Market Valuation. PG&E’s valuation methodology has several advantages over methods used by other utilities: • It is rooted in a comparison to market price forwards rather than to hypothetical model outputs for future price based on inputs such as forecast demand, modeled supply increases, and fuel market price forwards. • It is relatively rapid to turn around valuations of several PPAs at once, in contrast to the burdensome nature of running multiple cases of traditional utility production cost models with dozens of cases for each generating unit assumed built vs. assumed not built to calculate system cost differences between scenarios with each unit in vs. out. • It uses a valuation concept that is generally accepted in the electric power industry. • It provides an intuitive valuation based on the degree to which a generating unit is “in the money” with respect to market price There are some drawbacks with this approach, some of which are common to any valuation methodology for long-term PPAs: • Because western power market forwards are not liquid and transparent beyond a limited time horizon, PPAs that last for 25 or 30 years must rely on extrapolation of market forward curves for valuation rather than on direct observation of traded prices for power two decades hence. • A certain degree of interpolation or projection is required to achieve hourly granularity in price assumptions. • In the absence of functioning, liquid, transparent markets in California for Resource Adequacy or for Greenhouse Gas compliance, the valuation must rely on fundamental forecasts for the value of capacity and of GHG compliance rather than on traded forward curves. • The methodology assigns Resource Adequacy value to all offered facilities interconnecting within the CAISO except where the project explicitly identifies that it plans to interconnect to the CAISO as an energy-only resource. Such energy-only resources are deemed to have Net Qualifying Capacity of zero by the CAISO. The developer benefits by avoiding the cost of network upgrades for deliverability. However, PG&E ratepayers do not benefit from receiving Resource Adequacy value from the project, so it is appropriate to assign zero RA value in the valuation. • Xxxxxx has a concern about the extent to which projects that propose to interconnect to the CAISO through the SGIP will actually deliver the full calculated amount of Resource Adequacy to PG&E customers, in the absence of a deliverability assessment. The valuation methodology assi...

Market Valuation. General strengths and weaknesses. PG&E’s valuation methodology has several advantages over methods used by other utilities: • It is rooted in a comparison to market forward prices rather than to model outputs for hypothetical future market price based on inputs such as forecast demand, modeled supply increases, and fuel price scenarios. • It is relatively rapid to turn around several valuations at once, in contrast to the burdensome nature of running multiple cases of traditional utility production cost models with dozens of cases for each generating unit assumed built vs. assumed not built to calculate system cost differences between scenarios with each unit in vs. out. • Net Market Value is a valuation concept that is generally accepted in the electric power industry. • It provides an intuitive valuation based on the degree to which generating units are “in the money” with respect to market price. There are some drawbacks with this approach, some of which are common to any valuation methodology for long-term PPAs: • Because western power forward markets are not liquid and transparent beyond a limited time horizon, PPAs that last for up to 20 or 25 years must rely on extrapolation of market forward curves rather than on direct observation of traded prices for power two decades hence. Such extrapolated prices are unlikely to be accurate forecasts, but the ranking of Offers using extrapolated inputs might still be directionally correct. • A certain degree of interpolation or projection is required to achieve hourly granularity in price assumptions. The diurnal shape of California power market pricing is changing in response to the addition of new renewable resources, and it is rather difficult to forecast with accuracy how hourly price profiles might evolve over three decades. • In the absence of functioning, liquid, transparent markets in California for Resource Adequacy, the valuation must rely on fundamental forecasts for the value of capacity rather than on traded forward curves. These forecasts peg the value of RA at rather high and monotonically increasing levels in future years, whereas the record so far in deregulated wholesale power markets is one of boom and bust cycles where the value of capacity flies up in years of scarcity then collapses for extended periods after a burst of overbuilding new plants. • There are challenges in estimating what Net Qualifying Capacity will be assigned by the CAISO to a project that does not yet exist, and at a poi...

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Market Valuation. The market value of investments made pursuant to this Agreement shall be determined at least monthly and whenever the method of valuation authorized by the Agreement does not accurately reflect the value of Participants’ interests in such investments.

