Common use of EVALUATION OF PORTFOLIO FIT Clause in Contracts

EVALUATION OF PORTFOLIO FIT. PG&E’s current approach to evaluate portfolio fit within its renewable power solicitations has specific advantages: • The numerical score is based on quantitative calculations or on technology-specific attributes, and is fairly objective in its development. • The scoring for time of delivery is closely related to how well the generation profile of the project matches PG&E’s contractually designed super-peak periods vs. night periods, which in turn are intended to reflect the match with PG&E’s portfolio needs. • The range of score from zero to 100 enables a reviewer to discern differences between offers more easily than the range of zero to 5 used in the 2008 solicitation. There are a few drawbacks to this approach: • The methodology does not discern between how a contract might fit with PG&E’s portfolio needs today (when the utility has little or no need for new baseload power) vs. needs a decade from now, when load growth and the retirement of older facilities might engender a stronger need for baseload power. Similarly, the methodology does not distinguish a short-term from a long-term contract, though the latter might provide a better fit in the future given possible future portfolio needs. • The methodology doesn’t explicitly address the cost of remarketing power during off-peak periods, though it clearly recognizes the worse fit of resources that generate more in the early hours of the morning and more in winter rather than in summer. • It may be difficult to accommodate the portfolio fit of certain technologies, such as solar thermal facilities with storage, in the framework being used. It is not clear whether such a facility that has a limited ability to schedule generation past the peak hours of insolation and a limited ability to respond to dispatch orders fits well into the existing scoring system for portfolio fit. • In the greater scheme of things, the portfolio fit criterion does not appear to have as much impact as others such as market valuation, project viability, and RPS goals. To Xxxxxx’x knowledge there has not yet been a situation where a renewable PPA’s superior portfolio fit score has enabled it to be shortlisted despite inferior value or viability; nor has there been a situation where an inferior portfolio fit score has led a PPA to be rejected.

EVALUATION OF PORTFOLIO FIT. PG&E’s current approach to evaluate portfolio fit within its renewable power solicitations has specific advantages: • The numerical score is based on quantitative calculations or on technology-specific attributes, and is fairly objective in its development. • The scoring for time of delivery is closely related to how well the generation profile of the project matches PG&E’s contractually designed super-peak periods vs. night periods, which in turn are intended to reflect the match with PG&E’s portfolio needs. • The range of score from zero to 100 enables a reviewer to discern differences between offers more easily than the range of zero to 5 used in the 2008 solicitation. There are a few drawbacks to this approach: • The methodology does not discern between how a contract might fit with PG&E’s portfolio needs today (when the utility has little or no need for new baseload power) vs. needs a decade from now, when load growth and the retirement of older facilities might engender a stronger need for baseload power. Similarly, the methodology does not distinguish a short-term from a long-term contract, though the latter might provide a better fit in the future given possible future portfolio needs. • The methodology doesn’t explicitly address the cost of remarketing power during off-peak periods, though it clearly recognizes the worse fit of resources that generate more in the early hours of the morning and more in winter rather than in summer. • It may be difficult to accommodate the portfolio fit of certain technologies, such as solar thermal facilities with storage, in the framework being used. It is not clear whether such a facility that has a limited ability to schedule generation past the peak hours of insolation and a limited ability to respond to dispatch orders fits well into the existing scoring system for portfolio fit. • In the greater scheme of things, the portfolio fit criterion does not appear to have as much impact as others such as market valuation, project viability, and RPS goals. To Xxxxxx’x knowledge there has not yet been a situation where a renewable PPA’s superior portfolio fit score has enabled it to be shortlisted despite inferior value or viability; nor has there been a situation where an inferior portfolio fit score has led a PPA to be rejected.

EVALUATION OF PORTFOLIO FIT. PG&E’s current approach to evaluate portfolio fit within its renewable power solicitations has specific advantages: • The numerical score is based on quantitative calculations or on technology-specific attributes, and is fairly objective in its development. • The scoring for time of delivery is closely related to how well the generation profile of the project matches PG&E’s contractually designed super-peak periods vs. night periods, which in turn are intended to reflect the match with PG&E’s portfolio needs. • The range of score from zero to 100 enables a reviewer to discern differences between offers more easily than the range of zero to 5 used in the 2008 solicitation. There are a few drawbacks to this approach: • The methodology does not discern between how a contract might fit with PG&E’s portfolio needs today (when the utility has little or no need for new baseload power) vs. needs a decade from now, when load growth and the retirement of older facilities might engender a stronger need for baseload power. Similarly, the methodology does not distinguish a short-term from a long-term contract, though the latter might provide a better fit in the future given possible future portfolio needs. • The methodology doesn’t explicitly address the cost of remarketing power during off-peak periods, though it clearly recognizes the worse fit of resources that generate more in the early hours of the morning and more in winter rather than in summer. • It may be difficult to accommodate the portfolio fit of certain technologies, such as solar thermal facilities with storage, in the framework being used. It is not clear whether such a facility that has a limited ability to schedule generation past the peak hours of insolation and a limited ability to respond to dispatch orders fits well into the existing scoring system for portfolio fit. • In the greater scheme of things, the portfolio fit criterion does not appear to have as much impact as others such as market valuation, project viability, and RPS goals. To Xxxxxx’x Arroyo’s knowledge there has not yet been a situation where a renewable PPA’s superior portfolio fit score has enabled it to be shortlisted despite inferior value or viability; nor has there been a situation where an inferior portfolio fit score has led a PPA to be rejected.

EVALUATION OF PORTFOLIO FIT. PG&E’s The approach PG&E employed in the 2009 RPS RFO to score Offers on portfolio differed from that used in prior years. The current approach to evaluate portfolio fit within its renewable power solicitations has specific advantages: • The numerical score is based on quantitative calculations or on technology-specific attributes, and is fairly objective in its development. • The scoring for time of delivery is closely related to how well the generation profile of the project matches PG&E’s contractually designed super-peak periods vs. night periods, which in turn are intended to reflect the match with PG&E’s portfolio needs. • The range of score from zero to 100 enables a reviewer to discern differences between offers more easily than the range of zero to 5 used in the 2008 RPS solicitation. There are a few drawbacks to this approach: • The methodology does not discern between how a contract might fit with PG&E’s portfolio needs today (when the utility has little or no need for new baseload power) vs. needs a decade from now, when load growth and the retirement of older facilities might engender a stronger need for baseload power. Similarly, the methodology does not distinguish a short-term from a long-term contractOffer, though the latter might provide a better fit in the future given possible future portfolio needs. • The methodology doesn’t explicitly address the cost of remarketing power during off-peak periods, though it clearly recognizes the worse fit of resources that generate more in the early hours of the morning and more in winter spring rather than in summer. • It may be difficult to accommodate the portfolio fit of certain technologies, such as solar thermal facilities with storage, in the framework being used. It is not clear whether such a facility that has a limited ability to schedule generation past the peak hours of insolation and a limited ability to respond to dispatch orders fits well into the existing scoring system for portfolio fit. • In the greater scheme of things, the portfolio fit criterion does not appear to have as much impact as others such as market valuation, project viability, and RPS goals. To Xxxxxx’x knowledge there has not yet been a situation where a renewable PPAXxxxx’s superior portfolio fit score has enabled it to be shortlisted despite inferior value or viability; nor has there been a situation where an inferior portfolio fit score has led a PPA an Offer to be rejectedrejected from a short list. While the ability to dispatch a renewable resource may confer a certain attraction to a renewable generation project from a system operator’s point of view, it seems that on average such an operational benefit is generally outweighed by the costs required to achieve dispatchability.