Photovoltaic Program Power Purchase Agreements Request for Offers

Photovoltaic Program Power Purchase Agreements Request for Offers 2011 Solicitation Bidders Conference February 8, 2011

Agenda • Introduction • Commercial Overview • Evaluation Methodology • Map • Interconnection Process • Solicitation Documents • Offer Form • Q&A • Afternoon: Detailed Interconnection Application 1

Document Conflicts • This presentation is intended to be a summary level discussion of the information and requirements established in the RFO materials (it does not include all of the detailed information in the RFO Materials) • To the extent that there any inconsistencies between the information provided in this presentation and the requirements in the RFO Materials, the RFO Materials shall govern 2

Commercial Overview 3

RFO Schedule Event Date/Time February 2 PG&E issues the RFO February 8 Bidders’ Conference March 2 1: 00 P. M. Deadline for Participants to submit Offers and to submit applications for interconnection March 22 Participants provide proof that interconnection applications have been deemed complete and that the Project has received a queue position April 15 PG&E notifies Participants of Selected Offers June 3 Participants with Selected Offers provide proof that interconnection screens have been passed or studies completed[1] TBD Participants provide documentation on or before 2 weeks of the applicable resource adequacy forum deadline that they have made the request for full capacity deliverability status June 10 5: 00 P. M. Participants with Selected Offers submit signed PPAs June 17 PG&E executes PPAs July 15 Target Advice Letter Filing for executed PPAs 4

Independent Evaluator (IE) • Primary role of the IE is to: – Monitor RFO processes to ensure fair and equal treatment of all potential counterparties – Monitor evaluation processes to ensure PG&E has implemented methodology as described and that Offers are treated consistently – Report on RFO process and proposed transactions to CPUC when filed for CPUC approval • The IE performs an independent review of all proposals • The IE may review all proposal data and communications with Participants • 2011 IE is Wayne Oliver of Merrimack Energy Group, Inc. 5

Eligibility • New Photovoltaic systems only • Primarily ground-mounted systems in the 1 to 20 MW range. Rooftop systems also eligible • Aggregation of facilities to achieve the 1 MW minimum threshold allowed if each facility is at least 500 k. W and all facilities interconnect within a single PNode* • Located within PG&E’s service territory • Attest to site control • A complete interconnection application filed by the time of offer submission • Pre time-of-delivery adjusted contract price no greater than $246/MWh • May not participate in the California Solar Initiative or net energy metering programs • Must be scheduled to begin initial operation within 18 months following Commission approval of the PPA • Developer must have previously completed or begun construction of a solar project that is at least 500 k. W *The CAISO Tariff defines Pricing Node (“PNode”) as “[a] single network Node or subset of network Nodes where a physical injection or withdrawal is modeled and for which a Locational Marginal Price is calculated and used for financial settlements. ” 6

Filling the 50 MW Solicitation • 2011 RFO seeks PPAs for a total of 50 MW • If the RFO results in the execution of less than 50 MW of PPAs, the remaining MW will be added to the 2012 solicitation • If the most attractive offers result in more than 50 MW, there are three methods for getting within the 50 MW limit: Most Attractive Offers 1: Request that the last offer to be added reduce its size while holding its $/MWh price. This option is requested in the Offer Form; or 2: Drop the last offer, and add the shortfall to the 2012 RFO; or 3: Drop the last offer, and pick the next most attractive small offer that results in a total of 50 MW or less. The preferred approach will depend on the offers received. 7

Power Purchase Agreements – Terms and Conditions • Two form PPAs – one for offers in the 1 MW to less than 3 MW range; another for offers in the 3 MW to 20 MW range • 20 year delivery terms • Contracts were developed collaboratively with representatives of the solar community • Terms and conditions are non-negotiable. No mark-ups will be allowed • Project Development Security is required to ensure seller completes its project by the Guaranteed Commercial Operation Date: – 1 – <3 MW: $20/k. W upon CPUC approval – 3 – 20 MW: $15/k. W upon contract execution. Then upon CPUC approval stepping up to: • • $20/k. W for projects < 10 MW • $35/k. W for projects 10 MW or greater Delivery Term Security is required in the 3 – 20 MW PPA to ensure the seller meets its obligations throughout the 20 year Delivery Term: – 1 – <3 MW: None – 3 – 20 MW: Six months revenue 8

