DOCKETED Docket Number: 20-SPPE-01

Project Title: Great Oaks South Backup Generating Facility Small Power

Plant Exemption

TN #: 239564

Document Title: SJCE 2020 IRP

Description: San Jose Clean Energy 2020 Integrated Resource Plan

Filer: Robert Sarvey

Organization: Robert Sarvey

Submitter Role: Intervenor

Submission Date: 8/31/2021 1:32:42 PM

Docketed Date: 8/31/2021

StandardLSEPlan

SANJOSECLEANENERGY

2020INTEGRATEDRESOURCEPLAN

SEPTEMBER1,2020

PUBLICVERSION

TableofContents

I. ExecutiveSummary................................................................................................................................1

II.StudyDesign.............................................................................................................................................8

a. Objectives........................................................................................................................................9

b. Methodology................................................................................................................................11

i. ModelingTools..........................................................................................................................11

ii. ModelingApproach..................................................................................................................14

III.StudyResults.........................................................................................................................................23

a. ConformingandAlternativePortfolios.........................................................................................23

b. PreferredConformingPortfolios..................................................................................................23

i. DifferencesbetweenSJCE’sportfoliosandtheRSP..................................................................28

c. GHGEmissionsResults..................................................................................................................30

d. LocalAirPollutantMinimizationandDisadvantagedCommunities.............................................30

i. LocalAirPollutants....................................................................................................................30

ii. FocusonDisadvantagedCommunities....................................................................................30

e. CostandRateAnalysis..................................................................................................................32

f. SystemReliabilityAnalysis.............................................................................................................33

i. StochasticAnalysis....................................................................................................................34

ii. ReliabilityRelatedProcurementActivities:..............................................................................36

iii. HowSJCE’sportfolioofresourcesmeetsitsload....................................................................40

iv. Curtailment..............................................................................................................................41

g. HydroGenerationRiskManagement...........................................................................................43

h. Long-DurationStorageDevelopment...........................................................................................45

i. Out-of-StateWindDevelopment...................................................................................................47

j. TransmissionDevelopment............................................................................................................47

IV.ActionPlan............................................................................................................................................48

a. ProposedActivities........................................................................................................................48

i. IncrementalProcurement:........................................................................................................49

b. ProcurementActivities.................................................................................................................50

c. PotentialBarriers...........................................................................................................................51

i. PCIARisk....................................................................................................................................51

ii. AllocationofUtilityResourcesincludedinthePCIA................................................................52

iii. DirectAccessExpansionRisk...................................................................................................55

iv. COVID-19LoadImpacts...........................................................................................................55

v. Capacity,ResourceAdequacy,andSystemReliability:............................................................56

d. CommissionDirectionorActions.................................................................................................59

e. DiabloCanyonPowerPlantReplacement.....................................................................................59

V.LessonsLearned.....................................................................................................................................60

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I. ExecutiveSummary

AboutSJCEandthisIntegratedResourcePlan(IRP)SanJoséCleanEnergy(SJCE)isSanJosé’snewelectricitysupplier,havinglaunchedserviceinFebruary2019.OperatedbytheCityofSanJosé’sCommunityEnergyDepartment,SJCEwascreatedtoimplementtheCity’sambitiouscleanenergygoalsandprovidechoicetoresidentsandbusinessesforelectricsupply.SJCEisgovernedbytheSanJoséCityCouncil.SJCEhascommittedtoachievingthegoalsoftheParisAgreementonclimatechangeanddevelopedacomprehensiveplan,ClimateSmartSanJosé,toachievethatobjective.WhileSJCEonlybeganservingresidentsandbusinessesinFebruaryof2019,SJCEhasengagedinaggressiveprocurementofabalancedportfoliooflong-termcontracts.SJCE’sportfolioalreadyincludesthefollowingnewresourcestobeaddednolaterthan12-31-2022:a225MWout-of-statewindproject,a62MWsolarprojectpairedwithstoragetoproducefixeddeliveryinhoursending07-22everydayoftheyear,andtwo100MWsolarprojects,oneofthesewitha10MWco-locatedbattery.OnAugust25,2020,theSanJoséCityCouncilapprovedtwoportfoliostobesubmittedaspartofSJCE’s2020IRP:

• AconformingportfoliothatresultsinSJCEemissionsequaltoitsproportionalshareofastatewideelectricsystemcasethatemits46millionmetrictons(MMT)ofgreenhousegas(GHG)emissionsby2030(the“Conforming46MMTPortfolio");and

• AconformingportfoliothatresultsinSJCEemissionsequaltoitsproportionalshareofastatewideelectricsystemcasethatemits38MMTofGHGemissionsby2030(the“Conforming38MMTPortfolio").

Inaddition,SanJoséCityCouncilapproved2020IRPCriteriaandauthorizedtheDirectoroftheCommunityEnergyDepartmenttofinalizeandfilewiththeCaliforniaPublicUtilitiesCommission(“Commission”)thisIRP.ThisreportwaspreparedinaccordancewiththeCommission’sDecisionD.18-02-018andsubsequentdecisionsunderproceedingR.16-02-007.InaccordancewiththerequirementsofSenateBill350andtheCommissionDecision(D.)20-03-028,SJCErespectfullysubmitsits2020IRP.TheIRPiscomprisedofthiswrittennarrativeaswellasthefollowingattachments:

i. CompletedCPUCResourceDataTemplate–46MMTConforming;ii. CompletedCPUCResourceDataTemplate–38MMTConforming;iii. CompletedCPUCCleanSystemPower(“CSP”)Calculator–46MMTConforming;andiv. CompletedCPUCCleanSystemPowerCalculator–38MMTConforming.

TheSanJoséCityCouncilapprovedSJCE’srecommendationthattheConforming38MMTPortfoliobeSJCE’spreferredportfolio.SJCEisnotsubmittinganyAlternativePortfoliosoradditionalConforming

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PortfoliosbeyonditstwoConformingPortfolios(whicharethereforeitsPreferredConformingPortfolios)aspartofitsIRP.1ProcessforCreatingThisIRPSJCEworkedjointlywithtwootherCommunityChoiceAggregators(“CCAs”),PeninsulaCleanEnergyandCleanPowerAlliance(together,the"JointCCAs"),aswellasactivelycollaboratedwithseveralotherCCAsthroughouttheIRPprocess,todevelopits2020IRP.TheJointCCAsrepresentapproximatelyeightpercentofCalifornia’sloadand40percentofCCAload.Inthiscoordinatedprocess,theload,resources,powerneeds,andexpansionplansofallparticipatingCCAsweredevelopedandassessedtogethertounderstandinteractionsbetweentheplansandensurethattheCCAsdonotallplantouseorbuildthesameresources.TheJointCCAsalsodevelopeddisaggregatedplanstoaccommodatelocalrequirementsandprovideforsubmissionofindividualplansasrequiredbytheCommission.TheJointCCAshiredSiemensEnergyBusinessAdvisory(“Siemens”)toassistinthepreparationoftheir2020IRPs.TheanalysisundertakenbySiemens,whichincludesproductioncostmodelingandstochasticanalysis,complementstheCommission'sworkdevelopingtheReferenceSystemPlanandReferenceSystemPortfolio(“RSP”)andprovidesastronganalyticalunderpinningforSJCE's2020IRP.ThemodelingsoftwareusedtodeveloptheIRPwasEnergyExemplar’sAuroraForecastingSoftware(AURORA).InadditiontotheConforming46MMTandConforming38MMTPortfolios,SJCEalsocommissionedSiemenstomodeltwoadditionalscenariostoinformpolicydecisions:acasethatmeta30MMTtargetin2030,andacarbon-neutralby2021case.Thesetwoscenarios,whilenotsubmittedasadditionalportfoliosinthisplan,areintendedtohelpguideSJCE’sprocurementinconjunctionwiththeConforming38MMTPortfolio.TheSanJoséCityCouncilhasauthorizedSJCEtoundertakeadditionalrenewableenergyandenergystorageprocurementthatwouldpositionSJCEtoachieveaportfoliobasedona30MMTscenarioifexistingregulatoryandmarketbarriersareresolved.SJCEhasundertakenaggressiveprocurementsinceitsinception,andiscurrentlyontracktomeettheneededresourcestoachieveaportfolioconsistentwitheithera46MMT,a38MMTora30MMTscenario.SJCEplanstocontinuetoaddsomeadditionalresourcesandintendstoconductadditionalanalysis,monitorregulatoryandmarketrisksandoutcomes,andfurtherconsiderthepossibilityofadoptingamoreambitiousportfolioinits2022IRP.Resultsofthe2020IRPSJCEpresentsinthisIRPtwoConformingPortfoliosthatareconsistentwiththeSiemen'smodelingandanalysis.

1TheSanJoséCityCouncileliminatedtherequirementforSJCEtodevelopaportfoliothatachievescarbonneutralitystartingin2021.

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SJCE’sConforming38MMTPortfolio,whichisitspreferredportfoliobetweenthetwoportfoliospresented,selectedthefollowingresourceadditionsby2030inadditiontonewresourcesalreadyundercontractwithSJCE:

• 100megawatts(“MW”)ofwind;• 320MWofsolar;and• 200MWofbatterystorage.

SJCE’sConforming46MMTPortfolioselectedthefollowingresourceadditionsby2030inadditiontonewresourcesalreadyundercontractwithSJCE:

• 90MWofwind;• 100MWofsolar;and• 150MWofbatterystorage.

Forpurposesofthisassessmentonly,SJCEacceptedtheCECassumptionsaboutdemand-response,energyefficiencyandbehindthemetersolar,andSJCE’sloadforecastincludesitsproportionalshareoftheCECassumptionsabouttheseimportantresources.Nonetheless,SJCEisassessingopportunitiestoincreasetheseimportantresources,particularlyasitseekstoaddresiliencyinthefaceofPowerSafetyShut-offsanddistributionoutages.The2020IRPCriteriaadoptedbytheSanJoséCityCouncil,continuetoreflectthegoalthatby2040SanJoséwillbetheworld’sfirstonegigawattsolarcity.DifferencesbetweenSJCE’sportfoliosandtheRSPTheanalysisconductedbySiemensandSJCEproducedresultsthatdifferfromtheRSPbasedona46MMT2030GHGtarget,aswellastheCPUC’s38MMT2030GHGtargetscenario,inthefollowingimportantrespects:

• Morerenewableswereselectedwithagenerallycorrespondinglevelofbatterystorage(notconsideringlongdurationbatterystorage(“LDS”))resultinginadifferenceintherenewablestobatteryratioofnewresources,butagenerallyconsistentratioofrenewablestobatterieswhenallresourcesintheRSPandthe38MMTscenarioweretakenintoaccount;

• LDSwasnotselecteduntil2037;and• Geothermalpowerwasnotselected.

InitialreviewoftheseresultswithSiemenssuggeststhatsinceSJCEisanewpowerproviderandhasinvestedinbatterystoragepairedwithsolarinvestmentssinceitsinception,SJCE’sproportionalshareofnewbatterystorageinvestmentsislowerthanitsshareintheRSPasthereislessofaneedtoensurepriorsolarinvestmentsarepairedwithsufficientbatterystorage.Notwithstandingtheseresults,SJCEiscontinuingtoexplorelong-durationstorageandcontinuestowelcomebidsfromallkindsofrenewableresourcesinitssolicitations.SJCElooksforwardtoexploringthesourceofthedifferencesbetweentheSiemen'sresultsandtheCommission'sresults,andthefurtherinformationthatwillresultfromcombiningtheIRPsfromallLoadServingEntities(“LSEs”).Ifappropriatebasedonfurtherinformation,SJCEcanmakeadjustmentstoitsIRP(subjecttotheapprovalofitsRiskOversightCommitteeandtheSanJoséCityCouncil).Inanyevent,SJCEwillmeetanyproportionalsharerequirementsadoptedbytheCommission.

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ReliabilitySJCEisdeeplyconcernedaboutreliabilityandunderstandstheimportanceofaresponsibletransitionfromthecurrentportfoliotoanelectricsystemwithsignificantlyreducedGHGemissions.WhileSJCEonlybeganservingresidentsandbusinessesinFebruaryof2019,asdescribedabove,SJCEalreadyhasadiverseportfoliooflong-termcontractsincludingoutofstatewind,andaninnovativefixeddeliverysolaragreement.Inaddition,SJCEhasenteredintoaseven-year150MWagreementwithCalpineforResourceAdequacy(“RA”)fromitsexistingnaturalgasfleet,andseveralotherthree-yearRAagreementswithnaturalgasplants.SJCEwasinnegotiationswithbatterystorageprovidersoverthesummer;howeverdeferredprocurementbecauseofregulatoryuncertainty,andisactivelyexploringLDSwithotherCCAs.Becausereliabilityisaparticularlycriticalfactorindevelopingarobustresourceprocurementplan,SJCEreviewedtherelationshipofitsConformingPortfoliosandsystemreliabilityfromseveralperspectives.First,SJCEconductedastochasticanalysistoassesstheperformanceofitsConformingPortfoliosunderarangeofmarketconditions.Inaddition,SJCEconsideredtheextenttowhichithasalreadyprocuredtheRAtomeetitsexpectedRAobligation.Finally,SJCEreviewedhowitsportfolioofresourcesmeetsitsloadonanumberofkeyrepresentativedaysduring2026and2030.Theresultsofthestochasticanalysissuggestthatthereisnotahighriskofasupply/demandimbalance.SJCEisencouragedbytheseresultsbutunderstandsthattheymeritfurtherexplorationespeciallygivenrecenteventsandtheimpactsofclimatechange.TotheextenttheCPUC’smodelingindicatesadifferentoutcome,anysuchdivergencesshouldbeinvestigatedfurthertoobtainmoredefinitiveinsightsandresultsandtoidentifythemostcost-effectivesolutions.TheassessmentsofSJCE’sRAprocurementtodateandhowSJCE’sportfolioofresourcesmatchitsloadillustratethatSJCEhasundertakenreasonableRAprocurementthrough2029,andthatcontinuedattentiontomeetingnon-solarhoursismerited.SJCEwillcontinuetoworkwithourpartnerstocontractforrenewablegeneration,energyandbatterystorageinamannerthatcomplementsmarketandportfolioneeds.ActionPlanInthelastyear,SJCEcontractedfor487MWofnewrenewablegeneration,whichwillsupply44percentofSJCE’sloadin2023,thefirstfullyearwhenalltheseresourcesareanticipatedtobeoperational.SJCEwillalsocontinuetoaddshort-termrenewableandGHG-freeresourcestomeetSanJoséCityCouncil-approvedportfoliocontentgoals.SJCEplanstocontinuetoaddnewrenewableenergyandstorageatameasuredpaceoverthenextdecadetoensureSJCE’sportfolioiscost-effectiveanddoesnotresultinexcesssupplywhilestillmeetingourambitiouslocalandstatede-carbonizationgoals.SJCEwillcontinuetomonitorkeyregulatoryissuesthataffectRAandtoexplorealternativestoprovideforstrongerreliabilitytoaddresslocal,statewide,andregionalresourceadequacyandresiliencyneeds.ModelingsuggeststhatinthemoreaggressiveConforming38MMTPortfolio,anadditional100MWofbatterystorageisrequiredtobeinservicebefore2024,withrenewableenergyadditionsselectedforlateryears.SJCEhasobtainedapprovalfromtheSanJoséCityCounciltoprocureanadditional100MWofrenewables,andhasauthorizationtoprocure70MWofadditionalenergystorage.SanJosé’sCity

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CouncilhasbeenverysupportiveofSJCE’sprocurementrecommendationsandmeetingstateregulatoryrequirements.DespitethefactthattheIRPmodeldidnotselectanyLDSasacost-effectiveresourcetomeetSJCE'sload,SJCEunderstandstheimportanceofcontinuingtoexploreandseekactualoffersforLDS,bothsystem-wideandforSJCE’sportfolio.SJCErecentlyparticipatedinajointCCARequestforInformation(“RFI”)forLDStobetterunderstandthetypesofprojectsandassociatedtechnologyandpricingthatareavailableinthemarkettoday.SJCEalsoplanstoparticipateintheupcomingjointCCARequestforOffers(“RFO”)forLDSprojectsinthewinter.ThesameCCAsareexploringtheformationofanewjoint-powersauthoritytoenabletheprocurementofLDSresultingfromtheRFO.SJCEremainsconcernedabouttherelativecostsofLDS,butunderstandsthereliabilityadvantagesandwillevaluateresponsestotheRFOanddeterminefutureprocurement.DisadvantagedCommunitiesSJCEbelievesthatthemostimportantandinfluentialwayitcanbenefitSanJosé’sdisadvantagedcommunitiesisbykeepingthecostofelectricityaffordableinordertoprovideequitableaccesstoanessentialservice.SJCE’sprocurementisguidedbythisobjective,andbyseekingtoreduceharmfulenvironmentalimpactsthatdisproportionatelyaffectdisadvantagedcommunities.SJCEhasrecentlyenteredintofourlong-termPPAsforrenewableprojectsthatwillserve44percentofSJCE’sloadwhentheyarealloperational,beginningonDecember31,2022.EquityisacorefocusoftheCityofSanJosé.WhilefocusingonachievingthefinancialreservesthatwillpermitSJCEtoprovideaffordableserviceoverthelongterm,initsinitialyearsofoperation,workingcloselyanddirectlywithitscommunityincludingdisadvantagedcommunities,SJCEdevelopedacomprehensivecommunityprogramsroadmap.ThisroadmapwillguidethedevelopmentofprogramstobenefitcommunitiesthroughoutSJCEserviceterritory,includingdisadvantagedcommunities.Theprogramsroadmaphasasetoffiveprogramguidingprinciples,withoneofthoseprinciplesfocusedonequity.Inaddition,theroadmapincludesasetofmetricsfocusedonmeasuringequityandeachprogram’simpactondisadvantagedcommunities.SJCEisalsopartneringwiththeCaliforniaEnergyCommission(“CEC”)toimproveaccesstoaffordableEVchargingoptions,withatleast25percentbeinginstalledindisadvantagedandlow-incomecommunities.ImprovingaccesstoaffordableEVchargingoptionsindisadvantagedandlow-incomecommunitiesiscriticalforovercomingoneofthekeybarrierstowidespreadEVadoption,aswellasreducingpollutionthatdisadvantagedandlow-incomecommunitiesoftenareexposedtoathigherlevelsthanothercommunities.AdditionalSJCEprogramsincludeEVworkshopsforlow-incomeSanJoséresidents,promotionofbackuppoweroptionstothemedicallyvulnerableandlow-incomeresidentsinSanJosé,andacommunitysolarprogramofferinga20percentdiscounttoCARE/FERAcustomersthroughtheCPUC’sDAC-GreenTariffprogram.RisksIdentifiedandLessonsLearnedAhandfulofimportantregulatoryandmarketrisksareaffectingSJCE’sabilitytopursueitsaggressiveenvironmentalgoalsandtoprovidefortheRAresourcesthatareanecessarycomplement.

• PowerChargeIndifferenceAdjustment(“PCIA”):PacificGas&Electric’s(“PG&E”)PCIAratehasincreasedbyover600percentinsevenyears.Thisincreasesuggeststhattheapproachfor

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calculatingthePCIAisdeeplyflawed,particularlygiventhatduringthesameperiod,energymarkets,andthusthevalueofPG&E’sresources,havebeenrelativelystable.TheSJCErevenuelosttopayforthisever-increasingfeedirectlyaffectsSJCErates,howcleanSJCE’spowermixcanbe,andthecostimpactsrelatedtoenteringintolong-termcontracts.

• AllocationofInvestor-ownedUtility(“IOU”)ResourcesincludedinthePCIA:AsloadhasmigratedtoCCAs,theIOUshavebeenleftwithsignificantexcessofresources.TopreventoverprocurementandunnecessaryexcesscosttoCaliforniaconsumers,itisnecessaryfortheCommissiontoensuretheIOUsmakeexcessresourcesavailableforsaletothemarketinatimelyandfairmanner.Forexample,in2020,thePG&EGHG-freeallocationsavedSJCEcustomers$5millioneventhoughitwasonlyputintoplaceinJune.However,theuntimelyinformationaboutwhetherandwhenPG&EwouldallocateGHG-freepowertoSJCEin2020resultedinSJCEhavingahigherthanapprovedcarboncontentthatresultsinunnecessaryadditionalcoststocustomers.TheallocationsofGHG-freeandrenewablesportfoliostandard(“RPS”)resourcesfromPG&E’sportfoliotoSJCEcanchangetheproportionofGHG-freepowerinSJCE’sportfoliofrom80and140percentbeforeDiabloCanyoncloses(dependingonSJCE’sloadandwhetherSJCEtakesjustGHG-freeorbothGHG-freeandRPSallocatedpower).TheallocationsofGHG-freeandRPSresourcesfromPG&E’sportfoliotoSJCEcanchangetheproportionofGHG-freepowerinSJCE’sportfoliofrom60and100percentafterDiabloCanyoncloses(dependingonSJCE’sloadandwhetherSJCEtakesjustGHG-freeorbothGHG-freeandRPSallocatedpower).Theamountofrenewablepowervariesfrom45percentto85percentdependingonwhetherSJCEreceivesanallocationandhowloadmaychange.ThisimportantissueisunderconsiderationinPCIAWorkingGroup3.2Toaddressthisproblem,SJCEsupportstheproposaldevelopedbySouthernCaliforniaEdison(“SCE”)andCaliforniaCommunityChoiceAssociation(“CalCCA”)inPCIAWorkingGroup3thatprovidesforthevoluntaryallocationoftheIOUportfoliostoLSEspayingtheabovemarketcostsofthoseresources.Whilethemeritsofthisproposalareunderdiscussion,theCommissionhasnotrequiredtheIOUstoinformLSEsofthevolumeofresourcesavailableforallocation.CCAshaveobtainedpreliminaryinformationaboutRPSandGHG-freeresourcesthatmaybeavailable,butnoinformationhasbeenforthcomingaboutthevolumeofRA.IfSJCEgoesforwardwithfurtherlong-termRAprocurement,itrisksover-procuringorlosingtheopportunitytoreducecostsforratepayerbyusingtheresourcesintheallocationandreducingpurchasedamountsofRA.TheCommissionshouldimmediatelydirecttheIOUstomakeavailableestimatesofthePCIAresourcesavailableforallocation,andthenpromptlyandfairlyresolvetheissuesconsideredinthePCIAWorkingGroup3process.Continuedregulatoryuncertaintyrelatedtothisissuehindersmediumandlong-terminvestments.

