Distribution Investment Deferral Framework CPUC Workshop December 12

Distribution Investment Deferral Framework CPUC Workshop December 12 th, 2016

Summary • All grid needs should be evaluated against deferral framework • • Deferral framework fits into existing distribution planning process Projects passing technical, economic and practical screens should be made available for competitive sourcing • Data transparency ensures competitive process • • All grid needs data should be available to DPAG members Utility application of deferral framework should be available to DPAG • Sensitive data can be kept from market participants, while still allowing market participants to engage in evaluation process • • DPAG to oversee application of deferral framework as well as advise on solicitation structure and approach Only PSG to view competitive market information within the solicitation process Solar. City Confidential Slide 2 2

Distribution Planning Process Source: Joint IOUs DRP Presentations Solar. City Confidential Slide 3 3

Applying the Deferral Framework Input into LNBAs A potential grid needs planning and sourcing process 3 Utility Performs Grid Needs Analyses Grid Needs Publish Complete Grid Needs 4 Evaluate Options Utility Applies Deferral Framework Utility Defines Sourcing Approach Utility DPAG PRG Data Publish Draft Deferral List DPAG Advises PRG Authorizes DPAG Authorizes Utility Sources Projects Publish Final Deferral List PRG Authorizes Execute Contracts Solar. City Confidential Slide 4 4

Deferral Framework Complete Grid Needs Technical Screen • Competitive Solicitation Working Groupidentified services ‒ Capacity ‒ Voltage ‒ Reliability / Resiliency • DPAG to expand categories of deferrable projects Economic Screen Practical / Programmatic • Consider the total • Consider timing of need and cost of all solutions available to ratepayers sourcing options ‒ Capex, Opex, • Consider Utility Return, magnitude of and Taxes need and • Utilize net costs of appropriate DERs, not gross sourcing options • Utilize publically available project costs, rather than proprietary costs (i. e. Reference Cost Library) Draft Deferral List DPAG Review • Deferral Framework is applied by utility and reviewed by the DPAG ‒ Market sensitive information not available to market participants • Final list of deferrable projects published after review by DPAG ‒ All feasible projects included Solar. City Confidential Slide 5 5

DPAG vs. PRG Distribution Planning, Deferral Evaluation and Solicitation Roles DPAG PRG Provide input on structure and details of solicitation or other sourcing options Input Approve Provide input on structure of solicitation evaluation framework Input Approve Advise on distribution planning studies, assumptions, approach Review application of Technical Feasibility Screen Review application of Economic Feasibility Screen Review application of Practical / Programmatic Screen Approve solicitation evaluation framework Evaluate and approve solicitation bids Solar. City Confidential Slide 6 6

Value of Market Participant Engagement • Market participants have most current and complete information about the capabilities of the market • Latest knowledge on DER technical capabilities • Latest knowledge of business models, value streams, and costs • Market participants can advise on how to structure solicitations to result in lowest cost solutions • Market participants can advise on how to maximize the number and diversity of assets that can participate Solar. City Confidential Slide 7 7

Summary • All grid needs should be evaluated against deferral framework • • Deferral framework fits into existing distribution planning process Projects passing technical, economic and practical screens should be made available for competitive sourcing • Data transparency ensures competitive process • • All grid needs data should be available to DPAG members Utility application of deferral framework should be available to DPAG • Sensitive data can be kept from market participants, while still allowing market participants to engage in evaluation process • • DPAG to oversee application of deferral framework as well as advise on solicitation structure and approach Only PSG to view competitive market information within the solicitation process Solar. City Confidential Slide 8 8