Common use of RPS GOALS Clause in Contracts

RPS GOALS. PG&E assesses the degree to which the Offer is consistent with and will contribute to the state of California’s goals for the RPS Program, and the degree to which the Offer will 7 California Public Utilities Commission, Decision 00-00-000, “Decision Conditionally Accepting 2009 Renewables Portfolio Standard Procurement Plans and Integrated Resource Plan Supplements”, June 8, 2009, page 20. Xxxxxx agrees that it is imprudent to rely excessively on the numerical score to make a judgment about the likelihood a project will come on-line on schedule. contribute to PG&E’s goals for supplier diversity. The CPUC has articulated specific attributes of renewable generation projects which can be considered in utility procurement evaluations, such as benefits to low-income or minority communities, environmental stewardship, and resource diversity, that do not clearly fall within the other evaluation criteria. Similarly, the CPUC has issued a Water Action Plan, and to the extent a renewable energy project makes use of water on site, its proposed use of water is evaluated for consistency or inconsistency with the CPUC’s recommended water conservation practices. Additionally, the state Legislature articulated benefits anticipated for the RPS program in the Legislative Findings and Declarations associated with the laws passed to create the program, and PG&E assesses the degree to which Offers would promote these benefits. The Governor of California issued Executive Order S-06-06 that, among other things, established a goal that the state will meet 20% of its renewable energy needs with electricity generated from biomass. PG&E assesses the extent to which an Offer supports that goal. PG&E has well-defined corporate objectives for supplier diversity, and evaluates whether the Participant is, or will make a good faith effort to subcontract with, Women-, Minority-, and Disabled Veteran-owned Business Enterprises (WMDVBEs). In the 2011 RPS RFO PG&E asked Participants to submit a completed Supplier Diversity Questionnaire with information on the Participant’s WMDVBE status, its intent to subcontract with diverse entities, and its own supplier diversity program. The PG&E team scored these questionnaires as part of evaluating Offers against the overall RPS Goals criterion. A change in the 2011 RFO is that PG&E stated that it will include in resulting PPAs a contractual requirement to make good-faith efforts towards a contracted supplier diversity target, and to report annual payments to diverse subcontractors. In Attachment L it requested Participants to specify the percentage of subcontracting spending would be to WMDVBEs. TRANSMISSION COST ADDERS The cost of transmission to move power from a project offered in the solicitation to PG&E retail customers is considered in valuation. The methodology takes into account the need to upgrade the transmission network in order to accommodate the increment of new renewable generation in locations (clusters) that may require significant capital outlay, either by PG&E or by other IOUs. Each California IOU publishes a Transmission Ranking Cost Report (TRCR) which identifies clusters that require network upgrades to accommodate new generation, and estimates a proxy for the cost of upgrades and the amount of new generation that would trigger the need for upgrades. If a CAISO interconnection study has been completed, the team generally uses the more project-specific estimate of transmission network upgrade costs identified in the study rather than the TRCR-based proxy (assuming that the Participant has included the study as part of its Offer package, as was required). PG&E takes into account both the cost of upgrades required to achieve a reliable interconnection as well as the cost required to achieve a fully deliverable interconnection, for Offers that propose to obtain a full capacity interconnection. While PG&E did not require Participants to achieve full capacity interconnections in the RFO, Offers that proposed energy-only interconnections were not credited with any Resource Adequacy value. The Solicitation Protocol and its Attachment K lay out the analysis required to allocate network upgrade costs to individual Offers. This includes the use of a model to calculate the present value of the impact of the network upgrade capital cost on revenue requirement, estimating in 2011 dollars per MWh the impact on customers of the upgrade. This year, PG&E required Offers to specify a CAISO delivery point and a price at that point, rather than allowing them to propose delivery outside the CAISO. Alternatively, these Participants could propose to use a pseudo-tie arrangement or dynamic scheduling arrangement for the CAISO to manage delivery, despite a project’s interconnection in a non- CAISO balancing authority area.

