director, regulatory relations pacific gas and electric ... · august 17 , 2018 advice 5360 -e...

STATE OF CALIFORNIA EDMUND G. BROWN JR., Governor

PUBLIC UTILITIES COMMISSION 505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

October 5, 2018

Advice Letter 5360-E

Erik Jacobson

Director, Regulatory Relations

Pacific Gas and Electric Company

77 Beale Street, Mail Code B10C

P.O. Box 770000

San Francisco, CA 94177

SUBJECT: 2018 Bundled RPS Energy Bilateral Sales; Power Purchase and Sale

Agreements Between Pacific Gas and Electric Company and Multiple

Buyers.

Dear Mr. Jacobson:

Advice Letter 5360-E is effective as of October 4, 2018.

Sincerely,

Edward Randolph

Director, Energy Division

Erik Jacobson

Director

Regulatory Relations

Pacific Gas and Electric Company

77 Beale St., Mail Code B13U

P.O. Box 770000


Fax: 415-973-3582

August 17, 2018 Advice 5360-E (Pacific Gas and Electric Company ID U39 E) Public Utilities Commission of the State of California Subject: 2018 Bundled RPS Energy Bilateral Sales; Power Purchase and Sale

Agreements Between Pacific Gas and Electric Company and Multiple Buyers

I. Introduction

A. Identify the Purpose of the Advice Letter

Pacific Gas and Electric Company (“PG&E”) seeks California Public Utilities Commission (“Commission” or “CPUC”) approval of power purchase and sale agreements (together, the “PPSAs” or “Transactions”) that seek to sell Renewables Portfolio Standard (“RPS”)-eligible products from PG&E’s existing procured energy portfolio to other load-serving entities (“LSEs”). The purpose of these Transactions is to further optimize PG&E’s RPS portfolio in light of PG&E’s forecasted bundled electric load, which has changed considerably in recent years due to anticipated load departure resulting from the growth of Community Choice Aggregator (“CCA”) and behind-the-meter distributed generation. These Transactions are consistent with the sales strategy approved as part of PG&E’s 2017 RPS Procurement Plan (“2017 RPS Plan”).1 The counterparties and associated sale volumes are as follows:

Counterparty Contract

Volume (MWh)

Delivery Term

Monterey Bay Community Power Authority (“MBCPA”)

1,151,000 2018-2020

Clean Power Alliance of Southern California (“CPA”)

1,200,000 2018-2019

East Bay Community Energy Authority (“EBCEA”) 525,000 2018-2019

Total 2,876,000

1 Final 2017 PG&E Renewable Energy Procurement Plan, filed in R.15-02-020 on Jan. 17,

2018.

Advice 5360-E - 2 - August 17, 2018

These short-term Transactions are for the sale of bundled energy and associated Renewable Energy Credits (“RECs”) generated in 2018-2020 and all energy delivery periods2 will conclude on December 31 of the last year of the energy delivery term. The bundled renewable product will be provided from one or more operating solar photovoltaic (“PV”), solar thermal, wind, and/or geothermal facilities located within the state of California.

B. Identify the Subject of the Advice Letter, Including:

1. Project Name

The PPSAs allow PG&E to deliver bundled products from various facilities located throughout California and certified as RPS-eligible by the California Energy Commission (“CEC”) that are currently under contract with PG&E (collectively, the “Projects”). The Projects are listed in Tables 1 and 2 below. PG&E’s methodology for filling contract volumes from the Projects is described in Confidential Appendix D.

Table 1: Preferred Resource List for PPSAs Except EBCEA

Name of Facility or Owner of Facility

Resource Location CEC

RPS ID

Host Balancing Authority

Shiloh II Wind Project Wind Rio Vista, CA 60639A CAISO

High Plains Ranch II Solar PV California Valley, CA

60603A CAISO

Topaz Solar Farm Solar PV Santa Margarita, CA

61698A CAISO

Hatchet Ridge Wind Burney, CA 60741A CAISO

Ivanpah Unit 1 Solar Thermal

Nipton, CA 62273A

CAISO

Ivanpah Unit 3 Solar Thermal

Nipton, CA 62275A

CAISO

AV Solar Ranch One Solar PV Lancaster, CA 60790A CAISO

Mojave Solar Project Solar Thermal

Hinkley, CA 60848A

CAISO

Genesis Solar Energy Project Solar Thermal

Blythe, CA 60605A

CAISO

Calpine Geysers - Units 5 & 6 Geothermal Middletown, CA 60002A CAISO

2 Each PPSA’s Green Attribute delivery period will end on the date PG&E has transferred the

total volume of Green Attributes to the counterparty.

Advice 5360-E - 3 - August 17, 2018

Name of Facility or Owner of Facility

Resource Location CEC

RPS ID

Host Balancing Authority

Calpine Geysers - Units 7 & 8 Geothermal Middletown, CA 60003A CAISO

Calpine Geysers - Unit 12 Geothermal Middletown, CA 60004A CAISO






Calpine Geysers - Sonoma Power Plant Unit 3

Geothermal Middletown, CA

60010A CAISO



Calpine Geysers - Aidlin Power Plant Unit 1

Geothermal Middletown, CA 60115A

CAISO

Calpine Geysers - Calistoga Power Plant Unit 19

Geothermal Middletown, CA 60117A

CAISO

Desert Center Solar Farm Solar PV Desert Center, CA 61068A CAISO

Coram Brodie Wind Tehachapi, CA 60973A CAISO

Shiloh III Wind Project Wind Rio Vista, CA 61069A CAISO

North Sky River Energy Center

Wind Tehachapi, CA 61385A

CAISO

Shiloh IV Wind Rio Vista, CA 61617A CAISO

Henrietta Solar Solar PV Lemoore, CA 61841A CAISO

Advice 5360-E - 4 - August 17, 2018

Table 2: Preferred Resource List for EBCEA PPSA

Name of Facility Resource Location CEC RPS ID Host Balancing Authority

Shiloh II Wind Project Wind Rio Vista, CA 60639A CAISO

High Plains Ranch II Solar PV California Valley, CA

60603A CAISO

Topaz Solar Farm Solar PV Santa Margarita, CA

61698A CAISO

Hatchet Ridge Wind Burney, CA 60741A CAISO

Ivanpah Unit 1 Solar Thermal Nipton, CA 62273A CAISO

Ivanpah Unit 3 Solar Thermal Nipton, CA 62275A CAISO

AV Solar Ranch One Solar PV Lancaster, CA 60790A CAISO

Mojave Solar Project Solar Thermal Hinkley, CA 60848A CAISO

Genesis Solar Energy Project

Solar Thermal Blythe, CA 60605A

CAISO

Desert Center Solar Farm

Solar PV Desert Center, CA

61068A CAISO

Coram Brodie Wind Tehachapi, CA 60973A CAISO

Shiloh III Wind Project Wind Rio Vista, CA 61069A CAISO

North Sky River Energy Center

Wind Tehachapi, CA 61385A

CAISO

Shiloh IV Wind Rio Vista, CA 61617A CAISO

Henrietta Solar Solar PV Lemoore, CA 61841A CAISO

2. Technology (including level of maturity)

The Projects from which the energy and RECs are being sold consist of PV, solar thermal, wind, and geothermal renewable technologies, all of which are commercially-available technologies.

3. General Location and Interconnection Point

The Projects are all located within California and are interconnected with the California Independent System Operator (“CAISO”).

4. Owner(s) / Developer(s)

a. Name(s)

The names or owners of the Projects are listed in Tables 1 and 2 above.

Advice 5360-E - 5 - August 17, 2018

b. Type of Entity(ies) (e.g., LLC, partnership)

Ownership of Projects: All wind, PV, geothermal, and solar thermal resources used for the sales are owned by limited liability companies. Ownership of Buyers under the PPSAs:

• MBCPA is a CCA serving residential and business customers in Monterey, San Benito, and Santa Cruz counties.

• CPA is a CCA serving residential and business customers within Los Angeles and Ventura counties.

• EBCEA is a CCA serving residential and business customers in Alameda County.

c. Business Relationship (if applicable, between seller/owner/developer)

PG&E is not aware of any corporate affiliations between the Projects, PG&E, and the PPSA Buyers.

5. Project Background, e.g., Expiring QF Contract, Phased Project, Previous Power Purchase Agreement, Contract Amendment

All of the Projects that are expected to deliver volumes pursuant to the PPSAs are existing and operating facilities under current RPS contracts to deliver output to PG&E.

6. Source of Agreement, i.e., RPS Solicitation Year or Bilateral Negotiation

The (“Bilateral Sale”) transactions resulted from PG&E’s participation in third-party solicitations for renewable energy. The transactions were executed in accordance with the RPS Sales Framework (“Sales Framework”) and are based on PG&E’s pro forma short-term sales confirmation approved as Appendix I.3 to PG&E’s 2017 RPS Plan.3 PG&E consulted with the Independent Evaluator (“IE”) throughout the process. PG&E submitted offers for sale of bundled energy and associated RECs into CPA’s RFO issued on March 20, 2018, MBCPA’s RFO issued on April 12, 2018 and EBCEA’s solicitation issued on April 25, 2018.

C. General Project(s) Description

The Projects are described in Section B.1. above. The terms of the Transactions are summarized as follows:4

3 The Sales Framework is discussed more fully below and in Confidential Appendix A. 4 PG&E has modified the table from the standard Advice Letter template to remove rows that

are not directly applicable to the PPSAs, since they are not tied to a specific generation facility (i.e., Capacity, Capacity Factor, Initial Commercial Operation Date, Vintage, Location, Competitive Renewable Energy Zone, Control Area, Type of Cooling).

Advice 5360-E - 6 - August 17, 2018

D. Project Location

Given the nature of the Transactions and the number of locations of the generation facilities that are expected to generate the products that will be sold pursuant to the Transactions, it is not practical to include a locational map in this filing. However, all of the generation facilities are located in California and interconnected to the CAISO.

E. General Deal Structure

Describe general characteristics of contract, for example:

1. Required or Expected Portfolio Content Category of the Proposed Contract

PG&E will sell bundled energy and associated RECs under the PPSAs. PG&E presently purchases the bundled product under contracts that PG&E expects would qualify as Portfolio Content Category (“PCC”) 1 as to PG&E.6 The Transactions must receive final, non-appealable Commission approval before energy deliveries and the transfer of RECs to Buyers may begin under the PPSAs.

2. Partial/Full Generation Output of Facility

PG&E has the right, but not the obligation, to deliver from the Projects listed above. PG&E is obligated under the terms of each sale to deliver each contract’s Total Quantity

5 The Green Attribute delivery period will end on the date PG&E has transferred the total volume of Green Attributes to the Buyer. 6 PCC 1 products are defined in California Public Utilities Code Section 399.16(b)(1).

Project Name MBCPA CPA EBCEA

Technology PV, Wind, Solar

Thermal and Geothermal

PV, Wind, Solar Thermal and Geothermal

PV, Wind, and Solar Thermal

Contract Quantity (MWh/Year)

351,000 – 2018

400,000 - 2019

400,000 - 2020

200,000 - 2018

1,000,000 – 2019

375,000 – 2018

150,000 – 2019

Date Contract Delivery Term Begins

The later of July 1, 2018 and the date of CPUC

Approval

The later of August 1, 2018 and the date of CPUC Approval

The later of August 1, 2018 and the date of CPUC Approval

Delivery Term (Months)5

From date contract delivery term begins to no later than

December 31, 2020

(approximately 30 months)


December 31, 2019



December 31, 2019


Advice 5360-E - 7 - August 17, 2018

of bundled energy and RECs within the Delivery Term. Thus, deliveries pursuant to each Transaction may, but need not, compromise the full output from any given Project. PG&E’s methodology for filling contract volumes from the resources listed above is described in Confidential Appendix D.

3. Any Additional Products, (e.g., capacity)

No.

4. Generation Delivery Point (e.g., busbar, hub, etc.)

NP-15, SP-15, and/or ZP-26.

5. Energy Management (e.g., firm/shape, scheduling, selling, etc.)

Under the terms of the PPSAs, PG&E or a third-party designee will act as scheduling coordinator for the resources. The scheduling coordinator is responsible for scheduling energy from the resources into the CAISO market. The Buyer will take title in real-time to the energy from multiple resources at the NP-15, SP-15, and/or ZP-26 Trading Hubs. PG&E will financially settle the energy and RECs approximately four months after the energy was generated. For example, for energy generated in the month of May, the corresponding RECs will be created and deposited into PG&E’s Western Renewable Energy Generation Information System (“WREGIS”) account at the end of August. In September, PG&E will invoice the Buyers for the delivered volume of energy at the hourly NP-15, SP-15, and/or ZP-26 Index Price and the associated RECs at the corresponding contract price. The invoice for energy will reflect a netting of energy payments. PG&E as scheduling coordinator will have received CAISO revenues for the delivered energy and is obligated to remit those revenues to the Buyers, and the Buyers are obligated to pay the NP-15, SP-15, and/or ZP-26 Index Price for the delivered energy to PG&E. The September invoice for May energy delivery would therefore show a netting of CAISO NP-15, SP-15, and/or ZP-26 revenues received by PG&E and payment owed by Buyers for the same energy, resulting in an invoice price of $0 for energy. Following invoicing and receipt of payment for the RECs, PG&E will transfer RECs to the Buyers’ WREGIS accounts.

Advice 5360-E - 8 - August 17, 2018

6. Diagram and Explanation of Delivery Structure

Figure 1: Delivery Structure of the Energy Portion of the PPSAs

Figure 2: Delivery Structure of the RECs Portion of the PPSAs

PG&E

Deliver each contract’s Total Quantity over the contract term

from currently operating resources.

Buyer

Receive RECs associated with delivered energy. RECs

transferred to Buyer’s WREGIS Account.

PG&E or its third-party designee

Act as scheduling coordinator for the resources. Deliver each

contract’s total Electric Energy Quantity over the contract term

from currently operating resources to the CAISO in real-time.

CAISO

Energy from multiple RPS-eligible resources delivered to the CAISO market in real-time.

Buyer

Receive RPS-eligible energy at NP-15, SP-15, and/or ZP-26 in

real-time.

Advice 5360-E - 9 - August 17, 2018

F. RPS Statutory Goals and Requirements

1. Briefly describe the Project’s consistency with and contribution towards the RPS program’s statutory goals set forth in Public Utilities Code §399.11. These goals include displacing fossil fuel consumption within the state; adding new electrical generating facilities within WECC; reducing air pollution in the state; meeting the state’s climate change goals by reducing emissions of greenhouse gases associated with electrical generation; promoting stable retail rates for electric service; a diversified and balanced energy generation portfolio; meeting the state’s resource adequacy requirements; safe and reliable operation of the electrical grid; and implementing the state’s transmission and land use planning activities.

Public Utilities Code §399.11 states that increasing California’s reliance on eligible renewable energy resources is intended to displace fossil fuel consumption within the state, promote stable electricity prices, reduce greenhouse gas emissions, improve environmental quality and promote the goal of a diversified and balanced energy generation portfolio. The Projects are consistent with these goals because they generate clean energy and provide economic benefits to California as in-state projects. The Transactions contribute to the optimization of PG&E’s portfolio of RPS-eligible resources, thereby promoting the stability and reasonableness of the impact on customer rates of that portfolio.

2. Describe how procurement pursuant to the contract will meet IOU’s specific RPS compliance period needs. Include Renewable Net Short calculation as part of response.

Senate Bill (“SB”) 2 1X was enacted in 2011 and was implemented by the Commission in Decision (“D.”) 11-12-020 to require retail sellers of electricity to meet the following RPS procurement quantity requirements beginning on January 1, 2011:

• An average of twenty percent of the combined bundled retail sales during the first compliance period (2011-2013).

• Sufficient procurement during the second compliance period (“CP 2”) (2014-2016) that is consistent with the following formula: (.217 * 2014 retail sales) + (.233 * 2015 retail sales) + (.25 * 2016 retail sales).

• Sufficient procurement during the third compliance period (“CP 3”) (2017-2020) that is consistent with the following formula: (.27 * 2017 retail sales) + (.29 * 2018 retail sales) + (.31 * 2019 retail sales) + (.33 * 2020 retail sales).

• Thirty-three percent of bundled retail sales in 2021 and all years thereafter.

SB 350, enacted in 2015, extended the RPS statutory target to 50% by 2030 with interim requirements in 2024 and 2027. On December 20, 2016, the Commission issued D.16-12-040 implementing the following compliance periods and procurement targets as mandated by SB 350:

Advice 5360-E - 10 - August 17, 2018

• Sufficient procurement during a fourth compliance period (“CP 4”) (2021-2024) that is consistent with the following formula: (.348 * 2021 retail sales) + (.365 * 2022 retail sales) + (.383 * 2023 retail sales) + (.40 * 2024 retail sales).

• Sufficient procurement during a fifth compliance period (“CP 5”) (2025-2027) that is consistent with the following formula: (.417 * 2025 retail sales) + (.433 * 2026 retail sales) + (.45 * 2027 retail sales).

• Sufficient procurement during a sixth compliance period (“CP 6”) (2028-2030) that is consistent with the following formula: (.467 * 2028 retail sales) + (.483 * 2029 retail sales) + (.50 * 2030 retail sales).

Beginning in 2031, SB 350 requires three-year compliance periods and a minimum renewable procurement requirement of 50% of bundled retail sales indefinitely. By ruling, the Commission has adopted a methodology for calculating a retail seller’s renewable net short (“RNS”) position relative to the RPS procurement targets adopted by SB 2 1X and implemented in D.11-12-020.7 PG&E is providing an RNS calculation in Appendices G1 and H1 that extends to 2036 and that is consistent in all other respects with the Commission’s adopted RNS methodology. PG&E is also providing an Alternative RNS calculation (the “Alternative RNS”) in Appendices G2 and H2. There are two main differences between the RNS and the Alternative RNS. First, the Alternative RNS utilizes PG&E’s internal Bundled Retail Sales Forecast for years 2018-2036. Second, the Alternative RNS presents a modified display of PG&E’s RNS in order to adequately show the results from PG&E’s stochastic optimization of its RPS position. Further details on PG&E’s stochastic optimization approach can be found in PG&E’s 2017 RPS Plan. As illustrated in PG&E’s Alternative RNS, PG&E’s existing RPS portfolio is expected to provide sufficient RPS-eligible deliveries to meet PG&E’s RPS compliance requirements in CP 2 through CP 6. As discussed more fully in PG&E’s 2017 RPS Plan, PG&E also expects that its RPS bank of excess procurement from past, current, and future CPs exceeds the margin of over-procurement needed to ensure compliance with existing RPS requirements. Accordingly, the Transactions will help to optimize PG&E’s RPS portfolio while continuing to meet PG&E’s RPS compliance needs.

G. Confidentiality

Explain if confidential treatment of specific material is requested. Describe the information and reason(s) for confidential treatment consistent with the showing required by D.06-06-066, as modified by D.08-04-023.

7 See Administrative Law Judge’s Ruling on Renewable Net Short issued on May 21, 2014,

including subsequent changes to the RNS reporting template per direction from the Energy Division on May 29, 2014.