Power Purchase Agreements – Offer Specifics • Contract terms based on seller’s offer: – Price – Guaranteed Commercial Operation Date (there a few excused delays) – Contract Capacity (MW) – Contract Quantity (GWh) • Guaranteed Energy Production is set at 160% of annual Contract Quantity over a 2 year period (3 – 20 MW PPA only) • Energy deliveries: – Surplus deliveries – We will pay for energy deliveries up to 120% of the Contract Quantity in a given year – Delivery shortfalls – You will be held to the Guaranteed Energy Production which is based on the Contract Quantity, so provide a realistic estimate of Contract Quantity 9

Time of Delivery (TOD) Factors Monthly Period Jun – Sep Oct. - Dec. , Jan. & Feb. Mar. – May Super-Peak 2. 20 1. 06 1. 15 Shoulder 1. 12 0. 93 0. 85 Night 0. 69 0. 76 0. 64 Payment = Contract Price * TOD Factor * MWh Super-Peak = Noon – 8: 00 PM, Monday – Friday, except NERC Holidays* Shoulder = 6: 00 AM – noon and 8: 00 PM – 10: 00 PM, Monday – Friday, except NERC Holidays; and 6: 00 AM – 10: 00 PM Saturday, Sunday and all NERC Holidays Night = 10: 00 PM – 6: 00 AM, all days Example: A $100/MWh Contract Price would result in payments of $220/MWh for deliveries in July at 2: 00 PM and $106/MWh for deliveries in October at 2: 00 PM *NERC Holidays are New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day 10

Not Part of PV PPA Solicitation • 2011 RPS Solicitation – Hope to issue it Q 2 of 2011 – Draft documents available at • • http: //www. pge. com/b 2 b/energysupply/wholesaleelectricsuppliersolicitation/renewables 2010/index. shtml Renewable Auction Mechanism – CPUC decision issued December 2010 – Open to all RPS-eligible resources 20 MW and less located in the service territories of any California investor owned utility – No schedule at this time for RFO issuance. Proposed protocol will be filed Feb 15 for CPUC approval. The schedule will depend on how long it takes for CPUC approval • Utility-Owned PV Program RFO – 50 MW/yr over 5 years – Separate from this solicitation – Non-public information from this solicitation will not be shared with team conducting the UOG RFO. Code of Conduct available at • • http: //www. pge. com/includes/docs/word_xls/b 2 b/wholesaleelectricsuppliersolicitation/PV_PPA_Code_of_Conduct. DOC Feed-In Tariff – Up to 1. 5 MW – Pricing based on Market Price Referent (MPR). Available without a solicitation. • http: //www. pge. com/b 2 b/energysupply/wholesaleelectricsuppliersolicitation/standardcontractsforpurchase/ 11

Evaluation Methodology 12

Evaluation Methodology Simplified evaluation methodology to streamline the process • Pricing: – Price must be a single value in $/MWh which will remain constant for the contract term. Escalating prices will not be allowed – Best and final price must be submitted with the offer. No price refresh • Supplier diversity: We will take into account the Participant’s status as a WMDVBE and/or an intent or policy of subcontracting with WMDVBEs. • We will combine the pricing and supplier diversity evaluations into an overall score for each offer and rank them from best to worst. • Local Capacity Requirements: If needed as a tie-breaker when selecting Offers, we will favor projects that will be located in CAISO-identified local capacity requirement (“LCR”) areas We will select more than 50 MW of offers for consideration, in case some selected offers don’t make it to the finish line 13

Map 14

PV Program Map • Current PV Program Map on PV Program website (herein referred to as PGE. com). 15

PV Program Map • PG&E is going to replace the existing PV Program map with a new map which will conform with the CPUC’s December 2010 decision in the Renewable Auction Mechanism (RAM) proceeding. • PG&E will use the same map and associated information for both the PV Program and the RAM. 16

PV Program Map • PG&E plans to update the current map to include more information. Here is a representative sample of what we plan to make available: 17

PV Program Map Key features of the new map: • Orange Lines – Primary distribution lines in a Millbrae neighborhood. • Distribution substation locations will also be provided. • Transmission facilities currently are not shown. • Scroll mouse over to obtain an identification number for a specific substation or line. • Use identification number to find specific substation and circuit data in an MS Excel spreadsheet, which will also be on the PGE. com to obtain the info on the next slide. • The current schedule for the new map appearing on PGE. com is March 2011. • This is a tool only, based on a snapshot in time. Your actual interconnection application will determine if capacity is available. 18