2 FinalReportofWorkingGroup3Co-Chairs:SouthernCaliforniaEdison(U-338e),CaliforniaCommunityChoiceAssociation,AndCommercialEnergy.pp.20-30RetrievedfromCPUCwebsite8/3/20:https://docs.cpuc.ca.gov/SearchRes.aspx?DocFormat=ALL&DocID=335710541

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• DirectAccess:WhenDirectAccesswasmadeavailableinCaliforniain2000,approximately10

percentofloadinSanJoséleftPG&EtobeservedbyEnergyServiceproviders.When,incompliancewithSB237,theCommissionallowedadditionalDirectAccessin2019,SJCElost1.9percentofitstotalload.TheCommission’sreporttotheLegislatureonwhethertofullyre-openDirectAccesshasbeensubstantiallydelayed.UntilthefutureofDirectAccessisresolved,asitconsidersenteringintoadditionallong-termcontracts,SJCEmustconsiderpotentialfurtherlossesofload.

• COVID-19andrecession:SJCE’saverageloadsincemid-Marchhasdeclinedbycloseto7percentduetoCOVID-19.EstimatesofwhentheBayAreawillreturntonormalcyareuncertain.SomeeconomistswarnthatCOVID-19mayresultinalongertermrecession.Asitconsidersenteringintoadditionallong-termcontracts,SJCEmustconsiderpotentiallossesofloadasaresultofCOVID-19.Inaddition,customernon-paymentshavealsoincreasedsincetheshelter-in-placeordersbeganinMarch2020,andCCAsshouldreceivethesamecostrecoveryreliefthatIOUsaregrantedfortheCOVID-19-relatedincreaseinuncollectiblebalancesfromcustomers.

• Outages:Inthepastseveralyears,SanJoséresidentsandbusinesseshavebeensubjectedtosignificantoutagesandthreatsofoutagesstemmingfromthevulnerabilityofPG&E’stransmissionanddistributionsystemincludingbothPublicSafetyPowerShutoff(PSPS)eventsandheatrelatedoutages.BetweenAugust15thandAugust20th,2020;SanJoséhadover500separatedistributionoutagesthatimpactedover86,000customers.Over800hundredcustomersexperiencedpoweroutageslastingmorethan24hours.Itiscriticalthatthereliabilityofthetransmissionanddistributionsystemisimprovedtolimitthesetypesofoutagesasthisisbothasignificantlifesafetyissue,andaneconomicissueasourlocaleconomyistechfocusedwherereliablepoweriscritical.Growingcustomerdissatisfactionofutilityoutagesisanimportantriskthatmustbemitigated.

• RAissues:o TheCommission,theCaliforniaIndependentSystemOperator(“CAISO”)and

stakeholdershaveallrecognizedthattheregulatoryrequirementsforresourceadequacyrequiremodificationtoensuresystemreliabilitygiventheincreasingpenetrationofrenewables,andCalifornia’sandCCAs’aggressivegoalsforgreenhousegasreductions.InR.19-11-009,SJCEandCalCCAhavepresentedajointproposaltoreformRAtobemoreconsistentwiththerequirementsofanelectricsystemwithahighproportionofrenewables.SJCEurgestheCommissiontogiveseriousconsiderationtothisproposal.

o Inaddition,theIOUscontinuetoholdsizableamountsofRAthatissubjecttothePCIAandthereisnomechanismtoensurethesePCIAresourcesaremadeavailabletothemarketinatimelyandfairmanner,includingpursuanttoreasonablemarkettermlengths,ortransparentinformationabouttheamountsthatcouldbeavailable.SJCEurgestheCommissiontogiveseriousconsiderationtothejointproposalofSCEandCalCCAinPCIAWorkingGroup3tovoluntarilyallocateIOUresourcesinamannerthat

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providesforbetterutilizationoftheseresourcesinamannerthatwillreducecostsandbenefitallratepayers.

o Finally,SJCEnotesthatthereliabilityeventsofmid-August,2020highlighttheimportanceofareliablesystemthatcanwithstandconvergingchallengessuchashightemperaturesthroughouttheWestandunexpectedgenerationoutages.However,thecausesoftheseeventsneedtobecarefullystudiedtoensureproposedsolutionseffectivelyaddresstheproblemandimprovereliabilityinthemostcost-effectivemanner.

TheCommissionhastheabilitytosubstantiallyaddressmostofthesechallenges.SJCElooksforwardtoworkingconstructivelywiththeCommissiontocreatearegulatoryandmarketenvironmentthatmakeitpossibleforallLSEstoachievetheirserviceandenvironmentalobjectivesinamannerthatisfiscallyresponsibleandassuresaffordable,safe,andreliableserviceforallcustomers.

II.StudyDesign

SJCEworkedjointlywiththeJointCCAstodevelopits2020IRP,withthegoalofimprovingplanningandcoordinationandaddressconcernsexpressedbytheCommission.Forexample,duringthe2018IRPcycle,theCommissionexpressedconcernthatindividualresourcebuild-outplansdidnotsufficientlyaddressrenewablesintegrationissueswithrespecttoCalifornia’sreliabilityrequirements.3TheJointCCAsrepresentapproximatelyeightpercentofCalifornia’sloadand40percentofCCAload.Inthiscoordinatedprocess,theload,resources,powerneeds,andexpansionplansofallparticipatingCCAsweredevelopedandassessedtogethertounderstandinteractionsbetweentheplansandensurethattheCCAsdonotallplantouseorbuildthesameresources.TheCCAsalsodevelopeddisaggregatedplanstoaccommodatelocalrequirementsandprovideforsubmissionofindividualplansasrequiredbytheCommission.ThejointCCAshiredSiemenstoassistinthepreparationoftheir2020IRPs.SJCEsupportedengagingSiemensinpartbecauseofSiemens'abilitytoundertakeproductioncostmodelingandstochasticanalysis.TheanalysisundertakenbySiemenscomplementstheCommission’sworkdevelopingtheRSPand38MMTscenarioandprovidesastronganalyticalunderpinningforSJCE's2020IRP.RequiredandOptionalPortfolios

SJCE’s2020IRPpresentsastrategyformeetingSJCE’spowerneedsandisguidedbythegoalsandpoliciesestablishedbytheSanJoséCityCouncilandtheState’sprocurementrequirementsforLSEs,includingCalifornia’sRPSandGHGreductionobligations.SJCE’s2020IRPfilingincludestwoPreferredConformingPortfolios.Bothportfoliosdevelopedusethe“midBaselinemidAAEE”versionofForm1.1coftheCEC’s2019IntegratedEnergyPolicyReportdemandforecastanduseinputsandassumptionsconsistentwiththoseusedbythestafftodeveloptheRSP.

3D.19-04-040p.105

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PortfolioName Purpose GHGTarget

Conforming46MMTPortfolio

PreferredConformingPortfoliofor46MMT2030GHGTarget

46MMTannualemissionsfromtheCAelectricsectorby2030.ExceedSJCE’sindividualCSPBenchmark(0.787MMTin2030)by<1.00%

Conforming38MMTPortfolio

PreferredConformingPortfoliofor38MMT2030GHGHTarget(ThisisSJCE’spreferredportfoliothatwillguideitsprocurementuntilthenextIRPcycle)

38MMTannualemissionsfromtheCAelectricsectorby2030.ExceedSJCE’sindividualCSPBenchmark(0.629MMTin2030)by<1.00%

a. Objectives

SJCEundertookits2020IRPtoidentifytheleast-costsolutionsavailabletomeetitsload,Staterequirementsandlocalgoals.SJCEisrequiredtoprepareanIRPeverytwoyearsbytheSanJoséCityCouncil4andunderPublicUtilitiesCodeSection454.52.TheCityofSanJosécreatedSJCEto"enhancethepublicwelfarebyestablishingCommunityChoiceAggregationintheCity...andtogiveitsresidentsandbusinesseslocalcontroloverelectricityprices,resourcesandqualityofservice."5TheCityidentifiedcreatingaCCAas"amethodbywhichtheCityofSanJosécanhelptoensuretheprovisionofclean,reasonablypricedandreliableelectricitytoresidentsandbusinessesinSanJosé."6SanJoséhascommittedtomeetingthegoalsoftheParisAgreementonclimatechange.Accordingly,ithascreatedClimateSmartSanJosé7asaguidancedocumentandactionplantoachievethiscommitment.In2018,theSanJoséCityCounciladopted2018IRPcriteriathatincorporatedmanyoftheenergy-relatedactionitemsinClimateSmartSanJosé.OnAugust25,2020,theSanJoséCityCouncilupdatedthe2018IRPcriteria,adoptingthefollowingcriteriaforthe2020IRP:

• SJCEwillofferatleastonepowermixoptionwitharateequaltoorlessthanPG&E’srates.• SJCEwillofferatleastonepowermixoptionat10percentormorerenewablesthanPG&E.• SJCEwillofferatleastonepowermixoptionthatis100percentrenewable.• SJCE'sinitialresourcemixwillincludeaproportionofrenewableenergyexceedingCalifornia's

prevailingRPSprocurementmandate.• SJCEwillmaintain,atminimum,low-incomeprogramsatthesamelevelasPG&E.• Afterbecomingestablished,SJCEwilldeveloplocalprogramsincludingenergyefficiency,

demandresponse,distributedgenerationandrenewableenergy.• SJCEwillencouragedistributedrenewablegenerationinthelocalareathroughtheofferingofa

netenergymeteringtariff;astandardizedpowerpurchaseagreementor"Feed-InTariff”;andothercreative,customer-focusedprogramstargetingincreasedaccesstolocalrenewableenergysources.

• By2030,SJCE’sbaseofferingwillbeatleast60percentrenewable.

4SanJoséCityCouncilResolutionNo.78711.June26,2018. https://www.sanjoseca.gov/your-government/department-directory/community-energy/public-meetings-and-documents5SanJoséMunicipalCodeSection26.01.0206SanJoséMunicipalCodeSection26.01.0107ClimateSmartSanJosé:APeople-CenteredPlanforaLowCarbonCity.2018.https://www.sanjoseca.gov/your-government/environment/climate-smart-san-jos

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• By2030,SanJoséwillhave668MWoflocalrenewablesandby2040,SanJoséwillbetheworld’sfirstonegigawatt(“GW”)solarcity.

• By2030,60percentofallpassengervehiclesintheCitywillbeelectric.• By2020,100percentofnewhomeswillbeZeroNetEnergy,andby2030,25percentofexisting

homeswillbeenergyefficientandall-electric.• SJCEwillcomplywithallapplicableStateLawincludingRPS,RArequirements,andGHG

reductionrequirements.• SJCEwillidentifythedisadvantagedcommunitiesSJCEwillserve,describetheimpactsofsuch

serviceonthedisadvantagedcommunities,andsetforthSJCE’splanstobenefitthesecommunities.

OnAugust25,2020,theSanJoséCityCouncilapprovedtwoportfoliostobesubmittedaspartofSJCE’s2020IRP:

• AConformingPortfoliothatresultsinSJCEemissionsequaltoitsproportionalshareofastatewideelectricsystemcasethatemits46MMTofGHGemissionsby2030(the“Conforming46MMTPortfolio”);and

• AconformingportfoliothatresultsinSJCEemissionsequaltoitsproportionalshareofastatewideelectricsystemcasethatemits38MMTofGHGemissionsby2030(the“Conforming38MMTPortfolio”).

TheSanJoséCityCouncilapprovedSJCE’srecommendationthat,ofthetwoConformingPortfolios,the38MMTPortfolioisSJCE’spreference.Inaddition,theSanJoséCityCouncilauthorizedtheDirectorofCommunityEnergytousethefindingsfromtheIRPmodelinganalysistofinalize,approve,andsubmittotheCommissionthe2020IRPwiththetwoabove-mentionedportfolios,providedthattheplanreflectsthe2020IRPcriteria.TheDirectormustsubmitthefinalSJCE2020IRPtotheSanJoséCityCouncilpursuanttoaninformationmemorandumwithintendaysoffilingtheplanwiththeCommission.Aspartofits2020IRPmodelingwork,SJCEalsodirectedSiemenstomodeltwoadditionalpossibleportfolios:

• AportfoliothatresultsinSJCEemissionsequaltoitsproportionalshareofastatewideelectricsystem case that emits 30 MMT of GHG emissions by 2030. This portfolio is built on theCommission’s38MMTscenario;and

• A portfolio that results in SJCE attaining carbon neutrality on an annual basis in 2021 andmaintainingthatcriteriagoingforward.ThisportfolioisalsobuiltontheCommission’s38MMTscenario.

SJCEisnotfilingtheseplanswiththeCommissionbecauseitintendstousetheseplanstoinformstretchgoalsforitsprocurementgoingforward.Currently,severalsignificantregulatoryandmarketrisksstandinthewayofSJCEpursingtheprocurementidentifiedbytheseportfolios.Nonetheless,theSanJoséCityCouncilhasauthorizedSJCEtoundertakeadditionalrenewableenergyandenergystorageprocurementthatwouldpositionSJCEtoachievetheportfoliothatresultinSJCEattainingitsproportionalshareof30MMTby2030iftheregulatoryandmarketbarriersareresolved.Thebulkoftheprocurementneededtoachieveaportfolioconsistentwithamoreambitious30MMTscenario

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wouldoccurafter2024.Therefore,SJCEintendstoconductadditionalanalysis,monitorregulatoryandmarketrisksandoutcomes,andfurtherconsiderthepossibilityofadoptingamoreambitiousportfolioinits2022IRP.TheSanJoséCityCouncileliminatedtherequirementforSJCEtodevelopaportfoliothatachievescarbonneutralitystartingin2021intheIRPbydevelopingnewresources.AlthoughprocuringGHG-freeattributescontributestowardsthecontinuedoperationandmaintenanceofGHG-freeresources,themodelingshowsthatcontinuedinvestmentinnewrenewableprojects,primarilysolarplusstorage,isthemostcost-effectiveoptiontomeetaggressivestatewideemissionreductiontargets.Moreover,SJCEcustomersarealreadypayingtheirsharetowardsPG&E’sexistingin-stateGHG-freeresourcesthroughthePCIAbutdonotgetcreditforthisonSJCE’sPowerContentLabel.Inthecurrentfinanciallychallengingenvironment,SJCEdoesnotbelieveitisfairorprudenttoimposeonitscustomers,includingasignificantproportionofdisadvantagedcustomers,thecostofpayingforadditionalredundantGHG-freeattributes,inordertoshowtheseattributesonSJCE’sPowerContentLabel.TheSanJoséCityCouncildirectedSJCEtoofferabasepowermixin2020thatwas45percentrenewableand80percentGHG-free.8SJCEwillpresentitsproposalforthe2021basepowermixtotheSanJoséCityCouncilinFall2020.ThatpresentationwilltakeintoaccounttheongoingregulatorytreatmentofGHG-freeassetsintheIOUportfoliosforpurposesofPowerContentLabelpresentation,andtherealitythatinvestmentsinnewrenewableresourcesareabetteruseoflimitedresourcestoachieveGHG-freereductionsthancontinuedprocurementofattributesfromexistingresources.

b. Methodology

i. Modeling Tools

ThemodelingsoftwareusedtodeveloptheIRPwasEnergyExemplar’sAURORAForecastingSoftware(AURORA).Theversionusedis13.4.1024,releasedMarch10,2020.AURORAisachronologicalunitcommitmentmodelwhichworkstosimulatetheeconomicdispatchofpowerplantswithinacompetitivemarketframework.Themodelusesamixedintegerlinearprogramming(MIP)approachtocapturedetailsofpowerplantandtransmissionnetworkoperations,whileobservingrealworldconstraints.Constraintsincludeitemssuchasemissionreductiontargets,transmissionandplantoperatinglimits,renewableenergyavailabilityandmandatoryportfoliotargets.AURORAiswidelyusedbyelectricutilities,consultingagencies,andotherstakeholdersforthepurposeofforecastinggeneratorperformanceandeconomics,developingIRPs,forecastingpowermarketprices,assessingdetailedimpactsofregulatoryandmarketchangesimpactingtheelectricpowerindustry,andtogeneratefinanciallyoptimizedgenerationportfolios.Themodelcanassessthepotential

8SJCEboughtthebulkoftheattributesneededtoachievethisobjectivebeforetheCommissionencouragedPG&EtoallocatetoCCAcustomerstheGHG-attributestheyalreadypayfor.Thus,SJCEanticipatesapowermixfor2020of45percentrenewableandabout93percentGHG-free.BasedonSJCE’scurrentestimateofits2020load,ifPG&EhadallocatedtoSJCE100percentoftheGHG-freeattributesSJCEcustomerspaidfor,ratherthanjusttheattributesproducedafterJune15,2020,SJCE’s2020PowerContentLabelwouldhavereflectedabasepowermixof100percentGHG-free.

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performanceandcapitalcostsofexistingandprospectivegenerationtechnologiesandresources,andmakeresourceadditionandretirementdecisionsforeconomic,systemreliability,andpolicycompliancereasonsonautilitysystem.TheCommissionusedRESOLVEtodeveloptheRSP,whichidentifiesthenewresourcesthatmeettheGHGemissionsplanningconstraintappliedbytheCommission.AsopposedtoAURORA,whichmodelseachgeneratorindependently,theRESOLVEmodelgroupstogetherresourcecategorieswithsimilaroperationalcharacteristics(e.g.nuclear,coal,gasCCGT,gaspeaker,renewables)andmodelsthemcollectively.RESOLVEusesalinearizedunitcommitmentwherethecommitmentvariableforeachclassofgeneratorsisacontinuousvariableratherthananintegervariable.AURORAmodelstheoperatingcostandperformanceparametersonaplant-levelbasis,wheretheoptimizationmethodusesamixedintegerprogram(“MIP”)todetermineunitcommitment.Basedonpublicdocuments,RESOLVEisrunforasampled37daysinayearandonlyforafewyears,therefore,onlyrepresentativeloadandrenewableprofileswereselectedtoreflectsystemconditions.TheCommissionusesSERVMasaseparatetooltoexaminesystemreliabilityandsimulateproductioncost.AURORAisbothalong-termcapacityexpansiontool(“LTCE”)andaproductioncostmodel.Inthelong-termcapacityexpansionprocess,Siemensusedasamplingof104daysandeveryotherhourforeachyearofthe20-yearstudyhorizon(2020-2040).Inthefinalsimulationofthesystem(productioncostsimulation),AURORAsimulatesplantoperatingandmarketconditionsforeveryhour,everydayandeveryyearofthestudyhorizon.Asummaryofthemethodologywithkeyinputs,algorithms,andoutputsareshowninFigure1.

Figure1.MarketAnalysisMethodology

Asindicatedabove,AURORAisbothaproductionmodelandacapacityexpansionoptimizationmodel.AURORAisanhourly,chronologicalproductioncostmodelwithanintegratedlong-termcapacity

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expansion(“LTCE”)feature.TheLTCEproducesaresourceexpansionplangivenresourceoptionsandconstraintsaroundthoseoptions.Theoptionscanincludesupplyanddemandgenericresources,includingenergystorage,forinclusionintheexpansionplan,existingresourcesandexistingresourcesforeconomicretirementasdesired.ThefullsetofstandardoperationalandcostparametersfornewandexistingresourcesareconsideredintheLTCE,providingarobustframeworkfromwhichtoevaluatedifferenttechnologieswithdifferentoperational(intermittentvs.baseload)costandincentiveprofiles.TheLTCEconsidersconstraintssuchasreservemargintargetsorrequirements,RPSrequirements,carbonlimits,andancillaryserviceconstraints.Thelong-termcapacityexpansionlogicisillustratedinFigure2.TheLTCEmodelmakesuseofaniterativelogictodeveloparegionalcapacityexpansionplan.Attheendofanygiveniteration,ithastheinformationitneedstotakeretirementactionsonexistinguneconomicresourcesandtoselecteconomicallyviablenewresourceoptions.Convergencecriteriareducethetotalnumberofresourcealternatives,whichareconsideredbytheLTCEmodelthroughtheiterations,withaconvergedsolutionbeingdefinedasoneinwhichsystempricesremainstableevenwithchangeinresourcealternatives.Inotherwords,thesolutionreflectsanexpansionplanthatisatoncebotheconomicallyrationalandstable.Withthisapproach,AURORAperformsaniterativefutureanalysiswhere:

1. Resourcesthathavenegativegoing-forwardvalue(revenueminuscosts)areretired;2. Resourceswithpositivevaluesareaddedtothesystemonagradualbasis,wherebyasetof

resourceswiththemostpositivenetpresentvalueisselectedfromthesetofnewresourceoptionsandaddedtothestudy;

3. AURORAthenusesthenewsetofresourcestocomputeallthevaluesagain;and4. Theprocessofaddingandretiringresourcesiscontinuallyrepeateduntilthesystemprice

stabilizes,indicatingthatanoptimalsetofresourceshasbeenidentifiedforthestudy.