RPS GOALS. PG&E assesses the degree to which the Offer is consistent with and will contribute to the state of California’s goals for the RPS Program, and the degree to which the Offer will 7 8 California Public Utilities Commission, Decision 00-00-000, “Decision Conditionally Accepting 2009 Renewables Portfolio Standard Procurement Plans and Integrated Resource Plan Supplements”, June 8, 2009, page 20. Xxxxxx agrees that it is imprudent to rely excessively on the numerical score to make a judgment about the likelihood a project will come on-line on schedule. contribute to PG&E’s goals for supplier diversity. The CPUC has articulated specific attributes of renewable generation projects which can be considered in utility procurement evaluations, such as benefits to low-income or minority communities, environmental stewardship, and resource diversity, that do not clearly fall within the other evaluation criteria. Similarly, the CPUC has issued a Water Action Plan, and to the extent a renewable energy project makes use of water on site, its proposed use of water is evaluated for consistency or inconsistency with the CPUC’s recommended water conservation practices. Additionally, the state Legislature articulated benefits anticipated for the RPS program in the Legislative Findings and Declarations associated with the laws passed to create the program, and PG&E assesses the degree to which Offers would promote these benefits. The Governor of California issued Executive Order S-06-06 that, among other things, established a goal that the state will meet 20% of its renewable energy needs with electricity generated from biomass. PG&E assesses the extent to which an Offer supports that goal. PG&E has well-defined corporate objectives for supplier diversity, and evaluates whether the Participant is, or will make a good faith effort to subcontract with, Women-, Minority-, and Disabled Veteran-owned Business Enterprises (WMDVBEs). In the 2011 RPS RFO PG&E asked Participants to submit a completed Supplier Diversity Questionnaire with information on the Participant’s WMDVBE status, its intent to subcontract with diverse entities, and its own supplier diversity program. The PG&E team scored these questionnaires as part of evaluating Offers against the overall RPS Goals criterion. A change in the 2011 RFO is that PG&E stated that it will include in resulting PPAs a contractual requirement to make good-faith efforts towards a contracted supplier diversity target, and to report annual payments to diverse subcontractors. In Attachment L it requested Participants to specify the percentage of subcontracting spending would be to WMDVBEs. TRANSMISSION COST ADDERS The cost of transmission to move power from a project offered in the solicitation to PG&E retail customers is considered in valuation. The methodology takes into account the need to upgrade the transmission network in order to accommodate the increment of new renewable generation in locations (clusters) that may require significant capital outlay, either by PG&E or by other IOUs. Each California IOU publishes a Transmission Ranking Cost Report (TRCR) which identifies clusters that require network upgrades to accommodate new generation, and estimates a proxy for the cost of upgrades and the amount of new generation that would trigger the need for upgrades. If a CAISO interconnection study has been completed, the team generally uses the more project-specific estimate of transmission network upgrade costs identified in the study rather than the TRCR-based proxy (assuming that the Participant has included the study as part of its Offer package, as was required). PG&E takes into account both the cost of upgrades required to achieve a reliable interconnection as well as the cost required to achieve a fully deliverable interconnection, for Offers that propose to obtain a full capacity interconnection. While PG&E did not require Participants to achieve full capacity interconnections in the RFO, Offers that proposed energy-only interconnections were not credited with any Resource Adequacy value. The Solicitation Protocol and its Attachment K lay out the analysis required to allocate network upgrade costs to individual Offers. This includes the use of a model to calculate the present value of the impact of the network upgrade capital cost on revenue requirement, estimating in 2011 dollars per MWh the impact on customers of the upgrade. This year, PG&E required Offers to specify a CAISO delivery point and a price at that point, rather than allowing them to propose delivery outside the CAISO. Alternatively, these Participants could propose to use a pseudo-tie arrangement or dynamic scheduling arrangement for the CAISO to manage delivery, despite a project’s interconnection in a non- CAISO balancing authority area.