PV Program Map • Information that will be available when the new map goes live: – Nominal circuit voltage (i. e. , 12 k. V, 17 k. V or 21 k. V) – Maximum normal circuit capacity (summer) – Projected circuit peak load for summer 2011 – Amount of distributed generation existing on the circuit (circuit allocated capacity) – Difference between the maximum normal circuit capacity and the sum of the allocated capacity – Substation transformer bank number that the circuit is connected t o (e. g. , 1, 2, etc. ) – Maximum normal substation transformer bank rating (summer) – Projected peak load for the substation transformer bank for summer 2011 – Amount of distributed generation existing on the substation transformer (substation allocated capacity) 19

PV Program Map • Information we hope to provide in near future. – Amount of distributed generation in the queue for the circuit (circuit queued capacity) – Amount of distributed generation in the queue for the substation (substation queued capacity) – Difference between the maximum normal substation transformer capacity and the sum of the allocated and queued capacity – Local capacity requirement area (if the substation is located in a local capacity requirement area) 20

Generation Interconnection Study Processes Mark Esguerra Generation Interconnection Services February 8, 2011 21

Topics to Cover • Overview of Wholesale Generation Interconnection Process • Interconnection Processes – Transmission Connections – Distribution Connections • Study Milestones for First Year RFO Program • Timelines for Study Processes 22

Wholesale Generator Interconnection Study Processes • Interconnection process must be complete for generator to deliver power to grid and meet obligations of PV contract • Generator responsible for timely applications and timely completion of applicable process – Not part of RFO solicitation – Interconnection study process (excluding Fast Track Process) should be underway already to meet milestones in 2011 round of the PV RFO 23

Overview of Wholesale Generation Interconnection Process Application Processing Technical Scoping Meeting Technical Studies Interconnection Agreement Project Implementation Transmission Interconnections – Governed by California Independent System Operator Corporation (CAISO) Tariff • PG&E’s transmission interconnections are for 60 k. V and higher • All applications must be submitted to the CAISO • These slides are per CAISO Tariff which is subject to the CAISO Distribution Interconnections – Governed by PG&E’s Wholesale Distribution Tariff (WDT) • PG&E’s distribution voltage level is defined as facilities operating below 60 k. V • All applications must be submitted to PG&E • These slides assume FERC approval of the proposed WDT to be filed in February 2011 24

Study Milestones to Qualify for First Year RFO Application Processing Technical Scoping Meeting Technical Studies Interconnection Agreement Project Implementation • One of the criteria for PG&E’s 2011 PV RFO is to have a completed technical study (Final Report) by June 3, 2011 • Technical Study Process and Report Ø Fast Track Process – Initial Review Technical Final Report Ø Serial (Independent Study) Process – System Impact Study Final Report Ø Cluster Process – Phase II Technical Study Final Report 25

Transmission Interconnection Study Process Criteria Initial and Supplemental Review System Impact and Facilities Study Fast Track • 5 MW Limit • 6 Test Screens • Electrical Independence Screens • Commercial Operation Date Screen Independent Study Process • No MW limit • Financial security requirements • Default process, no MW limit Phase I and II Studies Cluster Study • One annual study • Financial security requirements • All processes may apply for full capacity. Deliverability assessment will be conducted by CAISO in CAISO’s cluster process. 26

Distribution Interconnection Study Processes Criteria PG&E plans on filing the reformed Wholesale Distribution Tariff end of February seeking approval for a March 1 effective date. Initial and Supplemental Review System Impact and Facilities Study Fast Track • 2 MW on 12 k. V and 3 MW on 21 k. V and 5 MW on higher voltages • 10 Test Screens • Electrical Independence Screen (no COD screen) Independent Study Process • No MW limit • Financial security requirements • Default process, no MW limit Phase I and II Studies Cluster Study • One annual study, timelines match CAISO • Financial security requirements • All processes may apply for full capacity. Deliverability assessment will be conducted by CAISO in CAISO’s cluster process. 27

