatory decisions. The methodology has a few strengths: •  It provides a means to level the playing field between Offers that deliver directly into PG&E’s service territory at uncongested locations and those whose proposed facilities will require expensive new transmission upgrades and new substation facilities to maintain grid reliability. •  It provides a view of full costs of the project rather than only the energy procurement cost. The transmission cost methodology also has some drawbacks: •  The process of estimating transmission adders is analytically burdensome. It requires checking of Participant’s information by transmission experts and consumes a considerable portion of the total time for valuation analysis. •  TRCR adders are a generalized, regional proxy for the actual cost of a particular- sized project at a particular interconnection point. There can be rather large deviations between the final cost of network upgrades written into an interconnection agreement and an early TRCR estimate. •  In those cases where the TRCR adder turns out to be an underestimate of actual network upgrade cost, PG&E’s prior practice of only performing the full LCBF valuation including transmission adders during solicitations impedes the transparency of decision-making. •  TRCR adders are available only for California IOUs, and only for specific transmission clusters that the IOUs have analyzed. They are not available for other balancing authorities in California or outside the state. It would be challenging for the PG&E team to estimate a proxy for network upgrade cost for projects interconnecting, for example, in the Sacramento Municipal Utility District’s or IID’s grid unless the project had obtained a system impact study or facilities study or interconnection agreement from that balancing area authority. Given the focus on new renewables in Imperial Valley, this shortage of information is inconvenient. •  CAISO Phase I studies have been known to provide gross early overestimates of the actual network upgrade costs. In some transmission clusters, excessive numbers of new projects have applied for interconnections; their aggregate new capacity is so large that Phase I estimates of work required to accommodate such a large new build are massive. When posed with the obligation to finance hundreds of millions of dollars of network upgrades for their projects, many developers choose to drop out of the CAISO queue, leaving sufficiently fewer new projects moving through the Phase II study to result in much smaller estimates of network upgrade costs. In these situations, the methodology disadvantages projects that have received a Phase I study but not yet a Phase II study, even though the analysis in hand is the best currently available estimate of project-specific upgrade requirements. This seems less than fully fair to some projects caught in that early stage of analysis. Whether the transmission adder methodology relies more on TRCR proxy adders or on interconnection studies or interconnection agreement data depends entirely on what projects Participants submit. In the case of PG&E’s 2011 RPS solicitation, roughly half the Offers had not applied for an interconnection or had not yet completed a Phase I study or system impact study. This illustrates how reliant the methodology is on the accuracy of the IOUs’ Transmission Ranking Cost Reports. Most Phase I and Phase II interconnection studies provide estimates of both reliability network upgrades and deliverability network upgrades. In situations in which the project has not yet been studied as a full capacity resource, the studies lack an analysis of required deliverability upgrades. In many cases projects apply for an energy-only resource and later request a deliverability assessment (such as for projects that initiated their application under the Small Generator Interconnection Process). PG&E’s methodology is designed to be internally consistent; either it treats a project as energy-only and takes into account the estimated reliability network upgrades only and doesn’t attribute Resource Adequacy value to the facility, or it treats it as full-capacity, takes into account costs of both reliability and deliverability network upgrades, and attributes RA value. In some cases projects were analyzed both ways and the approach that provided the higher valuation was selected, giving the project the benefit of the doubt that of the two the higher-valued approach would be chosen. This would be consistent with the logic of PG&E choosing to contract with a new project as an energy-only resource if the deliverability network upgrade costs would exceed the value of Resource Adequacy the project can provide. Conformance checks of transmission study results were performed. Xxxxxx notes that some Offers misstated the estimated network upgrade costs provided by CAISO or PTO studies. Xxxxxx believes that PG&E did a thorough job of checking the original source materials when conducting its analysis of transmission adders. Part of the challenge was that many Participants omitted the requested copy of the latest interconnection study, requiring the utility team to seek this information for deficient Offer packages.