Advice 5360-E - 11 - August 17, 2018

In support of this Advice Letter, PG&E has provided the confidential information listed below. This information includes the PPSAs and other information that more specifically describes the rights and obligations of the parties involved. This information is being submitted in the manner directed by D.08-04-023 and the August 22, 2006, Administrative Law Judge’s Ruling Clarifying Interim Procedures for Complying with D.06-06-066 to demonstrate the confidentiality of the material and to invoke the protection of confidential utility information provided under either the terms of the Investor Owned Utility Matrix, Appendix 1 of D.06-06-066 and Appendix C of D.08-04-023, or Public Utilities Code section 454.5(g). A separate Declaration Seeking Confidential Treatment is being submitted concurrently with this Advice Letter.

Confidential Attachments:

Appendix A – Consistency with Commission Decisions and Rules and Project Development Status

Appendix B – Bilateral Sales Overview

Appendix C1 – Independent Evaluator Report – Confidential

Appendix D – Summary of Contracts

Appendix E1 – Comparison of PPSA of Monterey Bay Clean Power Authority with PG&E’s 2018 Pro Forma RPS Short-Term Sales Confirmation8

Appendix E2 – Comparison of PPSA of Clean Power Alliance of Southern California with PG&E’s 2018 Pro Forma RPS Short-Term Sales Confirmation

Appendix E3 – Comparison of PPSA of East Bay Community Energy Authority with PG&E’s 2018 Pro Forma RPS Short-Term Sales Confirmation

Appendix F1 – Power Purchase and Sale Agreement with Monterey Bay Clean Power Authority.9

Appendix F2 – Power Purchase and Sale Agreement with Clean Power Alliance of Southern California

Appendix F3 – Power Purchase and Sale Agreement with East Bay Community Energy Authority

Appendix G1 - PG&E’s Renewable Net Short Calculation (Confidential)

8 The Commission approved PG&E’s form agreement for the sale of RPS products with terms

of five years or less as part of its approval of PG&E’s 2017 RPS Plan, filed in R.15-02-020 and approved in D.17-12-007. That form agreement was included as Appendix I.3 to PG&E’s 2017 RPS Plan.

9 The PPSAs are in the form of confirms to the Edison Electric Institute (“EEI”) Master Contract for bilateral transactions (“EEI Master”). The EEI Master agreement, which is incorporated by reference into the PPSA, is available at the following link: http://www.eei.org/resourcesandmedia/mastercontract/Pages/default.aspx. PG&E did not include the EEI Master in Appendices E or F for purposes of brevity.

Advice 5360-E - 12 - August 17, 2018

Appendix H1 – PG&E’s Alternative Renewable Net Short Calculation (Confidential)

Public Attachments:

Appendix C2 – Independent Evaluator Report – Public

Appendix G2 – PG&E’s Renewable Net Short Calculation (Redacted)

Appendix H2 – PG&E’s Alternative Renewable Net Short Calculation (Redacted)

Appendix I – Confidentiality Declaration & Matrix

II. Consistency With Commission Decisions

A. RPS Procurement Plan

1. Identify the Commission decision that approved the utility’s RPS Procurement Plan. Did the utility adhere to Commission guidelines for filing and revisions?

PG&E’s 2017 RPS Plan was approved in D.17-12-007 on December 17, 2017, and the final, conforming version of the 2017 RPS Plan was filed in Rulemaking 15-02-020 on January 17, 2018. PG&E complied with all procedural requirements with regard to the filing of its 2017 RPS Plan.

2. Describe the Procurement Plan’s assessment of portfolio needs.

In PG&E’s 2017 RPS Plan, PG&E demonstrated that under the 33% RPS by 2020 target, and a “straight-line” trajectory10 implementing the SB 350 target of 50% RPS by 2030, PG&E is well-positioned to meet its RPS compliance requirements through CP 5 (2025-2027) and will not have incremental RPS physical need until at least 2030.11 PG&E believes that its existing portfolio of executed RPS contracts, its owned RPS-eligible generation, and its expected balances of excess RPS generation from prior compliance periods will be adequate to ensure compliance with near-term RPS requirements.12

3. Discuss how the Transactions are consistent with the utility’s

Procurement Plan and meet utility procurement and portfolio needs (e.g., capacity, electrical energy, resource adequacy, or any other product resulting from the Transactions).

10 See D.16-12-040. 11 2017 RPS Plan at p. 1 and Appendix C.2. Note that PG&E has presented an updated RPS

position and updated RNS tables in Appendices G and H using the latest vintage of its RPS position modeling.

12 Id. at pp. 19-20.

Advice 5360-E - 13 - August 17, 2018

The proposed PPSAs are for the sale of bundled energy and associated RECs generated in 2018-2020. As described above, PG&E’s 2017 RPS Plan concluded that PG&E is well-positioned to meet its near-term RPS compliance requirements until at least 2029. In light of its long position with respect to RPS targets, PG&E developed the Sales Framework, filed as Appendix J in the approved 2017 RPS Plan, to assess whether to hold or sell surplus RPS volumes.13 Based on its then-current forecast of bundled retail sales and RPS volumes in its portfolio, PG&E explained in the 2017 RPS Plan that it expected to sell short-term, bundled RPS volumes in 2018.14 As further described in Confidential Appendix A, the Transactions are consistent with the 2017 RPS Plan because the total quantity considered for sale (the ratable sales amount), and the prices of the Transactions are within the sales price curve described in the Sales Framework. As a result, the Transactions will help optimize PG&E’s RPS portfolio by reducing customer costs while maintaining compliance with RPS targets, as intended by the Sales Framework. The Transactions are also consistent with the approval granted by the Commission in D.17-12-007, Ordering Paragraph 7, which provides in relevant part:

PG&E is authorized to [sell volumes] for the short-term, meaning 5 years or less, sales of RPS volumes if the pro forma sales agreement for any such sale is executed during the timeframe covered by its 2017 RPS Procurement Plan, or prior to the Commission issuing a decision on the 2018 RPS Procurement Plans. Deliveries under any such short-term sales agreement, including any agreement with a delivery term of 5 years or less, may commence at any time prior to the Commission issuing a decision on the 2018 RPS Procurement Plans and continue until the expiration of the agreement’s term. PG&E must submit a Tier 1 Advice Letter for Commission approval of short-term sales resulting from a [sales transaction] that both utilizes the pro forma sales agreement submitted with its 2017 RPS Procurement Plan and is executed after PG&E receives bids [or submits offers] for a sales [transaction] resulting from its 2017 RPS Procurement Plan.

All of the Transactions are consistent with Ordering Paragraph 7. First, the Transactions are short-term, meaning five years or less. Second, PG&E executed the Transactions during the timeframe covered by the 2017 RPS Plan and prior to the Commission issuing a decision on the 2018 RPS Procurement Plans. Third, the deliveries under the Transactions may commence before or after the Commission issuing a decision on the 2018 RPS Procurement Plans. Fourth, as required, PG&E is submitting this Tier 1 Advice Letter for Commission approval of these Transactions.

13 Id. at pp. 2-4. 14 Ibid.

Advice 5360-E - 14 - August 17, 2018

Consistent with the 2017 RPS Plan, each of the Transactions used PG&E's pro forma Sales Agreement and PG&E is providing comparisons of the executed Transactions against the approved pro forma short-term sales confirmation. The adherence to the PG&E’s pre-approved Sales Framework, the use of the approved pro forma short-term sales confirmation, and the execution of the Transactions through bilateral negotiations allows for the filing of the Transactions through this Tier 1 advice letter, consistent with the 2017 RPS Plan and D.17-12-007.15

4. Describe the preferred project characteristics set forth in the third-party Solicitations, including the required deliverability characteristics, online dates, locational preferences, etc., and how the Transactions meet those requirements.

Required deliverability characteristics, online dates, and location preferences do not apply to PG&E’s approach to bundled RPS sales.

5. Sales

a. For Sales contracts, provide a quantitative analysis that evaluates selling the proposed contracted amount vs. banking the RECs towards future RPS compliance requirements (or any reasonable other options).

PG&E’s approved Sales Framework, described more fully in Confidential Appendix A, is designed to ensure that sales of RPS products pursuant to the Sales Framework are in the best interest of PG&E’s customers when considering the alternative options available to PG&E. The Sales Framework assesses the net present value of PG&E’s expected future cost of RPS procurement against the net present value of the offers it receives to buy excess RPS procurement in years 2018-2020. This analysis, which is confidential given the market sensitivity of the proprietary REC value forecasts it includes, demonstrates that PG&E’s sale of 2,876,000 MWh of bundled renewable energy and RECs through the PPSAs is reasonably expected to reduce overall RPS compliance costs for PG&E’s customers.

b. Explain the process used to determine price reasonableness, with maximum benefit to ratepayers.

PG&E followed the approved Sales Framework to evaluate bids resulting from bilateral discussions and to maximize benefit to customers. The Sales Framework describes how PG&E would assess whether to hold or sell surplus RPS volumes.16

15 See 2017 RPS Plan at p. 79; D.17-12-007 at Ordering Paragraph 7. 16 2017 RPS Plan, Appendix J.

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6. Portfolio Optimization Strategy

a. Describe how the proposed procurement (or sale) optimizes IOU’s RPS portfolio (or entire energy portfolio). Specifically, a response should include:

i. Identification of IOU’s portfolio optimization strategy objectives that the proposed procurement (or sale) are consistent with.

See Section II.A.3, above.

ii. Identification of metrics within portfolio optimization methodology or model (e.g., PPA costs, energy value, capacity value, interest costs, carrying costs, transaction costs, etc.) that are increased/ decreased as a result of the proposed transaction.

See Sections B and F.9 of Confidential Appendix D.

iii. Identification of risks (e.g., non-compliance with RPS requirements, regulatory risk, over-procurement of non-bankable RPS-eligible products, safety, etc.) and constraints included in optimization strategy that may be decreased or increased due to proposed procurement (or sale).

The Transactions are consistent with PG&E’s objective of minimizing customer costs while achieving and maintaining RPS compliance. Through the timely sale of excess RPS-eligible energy at competitive prices, the PPSAs reduce the total cost impact of the RPS program to customers. Given PG&E’s current long RPS position, it is highly unlikely that the PPSA will jeopardize PG&E’s ability to meet RPS requirements.17

b. Description of how proposed procurement (or sale) is consistent with IOUs overall planned activities and range of transactions planned to optimize portfolio.

PG&E filed its Sales Framework as part of its approved 2017 RPS Plan in order to guide its overall activities and the range of transactions it would undertake to optimize its portfolio by addressing PG&E’s growing bank of RPS compliance products.18 The purpose of the Sales Framework is to assess whether to hold or sell surplus RPS volumes and minimize customer costs while maintaining an adequate RPS compliance position.

17 See Section II.A.2, supra. 18 2017 RPS Plan, Appendix J.

Advice 5360-E - 16 - August 17, 2018

B. Least-Cost, Best-Fit (LCBF) Methodology and Evaluation

1. Briefly describe IOU’s LCBF Methodology and how the Project compared relative to other offers available to the IOU at the time of evaluation.

Because the Transactions are sales rather than procurement, PG&E has used its approved Sales Framework to evaluate the offers rather than the procurement LCBF evaluation methodology. Nonetheless, PG&E has provided LCBF values in Confidential Appendix A. PG&E also provides a comparison against other RPS sales transactions executed by PG&E in 2018 in Confidential Appendix A.

2. Indicate when the IOU’s Shortlist Report was approved by Energy Division.

Not applicable as the Transactions did not result from a PG&E-issued solicitation. C. Compliance With Standard Terms and Conditions (“STCs”)

1. Do the proposed Transactions comply with D.08-04-009, D.08-08-028, and D.10-03-021, as modified by D.11-01-025?

The non-modifiable STCs in the PPSAs conform exactly to the “non-modifiable” terms set forth in Attachment A of D.08-04-009, as modified by D.08-08-028 and D.13-11-024 and by Appendix C of D.10-03-021, as modified by D.11-01-025.

2. Using the tabular format, provide the specific page and section number where the RPS non-modifiable STCs are located in the contract.

The locations of non-modifiable terms in the PPSAs are indicated in the table below:

Counterparty Contract

Reference

Non-Modifiable Term

STC 1: CPUC

Approval

STC 6: Eligibility

STC 17: Applicable

Law

STC REC 1: Transfer

of RECs

STC REC 2: WREGIS

Tracking of RECs

EBCEA Section 2.12 6.1 (a) 8.3(b) 6.1(b) 6.1(c)

Page Number

6 - 7 12 – 13 15 13 13

MBCPA Section 2.12 6.1(a) 8.3(b) 6.1(b) 6.1(c)

Page Number

6 12 15 12 13

CPA Section 2.12 6.1 (a) 8.3(b) 6.1(b) 6(c)

Page Number

6 12 15 12 12

Advice 5360-E - 17 - August 17, 2018

3. Provide a redline of the contract against the utility’s Commission-approved pro forma RPS contract as Confidential Appendix E to the filed advice letter. Highlight modifiable terms in one color and non-modifiable terms in another.

Redlines comparing each of the executed PPSAs to the form of Short-Term Sales Confirmation included as Attachment I.3 to PG&E’s 2017 RPS Plan are included in Confidential Appendices E1-E3. The non-modifiable terms and modifiable terms have been highlighted in each redlined comparison.

D. Portfolio Content Category Claim and Upfront Showing (D.11-12-052, Ordering Paragraph 9)

1. Describe the contract’s claimed portfolio content category.

PG&E makes no representation about the compliance value to other LSEs of the RPS products that will be sold pursuant to the PPSAs, if approved. However, PG&E believes that each of the products that will be sold would meet the criteria for PCC 1 categorization as set forth in California Public Utilities Code section 399.16(b)(1) pursuant to the original power purchase agreements (“PPAs”) between PG&E and the respective generators.

2. Explain how the procurement pursuant to the contract is consistent with the criteria of the claimed portfolio content category as adopted in D.11-12-052.

PG&E will sell energy and associated RECs generated from California-based, CEC-certified eligible renewable energy resources that have their first point of interconnection within a California balancing authority. Accordingly, deliveries to PG&E under the original PPAs between PG&E and the respective generators would generate a PCC 1 or PCC 0 product as defined in California Public Utilities Code Section 399.16(b)(1) if used by PG&E for RPS compliance. Furthermore, as defined under D.10-03-021, as modified by D.11-01-025, the proposed PPSAs transfer a bundled product since both renewable energy and its associated RECs are being sold together.

3. Describe the risks that the procurement will not be classified in the claimed portfolio content category.

There is no known risk that the products conveyed by the PPSAs would not be categorized as PCC 1 or PCC 0 if used by PG&E for RPS compliance.

4. Describe the value of the contract to ratepayers if:

1. Contract is classified as claimed

2. Contract is not classified as claimed

The value to PG&E’s customers of the Transactions does not depend on the ultimate categorization of the transferred RPS products by the verifying regulatory agencies, since PG&E has not assumed compliance value risk under the Transactions. For the counterparties or the LSEs to which the products are ultimately sold, the value to the

Advice 5360-E - 18 - August 17, 2018

customers of those entities would be less if the products are not classified as PCC 1 products.

5. Use the table below to report how the procurement pursuant to the contract, if classified as claimed, will affect the IOU’s portfolio balance requirements, established in D.11-12-052.

PG&E’s current Portfolio Balance Requirements are listed in the table below. As the generation that may be sold pursuant to the PPSAs is a combination of PCC 0 and PCC 1 volumes, PG&E will not know the exact allocation between the categories until the RECs have been transferred to the counterparties. PG&E estimates that the quantity of PCC 1 reduction to PG&E’s portfolio from the PPSAs could be as high as 2,876,000 MWh, as reflected in the following table. As shown in the RNS tables included in Appendices G and H, PG&E expects to be able to meet its CP 3 balance requirements notwithstanding the sale of the PCC 1 volumes pursuant to the PPSAs.

Forecast of Portfolio

Balance Requirements

(GWh)

Compliance Period 3

(2017-2020)

PCC 1 Balance Requirement CP 3 = 75% of RECs applied to procurement quantity requirement

Quantity of PCC 0 and 1

RECs 78,318

(under contract, not including

proposed contracts)

Quantity of PCC 1 RECs*

from proposed contracts

2,876

Quantity of PCC 2 RECs 0

Quantity of PCC 2 RECs

0 (under contract, not including

proposed contract)


from proposed contract 0

PCC 3 Balance Limitation

CP 3 = 10% of RECs applied to procurement quantity requirement


0 (under contract, not including

proposed contract)


from proposed contract 0

Advice 5360-E - 19 - August 17, 2018

*RECs to be sold are a combination of PCC0 and PCC1 volumes. PG&E will not know the exact allocation between the categories until the RECs have been transferred to the counterparties.

E. Long-Term Contracting Requirement

In D.12-06-038, the Commission adopted a threshold standard pursuant to SB 2 (1X) that requires LSEs to sign long-term contracts in each compliance period equal to at least 0.25 percent of their expected retail sales over that same compliance period. Senate Bill 350 established a new long-term contracting requirement for procurement used for RPS compliance. Specifically, Public Utilities Code section 399.13(b) requires that beginning in January 2021 (or January 2017 for retail sellers, like PG&E, that elect early compliance),19 at least 65 percent of procurement counted toward the RPS procurement requirement of each compliance period must be from contracts of 10 years or more in duration or in ownership or ownership agreements for RPS resources. Procurement from RPS contracts signed prior to June 1, 2010 that meets the requirements set forth in California Public Utilities Code section 399.16(d) is counted as long-term for the purposes of SB 350’s long-term contracting requirement.20 Although the proposed PPSAs will draw from PG&E’s portfolio of long-term contracts, the absence of this generation will not impact PG&E’s ability to comply with either the SB 2 (1X) or the SB 350 long-term contracting requirements.

F. Interim Emissions Performance Standard

In D.07-01-039, the Commission adopted a greenhouse gas Emissions Performance Standard (EPS) which is applicable to electricity contract for baseload generation, as defined, having a delivery term of five years or more.

1. Explain whether or not the contract is subject to the EPS.

Pursuant to D.07-01-039, the proposed PPSAs are not subject to the EPS as they are not long-term commitments to procure baseload generation. Rather, the PPSAs are contracts for the sale of RPS-eligible products from PG&E’s existing procured energy portfolio with delivery terms that are less than five years.

2. If the contract is subject to the EPS, discuss how the contract is in compliance with D.07-01-039.

See Section F.1 above.

3. If the contract is not subject to EPS, but delivery will be firmed/shaped with specified baseload generation for a term of

19 D.17-06-026, p. 9 (footnote 13). 20 Id. at p. 12 (footnote 20).

Advice 5360-E - 20 - August 17, 2018

five or more years, explain how the energy used to firm/shape meets EPS requirements.

No firming or shaping will occur under the PPSAs.

4. If the contract term is five or more years and will be firmed/shaped with unspecified power, provide a showing that the utility will ensure that the amount of substitute energy purchases from unspecified resources is limited such that total purchases under the contract (renewable and non-renewable) will not exceed the total expected output from the renewable energy source over the term of the contract.