Figure2.Long-TermCapacityExpansion

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AURORAandRESOLVEbothoptimizedispatchforasystemunderagivensetofinputs.RESOLVEisalinearoptimizationmodel,whichassessesdispatchbasedonrepresentativedaysoveradefinedforecasthorizon.AURORAdiffersinthatitisamixedintegerprogramandhourlychronologicaldispatchsimulation.RESOLVEgenerallyfocusesonasinglemarket,reflectinghighlevelintertiesandmarketinteractionwithneighboringregions.AURORAcanbesetupinseveraldifferentways.Forthisanalysis,AURORAwasrunformostoftheWesternInterconnection.BothRESOLVEandAURORAidentifytheoptimalresourcestomeetneedsbasedonthetechnologyoptionsofferedincludinggenerationandstorage.Bothmodelsalsoallowfortheincorporationofdifferenttypesofmarketandportfolioconstraintsincludingrenewablegeneration,carbonemissions(oremissionrates),reservemargin,andtimingofnewbuildrequirements.Nonetheless,asisdescribedfurtherbelow,thereareimportantdifferencesintheresultsofthemodeling,particularlywithrespecttotheamountofbatterystoragetobeadded.InevaluatingSJCE’s2020IRP,theCommissionshouldconsiderthatSJCE’sIRPwasdevelopedusingarobusttoolandmethodology.SJCE’sIRPlargelyusesthesameinputsastheCommission’sRSPand38MMTscenario,thusanydifferencesinresultsshouldbeexploredcarefully.Allmodelinghaslimitations.Uponcarefulreview,differencesinresultsusingsimilarinputsbutdifferentmodelscanprovidecomplementaryinformationandleadtomorerobustconclusions.

ii. Modeling Approach

A. Inputs and Assumptions SJCE’s2019-2020IRPinputsandassumptionsreflectthoseoftheCommission’s2019-2020InputsandAssumptionsdocument,including:

• Loadforecast;• Fuelprices;• Emissionscosts;• Technologycostsandoperationalspecifications,unlessotherwisedescribedbelow;• Baselineandcandidateresources;• Resourceavailability;• Transmissionconstraints;• State’sRPStarget;and• 46MMTand38MMT2030GHGemissionstargetsfortheelectricsector.

TheRenewableEnergyCertificate(“REC”)andGHG-freepricesweredevelopedbasedonS&PPlattsNorthAmericanEmissionsSpecialReport.Intheabsenceofatransparentcapacitymarket,apriceof$5perkw-monthwasusedforcapacity.Themodelalsoaccountsforthecostsandbenefitsofanyresourcessubjecttothecostallocationmechanism(“CAM”).

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B. Load Forecast SJCE’sannualbaseloadforecastandloadmodifierswerederivedfromthe“midBaselinemidAAEE”versionofForm1.1coftheCaliforniaEnergyCommission’s(“CEC”)IntegratedEnergyPolicyReport(“IEPR”)2018release.SJCE’sloadwasmodeledinAURORAtoincludeallloadmodifiers.ThereasonforthisapproachisduetotheinabilitytodisaggregateloadmodifiersprovidedbytheCommissiondowntoindividualLSEs,asthedataprovidedbytheCommissionisaggregatedbyTransmissionAccessCharge(“TAC”)area.InordertodevelopSJCE’sannualbaseloadforecastintomonthlyandhourlydata,historicalhourlymetereddatawasused.ThefollowingprocesswasusedtotranslatetheannualenergyforecastfromForm1.1cintohourlyloadinputs:

1. Annualenergyforecastswereextractedfor2020-2030fromthe“midBaselinemidAAEE”versionofForm1.1coftheCEC2019IEPR;

2. Monthlyaverageloadshapesweredevelopedfromhistoricmetereddataandnear-termmodelingdatafromSJCE.Themonthlyaverageloadshapeswerethenappliedtotheannualenergyforecaststoprovideaveragedemandonamonthlybasis;

3. Monthlypeakloadshapesweredevelopedfromhistoricmetereddataandnear-termmodelingdatafromSJCE.Themonthlypeakloadshapeswerethenappliedtothemonthlyaverageenergyforecaststoprovidepeakdemandonamonthlybasis;and

4. Hourlyloadshapesweredevelopedfromhistoricmetereddataandnear-termmodelingdatafromSJCE.Thehourlyloadshapeswerethenappliedtothemonthlyaverageenergyandmonthlypeakenergytoprovideloadonanhourlybasis.

ThisprocessusedtoderivehourlyloadfromtheCEC’sIEPRdataensuresthatthetotalannualenergyvolumesforloadremainsconsistentwithSJCE’sassignedforecast. SJCEusedthecustomizedhourlyloadshapeintheCSPCalculatorforalltheportfoliosanalyzed.ThecustomhourlyloadshapeisusedfortheBaselinedemandcomponentsofC&IandNon-C&Icustomers.ThecustomhourlyloadshapewasderivedoffhistoricalmetereddatafromtheSJCE’sterritoryandthusismorereflectiveoftheactualconditionsexperienced.SJCE’s2020-2030loadandpeakforecastusedindevelopingitsConformingPortfoliosareshowninTable1.

Table1:SJCE’s2020-2030LoadForecastandPeakForecastError!Bookmarknotdefined.

SJCE 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

LoadForecast(GWh) 4,511 4,462 4,438 4,431 4,437 4,442 4,446 4,446 4,448 4,447 4,449

PeakForecast(MW) 1,081 1,072 1,066 1,064 1,063 1,067 1,068 1,068 1,066 1,068 1,069

Thisloadforecastshowsaslightreductionbetween2020and2021andthenamostlystableload.SJCEdidnotadjustthisloadforpurposesofthisIRPgiventhelevelofdiscussionthatamodificationoftheloadforecasttendstotriggerandcompetingpriorities.Nonetheless,SJCEnotesthatSJCE’splanning

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departmentisprojectingsignificantpopulationandbusinessgrowthinthecomingyears,andSanJoséhasaggressiveelectrificationandEVexpansiongoals.9Moreover,forthenextIRPprocess,itwillbeimportanttoassesstheimpactsonloadfromsubstantialeffortsnecessaryonthepartofresidents,business,andlocalandStateauthoritiestoprovidefordistributionresiliencyinthefaceofsignificantproblemsinthelasttwoyears.

C. SJCE Contracted Resources ExistingResources

ConsistentwiththedefinitionsprovidedintheResourceDataTemplate,otherthanRAcontracts,SJCEhadnocontractswithexistingresourcesinplaceorundernegotiationasofJune30,2020.NewResources

ConsistentwithdefinitionsprovidedintheResourceDataTemplate,Table2belowsetsforthnewresourcesSJCEhadundercontractorinnegotiationstocontractasofJune30,2020.IntheAURORAanalysis,SJCEmodeled100MWofsolarand100MWofwindasaplaceholderfora225MWwindprojectfromNewMexicothatwasundernegotiationthatSJCEsubsequentlyenteredintoacontractwith.ThisisbecauseatthetimetheIRPanalysisbegan,negotiationswereinanearlystageandSJCEwasuncertainwhetherthecontractwouldbesigned.InthesametimeframeasitisfilingthisIRP,SJCEisexecutingtheagreementfor225MWofwindfromNewMexicowithacommercialoperationdateofDecember31,2021.Thusthelong-termcontractsintheResourceDataTemplateare:

Table2:Long-TermContractsProject Term Technology MW OnlineDate Location(County)

1 20years Solar+Storage 100+10 12/31/2022 Fresno2 15years Solar 100 12/31/2022 Kern3 12years Solarwith

GuaranteedDeliveryinHE7-22

62 12/31/2021 Kern

4 15years OutofStateWind 225 12/31/2021 NewMexicoHydroresources

TocreatethePortfolios,theanalysisreliedontheCommission’s2019-2020IRPassumptionsonavailabilityandcontractingpriceofhydroresources.SJCEfollowedtheRSPtodetermineout-of-stateandin-statehydroavailabilityduetotheabsenceofavailablepublicinformationoncontractedhydroorexpectedtobecontractedhydrointhefuture.Specifically,theRSPindicatesthereis2,852MWofavailableimportedhydroin2020to2030and7,070MWofin-statelargehydroduringthesametimeperiod,asshowninTable3.Forimportedhydro,SJCEconsideredBonnevillePowerAdministrationandWesternAreaPowerAdministrationaspotentialcounterparties.

9TheSanJoséCityCouncilapprovedabuildingreachcodeordinanceencouragingelectrificationandEVreadiness,andanotherordinanceprohibitingnaturalgasinfrastructureinnewsingle-familyandlow-risemulti-familybuildings,inFall2019.

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TheanalysisassumedthatSJCEwouldbeabletoprocurenomorehydroresourcesthanitsrelativeshareofloadinCaliforniaforin-statehydro.Forlargein-statehydro,themodelingassumedthatSJCEcanprocurehydrofromanywhereinCaliforniauptoSJCE’scorrespondingshare,whichisapproximately120MWandisreflectedinTable5.Themodelwasfreetochooseasmuch,oraslittleofthisproportionalshareaswaseconomic.TheanalysisassumedthatSJCEwouldbeabletoprocureitsrelativeshareofloadintheregionsofCaliforniawithdirectintertiestothePacificNorthwestfortheoutofstatehydro.TherearetwomaintransmissionlinesconnectingthePacificNorthwesttoCalifornia:oneconnectingtoNorthernCalifornia,andtheothertoLADWP.Thus,foroutofstatehydro,itwasassumedthatSJCEwouldhaveaccesstoitsrelativeshareofthecombinedloadofNorthernCaliforniaplusLosAngelesDepartmentofWaterandPower(“LADWP”).SJCE’scorrespondingshareisapproximately110MWandisreflectedinTable4.Again,themodelwasfreetochooseasmuch,oraslittleofthisproportionalshareaswaseconomic.SJCEusedgenerationprofilesofin-stateandout-of-statehydroresourcesthatalignwiththeprofilesprovidedintheCSPCalculators,wheretheannualcapacityfactorforimportedhydrois44percentandthecapacityfactorforin-statehydrois31percent.SJCEassumedcontractedhydropricesforeachtypebasedoninformationobtainedfromEnergyDivisiononforecastedoperationalcosts.

Table3:AvailableLargeHydroper2019-2020RSPAnnualAvailability 2020-2030InStateHydro–MW 7,070

Hydro(ScheduledImports)-MW 2,852

Table4:PotentiallyAvailableHydroImports(MW)basedonSJCE’sPro-RataShare 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

SJCE 114 113 112 112 111 111 110 109 109 108 108

Table5:PotentiallyAvailableIn-StateLargeHydro(MW)basedonSJCE’sPro-RataShare 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

SJCE 126 124 123 122 122 121 120 120 119 118 117

D. Generation shapes ModellingperformedwasbasedonallofSJCE’sPPAscurrentlyundercontract,andaplaceholderforacontractthatwasundernegotiationasofJune30,2020.Theinformationusedincludedtechnology,term,contractedgeneration,priceandhourlyshapes,amongotheritems.AllSJCE’sexecutedPPAsplustheplaceholderforthecontractundernegotiationwereincludedinthesimulationsintheAURORAmodelalongwithnewcapacityselectedbytheLTCE.Aspartofthesimulation,SJCEusedrepresentativehourlygenerationshapesforwindandsolarassetsinNorthernandSouthernCaliforniaderivedfromthe2018NationalRenewableEnergyLaboratory(“NREL”)AnnualTechnologyBaselines(“ATB”)report.Theshapesdiffertosomeextentwiththelocation-specificshapesavailableintheCSPCalculators.Figure3showsacomparisonoftheaveragehourlycapacityfactorsfortherepresentativesolarshapesusedintheAURORAmodelcomparedtothe

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location-specificsolarshapesintheCSPCalculators.Figure4showsanequivalentcomparisonoftheaveragehourlycapacityfactorsforwindresources.

Figure3:ComparisonSolarTrackingShapes

Figure4:ComparisonWindShapes

Forhydroresources,CSPhourlyshapesforin-stateandimportedhydrowereusedfornewhydrocontracts.

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ThestoragecomponentwasmodeledindependentlyusingtheAURORAchronologicalstoragedispatchlogic.PleaserefertothesectiononAssignmenttogeographicregionsfortheprocessundertakentotranslateresourcesselectedbythemodeltoCSPresourcelocations.InadditiontotheexecutedPPAs,informationontheshort-termcontractsforresourceadequacyandenvironmentalproductsinplaceatthetimewereincludedinthemodeling.

E. Resource Costs Thecandidateresources’capitalcost,operatingcost,andlevelizedcostofenergyusedintheanalysiswerederivedfromtheCPUC’s2019-2020IRPassumptions.CostvaluesweretakenfromtheCommission’sreleased“RESOLVE_ResourceCostsandBuild_2020-02-07.xlsb“file,whicharereportedin2016dollars.Figure5belowdisplaythelevelizedcostsassumptionsindollarpermegawatthour(“$/MWh”)forthesetofcriticaltechnologies.ThesecostsincludeOvernightCapitalCosts,InterconnectionCost,andInvestmentTaxCreditsasapplicabletoeachtechnology.Inaddition,periodicreplacementandaugmentationcostsforbatterystoragetechnologiesareincludedaswell.AllcostsareconsistentwithCPUCassumptionsasprovidedinthe“RESOLVE_ResourceCostsandBuild_2020-02-07.xlsbfile.

Figure5.LevelizedCostsofEnergyforSelectedTechnologies(2016$/MWh)

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Table7showsthefuelandemissionscostassumptionsusedindevelopingSJCE’sportfolios.

Table7:FuelandEmissionsCostsAssumptionsFuel/Emission

CostsCANG NWNG SWNG CACoal CarbonCost Uranium PCC1RECs

$/MMBTU $/MMBTU $/MMBTU $/MMBTU $/tCO2 $/MMBTU $/MWh2019 4.28 3.34 2.54 2.00 14.57 0.70 15.122020 4.30 3.35 2.57 2.00 15.25 0.70 15.362021 4.31 3.35 2.58 2.00 16.00 0.70 15.602022 4.31 3.36 2.59 2.00 16.84 0.70 15.842023 4.31 3.36 2.59 2.00 17.71 0.70 16.082024 4.32 3.37 2.59 2.00 18.62 0.70 15.362025 4.33 3.37 2.60 2.00 19.59 0.70 15.122026 4.34 3.38 2.61 2.00 20.59 0.70 14.402027 4.34 3.38 2.62 2.00 21.66 0.70 13.442028 4.34 3.39 2.62 2.00 22.79 0.70 12.242029 4.35 3.39 2.63 2.00 23.99 0.70 9.602030 4.36 3.40 2.64 2.00 25.25 0.70 15.12

F. Demand-Response, Energy Efficiency, and Behind the Meter Solar

Forpurposesofthisassessmentonly,SJCEacceptedtheCECassumptionsaboutdemand-response,energyefficiencyandbehindthemetersolar,andSJCE’sloadforecastincludesitsproportionalshareoftheCECassumptionsabouttheseimportantresources.Inthepast,changestotheCEC’sassumptionshavetriggeredmuchdebateandSJCEhasnotyetundertakenextensiveanalysisoftheapproachesavailabletocost-effectivelyincreasetheleveloftheseimportantresourceswithinitsportfolio.Nonetheless,SJCEisassessingopportunitiestoincreasetheseimportantresources.SJCEhasambitiousplanstoaccelerateenergyefficiencyandbehindthemetersolaraswellasdemandresponseprograms.

G. Post-Processing Calculations Aspartofthe2019-2020IRPfiling,severalpost-processingcalculationswereusedtogeneratemetricsfortheportfolio.Thepost-processingcalculationsencompassedcostmetrics,reliabilitymetrics,emissionsmetricsandafewothermiscellaneousmetrics.AlmostallthecalculationswerebasedoffoutputsfromtheAURORAmodel.NotableexceptionsincludePowerContentCategory1(”PCC1”)prices,GHG-freepricesandsystemcapacitypricesasdescribedintheabovesectiononInputsandAssumptions.Criticalpost-processedcalculationsarediscussedbelow.Toprovidedeeperinsightsintoportfoliocostsseveralvariationsofcosttoserveloadona$/MWhbasisweredeveloped.Additionalcostmetricsincludedwere:

• WeightedAverageCostNewCapacity($/MWh)• WeightedAveragePowerPurchaseAgreement(PPA)Costs($/MWh)• WeightedAverageCostofShort-termContracts($/MWh)• WeightedAverageCostofSpotPurchases($/MWh)• WeightedAverageCostofRACapacityPurchases($/kW-year)• WeightedAverageCostofRPSAttributes• WeightedAverageCostofGHG-FreeAttributes

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Toprovidedeeperinsightsintothegenerationandemissionprofilesoftheportfolio,severalmetricsweredevelopedtoensurecompliancewithCPUCrequirementsandSJCE’sinternalgoals.SJCEappliedcalculationstodeterminethepercentageoftheportfoliocoveredfromlong-termcontractstoverifycompliancewiththe65percentRPSlong-termcontractingrequirementunderSB350.Additionally,post-processingcalculationswereundertakenfortheRPSandGHG-freepositionsoftheportfolio.TheAURORAmodeldidnotincludetheabilityforSJCEtoprocureattribute-onlycontractstomeetRPSandGHG-freeinternaltargets.Asaresult,apost-processingcalculationwascreatedtoidentifyanyadditionalPCC1and/orGHG-freeattribute-onlyproductsthatwouldberequiredtomeetorexceedSJCE’sRPSrequirements.SJCEconsideredthefollowingmetrics:

• Long-termContractingRequirements(MWh)• Pre-ProcurementRPSpercentofLoad• Pre-ProcurementGHG-freepercentofLoad• AdditionalPCC1Purchases• AdditionalGHG-freePurchases

H. Assignment to geographic regions TheCommissionrequiresLSEstoidentifythegeographicregioninwhichanyplannednewresourcewillbelocatedforpurposesofrunningtheCSPCalculator.UntilSJCEissuessolicitationsandobtainsrealproposals,theidentificationofanyparticularlocationforplannedresourceswouldbeentirelyspeculative.Accordingly,SJCEendeavoredtoapplythedistributionofresourcesselectedintheCommission’s2019-2020RSPand38MMTscenariotoSJCE’splannedresourcesinitsrespectiveportfolios.Todothis,theRESOLVEresultsviewerwasusedtoextracttheincrementalcapacitybuiltfromtheRESOLVEmodel10andtheanalysisusedthearealistedintheResourceDataTemplate11.Asaresultofresourcesnotbeingreportedintheyears2025,2027,2028and2029,SJCEappliedtheaveragedistributionovertheIRPplanninghorizon.Tables8and9belowindicatethelocationalallocationofSJCE’sfutureadditionalresources,purelyforpurposesofrunningtheCSPCalculator.

Table8:LocationalAllocationofNewSolarResourcesSolar 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Avg.

GreaterKramerSolar 0% 0% 7% 5% 5% 5% 4% 4%SacramentoRiverSolar 0% 0% 0% 0% 0% 0% 0% 0%SouthernCADesert 60% 30% 34% 29% 29% 29% 39% 36%SouthernNVSolar - - - - - - - -SouthernPGESolar 0% 0% 2% 24% 24% 24% 19% 13%TehachapiSolar 40% 70% 57% 43% 43% 43% 38% 48%

10Specifically,the“46MMT_20200207_2045_2GWPRM_NOOTCEXT_RSP_PD”casewasused,anddatawasextractedfromthe“PortfolioAnalytics”tab.11Tab“cns_mapping.”BecausetheBaja_California_WindRESOLVElocationwasnotincludedinthe“cns_mapping”tabandincludesaresourcethatshouldhavebeentiedtotheSouthern_CA_Desert_Southern_NV_WindCSPcategory,thisincrementalexpansionwasexcludedfromthedistributioncalculations.

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Table9:LocationalAllocationofWindSolarResourcesWind(On-Shore) 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Avg.

NewMexicoWind 0% 0% 0% 0% 0% 21% 4%SacramentoRiverWind 100% 74% 74% 67% 67% 51% 72%SouthernCADesert - - - - - - -SouthernNVWind - - - - - - -SouthernPGEWind 0% 12% 12% 20% 20% 18% 14%TehachapiWind 0% 14% 14% 13% 13% 10% 11%

I. Curtailment TheAURORAmodeldeterminescurtailmentsforsolar,windandothernon-dispatchableresourcesonanhourlybasisbasedonloadrequirements,batterystoragechargingandeconomics.Duringaspecifichouroftheday,forinstanceduringsolarhours,ifthereisexcessgeneration,theAURORAmodeldetermineshowmuchofthatexcessgenerationisusedtochargebatteriesandhowmuchwouldbecurtailed.

