What’s Needed for Rational Discussionof Resource Adequacy:

A Framework and Some Facts *

presented by Kevin Woodruff, Principal, Woodruff Expert Services,to Power Agency of Northern California 2014 Annual Seminar

session on Resource Adequacy Issues for California - Cost & RiskMay 20, 2014

* Adapted from Case for More Forward Procurement is Murky,but Need for Transparency is Clear, presented at Workshop in CPUC Joint Reliability Plan (R.14-02-001), May 2, 2014.

Figure 1Model of IOUs’ Current Forward RA Procurement

Woodruff Slides for Power Agency of Northern California 2014 Annual Seminar, May 20, 2014

? ? ? ? ?115%

Yr 2 Yr 3 Yr 4 Yr 5 Yr 6

Current Long-Term Procurement or Commitments:

- Utility-Owned Generation

- Existing Long-Term Conventional Contracts

- Qualifying Facilities / Combined Heat and Power

- Renewables

- Other Preferred Resources (including storage)

1 2 3 4 5 6 7 8 9 10+

Year

Uncontracted Capacity / Surplus

NOTE: FIGURE HIGHLY-STYLIZED AND NOT TO SCALE

% o

f Pea

k Lo

ad

0%

Reso

urce

Ade

quac

y Co

ntra

cts

Long-Term Procurement Plan

CurrentMid-Term Procurement

Future Mid-Term Procurements(to be conducted in these years)

N.B. Current Mid-Term Procurement, Uncontracted Capacity / Surplus, and Future Mid-Term Procurements are home for existing gas generation and imports.

3

Figure 2IOUs’ Bundled Procurement Plans, as of 2012

2012 2013 2014 2015 2016 2017 2018 2019 2020

PG&E 100 90 84 84 84 84

SCE 100 90 56 57 57 55

SDG&E 100 90 69 70 70 56

TOTAL 100 90 69 70 70 67

- w/o SONGS 64 65 65 62

- w/ AES & w/o SONGS 73

0

10

20

30

40

50

60

70

80

90

100

Perc

ent o

f Cap

acit

y N

eeds

Met

in m

id-2

012

(incl

udes

Pea

k +

Plan

ning

Res

erve

s)

Minimum IOU peak-month RA procurement per current policy 1/

IOU Forward peak-month RA Procurement per Bundled Procurement Plans 1/

IOU Forward RA Procurement data for 2014 to 2016

confidential.

CONFIDENTIAL

1/ I

OU

forw

ard

RA p

rocu

rem

ent f

or o

ther

mon

ths

exce

eds

thes

epe

ak-m

onth

per

cent

ages

, oft

en s

ubst

antia

lly.

w/ 'AES 4000' contract (thru May '18) & w/o SONGS

without SONGS

Sources:• 2012-2013: CPUC Resource

Adequacy policy.• 2017-2020: IOUs’ final

Bundled Procurement Plan filings.

• SONGS Capacity (2,246 MW): CAISO 2013 Net Qualifying Capacity List.

• AES Contract Capacity (3,818 MW): SCE Advice Letter 2853-E.

Notes:• Expected Demand Response,

Energy Efficiency and some customer generation deducted from load.

• Capacity of PG&E Qualifying Facility contracts not included due to confidentiality limits.

Woodruff Slides for Power Agency of Northern California 2014 Annual Seminar, May 20, 2014

4

Figure 3IOUs’ Recent Mid-Term Capacity RFOs

IOU Year(s) of Delivery: Notes

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

2008 PG&E

SCE

SDG&E

2009 PG&E

SCE

SDG&E 1/

2010 PG&E

SCE

SDG&E

2011 PG&E

SCE

SDG&E

2012 PG&E

SCE

SDG&E

2013 PG&E

SCE 2/

SDG&E 3/

2014 PG&E

SCE 4/

SDG&E 5/

Notes:

3/ SDG&E 2013 RFO sought only energy products, but SDG&E said it would value Resource Adequacy if included in bids.

Sources: IOU Requests for Offers and supporting materials and select quarterly procurement plan compliance reports.

Year Mid-Term RFO Issued

1/ SDG&E 2009 RFO requested bids from existing resources (a) for delivery in 2010 and 2011 and (b) for delivery over ten-year term from 2012-2021. No contracts submitted to CPUC for this latter option.

2/ SCE extended 3,800 MW of local Southern California capacity contracts that were set to expire from 2013 -2015 through 2018 pursuant to bilateral negotiations.

4/ SCE Local Capacity Requirements RFO does not require delivery until January 2021, but allows for delivery as early as January 2018. SCE will also encourage delivery as early as January 2015 in South Orange County and Goleta substation areas.

5/ SDG&E may propose to contract for new gas capacity to begin operations by end of 2018 pursuant to D.14-03-004 and January 2014 agreement between City of Carlsbad, NRG and SDG&E.

Woodruff Slides for Power Agency of Northern California 2014 Annual Seminar, May 20, 2014

5

Figure 4IOUs’ Forward Procurement of Flexible Capacity *

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000 Ja

n-14

Apr

-14

Jul-1

4

Oct

-14

Jan-

15

Apr

-15

Jul-1

5

Oct

-15

Jan-

16

Apr

-16

Jul-1

6

Oct

-16

Jan-

17

Apr

-17

Jul-1

7

Oct

-17

Jan-

18

Apr

-18

Jul-1

8

Oct

-18

MW

of C

apac

ity

Capa

ble

of M

eeti

ng "

Thre

e-H

our

Ram

p"

Month

Capacity Not Publicly Known to be Contracted POU Generation

IOU Publicly-Known PPAs IOU-Owned Generation

Total Flexible Capacity Flexibility Need - per CAISO estimate

Flexibility Need - escalated from 2016

Sources: CAISO Effective Flexible Capacity workpaper provided April 1, IOU responses to TURN Data Requests, and CAISO April 5 comments (w/ esc. after 2016), all in R.11-10-023, and public information on IOU and POU flexible assets.

* Data last updated July 2013.

Woodruff Slides for Power Agency of Northern California 2014 Annual Seminar, May 20, 2014