See Sections F.1 and F.3 above.

5. If substitute system energy from unspecified sources will be used, provide a showing that:

a. the unspecified energy is only to be used on a short-term basis; and

b. the unspecified energy is only used for operational or efficiency reasons; and

c. the unspecified energy is only used when the renewable energy source is unavailable due to a forced outage, scheduled maintenance, or other temporary unavailability for operational or efficiency reasons; or

d. the unspecified energy is only used to meet operating conditions required under the contract, such as provisions for number of start-ups, ramp rates, minimum number of operating hours.

See Sections F.1 and F.3 above.

G. Procurement Review Group (PRG) Participation

1. List PRG participants (by organization/company).

The PRG for PG&E includes the Commission’s Energy Division, the Office of Ratepayer Advocates, the Union of Concerned Scientists, The Utility Reform Network, the Coalition of California Utility Employees, and Coast Economic Consulting.

2. Describe the utility’s consultation with the PRG, including when information about the contract was provided to the PRG, whether the information was provided in meetings or other correspondence, and the steps of the procurement process where the PRG was consulted.

At the February 8, 2018 in-person PRG meeting, PG&E shared its portfolio position and updated the PRG on its intent to sell bundled energy and RECs from deliveries in 2018 through 2022.

Advice 5360-E - 21 - August 17, 2018

On March 20, 2018 PG&E’s portfolio position was shared with the PRG as part of the Quarterly Renewable Net Short Update. On March 23, 2018 PG&E provided notice of its intent to participate in a Request for Offers (RFO) issued by CPA seeking to buy wholesale energy products to be delivered during the 2018- 2020 period. On April 18, 2018 PG&E provided notice of its intent to participate in a solicitation issued by MBCP seeking to buy renewable energy to be delivered during the 2018 - 2020 period. On May 2, 2018 PG&E provided notice of its intent to participate in a solicitation issued by EBCEA seeking to buy renewable energy to be delivered during the 2018 - 2019 period. On May 24, 2018 PG&E notified the PRG via email of its intent to execute the MBCPA transaction. On July 13, 2018 PG&E notified the PRG via email of its intent to execute the CPA and EBCEA transactions. On August 3, 2018 PG&E notified the PRG via email of an update to the sales volumes of the EBCEA transaction.

3. For short-term contracts, if the PRG was not able to be informed prior to filing, explain why the PRG could not be informed.

This is not applicable as the PRG was notified in advance of execution.

H. Independent Evaluator (IE)

The use of an IE is required by D.04-12-048, D.06-05-039, 07-12-052, and D.09-06-050.

1. Provide name of IE.

The IE is Lewis Hashimoto of Arroyo Seco Consulting.

2. Describe the oversight provided by the IE.

The IE provided active oversight of the PG&E’s participation in each of the mentioned third-party Solicitations through contract execution. Throughout the process, the IE reviewed e-mails exchanged between PG&E and the counterparties and participated on phone calls between PG&E and the counterparties.

3. List when the IE made any findings to the Procurement Review Group regarding the applicable solicitation, the project/bid, and/or contract negotiations.

The IE did not provide any findings to the PRG related to the PPSAs. The IE concludes in the IE report that the Transactions merit Commission approval.

Advice 5360-E - 22 - August 17, 2018

4. Insert the public version of the project-specific IE Report.

The public and confidential versions of the IE report are attached to this Advice Letter as Appendices C1 and C2.

III. Project Development Status

Since the Projects are operating facilities, this section is not applicable.

IV. Contingencies and/or Milestones

Describe major performance criteria and guaranteed milestones, including those outside the control of the parties, including transmission upgrades, financing, and permitting issues.

Absent the delivery of the contract quantities of energy and corresponding quantities of RECs, these short-term Transactions have no guaranteed milestones. The Transactions are conditioned upon CPUC Approval, as defined in the proposed PPSAs.

V. Safety Considerations

The Transactions cover the resale of energy and RECs purchased under existing PPAs. The Projects are existing resources currently performing under existing PPAs with PG&E. The Transactions that are the subject of this Advice Letter have no impact on the underlying PPAs and therefore raise no incremental safety matters related to the generation of the energy.

VI. Request for Commission Disposition

PG&E requests that the Energy Division issue a disposition making this advice letter effective no later than 30 days after filing. Any such disposition that makes this advice letter effective shall be deemed to constitute the following:

1. Approval of each PPSA in its entirety, including payments to be received by PG&E, subject to CPUC review of PG&E’s administration of the PPSAs;

2. A finding that each PPSA is consistent with the Sales Framework approved as part of PG&E’s 2017 RPS Plan and is consistent with Ordering Paragraph 7 of Decision 17-12-007, and that the sale of the bundled renewable electricity and Green Attributes under each of the PPSAs is reasonable and in the public interest;

3. A finding that all costs of the PPSAs are fully recoverable in rates over the life of the PPSAs, subject to CPUC review of PG&E’s administration of the PPSAs; and

4. A finding that the payments received by PG&E pursuant to the PPSAs shall be credited to PG&E customers through PG&E’s Energy Resource Recovery Account over the life of the PPSAs.

Advice 5360-E - 23 - August 17, 2018

Protests

Anyone wishing to protest this Advice Letter may do so by letter sent via U.S. mail, facsimile or E-mail, no later than September 6, 2018, which is 20 days after the date of this filing. Protests must be submitted to:

CPUC Energy Division ED Tariff Unit 505 Van Ness Avenue, 4th Floor San Francisco, California 94102 Facsimile: (415) 703-2200 E-mail: [email protected]

Copies of protests also should be mailed to the attention of the Director, Energy Division, Room 4004, at the address shown above. The protest shall also be sent to PG&E either via E-mail or U.S. mail (and by facsimile, if possible) at the address shown below on the same date it is mailed or delivered to the Commission:

Erik Jacobson Director, Regulatory Relations c/o Megan Lawson Pacific Gas and Electric Company 77 Beale Street, Mail Code B13U P.O. Box 770000 San Francisco, California 94177 Facsimile: (415) 973-3582 E-mail: [email protected]

Any person (including individuals, groups, or organizations) may protest or respond to an advice letter (General Order 96-B, Rule 7.4). The protest shall contain the following information: specification of the advice letter protested; grounds for the protest; supporting factual information or legal argument; name, telephone number, postal address, and (where appropriate) e-mail address of the protestant; and statement that the protest was sent to the utility no later than the day on which the protest was submitted to the reviewing Industry Division (General Order 96-B, Rule 3.11).

Effective Date

Consistent with its approved 2017 RPS Plan, PG&E is filing this advice letter with a Tier 1 designation to be effective upon filing, August 17, 2018.

Advice 5360-E - 24 - August 17, 2018

Notice

In accordance with General Order 96-B, Section IV, a copy of this Advice Letter excluding the confidential appendices is being sent electronically and via U.S. mail to parties shown on the list shown below, including the service list for R.15-02-020 and R.18-07-003. Non-market participants who are members of PG&E’s PRG and have signed appropriate Non-Disclosure Certificates will also receive the Advice Letter and accompanying confidential attachments by overnight mail. Address changes to the General Order 96-B service list should be directed to [email protected]. For changes to any other service list, please contact the Commission’s Process Office at (415) 703-2021 or at [email protected]. Advice letter filings can also be accessed electronically at http://www.pge.com/tariffs.

/S/ Erik Jacobson Director, Regulatory Relations cc: Service List for R.15-02-020 and R.18-07-003 Cheryl Lee – Energy Division

Limited Access to Confidential Material

The portions of this Advice Letter marked Confidential Protected Material are submitted under the confidentiality protection of Section 583 and 454.5(g) of the Public Utilities Code. This material is protected from public disclosure because it consists of, among other items, the PPSAs themselves, price information, and analysis of the PPSAs, which are protected pursuant to D.06-06-066 and D.08-04-023. A separate Declaration Seeking Confidential Treatment regarding the confidential information is filed concurrently herewith.

CALIFORNIA PUBLIC UTILITIES COMMISSION ADVICE LETTER FILING SUMMARY

ENERGY UTILITY

MUST BE COMPLETED BY UTILITY (Attach additional pages as needed)

Company name/CPUC Utility No. Pacific Gas and Electric Company (ID U39 E)

Utility type: Contact Person: Yvonne Yang

ELC GAS Phone #: (415) 973-2094

PLC HEAT WATER E-mail: [email protected] and [email protected]

EXPLANATION OF UTILITY TYPE

ELC = Electric GAS = Gas

PLC = Pipeline HEAT = Heat WATER = Water

(Date Filed/ Received Stamp by CPUC)

Advice Letter (AL) #: 5360-E Tier: 1

Subject of AL: 2018 Bundled RPS Energy Bilateral Sales; Power Purchase and Sale Agreements Between Pacific Gas

and Electric Company and Multiple Buyers

Keywords (choose from CPUC listing): Agreements

AL filing type: Monthly Quarterly Annual One-Time Other _____________________________

If AL filed in compliance with a Commission order, indicate relevant Decision/Resolution #: N/A

Does AL replace a withdrawn or rejected AL? If so, identify the prior AL: No

Summarize differences between the AL and the prior withdrawn or rejected AL: N/A

Is AL requesting confidential treatment? If so, what information is the utility seeking confidential treatment for: Yes

Confidential information will be made available to those who have executed a nondisclosure agreement: Yes

Name(s) and contact information of the person(s) who will provide the nondisclosure agreement and access to the confidential

information: Amy Barr [email protected] and Muranishi, Mark, [email protected]

Resolution Required? Yes No

Requested effective date: August 17, 2018 N No. of tariff sheets: N/A

Estimated system annual revenue effect (%): N/A

Estimated system average rate effect (%): N/A

When rates are affected by AL, include attachment in AL showing average rate effects on customer classes (residential, small commercial,

large C/I, agricultural, lighting).

Tariff schedules affected: N/A

Service affected and changes proposed: N/A

Pending advice letters that revise the same tariff sheets: N/A

Protests, dispositions, and all other correspondence regarding this AL are due no later than 20 days after the date of this filing, unless

otherwise authorized by the Commission, and shall be sent to:

California Public Utilities Commission Pacific Gas and Electric Company

Energy Division

EDTariffUnit

505 Van Ness Ave., 4th Flr.


E-mail: [email protected]

Attn: Erik Jacobson

Director, Regulatory Relations

c/o Megan Lawson

77 Beale Street, Mail Code B13U

P.O. Box 770000


E-mail: [email protected]

PACIFIC GAS AND ELECTRIC COMPANY

Appendix A

Consistency with Commission Decisions

and Rules and Project Development

Status

(CONFIDENTIAL IN ITS ENTIRETY)


APPENDIX B

BILATERAL SALES OVERVIEW



APPENDIX C1

INDEPENDENT EVALUATOR REPORT



APPENDIX C2

INDEPENDENT EVALUATOR REPORT

(PUBLIC VERSION)


BILATERAL CONTRACT EVALUATION

REPORT OF THE INDEPENDENT EVALUATOR ON THREE CONTRACTS FOR

SALE OF RENEWABLE ENERGY

AU G U S T 1 6 , 2 0 1 8

A R R O Y O S E C O C O N S U L T I N G

2

TA B L E O F C O N T E N T S 1. EXECUTIVE SUMMARY ....................................................................................................... 3 2. ROLE OF THE INDEPENDENT EVALUATOR............................................................ 5 3. FAIRNESS OF PG&E'S EVALUATION METHODOLOGY ....................................... 6 4. FAIRNESS OF PG&E'S BIDDING AND SELECTION PROCESS ............................ 8 5. FAIRNESS OF CONTRACT-SPECIFIC NEGOTIATIONS ........................................ 12 6. MERIT FOR CPUC APPROVAL ......................................................................................... 23

3

1 . E X E C U T I V E S U M M A RY

This report provides an independent evaluation of contracts between the Pacific Gas and Electric Company (“PG&E”) and three individual community choice aggregators (CCAs), Clean Power Alliance of Southern California (“CPA”), East Bay Community Energy Authority (“EBCE”), and Monterey Bay Community Power Authority (“MBCP”), for the sale by the utility of fixed volumes of renewable energy. An independent evaluator (IE), Arroyo Seco Consulting (Arroyo), conducted various activities to review, test, and check PG&E’s processes as the parties negotiated the agreements.

• CPA’s contract requires delivery of 1.2 TWh of RPS-eligible energy during the period 2018-2019, with specific fixed volumes in each year. CPA is in the process of phasing in power supply operations to serve 29 cities and unincorporated Los Angeles and Ventura Counties within Edison’s transmission and distribution service territory.

• EBCE’s contract will have PG&E deliver 525 GWh of RPS-eligible energy in 2018-2019. EBCE is in the process of phasing in retail electricity service to different classes of customers in Alameda County (excluding the cities of Alameda, Newark, and Pleasanton) within PG&E’s transmission and distribution service territory.

• MBCP’s contract specifies delivery of 1.151 TWh of RPS-eligible energy over the period of 2018 through 2020. MBCP serves customers in Monterey, San Benito, and Santa Cruz counties (excluding King City and Del Rey Oaks), within PG&E’s transmission and distribution service territory, and is in the process of phasing in its power supply operations to different classes of customers.

This report provides a review of:

• The role of the Independent Evaluator, • The degree to which the design of PG&E’s methodology provided fairly for

preparation of its offers to the CCAs’ solicitations, • The fairness with which PG&E’s evaluation of its offers was administered, • The fairness of contract-specific negotiations, and • Merit of the executed contracts for approval by the California Public Utilities

Commission (“CPUC”).

The sales resulted from the individual CCAs’ competitive solicitations seeking offers to sell them short-term Portfolio Content Category 1 (“PCC1”) RPS-eligible energy to which PG&E responded, rather than from any solicitation run by PG&E. Consequently, this report does not address outreach activities by the utility but focuses on the reasonableness of the sale prices, fairness of negotiations and the merit of the contracts for approval.

Arroyo’s opinion is that in each case contract negotiations were conducted in a manner that was, overall, fair to ratepayers and to competing buyers. Arroyo believes that the contract prices are reasonable and rank as moderate to high in comparison to the very

4

limited set of publicly available market price benchmarks. In Arroyo’s opinion, the three sales transactions are consistent with PG&E’s CPUC-approved 2017 renewable energy procurement plan and with the detailed framework for sales of surplus renewable energy that was part of that plan. Consequently, Arroyo’s opinion is that the executed contracts merit CPUC approval.

5

2 . RO L E O F T H E I N D E P E N D E N T E VA L UAT O R

This chapter describes key roles of the IE.

A. KEY IND EPEND ENT EVALUATOR ROLES

The CPUC stated its intent for participation of an IE in competitive procurement solicitations to “separately evaluate and report on the investor-owned utility’s (IOU’s) entire solicitation, evaluation and selection process”, in order to “serve as an independent check on the process and final selections.”1 The Energy Division has provided IEs with a standard-form template for use in reporting about Renewable Portfolio Standard (RPS) transactions for which utilities seek approval through advice letters, specifying that such a report should cover topics including:

• Describe the IE’s role. • How did the IOU conduct outreach to bidders, and was the solicitation robust? • Was the IOU’s methodology designed such that proposals were fairly evaluated? • Was the evaluation process fairly administered? • Were contract-specific negotiations fair? • Do the contracts merit Commission approval?

The structure of this report, setting out detailed findings for each of these issues, is organized around these major topics excluding the discussion of outreach to bidders and robustness of solicitation, as this contract resulted from PG&E’s response to a solicitation.

B. IE ACTIVITIES

To fulfill the role of evaluating the renewable energy contracts between PG&E and the three CCAs, Arroyo performed various key tasks:

• Observed PG&E’s recent efforts to sell RPS-eligible energy through its 2018 Bundled RPS Energy Sale Solicitation;

• Monitored (telephonically) negotiations between parties; • Reviewed marked-up drafts of the confirmation agreements as the parties proposed

edits to the underlying form; • Analyzed transaction prices and volumes using PG&E’s approved framework for

sales of surplus renewable energy; and • Researched comparable transactions of PCC 1 energy from publicly available market

pricing data.

1 CPUC Decision 06-05-039, May 25, 2006, “Opinion Conditionally Approving Procurement Plans for 2006 RPS Solicitations, Addressing TOD Benchmarking Methodology”, page 46.

6

3 . FA I R N E S S O F P G & E ’ S E VA L UAT I O N M E T H O D O L O G Y

This section briefly describes PG&E’s methodology for evaluating renewable energy contracts, and its fairness to ratepayers and participants.

A. PRINCIPLES TO EVALUAT E PG&E’S BID EVALUATION METHODOLOGY

The Energy Division of the CPUC has suggested a set of principles for evaluating the process used by IOUs for selecting Offers in competitive renewable solicitations, within the template intended for use by IEs in reporting:

• There should be no consideration of any information that might indicate whether the

participant is an affiliate. • Procurement targets, objectives, and preferences were clearly defined in the IOU’s

solicitation materials. • The IOU’s methodology should identify quantitative and qualitative criteria and

describe how they will be used to rank offers. These criteria should be applied consistently to all offers.

• The LCBF methodology should evaluate proposals in a technology-neutral manner. • The LCBF methodology should allow for consistent evaluation and comparison of

proposals of different sizes, in-service dates, and contract length.

B. PG&E’S METHODOLOGY

Because the sales resulted from PG&E’s response to buyers’ requests for proposals, PG&E did not draft written protocols stating its methodology for evaluating its own offers. Observing PG&E’s actual conduct, Arroyo infers that the utility employed one evaluation criterion, pricing. Each of the CCAs requested offers for PCC1 energy priced as market index plus a fixed premium for renewable energy credits (RECs). PG&E constructed its offers to ensure that, should they clear the CCAs’ competitive solicitations, their pricing would be consistent with its “Framework for Assessing Potential Sales of Surplus RPS Volumes”, Appendix J of its CPUC-approved 2017 renewable energy procurement plan.

The utility team did not directly employ its Portfolio-Adjusted Value methodology, specified in its approved 2015 RPS procurement plan, for analyzing offers (as opposed to bids) for value and portfolio fit. However, in this situation where PG&E’s offers sought to sell fixed volumes of RPS-eligible energy in specific years, priced at market index plus a fixed REC premium in $/MWh, ranking by PAV should be directly related to ranking by price.

Arroyo does not believe that other criteria such as portfolio fit, RPS Goals, counterparty concentration, etc. played a role in PG&E’s decisions to pursue these transactions. While

7

creditworthiness has played a role as an evaluation criterion in most of PG&E’s competitive solicitations, and none of these CCAs is currently an investment-grade credit, PG&E has followed its recent precedent of transacting short-term renewable energy sales to CCAs by employing specific contract terms for CCAs that it believes are sufficient to protect its ratepayers’ interests against the risk of buyer default.

C . STRENGT HS AND WEAKNESSES OF PG&E’S METHOD OLOGY

Pricing is a straightforward metric for evaluating the reasonableness of sales of surplus RECs and is grounded in a CPUC-approved methodology for this type of transaction.