J. Stochastic Analysis TheIRPteamundertookastochasticanalysisofsomeofthekeyvariablesusedtodevelopitsportfolios.ThepurposeoftheseanalyseswastotestSJCE’sConformingPortfolios’performanceunderarangeofmarketconditions.Thestochasticapproachincludedthedevelopmentof200MonteCarloiterationsofcertainkeyvariablestotesteachportfoliooverabroadrangeofmarketconditions.SJCEreliedontheexpertiseofSiemenstodevelopdistributionsforkeyvariables,includingloadforecasts,emissionprices,gasprices,coalprices,technologycost,andhydrogeneration,foruseinthe200iterationsofthemodel.12Becausereliabilityisaparticularlycriticalfactorindevelopingarobustresourceprocurementplan,SJCEfocusedonasetofstochasticexposuresrelevanttoreliabilityincludingmarketprices,marketpurchases(spot)exposure,curtailment,andtoalesserextent,emissions.

K. Discussion with SJCE’s Community SanJoséhasformedacitizenadvisorycommittee,theCleanEnergyCommunityAdvisoryCommission(“CECAC”),toprovidecommunityinputtotheSanJoséCityCouncilregardingSJCEmatters.Itiscomposedofcommunitymemberswithtechnical,business,andotherareasofexpertise.TheCommitteeisthecommunity’sliaisontoSJCE.SJCEupdatesanddiscussesimportantpolicymatterswiththeCECAConaregularbasis,includingportfoliocompositionandcommunityprograms.Unfortunately,becauseoftheshelterinplaceordersrelatedtoCOVID19,theCECACdidnotreviewandprovideinputtotheSanJoséCityCouncilonthis2020IRP. 12 Siemensadvisesthatwhiletheanalysisdoesnothaveweatherasastochasticinput,butthestochasticvariationstodemandcanbeusedtoextrapolatetheimpactofseasonalweatherevents.

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WorkingwiththeJointCCAs,SJCEdidhaveanearlycallwithrepresentativesoftherenewabletradesandparticipatedinweeklycallsorganizedbyPCEwithkeyenvironmentaladvocacyorganizations.Inaddition,SJCEhasundertakenextensiveoutreachwiththecommunityincludingdisadvantagedsectorsasitprepareditsroadmapforprograms.Thisisdiscussedinfurtherdetailinthesectionondisadvantagedcommunities.

III.StudyResults

a. Conforming and Alternative Portfolios

SJCEissubmittingtwoPreferredConformingPortfoliosinthisIRP:theConforming46MMTPortfolioandtheConforming38MMTPortfolio.SJCEisnotsubmittinganyAlternativePortfoliosoradditionalConformingPortfoliosbeyonditstwoPreferredConformingPortfoliosaspartofitsIRP.TheConforming38MMTPortfolioisSJCE’spreferredportfoliothatwillguideitsprocurementuntilthenextIRPcyclebecauseitprovidesforlessGHG-emissions,andlessexposuretofluctuationsinmarketpricesalthoughitonanNetPresentValuebasis,thecostisslightlyhigher(1.7%).

b. Preferred Conforming Portfolios

ForeachConformingPortfolio,SJCEdeterminedtheamountofnewresourcecapacitythatwouldberequiredtomeetthevariousobjectivesoftheportfolio.Specifically,theanalysisfocusedonmeetingthreeprimaryobjectives:(1)serveloadinallhours,(2)meetRPSrequirements,and(3)meetGHG-freetargets.SJCE’sanalysisdeterminedthatlong-termcontractingwithrenewableenergyandbatterystorageresourceswillbekeycomponentsofaleast-costportfolioforSJCEandiseffectiveatreducingmarketexposureandriskstotheportfolio.However,someshort-termcontractswithcleanresourcesandspotmarketpurchaseswerealsoselectedtohelpfulfillshort-termgapsinservingloadormeetingcompliancetargets.Inparticular,short-termcontractswithcleanresourceswereusefulinthefirstthreeyearsoftheforecastperiodwhenSJCEisstillbuildingitsportfolio.BecauseSJCEenteredintocontractswithalargequantityofrenewableenergyresourcesinitsfirstyearandahalfofoperation,SJCEwillonlyneedtoprocureanadditional100MWofbatterystoragebefore2024tobeontracktoachieveitsproportionalshareofGHGemissionreductionsby2030inbothConformingPortfolios.Table10providesadditionaldetailsaboutthetwoportfolios.Tables11-16providedetailedinformationabouteachoftheportfolios.Althoughdemandresponse,behindthemetersolarandenergyefficiencyarenotexpresslyidentifiedinSJCE’sConforming46MMTPortfolioortheConforming38MMTPortfolio,theCEC’sassumptionsfortheadditionoftheseresourcesoverthestudyperiodarereflectedinSJCE’sloadforecastsusedtopreparethePortfolios.Inaddition,SJCEisassessingopportunitiestoincreasetheseimportantresources,particularlyasitseekstoaddresiliencyinthefaceofPowerSafetyShut-offsanddistributionoutages.SJCEworkingwithotherstakeholderstoincreasefundingstatewidetosupportlocalcommunityresiliencyprojectsandexploringalternativestoimplementthesewithinSanJosé.The2020IRPCriteriacontinuetoreflectthegoalthatby2040SanJoséwillbetheworld’sfirstonegigawattsolarcity.SJCEexpectstoapplytoadministerCommissionEnergyEfficiencyprogramsinearly2021,subjecttoSanJoséCityCouncilapproval.

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Further,theexpansionplansindicatethatSJCEwillbuyitsproportionalshareofexistingin-stateandoutofstatehydroresources.Asstatedpreviously,toavoidassumingitwouldobtainanunrealisticamountoftheexistinginandoutofstatehydro,SJCElimitedtheamountofhydroavailabletoSJCEtonomorethanitsproportionalsharetakingintoaccount,foroutofstatehydro,onlytheentitieswithtransmissionaccesstothePacificNorthwest.

Table10:ProcurementNeedsofConformingPortfolios

AddedMWby2030*

Portfolio Solar Wind4-HourBatteries

MetricTonsofGHGEmissions

in2030

PortfolioCostNPV

(2018,$,000)

PortfolioCost%moreexpensivethan46MMTConforming

MWAddedRenewablesbefore2024

Conforming46MMT 100 90 150 640,000 $2,330,168 NA 0Conforming38MMT(Preferred) 320 100 200 435,000 $2,369,832 1.7% 0

Table11.Conforming46MMTPortfolioExpansionPlan

MW 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 TotalAnnualCapacityAdditions - 240 - 100 125 50 50 - - - 15 580BatteryStorage(Li-Ion) - - - 100 50 - - - - - - 150Biomass - - - - - - - - - - - 0ExistingPPAs - - - - - - - - - - - 0FlowBattery - - - - - - - - - - - 0ExistingGeothermal - - - - - - - - - - - 0ExistingLargeHydro(InState) - 120 - - - - - - - - - 120ExistingLargeHydro(OutofState) - 120 - - - - - - - - - 0LongDuration(Pumped)Storage - - - - - - - - - - - 0SolarPV - - - - - 50 50 - - - - 100Wind(CAonshore) - - - - 75 - - - - - 15 90Wind(Offshore) - - - - - - - - - - - 0Wind(OOSonshore) - - - - - - - - - - - 0

Table12.Conforming46MMTPortfolioCumulativeExpansionPlanMW 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

CumulativeCapacityAdditions - 240 240 340 465 515 565 565 565 565 580BatteryStorage(Li-Ion) - - - 100 150 150 150 150 150 150 150Biomass - - - - - - - - - - -ExistingPPAs - - - - - - - - - - -FlowBattery - - - - - - - - - - -ExistingGeothermal - - - - - - - - - - -ExistingLargeHydro(InState) - 120 120 120 120 120 120 120 120 120 120ExistingLargeHydro(OutofState) - 120 120 120 120 120 120 120 120 120 120LongDuration(Pumped)Storage - - - - - - - - - - -SolarPV - - - - - 50 100 100 100 100 100Wind(CAonshore) - - - - 75 75 75 75 75 75 90Wind(Offshore) - - - - - - - - - - -Wind(OOSonshore) - - - - - - - - - - -

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Table13.Conforming46MMTPortfolioRPSandGHG-freeGWh 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Load 4,511 4,462 4,438 4,431 4,437 4,442 4,446 4,446 4,448 4,447 4,449RPSCompliancefromLTContracts(contracted) 90 180 1,349 1,851 1,839 1,826 1,813 1,801 1,790 1,776 1,764

RPSCompliancefromLTSolarContracts(expansionplan) 124 248 247 247 248 248

RPSCompliancefromLTWindContracts(expansionplan) 194 195 195 195 195 195 219

TotalRPSCompliancefromLTContracts 90 180 1,349 1,851 2,033 2,145 2,256 2,243 2,232 2,219 2,231

ExistingRECContracts-PCC1 1,470 1,250 100 - - - - - - - -

ExistingRECContracts-PCC2 360 308 200 - - - - - - - -

AdditionalRECPurchases - - 100 - - - 107 237 380 467

RequiredRPS%fromLong-termContracts 6% 11% 79% 101% 104% 103% 103% 97% 91% 86% 84%

RPS%ofLoad 43% 36% 38.5% 41% 44% 48% 51% 53% 55% 58% 61%

CARPSTarget 33% 35.75% 38.5% 41.25% 44% 46.75% 49.5% 52.25% 55% 57.75% 60%

CARPSTargetMWh 1,489 1,595 1,709 1,828 1,952 2,077 2,201 2,323 2,446 2,568 2,669

GHG-FreeGeneration 785 785 785 787 785 785 785 787 785 785

ExistingGHGContracts 2,038 876 - - - - - - - - -

GHG-Free%ofLoad 80% 69% 50% 59% 64% 66% 68% 71% 73% 76% 78%

Table14.Conforming38MMTPortfolio(Preferred)ExpansionPlan

MW 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 TotalBatteryStorage(Li-Ion) - - - 100 100 - - - - - - 200Biomass - - - - - - - - - - - 0ExistingPPAs - - - - - - - - - - - 0FlowBattery - - - - - - - - - - - 0ExistingGeothermal - - - - - - - - - - - 0ExistingLargeHydro(InState) - 120 - - - - - - - - - 120ExistingLargeHydro(OutofState) - 120 - - - - - - - - - 120LongDuration(Pumped)Storage - - - - - - - - - - - 0SolarPV - - - - 50 50 - - - 20 200 320Wind(CAonshore) - - - - - - 100 - - - - 100Wind(Offshore) - - - - - - - - - - - 0Wind(OOSonshore) - - - - - - - - - - - 0

Table15.Conforming38MMTPortfolio(Preferred)CumulativeExpansionPlanMW 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030BatteryStorage(Li-Ion) - - - 100 200 200 200 200 200 200 200Biomass - - - - - - - - - - -ExistingPPAs - - - - - - - - - - -FlowBattery - - - - - - - - - - -ExistingGeothermal - - - - - - - - - - -ExistingLargeHydro(InState) - 120 120 120 120 120 120 120 120 120 120ExistingLargeHydro(OutofState) - 120 120 120 120 120 120 120 120 120 120LongDuration(Pumped)Storage - - - - - - - - - - -SolarPV - - - - 50 100 100 100 100 120 320Wind(CAonshore) - - - - - - 100 100 100 100 100Wind(Offshore) - - - - - - - - - - -Wind(OOSonshore) - - - - - - - - - - -

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Table16.Conforming38MMTPortfolio(Preferred)RPSandGHG-freeGWh 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Load 4,511 4,462 4,438 4,431 4,437 4,442 4,446 4,446 4,448 4,447 4,449

RPSCompliancefromLTContracts(contracted)

90 180 1,349 1,851 1,839 1,826 1,813 1,801 1,790 1,776 1,764

RPSCompliancefromLTSolarContracts(expansionplan)

124 249 248 247 247 297 794

RPSCompliancefromLTWindContracts(expansionplan)

260 260 259 258 239

TotalRPSCompliancefromLTContracts 90 180 1,349 1,851 1,963 2,075 2,321 2,308 2,296 2,331 2,797

ExistingRECContracts-PCC1 1,470 1,250 100 0 0 0 0 0 0 0 0

ExistingRECContracts-PCC2 360 308 200 0 0 0 0 0 0 0 0

AdditionalRECPurchases

0 0 100 2 27 46 0 52 181 274 0

RequiredRPS%fromLong-termContracts 6% 11% 79% 101% 101% 100% 105% 99% 94% 91% 105%

RPS%ofLoad 43% 39% 39% 42% 45% 48% 52% 53% 56% 59% 63%

CARPSTarget 33% 35.75% 38.5% 41.25% 44% 46.75% 49.5% 52.25% 55% 57.75% 60%

CARPSTargetMWh 1,489 1,595 1,709 1,828 1,952 2,077 2,201 2,323 2,446 2,568 2,669

GHG-FreeGeneration 785 785 785 787 785 785 785 787 785 785

ExistingGHGContracts 2,038 876 - - - - - - - - -

GHG-Free%ofLoad 80% 69% 50% 59% 62% 64% 70% 71% 73% 76% 81%

PublicUtilitiesCodeSection454.52(a)(1)requiresthatIRPs:

(A)MeetthegreenhousegasemissionsreductiontargetsestablishedbytheStateAirResourcesBoard,incoordinationwiththecommissionandtheEnergyCommission,fortheelectricitysectorandeachload-servingentitythatreflecttheelectricitysector’spercentageinachievingtheeconomywidegreenhousegasemissionsreductionsof40percentfrom1990levelsby2030.

(B)Procureatleast60percenteligiblerenewableenergyresourcesbyDecember31,2030,consistentwithArticle16(commencingwithSection399.11)ofChapter2.3.

(C)Enableeachelectricalcorporationtofulfillitsobligationtoserveitscustomersatjustandreasonablerates.

(D)Minimizeimpactsonratepayers’bills.

(E)Ensuresystemandlocalreliabilityonbothanear-termandlong-termbasis,includingmeetingthenear-termandforecastlong-termresourceadequacyrequirementsofSection380.

(F)Complywithsubdivision(b)ofSection399.13[whichspecifiesthataretailsellermayenterintoacombinationoflong-andshort-termcontractsforelectricityandassociatedrenewableenergycredits.BeginningJanuary1,2021,atleast65percentoftheprocurementaretailsellercountstowardtherenewablesportfoliostandardrequirementofeachcomplianceperiodshallbefromitscontractsof10yearsormore

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indurationorinitsownershiporownershipagreementsforeligiblerenewableenergyresources.]

(G)Strengthenthediversity,sustainability,andresilienceofthebulktransmissionanddistributionsystems,andlocalcommunities.

(H)Enhancedistributionsystemsanddemand-sideenergymanagement.

(I)Minimizelocalizedairpollutantsandothergreenhousegasemissions,withearlypriorityondisadvantagedcommunitiesidentifiedpursuanttoSection39711oftheHealthandSafetyCode.

SJCE’sportfoliosmeetthoserequirementsassummarizedhere:

• SJCE’sConforming46MMTPortfolio2030GHGemissionsarewithin1percentoftheassigned2030GHGBenchmarkof0.787,ascalculatedbytheCSPCalculator.SJCE’sConforming38MMTPortfolio2030GHGemissionsarewithin1percentoftheassigned2030GHGBenchmarkof0.629,ascalculatedbytheCSPCalculator.

• SJCE’sConformingPortfoliosarebothcomprisedofatleast60percenteligiblerenewableenergyresourcesbyDecember31,2030.

• SJCEmakeseveryefforttokeepcostsdownandbalancebuildingitsfinancialreservesandofferingaffordableratesandservicestocustomers.

• AsdescribedingreaterdetailbelowinthesectiononSystemReliabilityAnalysis,SJCEprocuresresourceadequacytoachievecompliancewithCommissionrequirements.SJCE’sConformingPortfoliosdemonstrateabalancedresourcemixthatwillallowSJCEtocontinuetocontributetooverallgridreliability.

• SJCEhasenteredintolong-termcontractsfor487MWofRPS-eligibleresourcesandplanstoenterintoadditionallongtermagreementsassetforthintheexpansionplan.Thesecontractsareanticipatedtocover76percentofSJCE’sRPSrequirementsinthe2021-2024complianceperiodintheConforming46MMTPortfolio,and75percentofSJCE’sRPSrequirementsinthe2021-2024complianceperiodintheConforming38MMTPortfolio.

• SJCE’sConformingPortfoliosincludesignificantquantitiesofrenewableenergyandenergystorageresources,planstoinvestigateopportunitiesforlong-durationenergystorage,andalong-termcontractforRAwithnaturalgasgeneration.Thisbalancedportfoliocontributestothediversity,sustainability,andresilienceofthebulktransmissionanddistributionsystems,andourlocalcommunity.

• SJCEbuildingfinancialreservessothatitcanensureratestabilityforcustomers.• SJCEisworkingtominimizelocalizedairpollutantsandGHGemissionsbyprocuring

renewableenergyandenergystorageresourcesthatdisplacealternativessuchassystempowerpurchasesandnaturalgasgenerationthatdisproportionatelyimpactdisadvantagedcommunities.SJCEispartneringwiththeCECtofundanincentiveprojectthroughtheCaliforniaElectricVehicleInfrastructureProject(“CALeVIP”)fortheinstallationofDCfastchargingandLevel2ports,withatleast25percentofportsbeinginstalledindisadvantagedandlow-incomecommunities.ThisovercomesoneofthekeybarrierstowidespreadEVadoptionandreducespollutionthatdisproportionallyaffectdisadvantagedandlow-incomecommunities.

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i. Differences between SJCE’s portfolios and the RSP

WhiletheCommissionhasmadeitclearthatitdoesnotrequireSJCE’sConformingPortfoliostoexactlytracktheCommission’sRSPand38MMTscenario,keydifferencesbetweentheresultsmeritconsideration.BecauseSJCE’smodelingsoughttoidentifyanexpansionplanforSJCE,buildingonSJCE’sindividualprocurementtodate,oneshouldexpecttheoutcomestodiffer.SJCEunderstandsthatultimately,allLSEportfoliosmustbecombinedtoproduceareliablewholeandstandsreadytodoitsparttoensurethattheneededresourcesareinplacetoachievetheState’senvironmentalgoalsandmaintainreliability.SJCEhasprocuredaggressivelysinceitcommencedsubstantialoperationsinFebruary2019,andhasfocusedonputtingintoplaceaportfoliothatisbalanced,withattentiontomeetingeveningrampandnon-solarhoursalongwithsolarhours.SJCE’scurrentprocurementwillcover44%ofSJCE’sexpectedloadin2023whenalltheprojectscontractedforwillbeinoperation.Theprocurementtodateincludesa225MWout-of-statewindcontractthatwillprovideresourcesduringallnon-solarhoursaswellassolarhours,andaninnovative62MWfixeddeliveryagreementthatmustdelivereverydayoftheyearduringthehoursending07-22,andthusincludesthechallengingeveningramphours.Thefixeddeliveryagreementiswithasolarplusstoragefacility,sincewithoutthestorage,thefixeddeliveryprofilewouldnotbepossible.However,sincetheagreementdoesnotdictatehowmuchstoragetheSellermustaddtomeetitsfixeddeliveryrequirements,thechartsbelowdonotgiveSJCEcreditforthestoragenecessaryforthefixeddeliveryagreementtomeetitsdeliveryrequirements.Inaddition,SJCEhasenteredintotwo100MWsolarprojects,onewith10MWsofco-locatedbatteries.Finally,SJCEenteredintoasevenyear,150MWagreementwithCalpineforRAfromitsexistingnaturalgasfleet,andseveralotherthree-yearagreementswithnaturalgasplants.Departingfromthisstrongbase,forbothofSJCEsPortfolios,theAURORAmodelingidentifiedahigherproportionofrenewablesthantheRSPandthe38MMTscenarios.Thisisnotsurprisingsinceonlyrenewableresourceswereconsideredinthecandidateresources.Nonetheless,themodelselectedsimilaramountsofstorage(slightlylessintheConforming46MMTPortfolioandslightlymoreintheConforming38MMTPortfolio),andnoLDSuntil2037.Givenahigheramountofrenewables,andparticularlysolarinSJCE’sportfolios,foraconsistentratioofsolartobatteriesbetweentheCommission’snewresourcesandSJCE’s,alargeramountofbatterieswouldberequiredintheSJCEPortfoliostomatchtheproportionofnewrenewablestonewbatteriesintheCommission’sRSPandthe38Scenario.Table17.NewResourceCumulativeBuildoutof2019-2020RSPfor2030basedonDecision20-03-028

Resource(MW) 2030SJCE

ProportionalShare-2030

SJCEConforming46MMTResults

Wind 2,837 59 90WindonNewOut-of-StateTransmission 606 13 225Utility-ScaleSolar 11,017 229 362BatteryStorage 8,873 185 160Pumped(long-duration)Storage 973 20 0ShedDemandResponse 222 5 0NaturalGasCapacityNotRetained (30) (1) 0

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Table18:NewResourceBuildoutof38MMTby2030Portfolio(CumulativeMW)basedonDecision20-03-028

Resource(MW) 2030SJCEProportional

Share-2030SJCEConforming38MMTResults

Wind 5,279 110 100WindonNewOut-of-StateTransmission 3,000 62 225Utility-ScaleSolar 11,995 249 682BatteryStorage 9,714 202 210Pumped(long-duration)Storage 1,605 33 0ShedDemandResponse 222 5 0NaturalGasCapacityNotRetained 2,046 43 0

