Common use of INDEPENDENT OFFER ANALYSES Clause in Contracts

INDEPENDENT OFFER ANALYSES. Xxxxxx conducted its own rather simplified valuation analysis. PG&E’s and Xxxxxx’x valuations generally correlated well for many Offers, but with a fair amount of noise in the comparison, as shown in Figure 3 that compares the two sets of valuations. Some of the differences between valuations include: • Less value assigned to Resource Adequacy in the independent assessment, which tends to lower the value ranking of projects with the most estimated Net Qualifying Capacity such as solar generation; • Less value assigned to projects interconnecting in non-CAISO balancing authority areas; • Less of a premium assigned to projects with later CODs or longer delivery terms. This comparison was useful in quality control to identify errors in PG&E’s or the IE’s input parameters. Also, the comparison helped identify what factors caused specific Offers to be ranked high or low in PG&E’s short-listing process, such as the impact of the discount rate assumption, the on-line date, and the size of transmission adder. Xxxxxx also scored each Offer for viability independently of PG&E’s analysis. This was useful to get an estimate of what the standard error of the Calculator is, and a sense of whether differences in score reflect significant differences in viability or are within the noise of the method. Xxxxxx emerged from the comparison (shown in Figure 4) with a view that differences of a dozen or fewer points in viability score may not reflect significant differences in the likelihood that project will succeed in attaining commercial operation on schedule, given the modest precision of the tool and the subjectivity of its use. PG&E valuations, $/MWh • Lower IE scores for projects proposing very large solar photovoltaic facilities; • Lower IE scores for projects from developers with experience only in distributed generation (e.g. beyond the meter) projects rather than wholesale generation; • Lower IE scores for projects for which specific network upgrades are as yet poorly characterized.

INDEPENDENT OFFER ANALYSES. Xxxxxx conducted its own rather simplified valuation analysis. PG&E’s and Xxxxxx’x valuations generally correlated well for many Offers, but with a fair amount of noise in the comparison, as shown in Figure 3 that compares the two sets of valuations. Some of the differences between valuations include: •  Less value assigned to Resource Adequacy in the independent assessment, which tends to lower the value ranking of projects with the most estimated Net Qualifying Capacity such as solar generation; •  Less value assigned to projects interconnecting in non-CAISO balancing authority areas; •  Less of a premium assigned to projects with later CODs or longer delivery terms. This comparison was useful in quality control to identify errors in PG&E’s or the IE’s input parameters. Also, the comparison helped identify what factors caused specific Offers to be ranked high or low in PG&E’s short-listing process, such as the impact of the discount rate assumption, the on-line date, and the size of transmission adder. Xxxxxx also scored each Offer for viability independently of PG&E’s analysis. This was useful to get an estimate of what the standard error of the Calculator is, and a sense of whether differences in score reflect significant differences in viability or are within the noise of the method. Xxxxxx emerged from the comparison (shown in Figure 4) with a view that differences of a dozen or fewer points in viability score may not reflect significant differences in the likelihood that project will succeed in attaining commercial operation on schedule, given the modest precision of the tool and the subjectivity of its use. PG&E valuations, $/MWh •  Lower IE scores for projects proposing very large solar photovoltaic facilities; •  Lower IE scores for projects from developers with experience only in distributed generation (e.g. beyond the meter) projects rather than wholesale generation; •  Lower IE scores for projects for which specific network upgrades are as yet poorly characterized.