California Public Utilities Commission California Energy Commission Los

California Public Utilities Commission California Energy Commission Los Angeles Department of Water and Power Aliso Canyon’s Impact on Electric Reliability Technical Analysis and Action Plan Joint Agency Workshop April 8, 2016

DOGGR is Overseeing Comprehensive Safety Review • Goal: Ensure no other wells at Aliso Canyon could cause another leak – Safety program developed in cooperation with independent technical experts from national labs • Gas may be injected into Aliso Canyon only after all 114 wells have passed comprehensive tests or have been isolated. • New injections could increase gas pressure, so all wells must be fully safe and operational or be separated from the reservoir • Unknowns: when safety review will be completed; if or how many wells will be cleared to operate; the ultimate production capability of the wells • Division of Oil, Gas & Geothermal Resources (DOGGR) has issued emergency regulations for all gas storage facilities and is developing new permanent regulations – Includes limits on maximum pressure for all facilities, including Aliso Page 2

Working Since December to Understand Reliability Impacts and to Develop Action Plan • In compliance with Governor’s Proclamation, reliability studies performed by CPUC, CEC, CAISO and LADWP • Relied on support from So. Cal. Gas to analyze operations impacts and curtailment scenarios • Technical Assessment Report and Draft Mitigation Action Plan Released on April 5 th • Analysis focused on summer 2016 – Separate issues for next winter, yet to be fully assessed – Winter workshop planned for July or August • Report assessing long-term viability of natural gas storage; due in 2017 Page 3

Aliso Canyon has been Drawn Down to 15 Bcf • Worked in November and December to extract gas as quickly as possible to assist in reducing/stopping leak • Reliability analysis showed some Aliso gas is needed • Discontinued withdrawals per CPUC Order of 1/21/16 • No new injections have occurred since the leak • Remaining 15 billion cubic feet (Bcf) intended to: – help meet peak demand in recent winter – provide withdrawals for upcoming summer – support gas operations for winter 2016 • Uncertainty of remaining gas: Withdrawal capability shrinks as diminished inventory reduces field pressure Page 4

Aliso Supports ~9, 800 megawatts: 40% LADWP/ 60% in CAISO Critical for Peak Day and Contingency Reserve Situations 5

Capacity of Pipe and Other Storage Indicates General Risk Supply/Demand System Design (Bcf/day) Actual Experience (Bcf/day) Pipeline Capacity Supply 3. 8 3. 0 Other Storage Supply (without Aliso) 1. 7 1. 0 5. 5 4. 0 -5. 0 0. 5 (1. 0) TOTAL SUPPLY Peak Gas Demand (winter) RESERVE MARGIN • Typical outages can reduce capacity 0. 5 -1. 0 Bcf/day • Electric generation typically requires 1. 0 -2. 0 Bcf/day Page 6

Aliso Canyon Used Most Days of Year • • Aliso is the largest gas storage facility inside LA Basin; helps serve 11 million citizens Working capacity is 86 Bcf; daily withdrawal ~1. 8 Bcf; inject ~0. 4 Bcf Gas delivered into LA Basin is limited by pipeline capacity and velocity Gas from Aliso Canyon: – – • Helps to manage fast changes in pipe system flows Helps balance difference between scheduled gas and actual gas flows Aliso Canyon withdrawals were needed on 134 out of 151 “winter” days and 70 out of 214 “summer” days: Average Days per Year Gas Withdrawn from Aliso (2012 - 2015) Note: Historical withdrawal from Aliso could have been for operational or market reasons Page 7

Technical Assessment Group Consisted of CAISO, CPUC, CEC, LADWP and So. Cal. Gas • Applied industry standard hydraulic model – inputs include minimum and maximum acceptable operating pressures – simulates gas flows and operating pressures during gas day – used to determine when to add capacity or if new load can be served – frequently tested against actual operations – So. Cal. Gas frequently performs modeling for third-parties consistent with Public Utilities Code on proprietary models Page 8

Simulated Four Actual Operations Days • • DATE CONDITION Demand (Bcf per Day) 9/16/14 LADWP Peak Day 3. 5 7/30/15 Large Electric Generation Ramp 3. 2 9/9/15 CAISO – Large Difference between Day Ahead and Real Time actual + LADWP 2015 Peak 3. 5 12/15/15 Winter Day and High Electric Generation 4. 0 Assumed no planned or unplanned gas system outages Honor Rancho, La Goleta fully used; Playa Del Rey held in reserve Aliso Canyon considered unavailable Must restore system to neutral balance overnight to prevent cascading problems on subsequent days Page 9

Analysis Verified Risks to Reliability 1. Scheduled flowing gas can fail to meet actual demand 2. Planned and unplanned gas system outages can limit pipeline and other storage availability 3. Rapid ramping of electric generation can exceed dynamic capability of gas system • Recovering from contingencies • Following changes in renewable generation • Important: gas moves ~30 mph or less Page 10

Confirmed: Serious Risk to Gas/Electric Reliability This Summer • If Aliso is not used, the metropolitan Los Angeles area and surrounding counties could experience 16 summer days of gas curtailment in 2016 – Electric generators are first to be curtailed • Up to 14 summer days may require electric service interruption, potentially to millions of customers • Scenarios leading to gas curtailment and potential electric interruption in order of low to high impact: – Mismatch between scheduled and actual gas demand – Mismatch plus outage at other storage field – Mismatch plus pipeline outage – Mismatch plus outages both on other storage and pipeline Page 11

Mitigation Measures Help, but Do Not Eliminate Risks CATEGORY MITIGATION MEASURE Prudent Aliso Canyon Use • Make Available 15 Bcf Stored At Aliso Canyon to Prevent Summer Electricity Interruptions Tariff Changes • Implement Tighter Gas Balancing Rules • Efficiently Complete the Required Safety Review at Aliso Canyon to Allow Safe Use of the Field • Modify Operational Flow Order Rule • Call Operational Flow Orders Sooner in Gas Day • Provide Market Information to Generators Before Cycle 1 Gas Scheduling • Consider ISO market changes that increase gas-electric coordination Operational Coordination • Increase Electric and Gas Operational Coordination • Establish More Specific Gas Allocation among Electric Generators In Advance of Curtailment • Determine if Any Gas Maintenance Tasks Can be Safely Deferred LADWP Operational Flexibility • Curtail Physical Gas Hedging • Stop Economic Dispatch • Curtail Block Energy and Capacity Sales Reduce Natural Gas and Electricity Use • Ask customers to Reduce Natural Gas and Electricity Energy Consumption • Expand Gas and Electric Efficiency Programs Targeted at Low Income Customers • Expand Demand Response Programs that Target Air Conditioning and Large Commercial Use • Reprioritize Existing Energy Efficiency Towards Projects with Potential to Impact Usage • Reprioritize Solar Thermal Program Spending to Fund Projects for Summer and by end of 2017 Page 12

A Situation Requiring Unprecedented Coordination • Aliso is critical infrastructure for integrated gas and electric service • A significant risk to reliability exists this summer – Particularly from mismatch of expected and actual gas flows • Mitigation measures will help, but do not eliminate risk • Still need to analyze next winter • Consumer support is critical – Need all consumers to help when called upon during Flex Alerts by conserving – Rest of state can also help by conserving energy Page 13