SiemenshasadvisedtheseresultsmayarisebecauseSJCEisanewpowerproviderandhasinvestedinabalancedportfolio,includingoutofstatewindandbatterypairedwithstorage.Thus,SJCE’sproportionalshareofnewbatterystorageinvestmentsislowerasSJCEhaspairedsolarwithstoragefromitsinception.ItisimportanttonotethattheproportionofwindandsolartobatteriesinSJCE’sportfolioincludingtheexpansionplansinboththeConforming46MMTPortfolioandtheConforming38MMTPortfolioisquiteclosetotheproportionofwindandsolartobatterieswhenbothexistingandnewresourcesintheRPSand38MMTScenarioareincludedinthecomparison.Anotherlikelysourceofthisdifferenceisthemodelusedandthemodelingapproach.ThemodelingundertakenbySJCEreliedmostlyonCommissioninputs,butusedadifferentmodel(AURORA)andmodelingapproachasdescribedearlierinthisdocument.TheCommission’smodelingisbasedonrunsforasample37daysinayearforselectedyears.TheAURORAanalysissampled104daysandeveryotherhourforeachyearofthe20-yearstudyhorizon,andinthefinalsimulationofthesystem,themodelsimulatedplantoperatingandmarketconditionsforeveryhour,everydayandeveryyearofthestudyhorizon.Astoneighboringregions,asexplainedearlier,RESOLVEgenerallyfocusesonasinglemarket,reflectinghighlevelintertiesandmarketinteractionwithneighboringregions.AURORAwassetuptorunmostoftheWesternInterconnect.Eachmodelingapproachandefforthasitsstrengthsandweaknesses,andaconsiderationofmorethanoneanalysiswillresultinmorerobustinformation.Thediscrepanciesintheresultsmeritfurtherexploration.NotwithstandingtheresultsofitsIRPanalysis,SJCEiscontinuingtoexplorelong-durationstorageandcontinuestowelcomebidsfromallkindsofrenewableresourcesandbatterystorageinitssolicitations.Moreover,SJCElooksforwardtoexploringthesourceofthedifferencesbetweentheSiemen'sresultsandtheCommission'sresults,andthefurtherinformationthatwillresultfromcombiningtheIRPsfromallLoadServingEntities(“LSEs”).SJCEunderstandsthatCaliforniaasawholemusthaveabalancedportfolioofrenewablestotheflexiblecapacityneededfortheirfullutilization.SJCEalsounderstandsthat,particularlyoncetheIOUsexistingportfoliosarefairlyallocatedsuchasproposedbySCEandCalCCAinPCIAWorkingGroup3,13JCEdoesandwillmakeuseofexistingresourcestohelpmeetthe

13 FinalReportofWorkingGroup3Co-Chairs:SouthernCaliforniaEdison(U-338e),CaliforniaCommunityChoiceAssociation,AndCommercialEnergy.pp.20-30RetrievedfromCPUCwebsite8/3/20:https://docs.cpuc.ca.gov/SearchRes.aspx?DocFormat=ALL&DocID=335710541

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needsofSJCE’sload.Ifappropriatebasedonfurtherinformation,SJCEcanmakeadjustmentstoitsIRP(subjecttotheapprovalofItsRiskOversightCommitteeandSanJoséCityCouncil).Inanyevent,SJCEwillmeetanyproportionalsharerequirementsidentifiedbytheCPUC.

c. GHG Emissions Results

SJCEusedtheCSPCalculatortoestimatetheGHGemissionsassociatedwitheachConformingPortfolio.Table19belowshowstheresultingGHGemissionsassociatedwitheachofSJCE’sConformingPortfolios.SJCEusedacustomhourlyloadshapeintheCSPCalculator,asdescribedinmoredetailintheStudyDesignsectionabove.

Table19.GHGEmissions(MMT)AssociatedwithSCJE’sConformingPortfolios 2020 2022 2026 2030AssignedLoadForecast(GWh) 4,510 4,438 4,446 4,44946MMTGHGBenchmark 0.78746MMTConformingPortfolioEmissions 1.659 0.858 0.777 0.78438MMTGHGBenchmark 0.62938MMTConformingPortfolioEmissions 1.654 0.781 0.730 0.625

d. Local Air Pollutant Minimization and Disadvantaged Communities

i. Local Air Pollutants

SJCEreportsitsestimateofNOX,PM2 5,andSO2emissionsassociatedwithitsPreferredConformingPortfoliosinTable20below.

Table20:LocalAirPollutionEmissionsunderSJCE’sConforming46MMTPortfolioandConforming38MMTPortfolio.

ii. Focus on Disadvantaged Communities

SJCEbelievesthatthemostimportantandinfluentialwayitcanbenefitSanJosé’sdisadvantagedcommunitiesisbykeepingthecostofelectricityaffordableinordertoprovideequitableaccesstoanessentialservice.SJCE’sprocurementisguidedbythisobjective,takingintoaccountalsothatdisadvantagedcommunitiesaremostdirectlyaffectedbyenvironmentalimpacts.

Conforming 38 MMT Portfolio Conforming 46 MMT Portfolio

tons 2020 2022 2026 2030 2020 2022 2026 2030

PM 2.5 61 32 30 28 61 34 31 36

SO 2 6 3 3 3 6 3 3 3 NO x 97 60 62 54 97 63 63 69

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SanJoséhasaverydiversecommunityofresidents,withroughlyone-thirdofitspopulationAsian,one-thirdHispanic,andone-thirdwhite.14Thereare14censustractsthatscorewithinthetop25percentofcommunitieswiththehighestpollutionburdenusingtheCalEnviroScreentool.Those14tractshaveapopulationtotalof63,925,whichrepresents18percentoftheapproximately350,000accountsthatSJCEwillserveonceenrollmentiscomplete.AlthoughtheCalEnviroScreentoolonlydesignates14censustractsasdisadvantagedcommunities,AB1550passedonAugust31,2016whichamendedCaliforniaHealthandSafetyCode(HSC)§3971314designatesanadditional53censustractsinSanJoséaslow-income.These67censustractsareallrepresentedinsevenzipcodes(95110,95111,95112,95116,95122,95131,and95133)andfiveCouncildistricts(3,4,5,7,and8).TheseareasarecommonlyreferredtoasEastWillowGlen,Almaden,SevenTrees,Japantown,Spartan-Keyes,LittlePortugal,KingandStory,Berryessa,andMabury.SJCEseekstokeepthecostofelectricityaslowaspossibleforourcustomersconsistentwithachievingourregulatoryrequirementsandenvironmentalgoals.ProgramexpendituresaremonitoredcloselybySJCEstaff,aRiskOversightCommittee,andCouncil.TheCityofSanJoséhasbeenavocaladvocatebeforetheCPUC,otherStatepolicymakersandthepublicforregulatoryreformstoreducecosts,optimizethevalueoftheIOUresources,andtoreduceexitfees.TheseeffortsarecentralandforemosttoSJCE’scommitmenttoservetheneedsofitsdisadvantagedcommunities.SJCEalsoseekstotakeadvantageoftheopportunityaCCApresentstofundandoperateprogramstobenefitlocalcommunities.Duringitsfirstyearsofoperation,SJCEdevelopedacomprehensivecommunityprogramsroadmap.TheSJCEprogramsroadmap,whichwaspresentedtoSanJosé’sTransportationandEnvironmentCommitteeonMarch2,2020,wascreatedbasedoninputfromthecommunityaswellasextensiveresearchintoprogramoptionsandprogramcosteffectiveness.PartofthisprocessincludedoutreachtodisadvantagedcommunitiesincludingfocusgroupsinSpanishandVietnameseincensustractsofdisadvantagedcommunitiesaswellasonlinesurveysinEnglish,Spanish,andVietnamese.TheresponsestotheonlinesurveyrepresentSanJosé’sdiversemixofresidents.ThefoundationaldirectionofSJCE’sprogramsroadmapisbuiltaroundtheprogramguidingprinciples.Oneofthefiveprogramguidingprinciplesis“topromoteequity,affordability,andsupportdisadvantagedcommunities”.Tobuildonthisequity-focusedprogramguidingprinciple,SJCEhasalsoincorporatedasuiteofequitymetricsusedtoevaluatecustomerprogramsandtheirimpactondisadvantagedcommunities.Theseequitymetricsincludethepercentageoflowtomiddle-incomecommunitiesabletoaccesstheprogram,percentageofprogramfundingdirectedtodisadvantagedandlow-incomecommunities,andpercentagechangeinenergyburdenforparticipatingcustomers.SJCEisprioritizingbuildingadequatefinancialreservesintheearlyyearsofoperationstoensurefinancialstability;therefore,SJCE’sprogramsroadmapfocusesonlowercosteducationalprogramsintheearlyyears.Inlate2020andsubjecttoSanJoséCityCouncilapproval,SJCEplanstosubmittotheCPUCanapplicationtodevelopandadministertheDAC-GreenTariffprogram.Thisprogram,administeredbytheCommissionandfundedthroughgreenhousegasallowancecharges,provides100percentrenewableelectricityanda20percentbilldiscounttoCARE/FERAcustomers.Theprogramwilldrawelectricityfromafullyfundedandnewlyconstructed,approximately1.4MWsolararrayinNorthernCalifornia.SJCEestimatesaround500householdscouldbenefitfromtheprogram. 14https://oehha.ca.gov/calenviroscreen/report/calenviroscreen-30

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Currently,SJCEispartneringwiththeCECtofundanincentiveprojectthroughtheCALeVIPlaunchingonDecember16,2020fortheinstallationofDCfast-chargingandLevel2chargingportsinworkplace,commercial,publicsector,andmultifamilyhousinglocations.TheCECwillallocate$10millionforSanJosé,withSJCEmatching$4million,foratotalof$14milliontobedisbursedoverthenexttwotofouryears.This$14millionwillgotowardsinstalling1,500newelectricvehiclechargingportsthroughoutSanJosé,withatleast25percentbeinginstalledindisadvantagedandlow-incomecommunities.ImprovingaccesstoaffordableEVchargingoptionsindisadvantagedandlow-incomecommunitiesiscriticalforovercomingoneofthekeybarrierstowidespreadEVadoption,aswellasreducingpollutionthatdisadvantagedandlow-incomecommunitiesoftenareexposedtoathigherlevelsthanothercommunities.SJCEhasalsocontributedtothecommunitybysuccessfullynegotiatingatotalof$870,000incommunityinvestmentfundsfromitsfourexecutedPPAs.ThesedollarsareinvestedintoprogramsthatpositivelyimpactdisadvantagedcommunitiesinSanJosé.Thefirstagreementincluded$275,000whichhasbeenallocatedtoSJWorks,aprogramtoplaceat-riskyouthintoabout90internshipswithsustainabilityandcleanenergycompaniesinSanJosé.Throughthespecificusesoftheremaininginvestmentshavenotyetbeenfinalized,theywillalsofocusonpositivelyimpactingdisadvantagedcommunitiesinSanJosé.Initsinitialyearandhalfofsubstantialoperations,SJCEhasaddedsubstantialrenewableprojectstoitsportfolio,whileseekingalsotoprovideforreliabilityasthestatetransitionsfromnaturalgastostorageandotheralternativestobalancerenewables.SJCEhasenteredintofourlong-termPPAsthatwillserve44percentofSJCE’sloadwhenoperational.AstheseprojectsstarttocomeonlinebeginningDecember31,2021,SJCE’srelianceonsystempowerwillcontinuetodecrease.Atthesametime,SJCEhasenteredintonumerousnear-termRAagreementswithnaturalgasplants,andoneagreementthatgoesoutto2029toensurereliabilityduringaresponsibletransitiontoasignificantlylowercarbonelectricsystem.SJCEhasalsobeenexploringopportunitiesformorecost-effectiveandlongerdurationstoragewithitsCCApartnersasdiscussedlaterinthisIRP.

e. Cost and Rate Analysis

Asstatedearlier,SJCEconsidersthatkeepingelectricserviceaffordableiscriticallyimportantnotonlyforitsdisadvantagedcustomersbuttobetterservethecommunitygenerally.SJCEisconsideringcarefullythedatathatwasdevelopedthroughtheIRPprocess.TheanalysisindicatedthatSJCE’sConforming38MMTPortfoliois1.7percentmoreexpensiveonanNPVbasisthantheConforming46MMTPortfolio.However,thestochasticanalysisdemonstratesthattheConforming46MMTPortfolioSJCEreliesmoreheavilyonmarketpurchases,particularlyinlateryears.Therefore,the46MMTPortfolioitisathigherriskofincreasedmarketpricesandinparticularincreasedfuelpricesthanintheConforming38MMTPortfolio.Thus,providedSJCEhasastableload,pursuingtheConforming38MMTPortfolioisconsistentwithSJCE’srigorousattentiontomaintainingreasonablypricedelectricservicewhilestrivingforenvironmentalquality.Generally,theIRPresultsindicateaportfoliocosttrajectory,costmixandexpectedimpactstoratesfortheConforming46MMTPortfolioandtheConforming38MMTPortfoliowillberelativelysimilar,eventhoughtheNPVoftheConforming38MMTPortfolioisslightlymoreexpensivethantheNPVfortheConforming46MMTPortfolio.Onereasonthattheportfoliosexhibitsimilarcharacteristicsthroughthe

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studyperiodisadirectresultoftheprocesstakentodeveloptheSJCE’sConformingPortfolios.SJCE’sportfolioswereoptimizedaroundmeetingCaliforniaRPStargetsandthenresourceswereaddedorremovedtoarrivewithinonepercentofSJCE’sindividualGHGMMTtargetfortherespectivecase.SJCEwillcontinuetoexaminetheresultsoftheIRPprocessalongwithinformationfromitsprocurementefforts,andongoingmarketinformationtoensurethatitscostsareasaffordableaspossiblewhilemeetingSJCE’sregulatoryrequirementsandachievingstateandlocalcarbonreductiongoals.Asnotedpreviously,SJCE’sprocurementandratesettingactivitiesareoverseenindetailbySJCEandSanJoséCitymanagement,andbyaRiskOversightCommitteethatincludestheCityofSanJoséexecutivemanagementstaffthatarefocusedonthefinancialstabilityofallDepartmentsthroughouttheCityofSanJosé.ThesemembersincludetheCity’sDirectorofFinanceandtheCity’sBudgetManageraswellastheCity’sDeputyCityManager.SanJoséisalargecitythatoperatesanannualcitybudgetofover$4billiondollarsandeffectivelymanagesseveralcomplexutilitiesandenterpriseoperationssuchaswater,wastewater,andrecyclingservicesaswellastheSanJoséMinetaInternationalAirport.SJCE’sprocurementauthorityandratesaresubjecttotheapprovaloftheRiskOversightCommitteeandtheSanJoséCityCouncil.ThesebodieswillcontinuetooverseeSJCE’sprocurementandratesforthebenefitofthecommunity.SJCEisaccountabletotheSanJoséCityCouncil,thebodydirectlyelectedbythecustomersSJCEserves.SanJoséCityCouncilmeetingsareopentothepublicandoftengainextensivemediacoveragewhichensureseffectiveoversightofpublicfundsandservicesprovided.

f. System Reliability Analysis

Asstatedabove,SJCEhasprocuredaggressivelysinceitcommencedsubstantialoperationsinFebruary2019,andhasfocusedonputtingintoplaceaportfoliothatisbalanced,withattentiontomeetingtheeveningrampandnon-solarhoursalongwithsolarhours.SJCEcontinuestoprocureRAinacommerciallyreasonablemannertomeetallstaterequirements,includingincrementalresourceadequacyasdefinedinD.19-11-016.Whilefacingsignificantbarriersandchallenges,describedinthesectiononbarriers,SJCEcontinuestoundertakesolicitationsforshort-,medium-andlong-termresourceadequacy.Forexample,SJCEissuedaRequestforInformationonStandaloneStorageonOctober22,2019;joinedEastBayCommunityEnergy’s“NewResourceAdequacyand/orPeakEnergy”RequestforInformationissuedonSeptember6,2019;issuedaRequestforOfferstoSellIncrementalResourceAdequacyinNovember18,2019;issuedaRequestforOffersforlong-termResourceAdequacyonMarch13,2020;andjoinedseveralCCAsinissuinganRFIforLongDurationStorageonJune6,2020.Asaresult,SJCEwasabletoshortlistseveralenergystorageprojects,naturalgasfacilities,anddemandresponseprojects.Throughthesesolicitations(andrelatednegotiations)SJCEwasabletobringthefollowingprojectson-line:

§ Three-year(2021-2023)SystemRAagreementwithflexibleattributes(60,125and150MW-Moperyear,respectively);

§ Seven-year(2023-2029)150MW-MoSystemRAagreementwithflexibleattributes;and§ Three-year(2021-2023)48MW-MoSystemRAagreement.

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Furthermore,SJCEhasexecutedseverallong-termPPAsforenergyandcapacity.TheprojectslistedbelowarescheduledtocomeonlineonorbeforeJanuary1,2023.

§ 262MWsofin-statesolar,62MWsofwhichhasafixedquantityinhoursending7-22;§ 10MWsoffour-hourlithium-ioncollocatedbatterystorage,and;§ 225MWsofout-of-statewindthatisdynamicallyscheduledintotheCAISO.

Toitsknowledge,SJCEisthefirstCCAtoenterintoafixeddeliveryagreementwithasolarproject.Thisagreementmovesawayfromthetraditionaltakeorpayagreementsthatrequirethebuyertoacceptallenergyproducedbyasupplieratthetimethepowerisproduced.Instead,thisagreementrequirestheSellertodeliverysolarpowersevenfromhoursending7-22everydayoftheyear.Thisdeliveryprofilecoversthechallengingeveningramphours.Thisdeliveryrequirestheinstallationofbatteries,buttheagreementleavesthelogisticsofmakingthedeliveriespossibletotheSeller.ToSJCE’sknowledge,theCPUChasnotdevelopedamethodologytoaccuratelyascribeRAvaluetothisinnovativearrangement,eitherforpurposesoftheconventionalRAprogramorforpurposesoftherequiredincrementalprocurement.SJCEcontinuestostrategicallysolicitandevaluateenergyandcapacityprojects.Thesectiononlong-durationstoragesetsforthSJCE’seffortstoworkwithotherCCAstoexploreandsolicitlong-durationstorage.ThesectiononbarriersoutlinessomeofthechallengesSJCEandotherCCAsfacewithRA.Asthatsectiondetails,SJCEdecidedtopauseactivenegotiationswithbatterystoragedevelopersbecauseofregulatoryuncertainty.OneneartermmatterthatwouldsignificantlyhelpSJCEconsiderlongertermRAprocurementisresolutionofthepossibilityofbeingallocatedtheIOUsPCIAresourcesandadecisiononamechanismtoensureIOUstimelyandfairlymakethatcapacityavailabletothemarket.SJCEparticularlywouldwelcomeinformationontheRAthatcouldbeallocatedtoSJCEfromPG&E’sportfolio,iftheSCE/CalCCArecommendationinthePCIA,WorkingGroupIIIprocess15isimplemented.

i. Stochastic Analysis

Toassesstherelationshipbetweenitsportfoliosandsystemreliability,SJCEconductedastochasticanalysistoassessitsportfolios’performanceunderarangeofmarketconditions.Inaddition,SJCEconsideredtheextenttowhichithasalreadyprocuredRAtomeetitsexpectedRAobligation.Further,SJCEreviewedhowitsportfolioofresourcesmeetsitsloadonanumberofrepresentativedaysin2022,2026and2030.Finally,SJCEreviewedstochasticinformationabouttheriskofsignificantcurtailment.SJCEreviewedtheresultsofastochasticanalysisofseveralportfoliosthatbroadlyvariedmarketconditionsincludingload,emissionprices,gasprices,coalprices,technologycostandhydrogenerationtoidentifyextremepriceconditionsthatcouldsignalasupply/demandimbalanceandhenceasystemreliabilityproblem.16SJCEundertookastochasticanalysisoftheConforming46MMTPortfolioandthescenario,notfiled,thatachievescarbonneutralityin2021.Thesecaseswereselectedbecausetheyare 15FinalReportofWorkingGroup3Co-Chairs:SouthernCaliforniaEdisonCompany(U-338E)andCaliforniaCommunityChoiceAssociation.February21,2020.https://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M335/K710/335710541.PDF16 Siemensadvisesthatwhiletheanalysisdoesnothaveweatherasastochasticinput,butthestochasticvariationstodemandcanbeusedtoextrapolatetheimpactofseasonalweatherevents.

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thetwoextremesmodeled,theConforming46MMTPortfoliohavingthehighestcarbonemissionsandtheleastnewresources,andtheCarbonNeutralby2021scenariohavingthelowestcarbonemissionsandmorenewresources.Theanalysisshowedstablepricesthroughthestudytimeperiod,contrarytowhatcouldbeexpectedfromsupply/demandimbalances.Assetforthearlierinthisdocument,thestochasticapproachincludedthedevelopmentof200MonteCarloiterationsofrelevantfundamentalvariablestestingtheportfolioinquestionoverabroadrangeofmarketconditions.Siemensprovideddistributionsforallfundamentalvariables,includingloadforecasts,emissionprices,gasprices,coalprices,technologycost,andhydrogenerationthatcanbeusedforselectingthe200iterationsofthemodel.Themodelutilizedabroadrangeofdemandandcostvariables.ThegoalwastoproviderangesofmarketexposuresanddeterminethepotentialforpriceimpactsexperiencedbySJCE.Theresultoftheanalysiswasthat,onanannualbasis,priceswererelativelystable,evenaftervaryingtheinputsbroadly.ThissignalsthatthereisnotaserioussystemreliabilityconcernfortheCAsystem.ThisconclusionassumesthatLSEswillnotholdontorequiredamountsofexcesscapacityrelativetotheirloadratioshares.GiventhemarketdisruptionsandrollingblackoutsofAugust2020,itisimportantthatadditionalanalysisiscompletedtoensuretheseresultsareaccurate.Asthefiguresbelowillustrate,evenatthe95%probabilityband(95%oftheresultsofthestochasticanalysiswereatorbelowthislevel),annualpricesarestable,dippingin2023,spikingin2026andthengentlydeclining,withonpeakpricesdecliningmoresteeplythanoffpeakprices.Whilethetablebelowpresentsannualaverageprices,dampeningshortdurationpricespikeseveniftheyaredramatic,theanalysisdoesnotpredictasustainedincreaseinpricesasshouldresultfromasupply/demandimbalance.Figure9CaliforniaMarketPriceProbabilityBands2020-2040

AsSJCEexaminedtherangeofpricesthatcouldresultfromvaryinginputconditions,themaindriverofhighpricesprovedtobethepriceofgas(againstsupplyanddemandvariables)asgashasaheavyinfluenceonsystemandoff-peakpricing.