Consistency with RPS Procurement Plan. PG&E’s 2017 renewable energy procurement plan, accepted in the CPUC’s Decision 17-12-007, states that “PG&E will continue to assess potential sales of excess RPS volumes.” PG&E held a competitive solicitation in early 2018 resulting in several short-term sales of RPS-eligible energy.2 The CCAs’ requests for offers to procure PCC1 energy, with due dates in March 2018 for CPA, April for MBCP, and May for EBCE, followed closely upon the conclusion of PG&E’s bundled energy solicitation, and were based upon each CCA’s own timetable for meeting its power supply needs.

PG&E’s 2017 renewable energy procurement plan explicitly states that “PG&E anticipates selling short term RPS volumes in 2018” and defines “short term” as “five years or less”. Each of these sales has a delivery term of less than five years.

The bilateral sales to the CCAs are consistent with PG&E’s approved procurement plan based on how they comply with the CPUC-approved framework for surplus RPS sales; the consistency of sales prices with that framework is described in more detail in a later section.

Portfolio fit. PG&E’s approved methodology for assessing portfolio fit is the use of its Portfolio-Adjusted Valuation metric, which was not directly employed to evaluate this transaction. However, Arroyo believes that the sales of surplus RPS energy to CCAs may be considered to fit the needs of the utility’s portfolio qualitatively in the sense that they reduce the surplus bank of RECs being carried forward for future compliance needs. In past solicitations PG&E has measured portfolio fit quantitatively based on the extent to which a purchase transaction is expected to exacerbate its net long RPS position as opposed to filling a short RPS position. Using that logic, these sales transactions are expected to reduce PG&E’s net long position over the delivery terms, and therefore rank high in portfolio fit.

Other issues. Because projects from which sales volumes will be delivered are already constructed and operating, transmission network upgrade costs are sunk costs and do not factor into selection decisions. Similarly, all of these projects from which the energy will be sourced are viable by virtue of achieving commercial operation and delivering energy on an ongoing basis so that project viability is not a concern.

2 EBCE previously purchased RPS-eligible energy through PG&E’s 2018 bundled energy sale solicitation and was therefore familiar with PG&E’s CPUC-approved pro forma agreement for short-term sales. ''''''''''''''' '''''''' '''''''''''''''''''''''''' ''''' '''''''' ''''''''''''''''''''''' '''''''' '''''' ''''''''''''''''''''' ''''''''''' ''''''' ''''''''''''''''''''' ''''' ''''''''''' ''''''' ''''''''''''''''''''''' '''''''''''''''''''' ''''''''''''''''''''' ''''' '''''''' ''''''''''''''''''''''''''''''''''''''' ''''''''''''''''''''''''' ''''''' ''''''''''''''' '''''''''' ''''''''''''' '''''''''''

8

4 . FA I R N E S S O F P G & E ’ S E VA L UAT I O N P RO C E S S

This section provides a narrative of how PG&E administered its evaluation process in preparing offers to the competitive solicitations held by CPA, EBCE, and MBCP. Arroyo’s opinion is that the process was fair to ratepayers and competitors.

A. GUIDELINES TO D ETERMINE FAIRNESS OF EVAL UATION PROCESS

The Energy Division has suggested a set of principles to guide IEs in determining if an IOU’s administration of its evaluation process was fair:

• Were all proposals treated the same regardless of the identity of the bidder? • Were participants’ questions answered fairly and consistently and the answers made

available to all participants? • Did the utility ask for “clarifications” that provided one participant an advantage

over others? • Was the economic evaluation of the proposals fair and consistent? • Was there a reasonable justification for any fixed parameters that were a part of the

IOU’s LCBF methodology? • Were the qualitative and quantitative factors used to evaluate bids fair to all bids?

B. PG&E’S EVALUATION OF ITS OFFERS AGAINST CRITERIA

PG&E appears to have applied only the pricing criterion to evaluate its decisions in making offers to the CCAs’ three solicitations to buy short-term renewable energy and deciding to proceed with the selected sale transactions.

Pricing: CPA. Clean Power Alliance of Southern California (formerly Los Angeles County Clean Energy) released a request for offers for several products on March 20, 2018; it announced that it was seeking to purchase block energy, renewable energy, carbon-free energy, and resource adequacy for delivery in late 2018, 2019, and 2020. For the request for PCC1 and/or PCC2 renewable energy3, PG&E offered only PCC1 energy:

3 Absent a utility-led solicitation involving affiliates as participants, the obligation for an IOU to involve an IE is generally limited to solicitations or bilateral transactions of RPS products, so this report is focused on RPS-eligible energy sales to the CCAs and not on any other products.

9

∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋ ∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋

∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋

∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋

''''''''''''' ''''''''''''''''''''''''' '''''' '''''''''''' '''' '''''''''' ''''''' ''''''' '''''''' '''''' '''''''' ''''''''''''''''''''''''''''''''''''''' ''''''''''''''''''''' ''''''''''' '''''''''''''''''''''''''' '''''''''''''''''''''' '''''''''''''''''''' '''' ''''' '''''''''''' ''''''''''''''''''''''' '''''''''''''''' '''''''''''''''''''''''''''' '''''''''' ''''''''' ''''''' '''''''''''''' '''''''''''''''''' ''''' ''''''''' ''''''''''''''''''''' '''''''''''''''''''''' '''' '''''''''' ''''''''''''''''''''''''' '''''''' ''''''''''''' ''''''' '''''''''''' ''''''''' ''''''''''' '''''''''''''''''''''' '''''' '''''''''''''''''''''' ''''' '''''''' ''''''''''' ''''''' ''''''''' '''''''''''' '''''''''''''''''' ''''''''''''' ''''''''''''' '''''''''''''' ''''''''''' '''''''' ''''''''''' ''''''''' ''''''' ''''''''''''''' '''''''''''''''''' ''''' ''''''''''' ''''''''' '''' ''''''''''''''''''' '''''''''' '''' ''''''''''''' ''''''''''''''''''''' '''''''''''''''''''' ''''''' ''' '''''''' ''''' '''''''''''' '''''''''''''''''''''' ''''''''''' ''''''''' '' ''''''''''''''''' '''''''''''''''''''' ''''' ''''''''''' '''''''''''''''''''''' '''''''''' ''''' ''''' ''''''''''' '''''''''''''''''''''' ''''''''''''' '''''''''' '''''' '''''''''' ''''''''' '''''''''' '''''''''''''''''''' '''''' '''''''''''''' '''''''''''' '''''''''' ''''''''''''''''''''''''''''' ''''''''''''' '''''''''' ''''''''''' '''''''''' ''''''''' ''''''''' ''''''''''' '''''''''''' '''''''' ''''''''''''''''' ''''''''''' ''''''''''''''''''''''' '''' ''''''''''''''''''''''' ''''' ''''''''''''''''' '''''''''' '''''''''''''''''''' ''''''' '''''''''''''''''''''' ''''''''''''''' '''''''''' '''''''''''''' '''''''' '''''''''''' ''''''''''''''

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'''''''' '''''''''''' ''''''''' '''''''''' '''''''''''''''''''''''' ''''''''''' ''''''''''''''' ''''' '''''''''''''' ''''''''''''' ''''''''''' '''''''''''' '''''''''''' ''''''''''' ''''' '''''''''''''' '''''''' ''''''''''''''''''''''''''''''''' '''''''' ''''''''''''''''''''''''''''''' ''''''''''''''''''''''''''' '''''''''''' ''''''''''' ''''''''''''''''''''''' '''''' '''''''''''''''''''' '''''' ''''''''''''''' ''''''''''' '''''''' ''''''''''''''''''''''''''''''''''''''''' '''''''''''''''''''''''''' ''''''' '''''''''' '''''' ''''''''''''''''' '''''''''' '''''''''''''' '''''''''''' '''''''''

''''''''''''''' ''''''''''' ''''''''''''''''''''''' '''''''''''' ''''''''''''' ''''''''''''''' ''''''''''' '''''''''''''''''' '''''' '''''''''''' '''''''''''''' '''''''''''''''''''''''' ''''''''''' ''''' ''''''''''''''''''''' '''''''''''''''''' '''''' '''''''''''''''''''''''' '''''' ''''''''''''''''' '''''''''''' '''''''''''' ''''''''''''' '''''''' '''''''''' '''''''''''' '''''''''''''' ''''''''''' ''''''''' '''''''''''''''' '''''' ''''''''''''''''''''''''''''''''' '''''''''''''' ''''''''''''''''''''' ''''''' '''''''''''''''' '''''''''''' '''''''' '''''''''' ''''''''' '''''''''' '''''''''''' ''''''''''''' ''''''''''' '''''''''''''''''''''''''' ''''''''''''''''''' '''' ''''''''''''''''''''''''''''''' '''''''' ''''''''''''''''''''''''''' ''''''''''''''''''''''''' '''''''''''''' ''''''''''' ''''''''''''' '''''''''''''''''''' ''''''''''''''' ''''''' ''''''''''''' ''''''''''''' '''''''' ''''''''''' '''''''''

Pricing: EBCE. ''''''''''''''' '''''''''''' ''''' ''''''''''' ''''''' '''''''''''''' '''''''''''''' '''''''' ''''''''''''' '''''''''''''''' '''''' '''''''''' ''''''' ''''''''''' ''''''''''''''''' '''''''''''''' ''''''' '''''''''''''''' ''''' '''''''''' '''''''' ''''''''''''' ''''''''''' ''''''''''''''''''''''' ''''''' ''''''' ''''''''''''''''''''' '''''' '''''''''' ''' ''''''''' '''''''''''''' ''''''''

∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋

∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋

10

''''''''' ''''''''''' '''''''''''' ''''''''' '''''''''''''''''''''''''' '''''' '''''''''''''''''' ''''''''''''''''''''' '''''''''''' ''''' '''''' '''''' '''''''' '''''''''''' ''''''''''''' ''''''''''''''' '''''''''' '''''''''''''''''''''''' '''''' '''''''' '''''' '''''''''''''' '''''''' '''''''''''''' ''''''''''''''''''''''''''''''' ''''''''' ''''''' '''''''''''''''' '''''''''''''''''''''

Pricing: MBCP. '''''''''''''''' '''''''''''''''''' '''''' ''''''''''''''' '''''' '''''''''''' ''''''' ''''''''''''' '''''''''''''''''''''' '''''''''''''''' ''''''' ''''''''''''' ''''''' ''''''''''''' '''' '''''''''''''' '''''''''''''' ''''''' ''''''' '''' ''''''''' '''''''''''''' '''' ''''' '''''''''''''''''''' '''' '''''''' ''''''''''''''''''''' ''''' ''''''''''' '''''''' ''''''' '''' ''''''''' ''''''''''''' ''''''''' ''''' ''''''''''' '''''''' '''''''''''''

'''''''''''' '''''''''''''''' ''''''' '''''''''''''''''''''''' '''''''''''''''''''' '''''''''''''''''' '''''' '''''''''''''''' '''' '''''''' '''''''''''' ''''''''''''''' '''''''' '''''''''''''' ''''' ''''''' '''''''' ''''''''''' ''''''''''''

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∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋ ∋

∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋ ∋

''''''' '''''''''' ''''''' '''''''''' '''''''''''''' '''''''''''' ''''''''''''''''''''''''''''' ''''' '''''''''''' '''''''' '''''''''' ''''''''' ''''''''''' '''''''''''''''' ''''''' ''''''''''''''' '''''''''''''''''''''''' ''''' ''''''''''''' ''''' '''' '''''' '''''''' ''''''''''''''' ''''''''''' '''''''''''''''' '''''''' '''''''''''''''''''''''''' ''''' '''''''''''''' ''''''' '''''''' ''''' '''''''' ''''''''' '''''''''''' '''''''''''''''''''''''' '''''''' '''''' ''''''''''''''' '''''''''''''''''''''

Other. PG&E did not employ other evaluation criteria in evaluating its offers. PG&E did not involve any third party in performing any part of the evaluation; PG&E did not develop any inputs or parameters for analysis of its offers other than its internal '''''''''''' ''''''''''''' '''''''''''''''' ''''''''''''' '''''' ''''''''''' '''''''''''''''' consistent with its framework for short-term RPS sales. No transmission costs or integration adders were involved in the evaluation.

PG&E was aware of the degree to which the three CCAs lacked credit quality as non-rated entities; the utility did not consider this to be an evaluation issue as long as the transactions would be based on the version of its pro forma sales contract that it had adapted for use in sales to CCAs. This was a variant of the Edison Electric Institute (EEI) confirmation agreement that was included as Appendix I.3 of the 2017 procurement plan, with credit requirements that had been adapted for use with CCAs in the course of PG&E’s negotiations with CCAs during its competitive solicitation for short-term RPS sales.

C . RESULTS ANALY SIS

Arroyo agreed with PG&E’s evaluation of the pricing of the excess energy sales. Arroyo believes that PG&E adhered to the CPUC-approved framework for sales of surplus RPS volumes in pricing the transactions.

Other observations regarding fairness of administration of PG&E’s evaluation include:

• Arroyo did not observe PG&E treating its offers to the three CCAs differently '''''''''' '''''''''''' '''''''''''''''' ''''' '''''''''''''''''''''''''''' '''''''''''''' ''''''''' ''''''''''''''' '''''' ''''''''''''''''' ''''' '''''''''''''' ''''''''''''''

∋∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋ ∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋

11

∋∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋∋ ∋∋∋

• Arroyo believes that PG&E made reasonable and justifiable decisions in preparing and submitting its proposal to the CCAs.

• The CCAs found no deficiencies in PG&E’s proposal packages.

Arroyo’s opinion is that PG&E handled the evaluation process in competing for an award of a contract with the three CCAs in a manner that was fair to ratepayers and to the three CCAs’ competitors as buyers (see, specifically, footnote 7).

12

5 . FA I R N E S S O F C O N T R AC T-S P E C I F I C N E G O T I AT I O N S

This chapter provides an independent review of the extent to which PG&E’s negotiations with the three CCAs were conducted fairly with respect to competing buyers and to ratepayers.

PG&E is contracted to take delivery of volumes of PCC1 energy in 2018 from various projects that it expects to be surplus to its compliance needs. A portion of these volumes would provide greater value to ratepayers if sold at reasonable prices within 2018 to compliance entities that are short of their compliance needs than if the RECs are banked for later use. The same is true for 2019 and 2020.

A. NEGOTIATIONS BET WEEN PG&E AND CPA

Clean Power Alliance of Southern California (formerly Los Angeles County Clean Energy) is a CCA currently in the process of ramping up retail energy supply operations. It began deliveries to municipal accounts of unincorporated Los Angeles County in February 2018 and to commercial and industrial accounts in South Pasadena and Rolling Hills Estates and in unincorporated Los Angeles County territory in June 2018. At full phase-in in 2019 it will serve all retail customers in unincorporated Los Angeles and Ventura Counties and in more than two dozen municipalities within Edison’s distribution and transmission service territory. It began procuring power supply in mid-2017.

CPA’s 2018 Short-Term RFO was administered by The Energy Authority, Inc. (“TEA”), CPA’s contracted portfolio manager for power supply, that also negotiated PG&E’s contract on CPA’s behalf. The RFO was issued on March 20, 2018 and indicative offers were due on March 23. TEA reported to a subcommittee of CPA’s board that its RFO had eighteen respondents but that offers fell short of 2018 requirements for six of the eight requested products. TEA reported to CPA that it had received eight offers for RPS or carbon-free energy and was negotiating with six potential suppliers.

Overall, PG&E did not accommodate any material changes to the pro forma confirmation agreement that had been approved as part of the utility’s 2017 renewable energy procurement plan, with the exception of '''''''''''' '''''''''''.4 Negotiations between the parties began after shortlisting and continued to contract execution on July 27. Arroyo

4 ''''''''''' '''''''''' '''''''''''' ''''''''''' ''''''''' '''''''' ''''''''''' '''''''''''' ''''''''''''''''''''''''' '''''''''''''' ''''''''''''''' ''''''''''''''' ''''' '''''''''' ''''''''''''''''''''''''''' '''''''''''''''' ''''''' ''''''''''''' '''''''''''''''''''''''''''''' ''''''''''''''''''''' '''''''''' ''''''' ''''''''''''''''''' ''''''''''''''''''''' ''''''''' ''''''''''''''''''''' ''''''''' ''''' ''''''''''''''''''' '''''''' '''''''''''''' '''' '''''''''''''''''''' '''''''''''''''' '''''''''''''''''''' ''''' '''''''''''''''' ''''''' ''''''''''''''''''''''' ''''''''''''''''''''' '''''''''' ''''''' '''''''''''''''''''' ''''''''''' '''''''' ''''''''''''''''' '''''''''''''''''' ''''''''''''''''''''''''''' '''''''' ''''''''''''''''''''''''''' '''''''''''''' '''''''''''''''''' ''''''''''''' ''''''''''' ''''''''' ''''''''''''''' ''''''''' ''' ''''''''' '''''''''''''''' ''''''' ''''''''''''''' ''' '''''''''''''''' '''''''''''''''''''' '''''''''''''''''''''''''''''''' '''''''''' ''''''' '''''''''''''''''''''' '''''''' ''''''''''''' '''''''''''''''' ''''''''''' '''''''''''''''''''''' '''''''''''''' ''''''''''''''''''' ''''''''' ''''''''''''''''''''''''''' ''''' ''''''' '''''''''''' ''''''''''''''' '''''''''''''''

13

observed nine negotiation sessions between PG&E and TEA (acting on CPA’s behalf) that covered contract terms such as:

• Delivery volumes. '''''''''' ''''''''''''''''' ''''''''''' ''''''' '''''''''''''' '''''' ''''''''''' ''''''''' '''''''''''' ''''' '''''''' '''''''''''''''' '''''''''''''' ''''''' ''''''''''''''''''''''''''' ''''''''''''''' '''''''' '''''''''' '''''''''''''''''''''' '''''' ''''''''''''' '''''''''' ''''''''''''''''''''''''' '''''''' ''''''''''' ''''''''' '''''''''''''''''''' '''' ''''''''' '''''''''''' '''''' ''''''''''' ''''''''''''''''' '''''''''' '''''' '''''''' ''''''''''''' ''''''''''''''''''' ''''''''' ''''''' '''' '''''''''''' ''''''''' ''''''''''' ''''''''' ''''''''''''''''' ''''''' '''''''''''' '''''''''''''''''''' '''''''''' ''''''''''' '''''''''''''' ''''''' ''''''''''''''' '''''''''''''''''' ''''''''''''''''''''' ''''''' ''''''' '''''''''' ''''''''''''''''''' '''''''''' '''''''''''''''''''' '''''''''' '''''''''' ''''''''''''' ''''''''''' ''''''''''''''''' ''''''''''''''' ''''' ''''''' '''''''''' '''''''''''' ''''''''' '''' '''''''''''' ''''''''''''''' '''''''''''''''' '''''' '''''''''''''''''''' '''''''''''''''''''