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Market Valuation. In presenting the RE Astoria PPA to its Procurement Review Group in November 2013, the utility estimated the “portfolio-adjusted value” (PAV) of the contract ' among When PG&E selected a short list in March 2013, it estimated PAV for all Offer variants. At that time the RE Astoria Offer for a 100-MW project among conforming Category 1 Offer variants submitted the 2012 RPS RFO. The parties subsequently altered the contract price during negotiations as described in the previous chapter. Xxxxxx performed a valuation of all Offers to the 2012 RPS solicitation using a much simpler but independent methodology with independently determined input parameters. Using that approach to estimating net market value, Xxxxxx ranks the executed version of the RE Astoria contract in the highest-valued decile among Offers received. Based on these comparisons, Xxxxxx’x opinion is that the RE Astoria contract ranks high in market valuation. PORTFOLIO FIT Deliveries from the RE Astoria PPA are expected to begin in January 2019. The utility’s 2012 RPS procurement plan expressed an expectation that it would have procured sufficient RPS-eligible energy to meet its RPS compliance needs through the third compliance period, and a strong preference for Offers with deliveries beginning in 2019 or later.7 In its 2012 RPS RFO, PG&E eliminated its prior use of a stand-alone metric for portfolio fit and developed an adjustment used in calculating Portfolio-Adjusted Value that measures RPS Portfolio Need'' 6 PG&E altered the input parameters to its PAV methodology when ranking proposed contracts for selection for execution in November 2013. t , compared to the overall set of input parameters it previously used to select a short list in March 2013. While PG&E routinely updates input parameters such as market forward curve data when analyzing PAV, . At the margin Xxxxxx believes that the alteration changed which PPAs were selected for execution. However, despite this additional burden applied to RE Astoria’s economics in the adjusted valuation, the Offer was selected for execution.

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Market Valuation. In a “mark-to-market analysis,” the present value of the bidder’s payment stream is compared with the present value of the product’s market value to determine the benefit (positive or negative) from the procurement of the resource, irrespective of PG&E’s portfolio. This analysis is based on an evaluation of the contract price in the PPA. The transmission adder adjusts offer prices to include the cost, if any, of bringing the power from the generating facility to PG&E’s network. Each bid is associated with a transmission cluster based upon the location of the facility. The costs in the CAISO interconnection study are used for bid evaluation. PG&E’s analysis of the market value and transmission adder is confidential and addressed in Confidential Appendix A.

Market Valuation. Building Value New Year Built Effective Year Built Condition Code Remodel Rating Year Remodeled Depreciation % Functional Obsol External Obsol Trend Factor Special Condition Condition % Percent Good RCNLD Dep % Ovr Dep Ovr Comment Misc Imp Ovr Misc Imp Ovr Comment Cost to Cure Ovr Cost to Cure Ovr Comment 0 0 1.000 0 OB - OUTBUILDING & YARD ITEMS(L) / XF - BUILDING EXTRA FEATURES(B) Code Description L/B Units Unit Price Year Cond. Cd Percent Grade Grade Adj. Appr. Value SHED SHED Shed Shed L L 1 1 100.00 400.00 AV AV 11 C C 0.70 0.70 100 400 BUILDING SUB-AREA SUMMARY SECTION Code Description Living Area Floor Area Eff Area Unit Cost Undeprec Value Property Location 0000 X XXX XXXXXXX Map ID 46A/ 0/ / 0/ Xxxx Frontage RTS 11 & 762 PAVED District: 02 Fort Chiswell State Use Comm - Indl - Vac Vision ID 2401 Account # 2659 Bldg # 1 Sec # 1 of 1 Card # 1 of 1 Print Date 2/8/2023 12:28:48 AM OTHER ASSESSMENTS CURRENT OWNER TOPO UTILITIES STRT / ROAD LOCATION CURRENT ASSESSMENT GATEWAY ENTERPRISES, LLC E5 PROPERTIES, LLC PO BOX 806 WYTHEVILLE VA 24382 0 Well Type Description Code MARKET VALUE USE VALUE 00000 XXXXX XXXXXX, XX 0 Septic Building Land 400 400 500 41,500 500 41,500 SUPPLEMENTAL DATA Tax Map #Area Code Ag Dist Co User Field User Field User Field 046A-001-0000-0001 01:Wythe County 00:None User Field Appeal Ch N Appeal No N:No VISION GIS Id 046A-001-0000-0001 Associated P Total 42,000 42,000 RECORD OF OWNERSHIP BK-VOL/PAGE SALE DATE Q/U V/I SALE PRICE VC PREVIOUS ASSESSMENTS (HISTORY) GATEWAY ENTERPRISES, LLC 210002266 07-21-2021 Q V 150,000 12 Year Code Total Assesse Year Code Assessed V Year Code Total Assesse XXXXXXX XXXXXXXX XXXXXXXXX 180002736 0 10-09-2018 U V 0 00 2022 000 000 0000 400 500 2020 400 500 XXXXXX XXXXXX S & 970003479 0 09-16-1997 U V 0 00 400 41,500 400 41,500 400 41,500 XXXXXXX XXX X SR 492653 0 09-09-1997 U V 93,750 00 XXXXXX XXXXXX X & XXXXXX X 480098 0 02-13-1997 U V 0 00 Total 42,000 Total 42,000 Total 42,000 This signature acknowledges a visit by a Data Collector or Assessor Code Description Number Amount Interest