Who is Likely to Qualify for June 3, 2011 Final Report Milestone? Application Processing Technical Scoping Meeting Study Process Technical Studies Interconnection Voltage Interconnection Agreement Technical Study Final Report Required Project Implementation Application Date Deemed Complete by Fast Track Distribution Initial Review March 22, 2011 Fast Track Transmission Initial Review March 22, 2011* Serial (Independent Study) Distribution System Impact Study January 31, 2011 Serial (Independent Study) Transmission System Impact Study December 18, 2010* Cluster Distribution Phase II Does not qualify for 2011 PV RFO Cluster Transmission Phase II ISO Transition Cluster * Subject to CAISO 28

Application Processing Timeline Application Processing Technical Scoping Meeting Technical Studies Interconnection Agreement Project Implementation Application Process Milestone Duration Responsible Party Application Submission Clock Start Customer Application Deemed Complete or Notice of Outstanding Items 10 Business Days (BD) PG&E or CAISO* Customer to provide outstanding items or request extension 10 BD Customer to provide outstanding items if extension requested 20 BD Customer Application Deemed Complete * Subject to CAISO PG&E or CAISO* 29

Solicitation Documents 30

Offer Submittal • Offers must be received by PG&E in electronic form by Wednesday, March 2, 2011 no later than 1: 00 PM • E-mail Offers to PG&E at PVProgram@pge. com and to the I. E. at waynejoliver@aol. com • Electronic documents must be in Microsoft Word or Excel (standard edition 2003 SP 3) as specified in the solicitation documents • Hardcopy or facsimile transmission of Offers is not acceptable • Documents have been updated during the RFO development process. Please make sure you are using the latest forms from the website 31

Information due March 2 • Fully Completed Offer Form (Appendix A) • Applicable Form of PPA (Appendix B 1 or Appendix B 2), including only the Offer facility details and pricing. Mark-ups of the non-price terms and conditions are not permitted • Site Control Questionnaire and Attestation (Appendix C) • Demonstration of Interconnection Application Submission (Appendix D) • Acknowledgement and Commitment of Site Owner (Appendix E) • Supplier Diversity Questionnaire (Appendix F) Submit the above information using only Microsoft Word and Excel, standard edition 2003 SP 3 32

Additional Documents if Offer is Selected • By April 19 – Written notification by Participants whose Offers are selected that they accept the Offer selection and continued participation in the RFO • By June 3 – Documentation that the Offer facility has completed an interconnection system impact study or initial review, as applicable • By June 10 – Provide a signed PPA with completed appendices 33

Communications and Website • All RFO documents are available on PG&E’s website at www. pge. com/rfo. Click on Solar PV PPA Program RFO, or paste and bookmark the following in your browser: http: //www. pge. com/b 2 b/energysupply/wholesaleelectricsuppliersolicitation/PVRFO/index. s html • Announcements, updates and Q&As will also be posted on the website • Communications should be directed to: PVProgram@pge. com with a copy to the I. E. at Waynejoliver@aol. com 34

Offer Form 35

Offer Form • Instructions tab contains a list of detailed instructions and useful references/definitions • Some cells have additional drop down choices or information upon clicking • Fill out the whole thing • Some cells will be auto-calculated for you 36

Offer Form – Product Description 37

Offer Form – Product Description 38

Offer Form – Product Description 39

Offer Form – Product Description 40

Offer Form – Product Description 41

Offer Form – Aggregated Facilities • Complete this tab for offers where there is aggregation of facilities. Input data for the projects being aggregated. • Per the Protocol, aggregation of facilities to meet the minimum 1 MW size requirement is allowed only if each facility is no less than 500 k. W and the project comprised of the aggregated facilities interconnects with a single CAISO PNode. Up to 6 sites can be aggregated for a total no greater than 3 MW. 42

Offer Form – Aggregated Facilities 43

Offer Form – Developer Experience • Per CPUC Resolution E-4368, the IPP company and/or member of the project development team must have either completed or begun construction of solar project that is at least 500 k. W. 44

Offer Form – Contract Quantity • When entering contract quantity below, take into consideration the following: • The contract quantity should be the expected output of the facility. • Degradation should be taken into consideration when entering the contract quantity for each contract year. • Contract quantity should be net amount of energy delivered, net of station use. • For offers where there is aggregation of facilities, input the TOTAL contract quantity of the aggregated facilities. No more than 6 sites can be aggregated for a total no greater than 3 MW. The tab Aggregated Facilities must also be completed. 45

Q&A 46

Detailed Interconnection Session Begins at 1: 15 PM 47