'''''' ''''''''''''''''''''''' '''''''''''''''''''''''''' ''''''''''' ''''''''''''''''''' '''''''''' '''' '''''''''''''' ''''''' '''''''''''' '''''''''' ''''''''' '''' '''''''' '''''''''''''''''''''' ''''''''''''''''' ''''''''''' ''''''''''''''' '''''''''''''''''''' '''''''''''''''''''' ''''''''''''' ''''''''''' '''''' ''''''' ''''''''''' '''''''''''''''''''''''' '''''''' ''''''''''''''' ''''' '''''''''''' ''''''''' ''''''''''' '''''''''''''''''''' '''' '''''''' '''''''''''''' ''''''''' ''' '''''''''''''

• Credit and collateral. ''''''''''' '''''''''' ''''''' '''''''''' ''' '''''''''''' '''''''''''' '''''''' ''''' ''' ''''''''''' '''''''''''''''' ''''''''''''''''''' '''' ''''''''''''''''''''''''''''' ''''''''''' '''''' ''''''''''''''''''''' '''' '''''''' ''''''''''''''''''''''''''''''''' ''''''''' ''''''''''''''''''''''' ''''' ''' '''''' '''''''''''''' '''''''''''''''''' '''''' ''''''''''''''''''''''' ''''''''''''''''''' '''''''' '''''''' ''''''''''''''''''''''' ''''''''''' ''''''''''''''''''' ''''''' '''''' '''''' ''''''''' ''''''''''''' ''''''''''''''''''''' '''''''''''''''''''' ''''''''''''' ''''''''''''''''''''''' ''''''''''''''' ''''''' ''''''''''''''' '''''''''''''''' '''' '''''''''''' ''''''''' ''''''''''''''''' '''''' '''''''''''''''''''' ''''' '' '''''''''''' ''''''''''''''''' ''''' ''''''' '''''''''''''''''''''''''''''''' ''''''' '''''''''''' ''''''''''' '''''''''''''''' '''''''''''' ''''''''''''' ''' '''' '''''''''''''''' '''' '''''''''' ''''''''''' '''''''''''' ''''''''''''''''''''' '''''''''''''''''''' ''''''' ''''''''''' ''''''''''''' '''''''''''''''''''''''''''''' ''''''' '''''''''' ''''''''''''''' ''''''''''' ''''''''''' ''''''''''''''''''''''''' ''''' ''''''''''' '''''' '''''' '''''''''''''''''' '''''''' ''''' ''''''''''''''''' ''''''''''' ''''''''' ''''''''''''''''''''''' '''''' ''''''''' ''' ''''''''''''''''''''''''' '''''''''''''''''' ''''''''''''''' ''''' '''''''''' '''''''''''''''''''''

'''''''''''''' '''''''''''' ''''' '''''''''''''' '''''''''''' ''''''''' ''''''''''''''''''''''''' ''''''''''''' '''''''''''''' '''''''''''''''''''''''''' ''''' '''''' '''''''' ''''''''''''' '''''''''' ''''''''''''''''''''''' ''''' ''''''''''''''''''''''' '''''' ''''''' ''''''''''''''' ''''' '''''''''' '''''' '''''''' ''''''''''' ''''''''''''''''''''''' ''''''''''''''' '''''''''''''''''''''''''' '''''''''''' ''' ''''''''''''''''' ''''''''' ''''''' ''''''''''''' ''''''''''' ''''''''' '''''''''''''''''' ''''''''''' ''''' '''''''''' ''''''''''' '''''''' '''''''''''''''''' '''''' ''''''''''' ''''''''''''''''''''''''''' '''''''''''''' ''''''''''' ''''''' '''''''''''' ''''''''''''''''''''' ''''''' ''''''' ''''''''''''' ''''''''''' '''''''''''''''''' '''''''''''''''''''''''''''' ''''''''' ''''''''''''''''' ''''' '''''''''''' '''''' '''''''' ''''''''''''''' ''''' '''''''''''''''''''''''' '''''''''''''''' ''''' '''''''''''''''' ''''''''''' '''''''''''''''''''''''

''''''''''''''' '''''''''''' ''''' '''''''' ''''''''''' '''''''''''''' ''''''''''''''''''''' '''''''''''''''''''''''' '''' ''''' '''''''''''' ''''''''''''''''''''' '''''''' ''''''''''' '''' '''''''''' ''''''' '''''''''''''''''' ''''''''''''' '''''''''' '''' ''' '''''''''''''''''''''''''' '''''''''''' ''''' ''''''''''''''''''''' '''' '''''''' ''''''''''''''''''''''''''''' '''''''''''''''''''''' ''''''''''' ''''''''''''' ''''''''' '''''''''' '''''''''''' '''''' '''''''''''' '''''' '''''''''' '''''' ''''''''''''''''''' ''' ''''''''''''' ''' ''''''''''''''''''''' ''''''''''''' ''' '''''''''''''''''''''''' ''''''''''''' ''''''''''''''' '''''''''''''''''''' ''''''''''''' ''''''''''' '''''' '''''''''''''''''''''''''''' '''''''''''''''''''''' '''''''''''''' '''''' '''''' ''''''''''''''''''' '''''''''''''''''''' ''''''''''' ''''''''''''''''''''' '''''''' '''''' ''' ''''''''''''''''' ''''''''''''''''''''''''''''' '''' '''''''' '''''''''''''''' '''''' '''''''''''''''' ''''''''''''''''''' '''' ''''' '''''''''''''''''''''''''''' ''''' '''''''' '''''''''''' ''''' ''''''''''''''' '''''''''''''''''''' ''''''''''' ''' ''''''''''''''''''' '''''' ''''''''' ''''''' ''''''''' ''' ''''''''''''''''''' '''''''''''''''''' ''''' '''''''''''''' '''''''''''''''''''''' '''''''''''''''''''' '''''''''''' ''''''''' '''' ''''''''''''''' '''''' '''''' '''''''' ''''''''''' ''''''''''''''''' ''''' ''''''''''''''' ''''''''''''''''' ''''''''''''''''''''''' '''' ''''''' ''''''''''' '''''' '''''''''''''''''

''''''''' '''''''''''''' ''''''''''''''''''''''' '''''' ''''''''''' ''''''''''''''' '''''''''''''''''''''' '''''''''' ''''''''''''''''''''''' ''''' '''''''''''''' ''''''''''''''''''' '''''' '''''''''''''''''''''''''''''''' '''''' '''''''''''''' '''''''''''''' ''''''''''''' '''''''''''' '''''''''' '''''' '''''''''''''' '''''''''''''''''''' ''''''''' ''''''''''''' ''''''''''''''''''''' '''''''''''''''''' ''''''''''' '''''''''''''' ''''''''''' ''''''''''''''' '''''' '''''''''''''' ''''''''''''''''''''''''' '''''' ''''''''''' '''''''''''''''''''' '''' ''''' ''''''''''''''''''''''''''' '''''''''''''''''' '''''''' ''''''''''''' '''''''''''''''''''''' ''''' ''''''''''''''''' '''''''' ''''' ''''''''''''''' '''''''' ''''''''''''''''''''' '''''''''''''''''''' ''''''' ''''''''''' ''''' ''''''''''' ''''''''''''''''''''''' ''''''' ''''''''''''' '''''''''''''' '''''''''''' '''''''''' '''''''' '''''''''''''''''' '''''''''' '''''''''''' ''''''''''''''''' '''''''''''''''''''''''''''''''

14

'''''''''''''''''''''' ''''''''''' ''''''' ''''''''' ''''' ''' ''''''''''''''''''''''''''' ''''''''''''''''''' ''''''''''''''''''' '''''''''''''' ''''''''''' '''''''''''''''' ''''' '' ''''''''''''''' ''''''''''''''''''''''' ''''''''' ''''''''''''''''''''''''' '''' ''''''''''''''' '''''''''''''' '''''''''''''''''

'''''''''''' '''''''''''''''''''''' '''''''''' ''''''''''''' '''''''''''''' '''' ''' ''''''''''''''''''''''' '''''''''''''' '''' ''''''''''''' ''''' '''''''''''' '''''''''''''''''' '''''''' ''''''''''''''''''' '''''''''' '''''''''''''''''''' '''''''' '''''''' '''''''''' ''''''''''' ''''''''' '''''''''''''' ''''' ''''''''''''''''' ''''''''''''''''''''''' '''''''''''' '''''''' '''''''''''' '''''''' '''''''''' ''''''''' '''''''''''' ''''''' '''''''''''''''''''' ''''''''' ''' ''''''''''''' ''''''''''''''' ''''''''''' ''''''' '''''''''' ''''''''' '''' '''''''' '''''''''''''''''''''''' '''''''''''' ''''''''' ''''''''''''''''''''''' ''''''''''' ''' '''''''''''' '''''''''''''''''''''' '''''' ''''''''''''''''''''''''''''''''' '''''' '''''''''''''''''''''''''''''''' ''''' ''''''''''''''''''''''''''''

'''''''''''' ''''''''''''' '''''''' '''''''''''''''''''''' '''''''''''' '''''''''''''''''' '''''''' ''''''''''' ''''''''''''''''' ''''''''''''''''''''''''''' '''' ''''''''''''''' ''''''' ''''''''''''''''' '''''' '''''''''''''''''''''''' '''''''' '''''''''''''''''''''' '''' '''''''''''''' '''''''''''''''' '''''''''''''''''''''' '''''' '''''''''''''' ''' '''''''''''''''''''''''''' ''''''''''' ''''''''''' ''''''''' ''''' ''''''''' '''''' '''''''' '''''''''''''''' '''''''''''''' ''''''''''''''''''''' ''''''''''''''' ''''''''''''''''''''' '''''''''' ''''''''''' ''''''' ''''' '''''''' '''''''''''''' ''''' '''''''' '''''''''''''''''''''''''''' '''''''''''''''''' ''''''''''' '''''''''''' ''''''''''''''''''''''''''' '''''''' ''''''''''' '''''''''' ''''''' '''''' '''''''' ''''' '''''''''''''''''''''''' ''''''''''''''''''''''''''''''''''''' '''' '''''''' '''''''''' ''''''''''''' '''''''''''''''''''' ''''''''''''' ''''''''''''''''''''''''' '''''''' ''''''''''''''''''' ''''''''''' '''''''' ''''''''''''''''''''''''' ''''''''' ''' ''''''''''''''

''''''''''' '''''''''''''' ''''''''''''''''''''''''''''''' ''''''''''' ''''''''''''' '''' ''''''''''''''''''' ''''''' '''''''''''' '''''''''''''' ''''''''' '''' ''' '''''''''''' ''''''''''''''''''' ''''' ''''''''''''''''''''''''''''''' ''''''''''''''''' ''''''' '''''''''''''''''''''''' '''''''''''''''''''' '''''' ''''''''''''''''' '''''''''' '''' ''''''''''''''' '''''''''' ''''''''''' '''''''''''''''' ''''''''''''''''''''' ''''''''' ''''' '''''''''''''''''''''' ''''''''''''''' ''''''''' ''''''''''' ''''''''''''''''''''''' '''''''''''''''''''''''' '''''''''''' ''''' ''''''''''''''' '''''''' ''''''''''' '''''''' ''''' ''''''''''''''''' '''''''''''''''' ''' ''''''''''''''''''''' '''''''''''''''' '''''''''''' ''''''''''' '''''''''' ''''''''''''''''''' ''''''''''' '''''''' '''''''''''''''''''''''' ''''' '''''''''''

• Delivery term. ''''''''''''''' ''''''''''''''''''' '''''''''''''''''''''' '''''''''''''''''''' '''''''''''''' '''''''' '''''''''' ''''''''''''''''''''' '''''' '''''''''''' '''''''''''''''' ''''''''''''''' ''''''' '''''''''''''''' ''''''''''' '''''' '''''''''''''''''' ''''''''''''''''''''''' '''''''' '''''' ''''''''''''''''''''''''' ''''''''' '''''''''''''''''''''' '''''''''' ''''''''''''' '''''''''' ''''''''''' ''''''''''''''''''''' ''''''' ''''''''''''' '''''''''''''''' '''''' '' ''''''''''' ''''''''''''''''' ''''''''''''''' ''''''''''''''''''''' '''' '''''''''''''''''''

• Delivery timing. ''''''''''''' ''''''''' ''' ''' ''''''''''''' ''''''' ''''''''''''''''' '''''''''''''''''''' '''''''''''''''''' ''''' ''' ''''''''''''''' ''''' '''''' ''''''''''''''''' '''''' ''''''''''' '''''''''''''''''''' ''''''''' ''''''''''''''''''''''''' '''''''''' '''''''''''' '''''''''''' '''''''''' '''''''''''''' '''''' ''''''''''''''' ''''''''''' ''''''''''''''''''''''''' ''''''''''''''''''' '''''''''' '''' '''''''' '''''''''' '''' ''' ''''''''''''''''' ''''''''''''''''' ''' ''''''''''''''''''''''' '' ''''''''''''''''''''''''' ''''''''''''''''' '''''''''''''''''''' ''''''' ''''''''''' '''''''''''' ''''''''' '''''''''' '''' '''''''''''''' '''''''''''''''''''''' '''' '''''' '''''''''''''''''''' ''''''''''' '''''''''''''''''''''' '''''''''''''' ''' ''''''''''' ''''''''' '''''''' '''''' ''''''''''' '''''''''''''''''' ''''''''''''''''''''' '''''' ''''' ''''' ''''''''' '''''''''''''''

'''''''''''' '''''''''''''''''''' ''''' ''''''''''''' '''''''''''''''''''' '''' ''''' ''''''''''''''''''''''''''''''''' ''''''''''''' ''''''''''''' ''''' ''''''''''''' '''''''''''''''''''' '''''''' '''' '''''''''' '''''''''''' ''''''''''''''''' '''''''''''' '''''''''' ''' ''''''''' ''''''''''''' ''''''' ''' '''''''''''''' ''''''' ''''' ''''''''''''''''''''''''' ''''''''' ''' '''''''''''''''' ''''''''''''''''''' ''''' ''''''''''' ''''' '''''''''''''''''''' '''''''''''' '''''''''''''''''''''''' '''''''' ''''''''' ''''''''''''' ''' '''''''''''''''''''''''' '''''''''''''''' ''''' ''''' '''''''''''''' '''''''''''''''''''''''' '''''''''''''''' '''' ''''' ''''''''''' ''''''''''' '''''''' ''''''''''''''''''''''' '''' ''''''''''''''''''''''''''''''''''''''''' ''' ''''''''''''''''' ''''''''' '''''' '''''''' '''''''''''' '''''''''' ''''''' '''''''''''''''''''' '''''''''''' ''''''' '''''''''' '''''''''' '''''''' '''''''''''' ''''''''' '''''''' ''''''''''''''''''''' ''''' ''''''''''''

Overall, the executed confirmation agreement and master agreement adhere to PG&E’s precedents for making short-term sales of RPS energy to non-investment grade counterparties. A modest amount of customization was required to address CPA’s concerns '''''''''''''' ''''''''''''''' ''''''''''''''''''' ''''''''' '''''''''''''''''''''' '''''''' '''''''''''' ''''''''''''''''''' ''''''''''''''''.

15

B. NEGOTIATIONS BET WEEN PG&E AND EBCE

East Bay Community Energy Authority is a CCA that has begun retail energy service to municipal, commercial, and industrial customers in unincorporated Alameda County and most of the cities within Alameda County (excluding Alameda, Newark, and Pleasanton). It is scheduled to phase in energy service to residential customers later in 2018. All of EBCE’s customers are also customers of PG&E’s transmission and distribution business.

PG&E submitted offers to EBCE’s RFO on May 2. On May 5, EBCE notified PG&E that it had been shortlisted for deliveries of RPS-eligible energy.5 Discussions between the parties began shortly afterwards, culminating in contract execution on August 1. Arroyo observed eight negotiation sessions between parties. Among the issues discussed were:

• Delivery volumes. '''''''' ''''''''''' ''' '''''''''''''' ''''''''''''''''' ''''''''''''' ''''''''' ''''''''' '''''''''''''' '''''' ''''' '''''''''''' ''''''' ''''''' '''''''''''' ''''''''''''''''' '''''''''' '''''''''''''''''' '''''''''''' '''' ''''''''''' ''''''''''''' ''''''''''''''''''''''' ''''' ''''''''''''' ''''' '''''''''''''''' ''''' ''''''''' ''''''''''''' ''''' '''''''''''''' ''''' ''''''' ''''''''''' '''''''''''''

''''''''''' '''''''''''''''''''''' ''''''' '''''''''''''' '''''' '''''''''''''''' '''''''''''''' '''''''' ''''''''''''''''''''' '''''''''' '''''''' '''''''''''''''' ''''''''''''''' ''''''''''''''''''''''' ''''' ''''''''' ''''''''''''''' ''''' ''''''''' '''''''''''' ''''' '''''''''''' '''''''' ''''''''' '''''''''''' '''' '''''''''''' ''''''''''' '''''''''''''' ''''''''''''' ''''''''''''' ''''''''''''''''' '''''''''''''''''''''' ''''' '''''''''''''''''''''' '''''''''''' ''''''''''''''''''' ''''''''''' ''''''''''''''''' ''''''''''''''' '''''''''''''' '''''''''''''''''''''' ''''''''' ''' '''''''''''''' ''''''' ''''''''''''' ''' ''''''''' ''''''''''' ''''''''''''''''' '''' ''''''''''''''''''''''''' ''''''''''' ''''''' '''''''''''''''''''''' ''''''''''''''''' '''''''''''''''''''

'''''''' '''''''''' '''' ''''''''''''''' ''''''''''''''''' ''''''''''''' '''''''''' ''' ''''''''''''''' ''''' '''''''''''''''''''''' '''''''' '''''''''''''''''' '''''''''''' ''''''''''''''''''''' '''''''' '''''''''' '''''''''''' ''''''''''''''''''''''' ''''''''''' ''''''''''''''''''' ''''' ''''''''' ''''''''''''' '''''''' '''''''''''''''''''''''' '''''''''''' ''''''''''''''''''''''

'''''''''''''''''''''' '''''''' ''''''''''''''''' '''''''''''''''''''''' ''''' ''''''''''''''''''' '''''' ''''''''''''''''''''''''''''' '''''''''''''''' '''''''' '''''''''''' '''''' ''''''''''''''''''' ''''''''''''''''''' '''''''' ''''''''''''''' '''''''''' ''''''''''''' '''' '''''''''''' '''''''' ''''''''''''''''''''''''''' '''''''''''''''''''''''' '''''''' ''''''''''''''''''''''''''''''''''' ''''''''''''''''''''''''' ''''''''''''' ''''' '''''''' '''''''''''' '''' ''''''''''' '''''''' '''''' '''''''''''' '''' '''''''''''' ''''''''''''''''''''''''' '''''''' '''''''''''''''''''' '''''''''' '''''''''''''' '''''' '''''''''''''''''''''''''''''''''''''''''

''''''''''' '''' ''''''''''' ''''''''''''' '''''''''''''''''''''''' ''''''''''' '''''''''' ''' '''''''''''''''''' '''''' ''''''''''''''''' '''''''''' '''''''''''''''''''''' ''''''''''' '''''''' '''''''''''''' ''''' ''' ''''''''''''' '''''''''' '''' '''''''' '''''''''''' ''''' '''''''' ''''' '''''''' '''''''''''''' ''''''''''' '''''''''''''''''''''' ''' ''' ''''''''''''''''''''' '''' ''''''' '''''' '''''''''''''' ''''''' '''''''''''''''''''''' '''''' '''''''' '''''''''''''' ''''''''''''''' '''''''''''''''''''''''''' '''''''''''''''''''''''''' '''''''''''''''''''' ''''''''''' '''''''''''''''''''''' ''''''''' ''' '''''''''''''' ''''' '''''''''' ''''' ''''''''''''''''' '''''''''''''''''''''''' '''''''''''''''''''''' ''' ''''''''''''''' ''''''''''''''' ''''''''''''' ''''''''''''''' '''' ''' ''''''''''''''''''' '''''''''''' ''''''' ''''''''''''''''''''''''''' '''''''''''''''''''' '''''''''''''' '''''''''' ''''''''' ''''''''''''''' ''''''''''''''' '''''''' '''''''' '''''''''''''''''' ''' ''''''''''' ''''''' '''''''''''''''' '''' ''''' '''''''''''''''' '''''''''''''''''' '''''''' ''''''''''''''''''''''''' '''''''''''''' '''''''' ''''''''''''''''''' ''''''''''''' ''''' '''''''' ''''''''''''''''''''''' '''''''''''''''''''''' '''''''''''''''''''''''''''' ''''''''' ''''''''''''' '''''''' ''''''''''''''' '''''' ''''''''' '''''''''' '''''' ''' '''''''''''''''''''''''''''''''' ''''''''''''''''''''' '''''''''''' '''''' ''''''' '''''''''''''''''''''''''''''''''''''' '''''''' ''''''''''''''' '''''''' '''''''''''''''''''''' ''''''''''''' ''''' '''''''''''''''''' '''''''''''' '''''''''''''''' ''''''''''''''''''''''' ''''''''''''''''''''''''' ''''''''''''''''''''

5 In a June update on procurement activities to the Executive Committee of its board of directors, EBCE staff reported that its “large 2019 renewable transaction” with PG&E (resulting from PG&E’s 2018 bundled RPS energy solicitation) had been approved by the CPUC, and that staff was “working to complete 2018 renewables procurement”.