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Figure10:46MMTCompliance

Figure11:38MMTCompliance

ItisimportanttonotethatthemodeldidnotperformasystemwidereliabilitystudytodetermineconditionsunderN-1scenariosorotherredundancyconditions.Themodelutilizednormalsystemconditionstomodeltransmissionandgenerationavailability.SJCEdidnotandcouldundertakeafullsystemreliabilitystudy.Thus,SJCEisnotintendingtoimplytherearenoreliabilityconcernsinCalifornia.However,SJCEisencouragedbytheseresultsthatsuggestthereisnotahighriskofasupply/demandimbalance,andconsidersthattheymeritfurtherexploration.TotheextenttheCPUC’smodelingindicatesadifferentoutcome,anysuchdivergencesshouldbeinvestigatedfurthertoobtainmoredefinitiveinsightsandresults,includingconsideringCaliforniaresultswithamorefullconsiderationoftheregionalcontext.Oneofthebenefitsofusinganalternativemodeltoassessoutcomesusingsimilarinputsisthepossibilityofamorerobustunderstandingofpotentialoutcomesandrisks,asallmodelshavedifferentstrengthsandweaknesses.

ii. Reliability Related Procurement Activities:

SJCEconsidereditsprogresstowardprocuringitsexpectedRArequirements.Figure12demonstratesthatSJCE’sRAprocurementissubstantialthrough2023,stepsdowninyears2024-2029,andisonlyminorafterthat.

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Table21–CurrentSJCENetSystemRA–AnnualPeakCoverageRatio,46MMT

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Table22–CurrentSJCENetSystemRA–AnnualPeakCoverageRatio,38MMT

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Figure12–CurrentSJCENetSystemRA–AnnualPeakCoverageRatioinAugust17

However,SJCE’sRAprocurementbetween2023-2029isfarmorerobustthansuggestedbyFigure12.First,theCPUChasnowdirectedthatstartingin2023,theIOUsmustprocurealllocalRAonbehalfofCCAs.InAugust2021,themonthinwhichSJCEhasthehighestsystemrequirement,thetotalMWoflocalRAcompriseofapproximately45percentofSJCE’stotalmonthlysystemRArequirement.18Thus,asignificantportionoftheopenpositionreflectedinthechartistobeprocuredbytheIOUsperCommissiondirection.Further,SJCEseekstoretainroominitsRAportfolioforexcessRAthatmaybeheldbytheIOUs,particularlyPG&E.ThisisimportantinordertopreventasignificantoverprocurementofRAbecausethereisnotasyetanyreasonablemechanismfortheexcessPCIAresourcestobemadeavailabletothemarket,andnotransparentinformationaboutwhatthemagnitudeoftheseresourcesis.If,asaresultofthislackofmechanismandinformation,CCAsprocurelong-termRAresourcestomeetthebulkoftheirRAneeds,theexcessRAresourcesintheIOUportfolioswillbecomeevenmorestrandedandthecostsforallCaliforniaconsumerswillbeunnecessarilyelevated.Moreover,SJCEseekstoretainroominitsportfoliotoacceptSystemRAallocationsfromPG&E,ifthisisadvantageoustoitscustomers,shouldtheCPUCadoptthejointrecommendationofSouthernCaliforniaEdisonandCalCCAforvoluntaryallocationsofSystemRAinthePCIAWorkingGroup3process.Finally,SJCEnotesthat,itviewsitsmid-termagreementfor150MWsofRAfromCalpine’snaturalgasfleetasatransitionalresources.AsdescribedinthesectiononLDS,SJCEisworkingwithotherCCAstoexplorealternativestoensureareliabletransitiontoacleanerelectricsystem.Evennow,beforethein-

17PertheCPUC’sdirectionwithrespecttothisIRPcycle,thistabledoesnotaccountforthefactthattheCPUChasnowdirectedtheIOUstoprocurelocalRAforCCAsandthatSJCE’sRAobligationwillbereducedcorrespondingly.18ThisestimateisbasedonSJCEInitial2021YAPeakNetRARequirementCY2021.

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servicedatefortheagreementwithCalpine,SJCEisexploringalternativestoreplacethisagreementwithcleanerresourceswhenitexpires.

iii. How SJCE’s portfolio of resources meets its load.

SJCEisawarethatanoverrelianceonsolardoesnotprovideformeetingloadduringnon-solarhoursandcontinuestofocusonassociatedsolutions.Ofthe487MWofnewrenewablesSJCEhascontractedfortodate,225MWareoutofstatewind,and62MWaresolarthatmustdelivershapedsolarenergyforhoursending7-22,sevendaysaweek,365daysayear.SJCEmodeledhowresourcesfromthe2020IRPPortfoliosmatchitsloadonkeyrepresentativedates,inMarch,JulyandAugust,in2026and2030.19ThesedateswereselectedtoshowSJCE’scoverageduringSpringandinSummerwhencoverageissuesaresubstantiallydifferent.ThefiguresbelowshowthatSJCEwillbebuyingamoderateamountfromthemarketduringthechallengingeveningpeakhoursandover-nightinthecaseofitspreferredConforming38MMTPortfolio.However,thewindmodeledintheportfoliosprovidesresourcesovernight,andthedefineddeliverysolarprojectprovidesimportantresourcesduringtheeveningramp.Infact,SJCE’sactualmatchingofgenerationtoloadisbetterthanisreflectedbythefigures.Thisisbecausethefiguresstillreflecttheplaceholderof100MWofsolarand100MWofin-statewind,whichhavesincebeenreplacedby225MWofout-of-statewind,aresourcethatmorecloselymatchesourload.Moreover,relianceonnon-solarhourprocurementismoremarkedintheConforming46MMTPortfolio,whereasSJCEintendstopursuethe38MMTPortfolio.

Figure13:38MMTConforming(Preferred):MarchResourceLoadCoverage

19SJCEalsomodeled2022buttheseresultsarenotverymeaningfulsince2ofthe4projectsSJCEhascontractedwouldnotyethavebeenbuilt.

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Figure14:38MMTConforming(Preferred):JulyResourceLoadCoverage

Figure15:38MMTConforming(Preferred):AugustResourceLoadCoverage

SJCEwillcontinuetoworkwithourpartnerstocreaterenewablegenerationshapesthatcomplementmarketandportfolioneeds.Atthesametime,aftertheprojectsinSJCE’slong-termcontractscommenceoperations,SJCE’senergyprocurementwillhavetofocusevermoreintenselyonunservedhoursintheeveningandovernight.SJCEhasdiscussedopportunitiesfor5-to15-yearenergyprocurementfocusedonthesecriticalhourswithsomeofitssuppliersandispreparingtoadjustitsenergyprocurementtoexploresuchopportunities.WhileinthepastSJCEonlysoughtprocurementauthorityfornear-termenergyprocurement(withintheupcoming3years),onAugust25ofthisyearSJCEobtainedprocurementauthorityfor$212millionfortheperiod2024-2032inordertobeabletopursuethesetypesofopportunities.

iv. Curtailment

WithanincreasingproportionofrenewablesinCalifornia,itmaybenecessarytocurtailtheseresourcesduringhoursofexcess,decreasingtheirvaluetomeetloadorprovideenvironmentalbenefits.TheAURORAmodelcalculatedcurtailmentsforsolar,windandothernon-dispatchableresourcesonanhourlybasisbasedonloadrequirements,batterystoragechargingandeconomics.Thesimulationresultsshowcurtailmentsmostlyforwindduringthesolarhours.Thereareminimalornocurtailmentsofrenewablesduringnon-solarhours.TheAURORAmodelselectstocurtailwindover

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solarduetoitshighervariableoperatingcosts,basedonCPUCassumptions.Mostofthecurtailmentshappeninthelaterperiodsofthestudyhorizon,duringthelate2020sandafter2030,whenthereisgreaterpenetrationofrenewablegenerationintheportfolioandintheCaliforniamarket.Furthermore,afterthemid-2020s,winddevelopersarenolongereligibletoreceivethefederalProductionTaxCreditfornewlyconstructedwindfacilitygeneration,whichcurrentlyallowsthemtobidnegativepricesintothemarketanddispatchaheadofsolar.ThefigurebelowillustratesthatintheConforming46MMTPortfolio,forwind,by2030,attheP-50probabilityband(50%ofthecurtailmentresultsofthestochasticanalysisweregreaterthanthisestimateand50%ofthecurtailmentresultsofthestochasticanalysiswereless)10percentoftheannualpotentialoutputissubjecttocurtailment,growingto30percentby2040.Incontrast,forsolar,evenataP-95probabilitybandl,curtailmentsdonotquitegettothreepercentoftheannualpotentialoutputintheyearwiththehighestcurtailment,2024,andcurtailmentisvirtuallynonexistentafter2030.TheresultsforSJCE’sCarbonNeutralPortfolio,builtontheCPUC’s38MMTScenarioaresimilar.

Figure16–46MMTConforming:OnshoreWindCurtailment

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Figure17–46MMTConforming:SolarCurtailment

Thecurtailmentresultsreinforcetheimportanceofseekingtobettermatchresourceswithloadasdescribedinthesectionabove.Theyalsounderscorethevalueofout-of-statewindthathasaprofilethatisshiftedfromtheprofileofCaliforniawind.

g. Hydro Generation Risk Management

SJCEperformedastochasticanalysistoassessthemagnitudeofrisktoitsPortfoliosfromfluctuationsinhydroelectricavailability,anddeterminetheimpactofhydroavailabilityonthePortfoliocosts.SJCE’sanalysissuggeststhathydrogenerationavailabilityposesonlyamodestrisktoitscustomers,andthatSJCE’sactionstoprocurerenewableenergyandenergystorageareeffectivestrategiestomitigatingthisrisk.TheapproachtomodelinghydrouncertaintywasappliedinthestochasticanalysisfortheConforming46MMTPortfolioandintheCarbonNeutralby2021Portfolio.UsinghistorichydrogenerationyearsinCalifornia,themodelrandomlyassignedidentifiedlevelsofgenerationtothe200stochasticiterations.Theapproachresultsinarangeofhydrogenerationthatvariedacrossbothiterationsandyearswithineachiteration.TheanalysisshowedlittlecorrelationbetweenhydrovariationandSJCE’sPortfoliocostsandCaliforniawholesalepowerprices.ThecorrelationwasmuchlowerthanthecorrelationbetweenPortfoliocostsandvariationinload,gasprices,andGHGprices,whicheachhavealargerimpactonCaliforniapriceformationand,byextension,SJCE’smarketpurchase/salescostsandrevenues.Thissuggeststhatatthe

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levelsassumedinSJCE’s2020IRPPortfolios,theriskfromhydrologyisnotamongthemoreimportantconsiderations.ThisistrueeveninacasewhereSJCEoptedtocontinuetopursueaggressiveneartermcarbonneutralitygoalssuchasintheCarbonNeutralby2021Portfolio.Aswithotherresults,thisresultmeritsfurtherexamination.

Figure18–46MMTConforming–RelationshipofavailablehydrotoSJCEportfoliocost

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Figure19–46MMTConforming–GasPricerelationshiptoSJCEportfoliocost

Anotherimportantquestionwithrespecttohydrologicalvariationistheimpactonreliability.Becausebeyond2021,SJCEhasnotenteredintoagreementswithin-stateorout-of-statehydroproviders,fluctuationsinhydrodonotaffectSJCE’sanalysisofitsprocurementofRAoverthestudyperiod.

h. Long-Duration Storage Development

Aspartofthe2020IRPanalysis,SJCEincluded12-hourdurationstorageasaresourceoptiontoforthelong-termcapacityexpansionplan,butlong-durationstoragewasonlyselectedinSJCE’sPortfoliosin2037.Nevertheless,SJCErecognizesthepotentialimportanceofthistypeofresourcewithrespecttothevalueitcouldprovidetooverallsystemreliabilityinCalifornia.Accordingly,SJCEhasalreadytakenconcreteactionstoexploretheviabilityoflong-durationstoragetechnologiesandiscollaboratingwithotherCCAstoidentifylong-durationstorageprocurementopportunitiesthatcouldbenefitSCJEcustomersandtheCaliforniagrid.

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TheCommission’s2019-2020RSPidentifiedaneedfor973MWoflong-durationstoragein2026inthe46MMTportfolio,and1,605MWoflong-durationstorageinthe38MMTscenario.20Moreover,SJCEisawarefromitsprocurementandcomparingitsloadandgenerationprofilesthatCalifornianeedstoprioritizefindingcosteffectiveresourcestocoveroff-solarhours,particularlyasitpreparestophaseoutnaturalgasinordertoachieveitselectricsectorGHG-emissionsreductiongoals.

SJCEbeganitsexplorationofstoragegenerallyandlong-durationstorageinparticularinSummer2019,bysurveyingexistinginformationandreportsandsummarizingthisinasimplereport.SJCEthenissuedanRFIforstandalonestorageinOctober2019,incoordinationwithfiveotherCCAs.InMarchof2020SJCEissuedanRFPforlong-termstandalonestoragewithtermsofnomorethan15years,butdidnotreceiveanycost-competitivebidsfromlong-durationstorageinthatprocess.

InJune2020,SJCEand12otherCCAsissuedanRFIonlong-durationstorage.ThisRFIdefinedlong-durationstorageresourcesasthoseabletodischargeatfullcapacityforatleast8hours.TheRFIrequestedthefollowingtypesofinformation:(1)storagetechnologyandcommercialhistory;(2)projectspecifics,includinglocation,permitting,financinganddevelopmentrisks;(3)contractingtermsandpreferences,includingindicativepricing.

TheparticipatingCCAsreceivedresponsesfrom31entitiesrepresentingchemical,mechanicalandthermallong-durationstoragetechnologies.Theyincludedlithium-ionbatteries;vanadiumredoxandotherflowbatteries;usedelectricvehiclebatteries;wastetofuelsviaultrasound;hydrogenstorage;pumpedstoragehydro;geo-mechanicalpumpedstorage;craneandstackedblocks;compressedair;flywheels;andmoltensaltandotherthermalstoragetechnologies.Respondentsidentified25specificprojectsthatrepresentmorethan9,000MWofcapacity,two-thirdsofwhichcanachievecommercialoperationby2026.

SJCE,alongwithasub-setoftheCCAsthatparticipatedintheRFI,intendstoissueajointRequestforOffers(“RFO”)forlong-durationstoragelaterthisyear.ThesesameCCAsareexploringtheformationofanewjoint-powersauthoritytoenabletheprocurementofalong-durationstorageresultingfromtheRFO.Jointprocurementforlong-durationstoragecouldallowforbettereconomiesofscale.WhiletheresultsfromtheRFIappearpromisingfromatechnicalpotentialbasis,SJCEremainsconcernedabouttherelativecostsoflong-durationstorage.SJCEwillexaminetheresultsofitsfutureRFOanddiscussoptionswithdeveloperstoinformfutureprocurementdecisionsforlong-durationstorage.SJCEwillconsidercontractingwithlong-durationstorageinadvanceof2037,providedthattheproposalsitreceivesprovideadequatevalue.

20InCPUCDecision20-03-028,the973MWlong-durationstoragetargetisassociatedwithaReferenceSystemPlanthatlimitssystem-wideGHGemissionsto46MMTby2030,whereasthe1,605MWlong-durationstoragetargetisassociatedwiththescenariothatlimitssystem-wideGHGemissionsto38MMTby2030.

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i. Out-of-State Wind Development

Aspartofits2020IRPanalysis,SJCEincludedout-of-statewindasaresourceoption.Notwithstandinghighercapacityfactorswhencomparedtoin-statewind,theAURORAmodeldidnotselectanyout-of-statewindthrough2040ineitherofSJCE’sConformingPortfolios.Onepossibleexplanationforthisoutcomemaybehigherinterconnectioncostsandhigherinvestmentscoststoexpandthetransmissionnetworktoaccessout-of-statewind.SJCE’sConformingPortfolios,however,aresimplytheresultsofsophisticatedmodelingthatdependoncertaininputs,suchascostassumptionsaboutvariousresources.Asisthecasewithotherresources,SJCEwillcontinuetomakeprocurementdecisionsbasedonoutcomesofactualsolicitationprocessesandconsistentwiththedirectionandapprovaloftheSanJoséCityCouncilanditsRiskOversightCommittee.Forexample,inthesametimeframeasthefilingofthisIRP,SJCEisexecutinga225MWcontractwithout-of-statewindfromNewMexicowithanin-servicedateofDecember31,2021.ThepowerwillbedynamicallyscheduledattwoCAISOdeliverypointsandwillqualifyforPowerContentCategory1RPSenergy.WindresourcesgenerallyofferacomplementarygenerationprofiletothesolarresourcesinSJCE’sportfolio,butthisspecificprojectinNewMexicoisevenmorewell-suitedtomatchSJCE’seveningrampgivenitsmoreeasternlocation.Onaverage,itwillgenerateelectricityearlierinthedaythanCaliforniawindtypicallywould.Also,addinggeographicdiversitytotheportfoliocanofferasahedgeagainstregionalweatherpatterns.BecausethesellerwillenterintoaDynamicSchedulingAgreementwithCAISO,theenergycannotbewithheldformorelocaluse;thetransmissionisfirm.Whiletheprojectwillrelyononetransmissionline,havingtwodeliverypointswilloffersomeresiliencyvalue.Lastly,thisresourcecontributestothelargereffortbyLSEsintheWesttobuildregionaloptimizationandresiliencyintotheconnectedareas.WithmanyofthebestCaliforniawindresourcelocationsalreadydeveloped,cost-competitiveout-of-statewindcanaddvalueanddiversity.GiventhelargevolumeofthiscontractcomparedtoSJCE’sload,itisunlikelySJCEwillpursueanothercontractforsizablequantitiesofout-of-statewindresourcesinthenearterm,butSJCE’sprocurementwillbedeterminedbasedontheoutcomeofitssolicitations.SJCEwelcomescompetitiveoffersfromallkindsofrenewableresourcesinanylocationprovidedthattheymeetCalifornia’sRPSrequirements.

j. Transmission Development

SJCE’sConforming46MMTPortfolioandConforming38MMTPortfoliodonotidentifyresourcesinparticularlocations,butrather,asexplainedabove,adoptaproportionalshareofthegeographicdistributionofresourcesidentifiedintheCPUC’sRSP.ThisisbecauseuntilSJCEgoesforwardwithactualsolicitations,SJCEdoesnothaveanywayofknowingwhatthelocationoftheresourcesitwillcontractwillbe.OtherthantheNewMexicowindproject,SJCE’scontractswithnewresourcesallprovidefordeliveryatthegenerationnoderatherthanNP15.SJCEwillhavetoactivelymanageanyrelatedcongestionrisk.SJCEhasbeeninongoingdiscussionswiththeNewMexicowinddeveloper,astimelyconstructionoftherelatedtransmissioniscriticalforanon-timeprojectCOD.

