Market Valuation. General strengths and weaknesses. PG&E’s valuation methodology has several advantages over methods used by other utilities: Price vs. Value. PG&E’s LCBF methodology takes into account both proposed price and estimated net value of each Offer, in the sense that price is a key input to the utility’s valuation model. However, PG&E ranks Offers and Offer variants by calculated net value to make a primary screening for selection purposes, and does not construct or review a separate ranking by contract price. The valuation ranking takes into account the total cost to ratepayers of a PPA by including the contract payments (or purchase price) for a project and the transmission rate impact of required network upgrades and the effect of differing market prices across zones on the attractiveness of a project’s output. When reviewing Offers to make a short list, PG&E does include information on LCBF-based net value and pricing, but the focus is on net value including transmission cost impacts rather than on contract price.
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