16

'''''''''''''' ''''''''' ''''''''''''''' ''''' ''''''''''''''''''' '''''''''''''' ''''''''''''' ''''''''''''''''' ''''''''''' '''' '''''''' ''''''''''''''''''''''''' '''''''''''''''''''''' ''''''''''''' ''''''''''''' '''' ''

'''''''''''' ''''''''''''''''''' '''''' ''''''''''''''''''''''' '''''''''''''''''''' ''''' ''''''''''''' ''''''''''''''' ''''''''' ''''''''''' '''''''''''''''''' ''''' '''''''''''' ''''''''''''' '''''''''''' '''''''''''''''''''' ''''''''' ''''''''''''''''''''' '''''''''''''''''''''' ''''''''''''''''''' '''''''''''''' '''''''''' ''''''' ''''''''''''''''''''' '''''''''''' ''''''''''' ''''' ''''''''''''''''''''''''' ''''' ''''''' ''''''''''''' '''''''''''''' ''''' '''''''' '''''''''' ''''''''''''' ''''''' '''''''''''''' ''''' ''''''''''''''''' ''''''''''''''' ''''''''''''''''''''''' '''' '''''''''''''''' ''''' '''''''''''''''''''''''' ''''''' '''''''''''' ''''''''''''''' '''''' '''''''' '''''''''''''' ''''''''''''' ''''''''''''''' ''''''' '''''''''''''''''''' '''''' ''''''''''''''''''''''''''''''' ''''''''''''''''' '''''''''''''' ''''''''' ''''''''''''''' '''' '''''''''''''''''' '''''''''''''''' ''''''''''' '''''''' '''''''''''''''''''''' '''' ''''''''''''''''''''''''' '''''''''' ''''''' '''''''''''''''''''' ''''''''''''''' '''''''''''''''' '''''''''''''''''''''' '''''''''''''' '''''' '''''''''''' '''''''''

• Delivery timing. '''''''''''''''' '''''''''''''' ''''''''''' ''''''''''' ''''' ''''''''''' ''''''''''''' '''''''''''''''''''' '''''''''''''''''''' ''''''''''''''''''''' ''''''''''' '''''''' '''''''''''''''' ''''''''''''''' ''''''''''''''''''''' ''''''' '''''''''''''''' '''''''' '''''''''''''''''''' ''''''''''''''''''' ''''''''''''''' '''''''''''''''''''''' ''' ''''''''''''''''''''''' ''''''' ''''''''''' ''''''''''''''''''' ''''''''''' '''''''' ''''''''''''''''''' ''''''''' ''''''''''''''''''''''' ''' ''''''''''''''''''' ''''''''' ''''' ''''''''' '''''''''''' '''''' '''''''''''''''''''''' ''''' ''''''''''' '''''' '''''''''''' ''''''''''' '''''''''' ''''''''''''''' ''''''''''' ''''''''''''' ''''''''' ''''''''''' ''''''''' '''''''''''''''' '''''''''' ''''''' ''''''''''''' '''''''''''''''''' ''''''''''' '''' ''''''''''''''''''''' '''''''''''''''''''' '''''''' ''' '''''''''''''''''' '''''' ''''''''''''''''''' ''''''''''''''''''' ''''' '''''''''''''' ''''''''''''''''''' ''''''''''''' ''''' '''''''''' '''' ''''''''''''''' ''''' ''''''''''''''' ''''' ''''''' ''''''''''''' '''''' '''''''''''''''''''' '''' '''''''''''''''''''' ''''' ''''''''''''''' ''' '''''''''''''''''''' ''''''''''''''''' '''''''' ''''' ''''''' '''''''''''''''''''

• Delivery term. ''''' '''''' ''''''''''''''''' '''''''''''''' '''''''''''''''' '''''''''''''''''''' '''''''''''' '''''''' ''''''''''' '''''''''''''''' '''''''''''''''' ''''' '''''''''' ''''' ''''''''''' ''''''''''''''' ''''''''''''''''''''' ''''''''' ''''''' ''''''''' ''''''''''''''''''' ''''''''''''''''''''''' ''''''''''''' ''''''' '''''''' '''''''''''''''''''''''''' ''''''''''''''' ''''''' '''''''''''''''' '''''''''''''' '''' ''' '''''''''''''''''' ''''''''''' ''''''''' ''''''''''''''' '''''' '''''''' ''''''''' ''''' ''''''''''''''''' ''' '''''' '''''''' '''''''''' '''''' '''''''''''''''' ''''''''''''''''''''''

• Pricing. '''''''''''' '''''''' ''''''''''''''''''''''''' '''' ''''''''''''''''''''''' ''''''''''''' ''''''''' ''''''''''' ''''' '''''''''' '''''''''''''''''''''''''' ''''''''''''''' ''''''''''' '''' ''''' '''''''''''' '''''''''''''''''''''' '''''''''''''''' ''''''''' '''''''''''''''''''''''' '''''' '''''''''''''' ''''''''''' ''''''''' ''''''''''''''''''''' ''''' '''''''''' ''''''''' ''''' '''''''''''' '''''' ''' '''''''''''' ''''' '''''''''''' ''''''''''''''''''''' ''''''''' ''''''''''''''''''''''' '''' '''''''''''''''' ''''''''''''''' '''''''' ''''''''''''''' ''''' '''''''''' '''''''''''''' '''''''''''''''' ''''''''''''' '''''''''' '''''' ''''''''''' '''''''' '''''''' ''''''''''''' ''''' '''''''''' '''''''''''''''''''''' ''''''''' '''''''''''''''''''''''' ''''''''' '''''''''''''''''' '''''''''' ''''''''''''' '''''''''''''' ''''' '''''''' '''' '''''''' ''''''''''' ''''''''''' ''''''''''' '''''' ''''''''''''' ''''''''''''''' '''' ''''''''''' ''''''''''''' ''''''''' '''''''''''''' ''''''''''''''''' '''''' ''''''''''''''''''''''' ''''''' ''''' ''''''''''''''' '''''''''''''' ''''''''''' '''''''''''''''''' ''''''' '''''''''''' ''''' ''''''' '''''''''''' ''''''''' '''''''''''''''''''' ''''' ''''''''''''''''''''''' '''''' ''''''''''' '''' '''''''''''''''' '''''''''''''''''''''''''' ''''''''''''' ''''''''''''''''''''''''' ''''''''' ''' ''''''''' '''''''''''''''''' '''''''' ''''''''''''''' '''''''''''''''' '''''' '''''''''''' ''''''''' '''''''' ''''''''''' '''''''''''''''''''' '''''''''''''''' '''''' '''''''''''' '''''' ''''''''''''''''''''' '''''''''' ''''''''' '''' ''' '''''''''''''''''''''' ''''''''''''' '''''''''' ''''''''''' '''''''''' ''' '''''''' ''''''''''''''''''''' ''''' '''''''''' '''''''' '''''''''''''''' '''''' ''''''''''''''''''''' ''''''''' '''''' '''''''''''''''''''''''''' ''''''' ''''''''' ''''''''''''' ''''''''''''' ''''''''' '''''''' '''''''''''''''''''''''''''' ''''''''''''''''' '''''''''''''''''''''' ''''' ''''''' ''''''''''''' ''''''''''''''' ''''''''''''''''''''''''''' ''''''''''''' '''''''''''''''' '''''''''''''''''''''''' '''''''' ''' ''''''''''''''''' '''''' ''''''''' ''''''''''''''''' '''''' ''''''''''' '''''''''''''''''''' '''''''''''' '''''''''' ''''''''' '''''''''''' ''''''''''''''''''' ''' '''''''''''' '''''''' ''''''''''' '

• Resource type. '''''''''''''''' '''''''''''''''''''''' '' ''''''''''''''''''''''' '''''' ''''''''''''''''''''''''''' '''''''''''''''''''''''' '''''''''''' '''''''''''' '''''''' '''''''''''' ''''''''''''''''' '''' ''''''''''''' '''''''' ''''''''''' ''''''''' '''''''''''''' ''''''''''''''' '''' ''''''''''''''''''''''' ''''' ''''''''''''''''''''''''''' ''''''''''''''''''''''' ''''''''' ''''' '''''''''''''' '''' '''''''''''''''' '''''''''''''''''''''''''' '''''''''''''''''' ''''''''''''' '''''' ''''''''''''''''''''' ''''''''''''''''' '''''''' '''''''' ''''''''' '''''''' ''''''''''''''''''''''''' '''''''''''''''''''''' '''' '''''''''''''' ''''''''''''''''''' '''' '''''''''''''''''''''''''''''''''''' '''''''' '''''''' ''''''' ''''''''''''''''' '''''''''''''''''''''''' '''''' '''''''' ''''''''''''''''''''''' '''''''''''''''''''''''' ''''''''''''''''''''''' '''' '''''''''''' '''''''''''''' ''''''''''''' ''''''''''''' ''''''''' ''' ''''''''' ''''''''''''''''''''' '''''''''''''''''''''''''' '''''''''''''''''''' '''' ''''''''' ''''''''''''''''' '''''''''''''''' '''''' ''''''' ''''''''''''''''''''' ''''''''''''''''''' '''''''''' '''''''' '''''''' ''''''''''''''''''''''''' ''''''''' '''''''''''' ''' ''''''''''' '''''''''''''''''''''''' '''' ''''''''''' '''''''''''' ''''' '''''''''''''' ''''''''''''' '''''''''

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18

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C. NEGOTIATIONS BET WEEN PG&E AND MBCP

MBCP is a community choice aggregator that is in the process of phasing in energy service in 2018 to different classes of retail customers in its three-county territory. All of MBCP’s customers for retail energy are also customers of PG&E’s transmission and distribution business. PG&E and MBCP had previously executed an EEI master agreement in early 2018 to facilitate transactions for various products including MBCP’s purchase of Resource Adequacy from PG&E following the CCA’s September 2017 request for proposals for power supply products. MBCP subsequently held another competitive solicitation, for renewable energy, in April 2018 from which this transaction originated.

MBCP notified PG&E that its offers for 2018-2020 delivery had been shortlisted on April 18, 2018. The parties began discussions immediately, resulting in execution of a confirmation agreement for RPS-eligible energy sales on June 20, 2018.

Arroyo observed three telephonic negotiation sessions between the commercial teams of PG&E and MBCP as the parties discussed the sales contract. Arroyo also reviewed marked-up draft contract versions in order to identify specific changes the parties discussed. The starting point for the negotiations was a version of the pro forma confirmation agreement for short-term sales of renewable energy that had been included in PG&E’s 2017 renewable energy procurement plan; this form contract had subsequently been updated and edited during PG&E’s 2018 solicitation to sell excess RPS-eligible energy in order to customize its '''''''''''''' '''''''' '''''''''''''''''''' terms to accommodate sales to CCAs.

Changes to the form agreement that were effected during the parties’ discussions were minor. The parties’ discussions included:

• Delivery volumes. '''''''''''''' '''''''''''''''''' ''''''''''' ''''''''' ''' '''''''' '''''''''''''''''' ''''''' ''''''''''''''''''' '''''''''''''''' '''''''' '''''''''''''''''''''' ''''''''' '''''''''' ''''''''''''''''''''' '''''' ''''''''''''''''''''''' '''''''''' ''''''''''''''' '''''' '''''''' '''''''''''' ''''''''''' '''''''' '''''''''''''' '''''''''''' ''''''''''''''' '''' '''''''''''''''''''''''''''''' '''''''' '''''''''''''''''

• Delivery timing. '''''''''''''' ''''''''''''''''''''''' ''' ''''''''''''''''''' ''''''''' ''''''''''''''' ''''''''''''''''''''' '''''''''''' '''''' '''''''''''''' ''''''''' ''''''''''''''''''''''''''''' '''''''''''''' '''''''''''''' ''''''''''' ''''''''''''''''''''' ''''''''''''' ''''''''' ''''''' '''''''''''''' ''''''''''''''''' ''''''''' ''''''''''''' '''''''' '''''''''''''' '''''' '''''''''''''''''''' '''''''''''''''''' ''''''''''''' '''''''''''' '''''' ''''' '''''''''''

19

'''''''''''''' ''' ''''''''''''''''' '''''' '''''''''''''''' '''''''''''''''''''' ''' '''''''''''''''''''' '''''''' ''''''' '''''''''' '''''''''''''''''''''' ''''' ''''''''''' '''''' '''''''''' ''''''''''''''' ''''''' '''''''' '''''''''' '''''''''''' '''''''''''''''''''''' '''''''' ''' ''''''''''''''' '''' '''''''''''' '''''''''''''''''''' '''' '''''''''''''''''''''''''''' ''''''''''' '''''''' '''''''''' '''''' '''''''''''' '''''''''''''''''''''' '''''''' '''''''''''''''''''' '''''' ''''''''''''''''''''''''''''' ''' '''''''''''''''''' '''''''' '''''' '''''''''''''''''''''''' '''''''''''''''''''' '''''''''''' ''''''''''''''''''''' ''''''''''''''''''''''''' ''''' '''''''''''''''''''' ''''' '''''''''''''''' '' '''''''''''''''''''''''''''''' ''''''''''''''''' '''''''''''''''' ''''' '''''''''''''''''''' ''''''''''' ''''''''''''''''''''''''''''' ''''''''''''' '''' '''''''''''''''''''''' '''''''' '''''''''''' ''''' '''''''''''''''' ''''' '''''''''''''' '''' '''''''''''' ''''' ''''''''''' ''''''''''''''' ''''' ''' '''''''''''''''''''' '''''' '''''''''' ''''''''''' ''''''''' ''''''''''''''''''''''''''''''

• Delivery term. '''''''''''''''''''' '''''''''''''''' '''''''''' '''''''''''''''''''''' ''''''''''' ''''''''''''''''''' ''''''''''''''''''''''' ''''' ''''''''' '''''' ''''''''''' '''''''''''''' ''''''' '''''''''''''''' '''''' '''''''''' ''''' ''''''''''''''''''''''''' '''''''' ''''''' '''''''''' ''''''' '''''''''''''''''''''' ''''''''''''''''''' '''''''''''' '''' ''''''''''''''''''''' '''''''' '''''''''''''''' ''''''''''''''''''''' '''''''''''''''''''''' ''''''''''''''''''''' ''''''' ''''''''''''''''''' ''''' '''''''''''' ''''''''''''''''''''''''''''''' '''''' '''''''' ''''''''' ''''

• Credit requirements. ''''''''''' ''''''''' ''' '''''''''' '''''' ''''' ''''''''''''''''''''''''''''''''''''''''' ''''''''''' '''''''''''''''''''''' ''''''' '''''''''''''''''''''''' ''''''''''''''''''''''''' ''''''''''''''' ''''''''''' ''''''''''' ''''' ''''''''''' '''''' '''''''''''''''' ''''''''''' '''''''''''''''''' ''' ''''''''''''''''''''''''''' ''''''' ''''''' '''''''''''''' '''''' ''''''''''' ''''''''''''''''''''' '''''' ''''''''''' ''''' ''''''' '''''''''''' ''''' ''''''''''''''''''''''''''''''''''''''' '''''''''''' '''''''''''''''''''''' '''' ''''''' '''''''''''''''''''''''' '''''''''''' '''''''''''' '''''''''''''' ''''''''''''''''''''' '''''' ''''''''''''''''''''' '''''''' '''''''' '''''' '''''''''''''''''''' '''''' ''''''' ''''''''''''''''''''''' ''''''''''' ''''' '''''''''''''''' '''''''''' ''''''''''''''''''''''''''''' ''''''''''' ''''''''' ''''' '''''''' ''''''''''''' '''' ''''''' '''''''''' '''''''''''''''''''''''''' '''''''''''''''' ''''''''''' '''''''''''''''''''''''6 ''''''''''''' ''''''''''''''''' '''''' ''''''''''''''''''' '''''''''' '''''''' ''''''''''' ''''' '''''''''' ''''' '''''''' '''''''''''''''' '''''''''''''''''''''' ''''''' ''''''''' '''''''''''''''' '''''''''''''''''''''''''' ''''''''' ''''''''''''''''''''''''''' '''''''''''''''''''''''''' ''''''''''' '''''''' '''' ''''''''''''''''''' ''''''''''''''' ''''''''''' ''''''' '''''''' ''''''''''' ''''''''' ''''''''''' '''''''''''''' '''' ''''''''''''''''''' ''''' ''''''' ''''''''''''' '''' '''''''''''' '''''''''''''''''''''''''' ''''''''''''' ''''''''' '''''''''''''''''''''' ''''''''''''''' ''''''''''''' '''''''''''''' '''''''''' '''''''' '''''''''''''''''''''''''''''''''' '''''''''' '''' ''' ''''''''''''''''' '''' ''''''''''''' '' ''''''''''''''''''''' ''''''''''''''''''''' ''''''''''' '''''''''' ''''' '''''''' '''''''''''''' '''''''''''''''''''' ''''''' ''''''''''''' '''''''''''''''''''''''' '''''''' ''''''''''' ''''''''''''' ''''''''''' '''''' ''''''''''''''''''' '''''' '''''''''''''''''''''''' '''''''''''' ''''''''' '''''''' ''''''''''''''''''''' ''''''''''''''' ''''''''''''' ''''' ''''''''''''' '''''''''''''' ''''' ''''''' '''''''''''' '''''''''' '''' ''''''''''''''''''' ''''' ''''''' ''''''''''''''' ''''''''''' '''''''' '''''''''''''''''''''''' ''''' '''''''''''''