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IV.ActionPlan

a. Proposed Activities

Inthelastyear,SJCEhascontractedfor487MWofrenewablegeneration,including262MWofnewin-statesolarand225MWofnewout-of-statewind,aswellas10MWofco-located4-hourlithium-ionbatteries.Theseresourceswillprovideenoughrenewableenergytomeet44percentofSJCE’sloadin2023,thefirstfullyearwhenalloftheseresourcesareanticipatedtobeoperational.SJCEplanstoaddnewrenewableenergyandenergystorageatameasuredpaceoverthenextdecadetoensureSJCE’sportfolioiscost-effectiveanddoesnotresultinexcesssupply.SJCEwillalsocontinuetoaddshort-termrenewableandGHG-freeresourcestomeetCouncil-approvedportfoliocontentgoals.Inaddition,SJCEwillcontinuetomonitorkeyregulatoryissuesthataffectRAandtoexplorealternativestoprovideforstrongerreliabilitytoaddresslocal,statewide,andregionalresourceadequacyandresiliencyneeds.SJCE’sConforming38MMTPortfolio,whichisitspreferredportfolio,selectedthefollowingresourceadditionsby2030:

• 100MWofwind• 320MWofsolar• 200MWofbatterystorage

DuetoSJCE’ssignificantprogressincontractingfornewrenewableresources,includingcontractingforfixedshapesolarprojectthatutilizesbatteriestoprovideafixedquantityofrenewableenergy;themodelingshowsthatSJCEonlyneedsanadditional100MWofbatterystoragetobeinservicebefore2024,withrenewableenergyaddedinlateryears.SJCEhasobtainedapprovalfromtheSanJoséCityCounciltoprocureanadditional100MWofrenewablegenerationand50MWofstorageatthetimeitgotCouncilapprovalforthe2020IRP.Asdescribedearlier,SJCEsupportsaggressiveGHG-emissionreductionsandisinterestedinworkingwiththeCPUC,environmentaladvocatesandotherLSEstotargetamorestringentgoalforGHG-reductions.Todothis,however,SJCEconsidersthatkeyregulatoryandmarketrisksmustbeaddressed.Inthemeantime,theauthoritytoprocureanadditional100MWofrenewablegenerationgivesSJCEtheabilitytocontinuetomakeprogresstowardsamoreaggressiveGHGemissionstargetwhiletheserisksareaddressed.Theauthoritytoprocureanadditional50MWofstorage,inadditiontoauthoritypreviouslygrantedtoSJCEbutthusfarunfilledforanother20MWofenergystorage,willallowSJCEtocontinuetomakeprogresstowardsadding100MWofstoragebefore2024.SJCEwillconsidertheresultsofthelong-durationstorageRFOasitundertakesprocurement.Inaddition,SJCEintendstocontinuetopushformoreinnovativeapproachesforrenewablesprocurementthatbettermatchresourceswithloadsuchasits62MWfixedshapedsolaragreement.SJCEnotesthatalthoughthisagreementdoesnotgiveSJCEanyrightstobatterystorage,itrequiresbatterystoragetosupportthefixeddeliveryprofile.Asdescribedinthesectiononbarriers,SJCEwaspoisedtoenterintoanumberofcontractswithbatterystoragedeveloperswithatermofatleast10years.However,thisefforthasbeenputonholdasof

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earlythissummerwhentheCPEdecisionmadeitclearthatthePG&EwillberesponsibleforroughlyhalfofSJCE’sRArequirements(andthesubstantialmajorityofitscalendaryearRArequirements).Additionally,theforecastofsubstantialPCIAincreaseshighlightthecriticalimportanceofoptimizingthePCIAresourceswithintheIOUportfolios.UnderstandinghowmuchoftheIOU’sPCIAresourcescouldbeallocatedtoCCAsisofcriticalimportancetoreducingcostsforallratepayerstoensureSJCEdoesn’tprocureredundantresources.ContinueduncertaintyregardingtheallocationofPCIAresourceshindersprocurementplanning,andafailureonthepartoftheIOUstomaketheirexcessRAavailableinatimelyandfairmanneraddsunnecessaryadditionalcoststoSJCEratepayers.Nevertheless,SJCEwillcontinuetomonitorandexploreopportunitiestostrengthenreliabilityincluding:

• ProcurementofresourceadequacymediumtolongertermcontractsthatSJCEhadunderwaywhenregulatorychangesanduncertaintywarrantedapausetoensureSJCEdoesnotprocureredundantresourcesduetoCPUCdirectionoftheIOU’stoprocurecertainresources.

• Participatinginthelong-durationstorageRFIevaluationandtheissuanceofaforthcomingRFO,asdescribedabove.

• EncouragingrenewableproviderstofocusonofferingproductswithfixeddeliveryprofilesthatmatchSJCE’sneeds.

• Exploringalternativestotraditionalenergyprocurementthatfocusonobtainingpricecertaintyinnon-solarhoursandhenceprovidearevenueforresourcesinthosehours.

Finallyandimportantly,asdescribedabove,SJCEisassessingopportunitiestoincreasedemandresponse,behindthemetercleanenergy,andenergyefficiency,particularlyasitseekstoaddresiliencyinthefaceofPowerSafetyShut-offsanddistributionoutages.SJCEworkingwithotherstakeholderstoincreasefundingstatewidetosupportlocalcommunityresiliencyprojectsandexploringalternativestoimplementthesewithinSanJosé.Asstatedearlier,SJCEexpectstoapplytoadministerCPUCEnergyEfficiencyprogramsinearly2021,subjecttoCityCouncilapproval.

i. Incremental Procurement:

ConsistentwithD.19-11-016,SJCEsetsforthhereitsprocurementtomeetitsincrementalprocurementrequirement.SJCEhascontractedforsufficientresourcestomeetitsrequirementandwillcontinuetomonitortheprogressoftheprojectsundercontracttoensurethatanydelaysthatcouldaffectSJCE’scomplianceareidentifiedearlyandSJCEtakesanystepsneededtoupdateitscurrentplan.SJCEmayhaveexcessstartingin2022,dependingonhowtheCPUCwillconsiderSJCE’s62MWfixeddeliverysolarplusstorageagreementwhichhasanin-servicedateof12/31/2021.

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programdevelopment,amongothers.ProcurementwillcontinueconsistentwiththedirectionoftheSanJoséCityCouncilandtheinputofSJCE’sRiskOversightCommittee.SJCEhasexploredandwillcontinuetoexploreoptionsforresourceadequacyfromsystemandlocalresourcessuchasbatterystorage,virtualpowerplants,batterynaturalgashybridconversionsorreplacingnaturalgasplantswithbatterystorageentirely.SJCEisalsoexploringofferingagreentariff,andDERandDemandResponseprograms,andplanstoexplorefeedintariffs.

c. Potential Barriers

KeyregulatoryandmarketuncertaintiesthatwillsignificantlyaffectSJCE’sprocurementgoingforwardinclude:

• DramaticallyincreasingPCIArates.• AllocationofIOUPCIAresources.• TheexpansionofDirectAccess.• COVID-19anda,relatedeconomicrecession.• Capacity,ResourceAdequacy,andSystemReliability/

Eachoftheserisksisdescribedinmoredetailbelow.Fundamentally,theserisksillustratethechallengesSJCEfacesasitseekstoprudentlyandcost-effectivelymeetprojectedloadwithresourcespursuanttolong-termcontracts.EvenifSJCEprocuresexcessiveresourcesbecauseoftheserisks,SJCEmayremainfinanciallystableprovidedthattheresourcesthatitprocuresremaineconomic.ThisrealitycallsforheightenedanalysisandfinancialdisciplinetotheextentthatSJCEcontinuestoenterintolong-termagreementsgoingforward.

i. PCIA Risk

PG&E’sPCIAratehasincreasedbyover600percentinsevenyears,asshowninFigure20.ThisincreasesuggeststhattheapproachforcalculatingtheannualPCIAisdeeplyflawed,particularlygiventhatduringthesameperiod,energymarkets,andthusthevalueofPG&E’sresources,havebeenrelativelystable.SJCEisadvocatingforincreasedandimprovedtransparencyinthePCIAcalculationprocess,suchasthosemeasuresincludedinAB2689(Kalra),whichwaspulledfromthisyear’slegislativesessionduetoCOVID-19considerationsbutwhichistobeintroducednextsession.TheIOU-reportedincreasesinabovemarketcosts,despitebroadlystableCaliforniaenergymarkets,mayalsoindicatethatincentivesforIOUstooperatetheirresourceportfolioefficientlyneedtobeincreased.Finally,thecurrentPCIAvolatilityfromthe“capandtrigger”mechanismistheoppositeofthestabilitythatcustomersdesperatelyneedinthesetryingtimes.TheCPUCandIOUsshouldprovidealongertermPCIAforecast,alongwithatruecap,extendedamortizationperiodandcorrespondingbalancingaccount,sothatLSEscanplanandprocureappropriatelyandsothatallcustomersseemorestablerates.

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Figure20:IncreasesinthePCIAsince2013

TheCommissionwilldeterminePG&E2021PCIAcostsandimplementationdetailsinthefallof2020.SinceSJCElaunchedservicein2019,thePG&EPCIAisprojectedtodoubleincost.Thisresultsinover$80Millioninreducedrevenuesin2020asSJCElowersratestoprotectcustomersfromthesedramaticincreases.InvestmentsinSJCE’slong-termresources,renewable,andcarbonfreecontentmustbetemperedtoensureSJCEcancontinuetoprovideaffordableratestoallcustomers.SJCEisworkingcloselywithotherstakeholdersandtheCommissiontoensuregreatertransparencyandaccuracyinPG&EcostprojectionsandrevenuerequirementstounderstandmorefullyPG&EPCIAcoststhathaveconsistentlyincreasedyearoveryear.SJCEisalsoworkingwithstakeholderstoidentifyopportunitiestoamortizecustomercostsovertimetominimizeratevolatilityandrateshock,bothgoalsexpressedbytheCommissioninapprovingD.18-10-019.21

ii. Allocation of Utility Resources included in the PCIA

AsloadhasmigratedtoCCAs,theIOUshavebeenleftwithsignificantvolumesofresources.Topreventover-procurementandunnecessaryexcesscosttoCaliforniaconsumers,itisnecessaryfortheCommissiontoensuretheIOUsmakeexcessresourcesavailableforsaletothemarketinatimelyandfairmanner.ThisimportantissueisunderconsiderationinthePCIAWorkingGroup3.22 TheCommissioniscurrentlyconsideringaproposaltoaddressthisproblemthatwouldallocatetoLSEstheir

21DecisionModifyingthePowerChargeIndifferenceAdjustment,D.18-10-019,10.11.1822 FinalReportofWorkingGroup3Co-Chairs:SouthernCaliforniaEdison(U-338e),CaliforniaCommunityChoiceAssociation,AndCommercialEnergy.p.20-30RetrievedfromCPUCwebsite8/3/20:https://docs.cpuc.ca.gov/SearchRes.aspx?DocFormat=ALL&DocID=335710541

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proportionalshareoftheIOUsportfolioofresourcestheypayforthroughthePCIA.23SJCEsupportsthisproposal,whichwasdevelopedafterextensivenegotiationsbetweentheIOUs,CCAs,andDirectAccessproviders,butitiscurrentlydelayedandopposedbyPG&E.TheCommission’sfinaldecisioniscurrentlyanticipatedforFall2020.Ifapproved,theresourceallocationcouldoccurassoonas2022or2023.TheCommissionhasnotrequiredtheIOUstoinformLSEsofthevolumeofresourcesavailableforallocation.ThroughparticipationinCPUCproceedings,CCAshaveobtainedpreliminary,nonbindinginformationabouttheGHG-freeandRPSresourcesthatmaybeavailableforallocation,butnoinformationhasbeenmadeavailableaboutvolumeorcharacteristicsofRAthatmaybeallocatedtoCCAs.Usingthisinformation,SJCEcanpreliminarilyestimatetheimpactofutilityallocationstoSJCE’sRPSandGHG-freeresourcesoverthenextdecade,andisthusabletoundertakeongoinglong-termprocurementoftheseresourceswhileleavingroomforapotentialallocation.However,SJCEisunabletodevelopevenapreliminarilyestimatetheimpactofutilityallocationstoSJCE’sRApositionbecausenoinformationaboutPG&E’sRAresourceshavebeenmadeavailabletoLSEs].ItisanticipatedthattheRAresourcesaresignificantgiventhepreliminaryinformationonotherproducts.Resolvingthisuncertaintyiscriticaltooptimizingcostsforallratepayersandcommittingtolonger-termRAinvestments.Figures21and22showthepercentageofRPS(Renewable)andGHG-freepowerSJCEwouldlikelymeetwiththeresourcesSJCEalreadyhasundercontract,theadditionalprocurementauthorityrecentlyauthorizedbyCityCouncilandallocationsfromPG&E.OnechartshowsthesepercentagesifPG&EonlyallocatesGHG-freeresourcesincludedinthePCIA,butnottheRPSresources.ThesecondchartshowsthesepercentagesifPG&EallocatesboththeGHG-freeresourcesandtheRPSresourcesincludedinthePCIA.ThesechartsillustratethatresolvingtheallocationquestioniscriticalforCCAstocontinuetoprocurewithoutforegoingthepotentialbenefitsofanallocationorunnecessarilyincreasingcostsfortheircustomers.ThebluelinesrepresentthecarbonneutralpercentagesSJCEwouldachieveassumingitsloaddoesnotchangeandifitisreducedby20percent(seesectionsbelowonDirectAccessriskandtheriskofreducedloadduetoCOVID-19).Thesevarybetween80percentand140percentinearlyyearsandbetween60percentandslightlyover100percentafterDiabloCanyonclosesdependingonwhetherSJCEreceivesanallocationandhowloadmaychange.Theamountofrenewablepowervariesfrom45percentto85percentdependingonwhetherSJCEreceivesanallocationandhowloadmaychange.

23FinalReportofWorkingGroup3Co-Chairs:SouthernCaliforniaEdison(U-338e),CaliforniaCommunityChoiceAssociation,AndCommercialEnergy.RetrievedfromCPUCwebsite8/3/20:https://docs.cpuc.ca.gov/SearchRes.aspx?DocFormat=ALL&DocID=335710541

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Figure21:SJCE’sexpectedpercentofRPSandGHG-freepowerwithanallocationofPCIAGHG-freeresourcesonly

Figure22:SJCE’sexpectedpercentofRPSandGHG-freepowerwithanallocationofPCIAGHG-free&RPSresources.

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Ascurrentlyproposed,boththeGHG-freeandtheRPSallocationswouldbevoluntaryratherthanmandatory.However,ifanLSErejectstheGHG-freeallocation,itgetsnocreditforthevalueoftheseresourcesinthePCIA,whereasifanLSErejectstheRPSallocation,itgetsafinancialcredit,intendedtoreflectthecurrentmarketvalueoftheresources,againstthecostoftheRPSresourcesinthePCIA.Inotherwords,ifanLSErejectsaGHG-freeallocation,itscustomerswillcontinuetopayforGHG-freeresourcesinthePCIAandwillgetnobenefitforthispayment.However,ifanLSErejectstheRPSallocation,itscustomerswillonlyhavetopayfortheabovemarketcostsoftheRPSresourcesinthePCIA,ratherthanthefullcostofthoseresources.GiventhesignificantvolumeofPCIAresourcesthatcouldbeallocatedtoSJCE,itisprudentforSJCEtoreserveroomfortheallocationofresourcesfromPG&E.AsshowninFigures21and22,theseallocationscouldsignificantlyaffectSJCE’sportfoliomix.Asstatedearlierinthisdocument,thePG&EGHG-freeallocationsavedSJCEcustomers$5millioneventhoughitwasonlyputintoplaceinJune.However,theuntimelyinformationaboutwhetherandwhenPG&EwouldallocateGHG-freepowertoSJCEin2020,resultedinSJCEhavingahigherthanapprovedcarboncontentthatresultsinunnecessaryadditionalcoststocustomers.Moreover,asisdiscussedbelowinthesectionontheRA,untiltheIOUsmakeavailabletoLSEsinformationaboutthevolumeofRAthatisavailableforallocation,itisprudenttodeferlong-termRAcommitmentstoavoideitherover-procuringorforegoinganypotentialbenefitsofanallocation.

iii. Direct Access Expansion Risk

In2018,SB237directedtheCommissiontoexpandDirectAccessby4,000GWhandtoprepareareporttoevaluatetheimpactsofre-openingtheprogramtoallnon-residentialcustomers.24IftheDirectAccessprogramisexpanded,SJCEcouldloseadditionalcustomerload.CommercialcustomerscurrentlymakeuphalfofSJCE’stotalload.WhenDirectAccesswasmadeavailableinCaliforniain2000,approximately10percentofloadinSanJosé’sterritoryleftPG&EtobeservedbyanElectricServiceProvider.WhentheCommissionexpandedDirectAccessin2019,SJCElost1.9percentofitstotalload.ACPUCreportfortheLegislatureonwhethertofullyre-openDirectAccesswasdelayedinJune2020andwilllikelybereleasedlaterthisyear.TheimpactsofthisdecisionneedtobefullyassessedinthecontextofnewrequirementsthatLSE’sprocureahigherpercentageofrenewablesfromlong-termcontracts.SJCEsupportstheserequirementsastheyalignwithSJCEgoalstoacceleratede-carbonizationandincreasenewrenewablegeneration;however,theyalsopresentsignificantrisksifSJCEexperiencesasubstantialloadreductionduetomarketchanges.

iv. COVID-19 Load Impacts

SJCE’sloadhasbeenaffectedbytheimpactsofCOVID-19.SJCE’saverageloadreductionsincemid-March2020hasbeen6.7percent.SJCEisplanningforcontinuedimpactsofCOVID-19andalikelyCOVID-19inducedrecession.The2009recessionreducedenergyconsumptionby4.9percentoveran18-monthperiod.

24SenateBill237andOrderInstitutingRulemakingtoImplementSenateBill237RelatedtoDirectAccess,RetrievedfromCPUCwebsite8/3/20:https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M275/K804/275804783.PDF

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Customernon-paymentshavealsoincreasedsincetheshelter-in-placeordersbeganinMarch2020,likelyduebothtoincreasedfinancialhardshipaswellastheCPUC-orderedmoratoriumoncustomerdisconnectionsuntilApril21,2021(CPUCResolutionM-4842).SJCE,alongwithCalCCA,isadvocatingthatCCAsshouldreceivethesamecostrecoveryreliefthatIOUsaregrantedfortheCOVID-19-relatedincreaseinuncollectiblebalancesfromcustomers.

v. Capacity, Resource Adequacy, and System Reliability:

TheCommission,theCAISOandstakeholdershaveallrecognizedthattheregulatoryrequirementsforresourceadequacyrequiremodificationtoensuresystemreliabilitygiventheincreasingpenetrationofrenewables,andCalifornia’sandCCAs’aggressivegoalsforgreenhousegasreductions.Inaddition,theIOUscontinuetoholdsizableamountsofRAandthereisnomechanismtoensureexcessismadeavailabletothemarketinatimelyandfairmannerincludingpursuanttomarkettermlengths,ortransparentinformationabouttheamountsthatcouldbeavailable.Fortunately,thereareproposedsolutionsforboththeseproblemsunderconsideration,includingbroadRAstructuralredesigninR.19-11-009Track3b.ArrivingattimelyandfairsolutionstothesetwoimportantproblemspromptlyisimportanttosupporttheaggressiveGHGreductionsthatarenecessarytostabilizetheEarth’sclimatewhilemaintaininganaffordablereliableelectricsystem.Itisalsonecessarytoaddressthereliabilityofthetransmissionanddistributionsystem.Inthepastseveralyears,SanJoséresidentsandbusinesseshavebeensubjectedtosignificantoutagesandthreatsofoutagesstemmingfromthevulnerabilityofPG&E’stransmissionanddistributionsystem.Providingforsystemandlocalreliabilityfromasufficiencystandpointisexpensive.Ifafterdoingthis,transmissionanddistributionassetsareinadequatelyorunsafelymaintained,customersdonotgetthefullvalueofthisaddedexpenditurebecausethepower,whileavailable,cannotbedelivered.Finally,SJCEnotesthatthereliabilityeventsofmid-August,2020highlighttheimportanceofareliablesystemthatcanwithstandconvergingchallengessuchashightemperaturesthroughouttheWestandunexpectedgenerationoutages.Thecausesoftheseeventsneedtobecarefullystudiedtoensurethatanystepstakeninresponseimprovereliabilityinacost-effectivemanner.GiventhehighcostsalreadypresentinthecostsCaliforniaconsumersarepaying,furtherexpendituresneedtobecarefullyconsideredandtargetedatsolutionsthatsolvetheproblem.Additionally,thiseventhighlightedthatsignificantimprovementsneedtobemadetothedistributioninfrastructureasSanJoséexperiencedmorethan500separateoutagesthatimpactedover86,000customerswithhundredsbeingwithoutpowerforover24hours.Manyoutageslasted2-3dayswhichiscriticallifesafetyissuethatmustbeaddressed.

A. The regulatory requirements for resource adequacy require modification. Thecurrentresourceadequacyrequirementsfundamentallyfocusonpeaksystemcapacity.Withanincreasingpenetrationofintermittentrenewables,theCAISOandtheCommissionhaveattemptedmakerefinementstoaddressthisshortcomingsuchaschangingELCCvaluesresourcecategoriesandMCCbuckets.Particularly,thechangingELCCvalueshavemadeinvestmentsinnewrenewableresourceschallenging,asLSEsanddevelopersareuncertainofthevalueofresourcesinthefuture.

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SJCEappreciatesthattheCommissionisseekingtoaddresstheregulatoryframeworkforRAholistically,andhascreatedatrackintheRAproceedingtodoso.25SouthernCaliforniaEdison(SCE)andCalCCArecentlyjointlyfiledaninnovativenewapproachinTrack3bthatbetteraccountsfortheintermittencyofrenewablesandaddressesbothcapacityandenergyneedsinallhours,whilemaintainingareasonablelevelofprocurementautonomyforLSEsandpermittingthemtoputintoplaceandprocureinaccordancewiththeirownriskmanagementmethodologies.SJCEurgestheCommissiontoseriouslyconsidertheSCE/CalCCAproposalandtoadequatelypreserveLSEprocurementautonomy.Providedthatfundamentalrequirementsareinplacetoprovideforsystemreliability,Californiabenefitsfromhavingadiversityofentitiesoperatingpursuanttotheirparticulareconomicimperativesandriskmanagementpolicies,ratherthanafewlargeentitieswhosefailureisdisruptivetotheentirestate.