Market Valuation. In its “mark-to-market analysis,” PG&E compares the present value of the bidder’s payment stream with the present value of the product’s market value to determine the benefit (positive or negative) from the procurement of the resource, irrespective of PG&E’s portfolio. PG&E evaluates the bid price and indirect costs, such as the costs the utility may incur to interconnect the resource to the transmission grid, or to integrate the generation into the system-wide electrical supply.4 4 PG&E’s RPS Renewable Energy Procurement Plan, June 24, 2004, page 6, lines 4-18.

Market Valuation. PG&E did not calculate Portfolio-Adjusted Values for the bids for these RECs. That would have been consistent with its past practice in renewable energy procurement and with the 2015 RPS procurement plan’s statement that the use of PAV ensures procurement providing the best fit for PG&Es portfolio at the least cost. However, in the context of ranking competing bids for the same 60 GWh volume, a ranking by highest price should be equivalent to a ranking by highest PAV. Transmission costs, congestion costs, capacity value, project viability, and other valuation components are identical across bids because they are attributes of the same 60 GWh regardless of buyer. Other issues. In the process of soliciting and evaluating bids for the 60 GWh volume, PG&E’s primary deviation from the Energy Division’s suggested principles for evaluating fairness is that PG&E did not thoroughly define the evaluation criteria it would apply to the bids and communicate them transparently to potential bidders. There was no written protocol describing qualitative and quantitative criteria and how they would be used to rank bids. PG&E did however include this text in its e-mailed note to its contact list: “PG&E will transact with the highest bidder that meets This statement omitted any specifics of how PG&E would apply creditworthiness as an evaluation criterion. There was no communication about what would constitute acceptable credit quality or posted collateral that would meet PG&E’s requirement. In contrast PG&E’s formal RPS solicitation protocols have spelled out in some detail the security requirements for RFO participants, have provided a form of letter of credit, and detailed within a form agreement what credit ratings are acceptable to PG&E for counterparty’s commercial bank to provide a letter of credit. When applying non-valuation criteria it is particularly important to provide participants with clear guidance on how their proposals will be evaluated in order to ensure that participants view PG&E’s methodology as fair. While PG&E has, with CPUC approval, used credit as a criterion in its formal RPS solicitations for several years, its use has always been accompanied by a written description of the evaluation criterion in a public solicitation protocol. In its decisions establishing the RPS program, the CPUC directed “the utilities to use transparent criteria in evaluating the tie-breakers used to rank bids”.5 The practice in this e-solicitation falls short of the ideal. I...

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