''''''''''''' '''''''''''''''''''' '' '''''''''''''''''''''' '''''''''' '''''' '''''' '''''''' ''''''''''''''''''''''' ''''''''' ''''' ''' ''''''''''' ''''''''''''''''''' ''''''''''''''''''''' ''''''''''''''''''' '''''''''''''''''''''' '''''' '''''''''''' '''' ''''' '''''''''' ''''' '''''''''''''' '''''''''''''' ''''' '''''''' ''''''''''''' ''''' ''''''''''''''''' '''''''''''''' ''''''' ''''''''''''''''''' '''''' ''''''''''' '''''''''''''' '''''''''''''' ''''''' ''''''''''''''''''''''''''''''' '''''''' ''''''''''''''''' ''''' '''''''''''' ''''''''''''''''''''''' ''''' ''''''' ''''''''''''''''''''''''' ''''''' '''''''''''''' '''''''''''''''''''''''''''''' '''''''''''''''''' ''' '''''''''''''' '''''''''' ''''''''''''' '''''''''''''''' '''''''''' ''''' ''''''' ''''''''''''' '''''''''''''' ''''''''' ''''' '''''''''''''''''''' '''''' '''''''' '''''''''''''' '''''''''''''' ''''''''''''''''''''' '''''' '''''''''''''''' '''''' '''''''' ''''' ''''''''''''''''''''' ''''''' '''''''''''''''''''''''''''' ''''''''''''''''''''' '''''''''''''' ''''''''''''' ''''' ''''''' ''''''''''' '''''''''''''''''''' '''''''''''''''''''' ''''''''''''''''''''''''''''''

6 '''''''''''''''''''' '''''''' '''''''''' ''''''''''''''''''''''' '''''''''''''''''' ''''''''''''''' ''''' '''''''''''''''' '''''''''''''''''' ''''' '''''''''' '''''''''''''' ''''''''' ''''''''''''''' ''''''''''''''' ''''''''''''' ''''''''''''''' '''' ''''''''''' '''''''''''''''''''''''''''''' '''''''''' ''''''''''' '''' ''''''' '''''''''''''''''''' ''''''''''' '''''''''''''' '''''''' ''''''''''''''''''''''''''' '''' '''''''' '''''''''''''''' ''''' ''''''''''''''' ''''''''''''''''''' ''''' '''''''''''' ''''' ''''''' ''''''''''''''''''''''''''' ''''''''''''''''''''''' '''''''''' ''''''''''''''' '''''''''''' ''''' ''''''''''''' '''''''''''''''' '''''''''' ''''''''''''''' '''''''''''''''' ''''''''''''''''' ''''''''''''''''''''' '''''''''''''' ''''''''''' '''''''''''' ''''''''' ''''''''''''''''''''''' ''''''''''' '''''''' ''''''''''''''''' ''''' '''''''''''''' '''''''''''''' ''''''''''''''''' '''''''' ''''''''''''''' ''''''''''''''''''' '''''''''''' '''''' '''''''''''' ''''''''''''''''''''''''''''''''' '''''''''''''''''''''''''''''' '''''''''' '''''''''''''''' ''''' '''''''''''''' '''''''' ''''''''''''''' ''''''''''''''''''''' '''''''''' '''''''' '''''''''''' ''''''''''''''''''''' '''''''''''''''''''''' ''''''' '''''''''''''''''' '''''''''''''''''''' ''''''''''''''' ''''''' ''''''' '''''''''''' '''''''''''' ''''''''''''''' '''''' ''''''''''''' ''''' ''''''' ''''''''''''''' '''''''' ''''''''''''' '''''''''''''''''''''''' '''''''''''''''''''''' '''''' '''''''' '''''''''''''' ''''' '''''''''''''''''' ''''' ''''''''' '''''''''''''''''''''''''''' '''''''''''''''''' '''''' ''''''''''''''' ''''''''' ''''' ''''''' ''''''''''''''''''''''''' '''''''''''''''''''''''' ''''' ''''' ''''''''''''' ''''''''''''''''''''' '''''''''' ''''' '''''''' ''''''''''' '''''''''''''' '''''''''''''''''''' '''''''''''''''''' '''''''' '''''''''''''''' ''''''''''''''''' ''''''' '''''''''''''''''''''''' ''''''' '''''''''''''' ''''''''''''''''' ''''''''''''''''' ''''''''''''''''''''' '''''''''''''''' '''''''''''''''''''''''' '''''''''' ''''''' ''''''''' '''''''''''''''''' '''''''' ''''''''''''' '''''''''''''''''''''''''' ''''''''''''''' ''''''''''' '''''' '''''''''''' ''''''''''''''''' '''''''''' ''''''''''''''' '''''''''' ''''''' '''''''' ''''''''''''' ''''''''''''''' ''''''''''' '''''''' ''''''''''' ''''''''''''''''''''''''''' ''''''''''''''''''''''' '''''''''''''''''''' '''''''''''''''''' '''''''''' '''''''''''''''' ''''''''''''''''''' '''''''' '''' ''''''''''''''''''''' '''''''''''''''''''

20

Arroyo’s opinion is that PG&E’s negotiations with MBCP were conducted in a manner that was fair to ratepayers and to competitors. Arroyo did not observe PG&E provide confidential information to MBCP in a way that advantaged it against competitors. The minor changes to PG&E’s approved short-term sales agreement were largely aligned with accommodations that the utility has previously made for other CCAs as counterparties.

D. DEGREE OF FAIRNESS OF CONTRACT-SPECIFIC NEGOTIATIONS

In Arroyo’s opinion, PG&E conducted its negotiations with the three CCAs fairly. The variances in the confirmation agreements from the version in PG&E’s CPUC-approved pro forma contract are quite small and ''''''''''''' '''''''''''''''' ''''' ''''''''''''' ''''''''''''''''''''''''''' ''''''''' '''''''''''' '''''''' '''''''''' ''''''''''''''''''''' '''' ''''''''''''''''''''''''' ''''''''' '''''''''''''''''''''''''''' ''''''''''' ''''''''''''''. Arroyo did not observe PG&E providing the three CCAs with any non-public information that advantaged buyers against ratepayers or competing buyers. Arroyo does not believe that any other buyer or potential buyer of RPS-eligible energy was disadvantaged by PG&E’s handling of the negotiations.

Arroyo cannot identify any situations in which any one of these buyers was treated in a sufficiently disparate manner from other CCAs or commercial firms to create concerns about fairness. One disparity is that '''''''''''' '''''''''''''''''''' '''''''''''''''''''''' '''''''''''''' ''''' ''''''''''' '''''''''''''''''''''''''''''''''''''' '''''''''''''''' '''''''' '''''''''' ''''''''' '''' ''''''''''''''''' '''' ''''''''''''''' '''''''''''''''''''' ''''''''''''''''' ''''''''''''''' '''''''' ''''''' ''''''''''''' ''''''''''''''''''''' ''''''''''''' ''''''''''''' '''''''' ''''''''''' ''''''''''''''''''''' '''' ''''''''''''''' ''''''''' ''''''''''''''' '''''''''' ''''' '''''''''''''''''''''''''' '''''''''''''' ''''''''''' ''''' '''''''''''' ''''''''''''' ''''' '''''''' '''''''''''''''''' ''''' '''''''''''' '''''''''''' ''''' ''''''' ''''''''''''''''''''' ''''' ''''''' '''''''''''''' '''''''' '''' ''''''''''''' '''''''''''' '''''''' ''''''''''' ''''''''' ''''''''''''''' ''''''''''' '''''''''''''''''' '''''''''' '''' '''''''''''''' ''' '''''''''''''' '''''''''''' '''''''' '''''''''''' '''''''''''''''''''' ''''' ''' ''''''''''' '''''''' ''''''''' '''''' '''''''' '''''''''''''''''''''' ''''''''''''''''''''' ''''''''''''''''''' ''' '''''''''''' '''''' '''''''''''''''''''''''''''''' '''' '''''''''''''''''''''' ''''''' ''''''' ''''''''''''' '''''''' ''''' '''''''''''''' ''''' ''''''' '''''''''''' ''''''

The CPUC adopted a code of conduct for IOUs’ interactions with CCAs in Decision 12-02-009. Most of the elements of the code of conduct govern IOU marketing and lobbying activities, but rule 20 (which recapitulates ordering paragraph 5 from Resolution E-4250) applies to PG&E’s conduct of its efforts to make renewable energy sales:

“Electrical corporations may not refuse to make economic sales of excess electricity to a community choice aggregation program, nor refuse in advance to deal with any community choice aggregation program in selling electricity because it is a community choice aggregation program.”

PG&E responded to each CCA’s efforts to find sellers of RPS-eligible electricity, and PG&E chose to deal with the CCAs because they are, in a sense, natural purchasers of PG&E’s excess position in RPS-eligible energy. The CCAs have short RPS positions as they ramp up operations and begin delivery of RPS-eligible energy to former retail customers of PG&E and Edison. Arroyo does not believe PG&E violated either this rule 20 or any other elements of the code of conduct in the manner in which it handled the sale transactions.7

7 ''''' ''''''''''''''' ''''''''''' ''''''''''''''''''''''' ''''''''''''' ''''''''''''''' ''''''''''''''''' ''''''''''''''''''''''''''' ''''''''''' ''''' '''''''''''''''''' ''''''''''' '''''''''''''''''' ''''' '''''''''''''''''''' '''''' ''''' ''''''''' ''''''''''''' '''''' '''''''''''''' ''''''''''''''' ''''''' ''''''''''' '''''''''''''''''' ''''''''' '''''''' '''''''''' ''''''''''''' ''''''''''''''''''' ''' ''''''''''''''''''' ''''''''' ''''''''''''''''' '''''''''' '''' '''''''' ''''''''''''''''''''' '''''''''''''''''''' '''''''''''' '''''''''' '''''''''''''' '''''''' ''''''''''' ''''''''''''' ''''''''''''''''''''''' (Footnote continued)

21

''''''''' '''''''''''''''' '''''' '''''''' ''''''''''''''''''''''' '''''''''''' ''''''''''''''''''''''''''''''' ''' '''''''' ''''''''''''''' '''''''' ''''''''''''''' '''''''''' ''''''''''''''''' ''''' '''''''''''''''''''' '''''''' ''''''''''''''' ''''''''''''' '''''''''''''''''' ''''''''''''''' '''''''''''''''''' '''' ''''''''' ''''' '''''''''' '''''''''' ''''''''''''''' '''''''''''''''''''''' ''''''' ''''''''' '''''''''''''''' '''''''''''''''''''''''''' '''''''' '''''''''''''''''''''''''' ''''''''''''''''''''' ''''''''' '''''''''''' '''''''' ''''''' '''''''''''''''''''''''' '''''' ''''''''''' ''''''''''' '''''''''''''''''''''''' '''''' ''''''''''''''''''''' ''''' '''''''' '''''''''''''''' '''' '''''''''''' '''''''''''''''''''''' ''''''''''''' ''''' ''''' ''''''''' '''''''''' '''''''''''''''''' '' '''''''''''''' '''' '''''''''' '''''''''' ''''''''''''' '''''''' ''''''''''''''' ''''''''''''' '''''' ''''''''''''''''''' ''''' ''''''''''' ''''''''''''''''' ''''''''''''''''''''''' ''''''''''' '''''''''''''''''''' ''''''''' '''''''''''''''''''' '''' ''''''''''''''' ''''''''''' ''''''''''''''''''''''''' '''''''''' ''''''''''''''''''' ''''''''''''''''''''' ''''''''''''''' ''''''''''''''' ''''' '''''''''''' '''''''''''''''''''''' ''''''''''''''' ''''''''' '''''''''''''''''''''''' ''''''''''''''''''''' ''' ''''''''' ''''''''''''''''' ''''''''''' '''' ''''''' ''''''''''' '''''''''''''''''''''''' '''''''''' '''''''''''''' ''''''''''''''''' ''''''''''' ''''''''' '''''''''''''''''''''''''

'''''' ''''''''''''''''''' ''''''''''''''' ''''''''''''''''''''' ''''''' ''''''''''''''''''''''''' ''''''''''''''''''''' ''''' '''''''''''''''' ''''''''''''' '''''''' '''''' ''''''''''''''''''''''' '''''' ''''''''''' ''''''''''' '''' '''''''''''' '''''''''' ''''' ''''''''' ''''''''''' ''''''''''''''''''' ''''''''''''''''''''''' ''''''''''''' ''''' '''''''''''' ''''''' ''''''' '''''''''''' ''''''''' ''''''''''' '''''''''''''''''''''''' '''''''''' '''''''''''' ''''''''''''' '''''''' '''''''''''''''''''''''''' ''''''' ''''''''''''''' ''''''''''''''''''''''' ''''' '''''''' '''''''''' '''''''' '''''''' '''''''''''''''' ''''''''''' ''''''''''' '''''' '''''''' '''''''''' '''' ''''''''''''''' ''''''''' '''''''''''''''' ''''''''''''''''' ''''''''''' '''''''''''''' ''''''''''' '''''''' '''''' ''''''''' ''''' '''''''''''''''' ''''''''''''''''''''''''''' ''''''''''''''''''''''''' '''''''''''''' ''''' ''''''''''' '''''''''''''''' ''''' ''''''''''''''''' '''''''''''''''''''''''' '''' '''''''''''' '''''' ''''''''''''' ''''''''''''' ''''''''''''' ''''''''''''''' '''''''''' ''''' ''''''''''''' '''''''''''''' ''''' '''''''''''''''''''''' ''''' '''''''''''''''''''' '''''' '''''''' '''''''''''''''' ''''' ''''''''''''''''''''' ''' '''''''''''' ''''''''''''''' '''''' ''''''''' ''''''''''''''' ''''''' '''''' '''''''''''''''''''' ''''''''''''' ''''''''''''''' '''''' '''''''' ''''''''' ''''''''''''''''''''''''''' ''''''''''''''''''''''''''' '''''''''''''''' ''''''''' '''''''''''''' '''''''' '''''' '''''''''''''' ''''''' ''''''''''''''''''''''''' ''''''''''''''' ''''' ''''''''' '''''''''''''''' '''''''''''''''''''''' ''''''''''''

'''''''''''''''''''' ''''''''''''''''''' '''''''''''''''''''''' ''''' '''''''''' '''''''''''''''' '''' '''''''''''''''''''' ''''''''''''''''''' '''' ''''''''''''''' ''''''''''''' '''''''''' ''''''' '''''''''''''' '''' ''''''''''' ''''''''''''''''' ''''''''''''' ''''''''''''''''''''' ''''''''' '''''''''''' '''''''''''' ''''''''''' '''''''''''''''''' '''''''' ''''''''''''' '''''''' ''''''''''''' ''''''' ''''''''''''''''' '''' ''''''''''''''''''''''''''''' '''''''' '''' '''''''''''' ''''''''''' ''''''''''''''''' '''''''' '''''' '''''''''''''' ''''' ''''''''''''''' '''''''''''''''' ''''''''''''''''''' '''''''''''''' ''''' ''''''''''' '''''''''''' '''''''''''''''''''' '''''''''''' '''''''''' '''' ''''''''' '''''' ''''''' '''''''''''' '''''' '''''''''''''''' ''''''''' '''''''''''''''''' ''''''''''''' ''''' ''''''''''''''''''''' '''''''''' ''''''''''''''' ''''' ''''''' ''''''''' ''''''''''''''''''' ''' ''''''''' '''''''''' '''''''' ''''''''''''''''''''' ''''' '''''''''''''''' '''''' '''''''''''''''' '''''''''''' ''''''''''''''''' ''''''' ''''''''' ''''''''''''''''''' '''''' ''''''' '''''''''''' '''''''''' ''''''''''''''''''''''''' ''''''''''' ''''''''''''''' '''''''''''' '''''''''''''''''' ''''''' ''''''''''''''''''' ''''''''''''''''''' '''''''' '''''''''' '''''''''' '''''''' '''''''''' '''''''''''''''''' '''''''''''''''''''' '''''''''''''''''''''''' '''''''''''''''''''' '''' '''''''' '''''''''' ''''''''' ''''''' ''''''' ''''''''''' ''''' ''''''' '''''''''''''''''''' ''''''''''''''''''''' ''''''''''''' ''''''''''''''' '''''' ''''' ''''''' '''''''''''''''''' '''''''' '''''''''''''''''''''''''' '''''''' ''' '''''''''''' ''''''''''''''' ''''''''''''''''''''''''''' '''''''''''' ''''''' '''''''''''''''''''''''''''' ''''''''''''' ''''''''''' ''''''' '''''''''''''''''''''''' ''''' ''''''' ''''''''''''''''''' ''''''''''''' '''''''''''' '''''''' '''''' ''' ''''''''''''''''''''''' '''''' ''''''''''''''''''''' '''''''''''''''''''''' '''''''''' '''''''''''''''' ''''' ''''''''''''''''' '''''''''''''''''''''''' '''''''''''''' '''''''''' ''''''' '''''''' ''''''''''''' '''''''' ''''''' ''''''''''''''''''''''''''''''' ''''' '''' '' '''''''''''' ''''''' ''''''''''' '''''''''''' ''''''''''' '''''''''''''''''''' '''''''''''''''''''''''' ''''''''''''''''''''''' ''''''''''''''''''''' '''' '''''''''''' '''''''''''''''''''''''' '''''''''''''''' ''''''''''''''''' ''''''''''''''''''''''''

'''''''' ''''''''' ''''''''''''' ''''''''''''''''''''''' '''''''''''''''''''' '''''' '''''''''''''''' ''''' ''''''' ''''''''''' ''''''''' '''' ''''''''''''''' ''''''''''''' '''''''''' '''''''' '''' '''''''' ''''''''''' '''''' '''''''' ''''''''' ''''''''''''''''''' ''''''''''''''''''''''' ''''''''''''''' ''''''''' '''''''' ''''''''''''''''''''''''' ''''''''''''''''''' '''' '''''''''''''''' '''' '''''''''''''' ''''' '''''''' ''''' '''''''''''' '''''''''''''''''''''''''' '''''''''' ''''' '''''''''''' '''''''''''''''''''''''''' ''''''''''''''' '''''''''''''' ''''''''''' '''''''''' ''''''''''''' '''''''' ''''''''''' ''''' ''''''''''''''''''''''''''''''''''''''''''''''''''' ''''''''''''' ''''' '''''''''''''''''' ''''''''''''''''' '''''''' ''''''''''''' '''''''''''''''''' ''''' '''''''' '''''''''' ''''''' '''''''' '''''' ''''''' ''''''''''' ''''' ''''''''''''' '''''''''''''''''''''''' '''''''''' ''''''''''''''' '''' '''''''' '' '''''''''' '''''''''''''''''' ''''''' ''''''''''' ''''''''''''''''''''''' '''' '''''''''''''''''''' ''''''' '''''''''''' ''''''''''''''''''' ''' ''''''''''''''''''''''' ''''''''''''''' '''''''''''''