B. The CPUC must ensure that the IOUs make their PCIA RA supply available to the market

TheIOUsholdsizableamountsofRAsuppliesincludedinthePCIA,andthereisnomechanisminplacetoensurethattheymakethissupplyavailabletothemarketinatimelymanner,onreasonabletermsandpursuanttoavarietyofcontractlengths.AsLSEsseektoprocureRAtomeetupcomingannualrequirementsorpursuanttolong-termagreements,thelackofamechanismtoaddresstheIOUsRA,ortransparentinformationabouttheRAthatmaybeavailablecreatesbarrierstoongoingprocurement.LSEsseekingtoenterintolong-termRAbutalsohavingcustomerssubjecttoincreasingPCIAfeescouldsignificantlyincreasecostsforratepayers.Ifnon-IOULSEsprocurelong-termRAresourcestomeetthebulkoftheirRAneeds,theexcessRAresourcesintheIOUportfolioswillbecomeevenmorestrandedandthecostsforallCaliforniaconsumerswillbeunnecessarilyelevated.ThelongertheperiodoverwhichLSEsforwardprocureRA,thegreatertheriskthatlargevolumesofIOUexcessRAcapacitywillbecomeevenmoreuneconomic.Fortunately,again,thereisreasonablesolutionunderdiscussion.InPCIAWorkingGroup3,CalCCAandSCEagainhavecomeforwardwithaproposalthatwouldensurethattheIOUswouldtimelymakeavailabletoLSEstheirproportionalshareoftheresourcesintheIOUsportfolio,andcouldthegiveLSEssometoolstoimprovethevaluetheyobtainfromtheirpaymentofthePCIA.26Again,SJCEurgestheCommissiontoseriouslyconsiderthisproposal.Moreimmediately,theCommissionshoulddirecttheIOUstoprovidetoLSEsinformationaboutthesystemRAthatisavailabletobeallocatedsothatLSEscanconsiderthisinformationintheirprocurement.GeneralinformationhasbeenmadeavailablewithrespecttoRPSandGHG-freeattributes,and,whileitwouldbehelpfultogetmoredetailedupdatedinformation,thishaspermittedSJCEtocontinuetomakeprogressinthoseareaswithoutasignificantriskofoverprocuringorgivingupthepotentialbenefitsofanallocation.Theimpactsofthisproblem,alongwiththeotherproblemsdiscussedaboveareveryreal.SJCErecentlysolicitedbidsforRApursuantto5-15yearagreementsandshortlistedanumberofprojects.SJCEfinalizedoneseven-yearagreementfor150MWofRAfromCalpinethatendsonDecember31,2029.

25Track3ofD.19-11-00926FinalReportofWorkingGroup3Co-Chairs:SouthernCaliforniaEdisonCompany(U-338E)andCaliforniaCommunityChoiceAssociation.February21,2020.https://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M335/K710/335710541.PDF

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However,SJCEpausedfurthernegotiationswithanumberofbatterystoragedevelopersbecauseofthebarriersdiscussedaboveincludingthelikelydramaticincreasesinPCIA,theCPEdecisionwhichtransferstotheIOUstheresponsibilitytobuylocalRA,andtherealizationthatavoluntaryallocationoftheRAinPG&E’sportfoliocouldcauseSJCEtobecomesignificantlyover-procured.SJCE,withitslargeproportionofdisadvantagedcustomers,hastobeparticularlyvigilantaboutcontrollingcostsandcannotriskenteringinagreements,particularlylong-termagreementsthatrisksubjectingthemtounnecessarycosts.

C. The transmission and distribution system must be prudently and safely maintained.

OnFebruary6,2019,PG&EfileditsfirstproposedWildfireMitigationPlan(WMP)withtheCommissioninRulemaking18-10-007.27Inthisplan,PG&Eindicatedthatitwas“significantlyexpandingthePSPSprogramtoincludehighvoltagetransmissionlines,”anddetailedsomeoftheelementsofitsprocessanddecisionfactorsassociatedwiththatprogram.28OnApril25,2019(justtwobusinessdaysbeforetheCommissionissuedadecisiontoapprovetheWMPs,andaftertheperiodforpartycommenthadexpired),PG&EmadesubstantivechangestoitsWMP,acknowledgingpotentialdisruptiontothedistributionserviceintheBayAreaand,morespecifically,SanFranciscoandSanJosé,ifahigh-voltagetransmissionlineisde-energizedduetopotentialcascadingfailures.29AcitywideoutageinalargeurbancentersuchasSanJoséposesanextraordinaryrisktothesafety,property,andlivesofonemillionresidents.SanJosékeymanagementandsafetypersonnelwerealarmedthatPG&Ewasconsideringoutagesinhighlypopulatedcitieswithoutanyinputfromlocalauthorities,considerationofmitigationalternatives,orcarefulplanning.AnotherconcernwasthatthismajorthreattotheCity’sresidentswasdisclosedinahastilyfiledamendmenttoPG&E’sWMP(i.e.,aplantopreventwildfires)withoutanyrealdiscussionofthesignificantriskstotheBayAreaurbandwellers.UponlearningabouttheamendmenttotheWMP,SanJosésafetypersonnelapproachedPG&E,whichconfirmedthattheCityshouldprepareforapotentialoutageoftheentireBayAreaforaperiodtoextendforuptoaweek.PG&Ewasconcernedthatitsill-maintainedpowerlinesmightsparkwildfireswithcatastrophicconsequences.TheBayAreadidexperienceanumberofextensiveandextendedoutages,andtheSanJoséemergencyoperationsteamwasdeployedtoaddresstheeventualityofmore.PG&E’spowershutoffswereunprecedentedanddramaticallyandadverselyimpactSanJosé’splanstoencouragebusinessestolocateintheCitytobringgoodjobsandprosperitytothearea.

27R.18-10-007,PacificGasandElectricCompany’sWildfireMitigationPlan,Feb.6,2019. 28Id.,pp.94-109. 29PG&EhasexpandedthescopeofthePSPSprogramtoincludehighvoltagetransmissionlines.Ifthesehighvoltagetransmissionlinesarede-energizedduringaPSPSevent,theinterconnectednatureofthegridcouldresultinacascadingeffectthatcausesothertransmissionlinesanddistributionlines–potentiallyfarfromtheoriginalfire-riskareas–tobede-energized.Thus,distributionlinesfarfromHFTDareasthattriggeredthePSPSevent,butwhichrelyonthede-energizedlinesforpower,suchaslinesincitieslikeSanFranciscoorSanJose,couldbede-energized.SanFranciscoisnotinaHFTDareasandishighlyunlikelytoexperiencethekindofclimateandweatherconditionsthatwouldtriggeraPSPSevent.NordoesSanFranciscopresentwildfirerisk.ButSanFranciscocouldpossiblybede-energizedifmultipleEastBaytransmissionlinesweretobede-energizedduetoextremeconditions.R.18-10-007,PG&EAmendedWildfireMitigationPlan,Apr.25,2019,p.20(emphasisadded)

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OnAugust14th,inthemiddleofapandemic,withtemperaturessoaring,SanJoséresidentsagainexperiencedextensiveoutages,includinginthecriticaldowntownareas,thistimeasaresultofaPG&Edistributionfailures.WhileotherpartsoftheStateexperiencedoutagesresultingfromasystemsupplydeficiencythatiscurrentlyundergoinginvestigation,theSanJoséoutageshavebeenconfirmedtohavebeencausebythefailureofaPG&E’sdistributioninfrastructure.TheCommission’sfocusontheRAmarketsandsupplysufficiency,areinsufficientifsupplycannotbedeliveredtocustomers.Thesignificantexpenseofprovidingforsufficientsupplyiswasted,iftheCommissiondoesnotalsoensurethattheIOUtransmissionanddistributionsystemsareadequatelyandsafelymaintained.

d. Commission Direction or Actions

SJCErequeststhattheCommissioncertifyitsIRPpursuanttostatute.

e. Diablo Canyon Power Plant Replacement

In2017,theCommissionundertookanexhaustiveevaluationoftheimpactsoftheretirementofDiabloCanyononreliabilityandGHG-emissions.Withrespecttoreliability,theCommissionfoundthat“[t]heretirementofDiabloCanyonwillnotcauseadverseimpactsonlocalorsystemreliability.”30WithrespecttoGHGemissions,theCommissionfound:“[t]heimpactoftheretirementofDiabloCanyononGHGemissionsisnotclear.TheIRPproceedingisbroaderinscopethanthisproceeding,andisconsideringissuesincludingoptimizedportfoliosofgenerationresourcestoachievethestatewideGHGemissionstarget.”31FromaGHG-emissionsstandpoint,DiabloCanyonPowerPlant(DCPP)isnotunique.AggressiverenewableprocurementispossibletoensuretheresourcesthatreplaceDCPParejustascleanandreliable.NothingintheCPUC’s2019-2020RSPor38MMTscenarioorinSJCE’sConformingPortfoliossuggestthatitwillbedifficultorundulycostlytoreplaceDCPPwithGHG-freerenewables.Amorecriticalexaminationrelatestoreliabilitywiththelossofa24X7resource.Nonetheless,asnotedabove,afteranextensiveanalysisin2017,theCommissionconcludedthattheclosureofDCPPwouldnotadverselyimpactsystemorlocalreliability.Inboththe46MMTand38MMTConformingPortfolios,SJCEisproposingaresourcemixthatincludessolar,windandstorageinthequantitiesandatthepaceneededtomaintainreliabilityafterDCPP’sretirementwithoutincreasingGHGemissions.SJCEalsoparticipatedinarecentRFIforlong-durationstorageresourcesandmayconsiderpursuingsuchresourcesinthefuture,asdescribedaboveinSectionIIIh.SJCEalsowelcomesbidsfromrenewablebaseloadgenerationsuchasbiomassandgeothermal,andwillpursueanyrenewableandenergyopportunitiesthatarecost-effectiveconsideringtheiradditionalreliabilityvalue.Seealsothediscussiononsystemreliabilityabove.

30D.18-01-022,FOF2.31D.18-01-022,FOF3and4.

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V.LessonsLearned

ThisisoursecondIRPfilingprocess.Overallastatewideplanningexerciseisimportanttoaddresskeyissuesofrenewableintegrationandsystemreliability.Havingastandardsetoftools,inputsandassumptionsisvaluableandnecessaryinbuildingourportfoliostoachievestatepolicytargets.However,webelievetherearesomeimprovementstobemadeintheIRPprocess.Whileaniterativeprocessthatincludespublicinputandvisibilityintotheassumptionsisimportant,amoreorganizedprocessisneededinwhichrequirementsarewellcommunicatedinadvanceandassumptionsandtemplatesdonotchangecontinuouslyandlateintotheprocess.

Additionally,SJCEwouldappreciategreatercoordinationbetweentheRPSprocurementplanandtheIRP.WeacknowledgeandsupportthecurrentworkfromstafftocoordinatetheseproceedingsundertheD.19-12-042.

Finally,weurgetheCommissiontoseriouslyconsiderthechallengesdiscussedintheBarrierssection.SJCEseeksthesameoutcomesastheCPUC:affordable,reliableserviceforallCaliforniansandanelectricsectorthatoperateswithsubstantiallyreducedGHG-emissions.SJCEintendstocontinuetoworkcooperativelywiththeCPUCandotherpolicymakersandstakeholderstoaddresscurrentchallengesforthebenefitofallCalifornians.

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GlossaryofTerms

AlternativePortfolio:LSEsarepermittedtosubmit“AlternativePortfolios”developedfromscenariosusingdifferentassumptionsfromthoseusedintheReferenceSystemPlan.Anydeviationsfromthe“ConformingPortfolio”mustbeexplainedandjustified.

Approve(Plan):theCPUC’sobligationtoapproveanLSE’sintegratedresourceplanderivesfromPublicUtilitiesCodeSection454.52(b)(2)andtheprocurementplanningprocessdescribedinPublicUtilitiesCodeSection454.5,inadditiontotheCPUCobligationtoensuresafeandreliableserviceatjustandreasonableratesunderPublicUtilitiesCodeSection451.

BalancingAuthorityArea(CAISO):thecollectionofgeneration,transmission,andloadswithinthemeteredboundariesoftheBalancingAuthority.TheBalancingAuthoritymaintainsload-resourcebalancewithinthisarea.

Baselineresources:Thoseresourcesassumedtobefixedasacapacityexpansionmodelinput,asopposedtoCandidateresources,whichareselectedbythemodelandareincrementaltotheBaseline.Baselineresourcesareexisting(alreadyonline)orownedorcontractedtocomeonlinewithintheplanninghorizon.ExistingresourceswithannouncedretirementsareexcludedfromtheBaselinefortheapplicableyears.Being“contracted”referstoaresourceholdingsignedcontract/swithanLSE/sformuchofitsenergyandcapacity,asapplicable,forasignificantportionofitsusefullife.ThecontractsrefertothoseapprovedbytheCPUCand/ortheLSE’sgoverningboard,asapplicable.Thesecriteriaindicatetheresourceisrelativelycertaintocomeonline.Baselineresourcesthatarenotonlineatthetimeofmodelingmayhaveafailurerateappliedtotheirnameplatecapacitytoallowfortheriskofthemfailingtocomeonline.

Candidateresource:thoseresources,suchasrenewables,energystorage,naturalgasgeneration,anddemandresponse,availableforselectioninIRPcapacityexpansionmodeling,incrementaltotheBaselineresources.

CapacityExpansionModel:acapacityexpansionmodelisacomputermodelthatsimulatesgenerationandtransmissioninvestmenttomeetforecastelectricloadovermanyyears,usuallywiththeobjectiveofminimizingthetotalcostofowningandoperatingtheelectricalsystem.Capacityexpansionmodelscanalsobeconfiguredtoonlyallowsolutionsthatmeetspecificrequirements,suchasprovidingaminimumamountofcapacitytoensurethereliabilityofthesystemormaintaininggreenhousegasemissionsbelowanestablishedlevel.

Certify(aCommunityChoiceAggregatorPlan):PublicUtilitiesCode454.52(b)(3)requirestheCPUCtocertifytheintegratedresourceplansofCCAs.“Certify”requiresaformalactoftheCommissiontodeterminethattheCCA’sPlancomplieswiththerequirementsofthestatuteandtheprocessestablishedviaPublicUtilitiesCode454.51(a).Inaddition,theCommissionmustreviewtheCCAPlanstodetermineanypotentialimpactsonpublicutilitybundledcustomersunderPublicUtilitiesCodeSections451and454,amongothers.

CleanSystemPower(CSP,formerly“CleanNetShort")methodology:themethodologyusedtoestimateGHGemissionsassociatedwithanLSE’sPortfoliobasedonhowtheLSEwillexpecttorelyonsystempoweronanhourlybasis.

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CommunityChoiceAggregator:agovernmentalentityformedbyacityorcountytoprocureelectricityforitsresidents,businesses,andmunicipalfacilities.

ConformingPortfolio:theLSEportfoliothatconformstoIRPPlanningStandards,the2030LSE-specificGHGEmissionsBenchmark,useoftheLSE’sassignedloadforecast,useofinputsandassumptionsmatchingthoseusedindevelopingtheReferenceSystemPortfolio,aswellasotherIRPrequirementsincludingthefilingofacompleteNarrativeTemplate,aResourceDataTemplateandCleanSystemPowerCalculator.

EffectiveLoadCarryingCapacity:apercentagethatexpresseshowwellaresourceisableavoidloss-of-loadevents(consideringavailabilityanduselimitations).Thepercentageisrelativetoareferenceresource,forexamplearesourcethatisalwaysavailablewithnouselimitations.Itiscalculatedviaprobabilisticreliabilitymodeling,andyieldsasinglepercentagevalueforagivenresourceorgroupingofresources.

ElectricServiceProvider:anentitythatofferselectricservicetoaretailorend-usecustomer,butwhichdoesnotfallwithinthedefinitionofanelectricalcorporationunderPublicUtilitiesCodeSection218.

FilingEntity:anentityrequiredbystatutetofileanintegratedresourceplanwithCPUC.

Future:asetofassumptionsaboutfutureconditions,suchasloadorgasprices.

GHGBenchmark(orLSE-specific2030GHGBenchmark):themass-basedGHGemissionplanningtargetscalculatedbystaffforeachLSEbasedonthemethodologyestablishedbytheCaliforniaAirResourcesBoardandrequiredforuseinLSEPortfoliodevelopmentinIRP.

GHGPlanningPrice:thesystemwidemarginalGHGabatementcostassociatedwithachievingaspecificelectricsector2030GHGplanningtarget.

IntegratedResourcesPlanningStandards(PlanningStandards):thesetofCPUCIRPrules,guidelines,formulasandmetricsthatLSEsmustincludeintheirLSEPlans.

IntegratedResourcePlanning(IRP)process:integratedresourceplanningprocess;therepeatingcyclethroughwhichintegratedresourceplansareprepared,submitted,andreviewedbytheCPUC

Longterm:morethan5yearsunlessotherwisespecified.

LoadServingEntity:anelectricalcorporation,electricserviceprovider,communitychoiceaggregator,orelectriccooperative.

LoadServingEntity(LSE)Plan:anLSE’sintegratedresourceplan;thefullsetofdocumentsandinformationsubmittedbyanLSEtotheCPUCaspartoftheIRPprocess.

LoadServingEntity(LSE)Portfolio:asetofsupply-and/ordemand-sideresourceswithcertainattributesthattogetherservetheLSE’sassignedloadovertheIRPplanninghorizon.

LossofLoadExpectation(LOLE):ametricthatquantifiestheexpectedfrequencyofloss-of-loadeventsperyear.Loss-of-loadisanyinstancewhereavailablegeneratingcapacityisinsufficienttoserveelectricdemand.Ifoneormoreinstancesofloss-of-loadoccurringwithinthesamedayregardlessofdurationarecountedasoneloss-of-loadevent,thentheLOLEmetriccanbecomparedtoareferencepointsuchastheindustryprobabilisticreliabilitystandardof“oneexpecteddayin10years,”i.e.anLOLEof0.1.

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NetQualifyingCapacity:QualifyingCapacityreduced,asapplicable,basedon:(1)testingandverification;(2)applicationofperformancecriteria;and(3)deliverabilityrestrictions.TheNetQualifyingCapacitydeterminationshallbemadebytheCaliforniaISOpursuanttotheprovisionsofthisCaliforniaISOTariffandtheapplicableBusinessPracticeManual.

Non-modeledcosts:embeddedfixedcostsintoday’senergysystem(e.g.,existingdistributionrevenuerequirement,existingtransmissionrevenuerequirement,andenergyefficiencyprogramcost).

NonstandardLSEPlan:typeofintegratedresourceplanthatanLSEmaybeeligibletofileifitservesloadoutsidetheCAISObalancingauthorityarea.

Optimization:anexerciseundertakenintheCPUC’sIntegratedResourcePlanning(IRP)processusingacapacityexpansionmodeltoidentifyaleast-costportfolioofelectricityresourcesformeetingspecificpolicyconstraints,suchasGHGreductionorRPStargets,whilemaintainingreliabilitygivenasetofassumptionsaboutthefuture.OptimizationinIRPconsidersresourcesassumedtobeonlineovertheplanninghorizon(baselineresources),someofwhichthemodelmaychoosenottoretain,andadditionalresources(candidateresources)thatthemodelisabletoselecttomeetfuturegridneeds.

Plannedresource:anyresourceincludedinanLSEportfolio,whetheralreadyonlineornot,thatisyettobeprocured.Relatingthistocapacityexpansionmodelingterms,plannedresourcescanbebaselineresources(needingcontractrenewal,orcurrentlyowned/contractedbyanotherLSE),candidateresources,orpossiblyresourcesthatwerenotconsideredbythemodeling,e.g.,duetothepassageoftimebetweenthemodelingtakingplaceandLSEsdevelopingtheirplans.Plannedresourcescanbespecific(e.g.,withaCAISOID)orgeneric,withonlythetype,sizeandsomegeographicinformationidentified.

Qualifyingcapacity:themaximumamountofResourceAdequacyBenefitsageneratingfacilitycouldprovidebeforeanassessmentofitsnetqualifyingcapacity.

PreferredConformingPortfolio:theconformingportfoliopreferredbyanLSEasthemostsuitabletoitsownneeds;submittedtoCPUCforreviewasoneelementoftheLSE’soverallIRPplan.

PreferredSystemPlan:theCommission’sintegratedresourceplancomposedofboththeaggregationofLSEportfolios(i.e.,PreferredSystemPortfolio)andthesetofactionsnecessarytoimplementthatportfolio(i.e.,PreferredSystemActionPlan).

PreferredSystemPortfolio:thecombinedportfoliosofindividualLSEswithintheCAISO,aggregated,reviewedandpossiblymodifiedbyCommissionstaffasaproposaltotheCommission,andadoptedbytheCommissionasmostresponsivetostatutoryrequirementsperPub.Util.Code454.51;partofthePreferredSystemPlan.

ReferenceSystemPlan:theCommission’sintegratedresourceplanthatincludesanoptimalportfolio(ReferenceSystemPortfolio)ofresourcesforservingloadintheCAISObalancingauthorityareaandmeetingmultiplestategoals,includingmeetingGHGreductionandreliabilitytargetsatleastcost.

ReferenceSystemPortfolio:themulti-LSEportfolioidentifiedbystaffforCommissionreviewandadopted/modifiedbytheCommissionasmostresponsivetostatutoryrequirementsperPub.Util.Code454.51;partoftheReferenceSystemPlan.

Shortterm:1to3years(unlessotherwisespecified).

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Staff:CPUCEnergyDivisionstaff(unlessotherwisespecified).

StandardLSEPlan:typeofintegratedresourceplanthatanLSEisrequiredtofileifitservesloadwithintheCAISObalancingauthorityarea(unle