RPS GOALS. PG&E assesses the degree to which the Offer a contract is consistent with and will contribute to the state of California’s goals for the RPS Program, and the degree to which the Offer a contract will 7 California Public Utilities Commission, Decision 00-00-000, “Decision Conditionally Accepting 2009 Renewables Portfolio Standard Procurement Plans and Integrated Resource Plan Supplements”, June 8, 2009, page 20. Xxxxxx agrees that it is imprudent to rely excessively on the numerical score to make a judgment about the likelihood a project will come on-line on schedule. contribute to PG&E’s goals for supplier diversity. The CPUC has articulated specific attributes of renewable generation projects which can be considered in utility procurement evaluations, such as benefits to low-income or minority communities, environmental stewardship, and resource diversity, that do not clearly fall within the other evaluation criteria. Similarly, the CPUC has issued a Water Action Plan, and to the extent a renewable energy project makes use of water on site, its proposed use of water is evaluated for consistency or inconsistency with the CPUC’s recommended water conservation practices. Additionally, the state California Legislature articulated program benefits anticipated for the RPS program in the Legislative Findings and Declarations associated with the laws passed to create the program, and PG&E assesses the degree to which Offers contracts would promote these benefits. The Governor of California issued Executive Order S-06-06 that, among other things, established a goal that the state will meet 20% of its renewable energy needs with electricity generated from biomass. PG&E assesses the extent to which an Offer a project supports that goal. PG&E has well-defined corporate objectives for supplier diversity, and evaluates whether the Participant counterparty is, or will make a good faith effort to subcontract with, Women-, Minority-, and Disabled Veteran-owned Business Enterprises (WMDVBEs)Enterprises. In PG&E’s methodology for scoring projects in the 2011 RPS RFO PG&E asked Participants to submit a completed Supplier Diversity Questionnaire with information solicitations on the Participant’s WMDVBE status, its intent to subcontract with diverse entities, and its own supplier diversity program. The PG&E team scored these questionnaires as part of evaluating Offers against the overall their support for RPS Goals criterioninvolves numerically scoring attributes of the proposal. A change in the 2011 RFO This numerical approach is that PG&E stated that it will include in resulting PPAs a contractual requirement typically not employed to make good-faith efforts towards a contracted supplier diversity target, and to report annual payments to diverse subcontractors. In Attachment L it requested Participants to specify the percentage of subcontracting spending would be to WMDVBEsevaluate bilaterally negotiated contracts. TRANSMISSION COST ADDERS The cost of transmission to move power from a project offered in the solicitation to PG&E retail customers is considered in the process of market valuation. The methodology takes into account the possible need to upgrade the transmission network in order to accommodate the increment of new renewable generation in locations (clusters) that may require significant capital outlay, either by PG&E or by other IOUs. Each California IOU publishes a Transmission Ranking Cost Report (TRCR) which identifies clusters that would require network upgrades to accommodate some level of new generation, and estimates a proxy for the cost of upgrades and the amount of new generation that would trigger the need for upgrades. If a CAISO interconnection study has been completed, the team generally uses can use the more project-specific estimate of transmission network upgrade costs identified in the study rather than the TRCR-based proxy (assuming that the Participant has included the study as part of its Offer package, as was required)TRCR proxy. PG&E takes into account both does not use TRCR adders in the cost evaluation of bilaterally negotiated contracts, and did not use a TRCR adder in evaluating the ERP contract amendment; the facility is already interconnected to the grid and operating, and continued operation will likely require no network upgrades required to achieve a reliable interconnection as well long as the cost required to achieve QF continues operating under its existing agreement, which includes a fully deliverable interconnection, for Offers that propose to obtain a full capacity interconnection. While PG&E did not require Participants to achieve full capacity interconnections in the RFO, Offers that proposed energyCPUC-only interconnections were not credited with any Resource Adequacy value. The Solicitation Protocol and its Attachment K lay out the analysis required to allocate network upgrade costs to individual Offers. This includes the use of a model to calculate the present value of the impact of the network upgrade capital cost on revenue requirement, estimating in 2011 dollars per MWh the impact on customers of the upgrade. This year, PG&E required Offers to specify a CAISO delivery point and a price at that point, jurisdictional interconnection rather than allowing them to propose delivery outside the CAISO. Alternatively, these Participants could propose to use a pseudoFERC-tie arrangement or dynamic scheduling arrangement for the CAISO to manage delivery, despite a project’s interconnection in a non- CAISO balancing authority areajurisdictional interconnection.