''''' ''''''''''''''''' '''' '''''''''''' ''''''''''''''''''''' '''''''''''''''''' ''''''''''' ''''''''' ''''''''' '''' '''''''''' '''''''''''''''''' ''''''''''''''''''''''''''''' ''''''''''''''''' '''''''''''''''''' ''''''' '''''''''''''''''''''' '''''''''''' ''''''''''''''''''' '''' ''''''' ''''''' ''''''''''''''' '''''''''' ''' '''''''''''' '''''''''''' ''''' ''''''''''''''''''''' ''''''''' ''''' '''''''''' '''''''''''' ''''' '''''''''''' ''''''''' ''''''''''''''''''''''' '''''''' ''''''''''' ''' ''''''''''''''' '''''''''''' ''''' ''''''''''''''''''' ''''''''''' ''''''''''''''' ''''''''''''''''''''' '''''''''' '''''''''''''' ''''''' '''''''' ''''' '''''''''''''' ''''''''' ''''''''''''''' ''''''''''''''''''''''' ''' '''''''''''''''''' '''''''''''''''''''''''''''''''''''''''''' '''''''' '''''' '' '''''''''''' '''''''''''''''' ''''''''''''''''' ''''''' '''''''' '''''''' '''''''''''''' ''''''' ''' ''''''''' '''''' ''''''' '''''''''' '''''' ''''''' '''''''''''''' ''''''''''''''' ''''''''''' '''''''' '''''''''''''''' '''''''' ''''''' ''''''''''''''''''''''' ''''''''' '''''''''''' ''''''''''''''' ''''''' '''''''''' ''''' '''''''''''''''''''' '''''''''''''''''' '''''' '''''''''''''''''''''''' '''''''''''' '''''''''''''''''''''''' '''''''''''' ''''''''''''''''''''''''' ''''''''''' '''''''''''''''''''''''''' '''''''''''''''''''' ''''''''' '''''''''''''''''''''''' '''''''''''''''''''' '''''''' ''''''''''''' ''''''''''''''' ''''''''''''' '''''' ''''''''''''''''''''' ''''' ''''''' ''''''''''' '''''''''''''''''' ''''' ''''''''''''' ''''''''''''''' ''''''''''''''''''' ''''''''' '''''''''' '''''''' '''''''''''''''''''''''''''

22

'''''''''''''''' ''''' '''''''''''''''' ''''' '''''' ''' ''''''''''''''''''''''' '''''''''''''''''''''''''''' ''''' '''''''''''''''''''''''' ''''''' '''''''' '''''''''' ''''''''''''''''''''' '''''''''''''''''''''' '''''''''''''''''''''' '''''' '''''''''''' ''''''''''''''''''''' '''' ''''''''''''''''''

Arroyo’s opinion is that PG&E handled negotiations with the three buyers in a manner that was fair to ratepayers and to competing buyers.

23

6 . M E R I T F O R C P U C A P P ROVA L

This chapter provides an independent opinion on whether PG&E’s contracts with the three CCAs, CPA, EBCE, and MBCP, merit approval by the CPUC. It also addresses other required topics identified in the Energy Division’s template for Independent Evaluators to use in preparing reports on RPS procurement.

A. FAIRNESS OF SOLICITATION

These sales transactions did not originate with a competitive solicitation run by PG&E, but rather from three independent solicitations for offers run by the three CCAs. Arroyo is not in a position to judge the fairness with how the three entities or their consultants administered their RFOs.

B. RANKING OF PG&E’S OFFERS

Each of the three CCAs shortlisted some or all of the volumes that PG&E offered into their solicitations. This suggests that the offers were viewed as competitive in relation to those proposed by competing sellers.

RANK IN PRICING

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24

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There are other less current price benchmarks for transactions of California PCC1 energy that are visible in the public domain.

• At the beginning of 2016, Silicon Valley Power (the city of Santa Clara) offered a ten-year agreement to sell 36.3 GWh/year of PCC 1 energy to Alameda Municipal Power for the 2018 – 2027 period at market index + $15/MWh. The latter opted instead to execute a fixed price contract.

• Alameda Municipal Power held a solicitation in August 2016 and selected a short list of two proposals for PCC 1 energy in the 2017 – 2019 period; both bids were reportedly priced at “approximately” market index + $13/MWh. The winning bidder was Shell Energy North America, which is buying 180 GWh/year of AMP’s energy at market index + $13.15/MWh.

• The city of Roseville executed a ten-year contract in early 2015 with Powerex to provide 75 GWh/year of PCC 1 energy. The pricing of deliveries escalates with each contract year. The contract pricing for deliveries to Roseville is market index + $14.40/MWh in 2018 and 2019, then rises to index + $15.30 and $16.30/MWh in 2020 and 2021.

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• In summer 2016, the city of Pasadena approved a contract with Powerex to buy both PCC 1 and PCC 2 energy in the 2017 – 2020 period. The sale includes a total of 17.5 GWh of PCC 1 energy priced at market index + $13.95/MWh.

• In February 2017 SVCE executed a PPA with Regenerate Power LLC, the Palo Alto-based developer of a new solar photovoltaic project in the Imperial Valley, for deliveries of PCC1 energy during the 2018 – 2021 period. The total price for bundled PCC1 energy under this contract was $42, $40.5, $39.3, and $39 per MWh for the delivery years 2018, 2019, 2020, and 2021 respectively. The fixed-price transaction differs in structure from PG&E’s sale of bundled PCC1 energy, so one can only guess what REC price was implied for the transaction. Arroyo speculates that the implied REC price for the delivery period, as of spring 2017, may have been less than $14/MWh but would depend on the parties’ assumed forward energy pricing curves and their expectations for the shape of the generation profile and the hourly market pricing profile.

• In January 2018 Redwood Coast Energy Authority executed a PPA with DG Fairhaven, LLC, the owner of a biomass-fueled generator on the Samoa peninsula in Humboldt County, for deliveries of 87.6 GWh of PCC1 energy from March 2018 through February 2019, with potential for extensions. The price for the base PCC1 deliveries is $65/MWh, and the contract calls for payments of market index plus a REC price of $14.50/MWh for deliveries above the contract capacity of 10 MW in any settlement period.

Arroyo notes that the base price for this PPA is far above market price for PCC1 energy, but this CCA counts among its objectives the development of local renewable resources and energy-related economic advancement. The pricing of surplus delivered energy, however, appears to be priced at Redwood Coast Energy Authority’s view of fair market price for PCC1 deliveries.

• Marin Clean Energy has made multiple purchases of renewable energy recently, though it is somewhat challenging for an outside observer to interpret pricing given the cryptic way in which transactions are publicly reported:

o An April 2016 purchase from Avangrid’s share of the Shiloh I wind project of approximately 75 GWh between June and December 2018. This sale appears to be priced between market index + $19 and $20/MWh; actual price may depend on outcomes.

o An October 2017 purchase from Powerex of 75 GWh of renewable energy for 2019 delivery, apparently priced at market index + $15.75/MWh.

Other older transactions for PCC 1 energy are also publicly visible, but these may be poorer benchmarks for a transaction for 2018 through 2020 deliveries. The transactions listed above appear to be comparable to the PCC 1 contracts that PG&E has executed, and most have priced the RECs in the range of $13.15 to $15/MWh for 2018 deliveries and $13.15 to $15.75/MWh for 2019 deliveries.

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Additionally, the sales prices fit within the CPUC-approved framework for short-term sales of surplus renewable energy within PG&E’s 2017 renewable energy procurement plan. ''''''''' '''''''''''''''''''''''''' '''''''''''''''''''''''''''''''''''' '''''''''' ''''''''''''' ''''''' '''''''''''''''''''''' ''''''''''' '''''''' ''''''' ''''' ''''''''''''' ''' '''''''''''''''' '''''''''''''' ''''''''''''''''''''' ''''' ''''''''''''' '''''''' ''''''''''' ''''''''''' '''''''' '''''''''''''''' '''''''''''''' '''''''''' '''''''''''''''''''' '''''''' ''''''''''''''''''''''''' '''''''''''''' ''''''' '''''''' '''''''''' ''''''''''''''''''' ''''''' ''''' '''''''''''' '''''''''''''' ''''''''''''''' '''''''''''''' ''''''''''''' '''''''''' '''' ''''''' ''''''''''''''''''''''''' '''''''''''''' ''''''' ''''''''''''' ''''''''' ''''''''''''''''''''''''''''''''' ''''''' ''''''''''' ''''''''''''''''''''''''''''''' ''''''' '''''''''''' '''''''' '''''''''''''''''''''''''' '''''''' ''''''''''''' ''''''''''' ''''''''''''''''''''' ''''''''' ''''''''''''''' '''''''''''''''''' ''''''''''''''''' '''''''''''''''''' '''''''''''' '''''' ''''''''''''' ''''''' '''''''''''' ''''''''' '''''''''' '''''''''' ''''''''' ''''''''''''' ''''''' ''''''''''''''' ''''' ''''''''''''''''' ''''''''''''''''' ''''''''''''''''''''''' '''''''''''''''

RANK IN PORTFOLIO FIT

Arroyo regards the three sales transactions as ranking high in portfolio fit. They have the effect of reducing PG&E’s long position in RPS compliance in 2018, 2019, and 2020. This reduces the excess procurement of renewable energy in those years and reduces the size of the bank of RECs that must be carried forward to future years

Overall, Arroyo ranks the pricing of PG&E’s sales to the three CCAs as moderate to high and ranks the sales transactions as high in portfolio fit. In the context of the sale of surplus RPS-eligible energy, a high rank in pricing is equivalent to a high ranking in market value. The project viability of facilities from which deliveries will be sourced is not relevant because these projects have already achieved commercial operation and are highly viable.

C. CONSISTENCY WITH PROTOCOL AND PROCUREMENT PLAN

As these transactions resulted from competitive solicitations run by the three CCAs, PG&E had no written protocol of its own that gave rise to the sales. PG&E’s bilateral negotiation of sales contracts for renewable energy with the three CCAs is consistent with its 2017 renewable energy procurement plan, in which the utility states its intent to sell RPS volumes. The prices and volumes of the sales transactions are specifically consistent with the detailed framework for surplus sales provided within the renewable energy procurement plan. The sales conform to the needs of PG&E’s portfolio and its RPS requirements, because they reduce the excess RPS procurement level and the excess REC bank that PG&E is carrying forward.

D. MERIT FOR CPUC APPROVAL

This section summarizes the IE’s view of the merits of the three sales contracts.

The RECs intended for use in these sales contracts are surplus to PG&E’s needs. Arroyo believes that it is advantageous to ratepayers for PG&E to sell surplus RECs at or above market price rather than to hold them for RPS compliance needs later. PG&E’s estimates indicate that its RPS net position in the third and fourth compliance periods is long, so the three sales contracts fit with the utility’s portfolio strategy of reducing the surplus REC position in the 2018 – 2020 period and monetizing part of the surplus for near-term ratepayer value through REC sales.

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The three sales transactions were consummated at prices that appear to be within the range of market pricing for PCC 1 RECs available for the delivery years in question, based on a very limited number of publicly visible comparable transactions. The sales prices rank moderate to high compared to a peer group composed of PG&E’s recent sales transactions. The sales contracts are consistent with PG&E’s 2017 RPS procurement plan and with the CPUC-approved framework for sales of surplus RPS-eligible energy, and the sales fit well with PG&E’s strategy for RPS portfolio management. Arroyo’s opinion is that the methodology for how PG&E evaluated and constructed its sets of offers to the three CCAs’ RFOs was fair and was administered fairly.

Arroyo believes that PG&E’s negotiations with the three counterparties were, overall, handled fairly with respect to ratepayers and to competing buyers.

On that basis, Arroyo’s opinion is that the three contracts merit CPUC approval.


APPENDIX D

SUMMARY OF CONTRACTS



APPENDIX E1

Comparison of PPSA of Monterey Bay

Community Power Authority with PG&E’s

2018 Pro Forma RPS Short-Term Sales

Confirmation



APPENDIX E2

Comparison of PPSA of Clean Power

Alliance of Southern California with

PG&E’s 2018 Pro Forma RPS Short-Term

Sales Confirmation



APPENDIX E3

Comparison of PPSA of East Bay

Community Energy Authority with

PG&E’s 2018 Pro Forma RPS Short-Term

Sales Confirmation



APPENDIX F1

Power Purchase and Sale Agreement with

Monterey Bay Community Power Authority



APPENDIX F2


Clean Power Alliance of Southern California



APPENDIX F3


East Bay Community Energy Authority



APPENDIX G1

PG&E’S RENEWABLE NET SHORT

CALCULATION



APPENDIX G2

PG&E’S RENEWABLE NET SHORT

CALCULATION

(PUBLIC VERSION)

VariableCalculation in Energy Division

RNS Calculation Template

Revised Calculation Correcting Apparent Errors in Energy

Division Template ItemDeficit from RPS prior to

Reporting Year2011 Actuals 2012 Actuals 2013 Actuals 2011-2013 2014 Actuals 2015 Actuals 2016 Actuals 2014-2016 2017 Actuals 2018 Forecast 2019 Forecast 2020 Forecast 2017-2020 2021 Forecast 2022 Forecast 2023 Forecast 2024 Forecast 2021 - 2024 2025 Forecast 2026 Forecast 2027 Forecast 2025 - 2027 2028 Forecast 2029 Forecast 2030 Forecast 2028 - 2030 2031 Forecast 2032 Forecast 2033 Forecast 2031 - 2033 2034 Forecast 2035 Forecast 2036 Forecast 2034- 2036

Forecast Year - - - CP1 - - - CP2 - - - - CP3 - - - - CP4 - - - CP5 - - - CP6 - - - CP7 - - - CP8

Annual RPS Requirement

A Bundled Retail Sales Forecast (LTPP)1 74,864 76,205 75,705 226,774 74,547 72,113 68,441 215,101 61,397 37,069 33,826 35,964 35,687 35,602 35,355 35,115 106,072 34,792 34,505 34,187 103,485 34,102 34,016 33,931 102,049 33,847 33,762 33,677 101,286

B RPS Procurement Quantity Requirement (%) 20.0% 20.0% 20.0% 20.0% 21.7% 23.3% 25.0% 23.3% 27.0% 29.0% 31.0% 33.0% 30.0% 34.8% 36.5% 38.3% 40.0% 37.4% 41.7% 43.3% 45.0% 43.3% 46.7% 48.3% 50.0% 48.3% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0%

C A*B Gross RPS Procurement Quantity Requirement (GWh) 14,973 15,241 15,141 45,355 16,177 16,802 17,110 50,089 16,577 11,491 12,346 13,756 14,275 14,846 15,309 15,802 45,956 16,248 16,666 17,094 50,008 17,051 17,008 16,966 51,025 16,923 16,881 16,839 50,643

D Voluntary Margin of Over-procurement2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

E C+D Net RPS Procurement Need (GWh) 14,973 15,241 15,141 45,355 16,177 16,802 17,110 50,089 16,577 11,491 12,346 13,756 14,275 14,846 15,309 15,802 45,956 16,248 16,666 17,094 50,008 17,051 17,008 16,966 51,025 16,923 16,881 16,839 50,643

RPS-Eligible Procurement

Fa Risk-Adjusted RECs from Online Generation3 14,699 14,513 17,212 46,424 20,207 21,285 22,551 64,042 22,345 20,520 20,700 20,428 83,993 20,076 17,608 16,856 16,578 71,118 16,417 15,883 15,627 47,927 15,570 14,999 14,928 45,497 14,164 13,620 12,384 40,168 11,120 10,013 9,333 30,467

Faa Forecast Failure Rate for Online Generation (%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Fb Risk-Adjusted RECs from RPS Facilities in Development4 - - - - - - 0 - - 26 588 769 1,384 985 981 977 974 3,916 968 963 959 2,889 956 950 945 2,851 941 939 932 2,811 563 501 384 1,447

Fbb Forecast Failure Rate for RPS Facilities in Development (%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Fc Pre-Approved Generic RECs - - - - - - - - - - 0 91 92 360 631 764 862 2,616 957 1,037 1,102 3,095 1,108 1,104 1,103 3,316 1,102 1,103 1,099 3,304 1,098 1,097 1,098 3,293

Fd Executed REC Sales - - (142) (142) (50) - (60) (110) (2,069) (450) (3,179) (1,453) (7,151) (300) - - - (300) - - - - - - - - - - - - - - - -

F Fa + Fb +Fc - Fd Fa + Fb +Fc + Fd Total RPS Eligible Procurement (GWh)5 14,699 14,513 17,069 46,281 20,157 21,285 22,491 63,932 20,276 20,096 18,109 19,836 78,318 21,120 19,220 18,597 18,414 77,351 18,341 17,883 17,687 53,911 17,635 17,053 16,976 51,664 16,207 15,662 14,415 46,284 12,781 11,611 10,815 35,207

F0 Category 0 RECs 14,651 13,049 14,163 41,863 16,899 17,408 17,914 52,222 14,804 13,873 10,985 12,447 52,109 13,284 11,199 10,903 10,675 46,060 10,556 10,046 9,816 30,418 9,768 9,240 9,195 28,204 8,524 8,420 7,789 24,733 7,158 6,711 6,701 20,569

F1 Category 1 RECs 48 1,464 2,906 4,418 3,257 3,876 4,577 11,710 5,471 6,224 7,124 7,390 26,209 7,837 8,022 7,694 7,738 31,291 7,785 7,837 7,871 23,494 7,866 7,812 7,781 23,460 7,683 7,242 6,625 21,551 5,623 4,900 4,114 14,637

F2 Category 2 RECs - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

F3 Category 3 RECs - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Gross RPS Position (Physical Net Short)

Ga F-E Annual Gross RPS Position (GWh) (274) (728) 1,928 926 3,980 4,482 5,381 13,843 3,699 6,618 6,874 4,840 4,139 24,813 3,495 2,574 1,886 7,955 1,387 387 (118) 1,656 (844) (1,346) (2,551) (4,741) (4,142) (5,270) (6,024) (15,436)

Gb F/A Annual Gross RPS Position (%) 19.6% 19.0% 22.5% 20.4% 27.0% 29.5% 32.9% 29.7% 33.0% 48.9% 56.8% 51.7% 51.6% 55.1% 51.5% 50.6% 50.4% 50.8% 50.7% 49.4% 49.7% 49.9% 47.5% 46.0% 42.5% 45.4% 37.8% 34.4% 32.1% 34.8%

Application of Bank

Ha H - Hc (from previous year) J - Hc (from previous year) Existing Banked RECs above the PQR6,7 - (274) (1,033) - 861 4,815 9,274 861 14,630 18,200

Hb RECs above the PQR added to Bank (274) (728) 1,928 926 3,980 4,482 5,381 13,843 3,699 6,618

Hc Non-bankable RECs above the PQR8 - 31 34 65 26 23 25 74 129 2 - - 132 - - - - - - - - - - - - - - - - - - - - -

H Ha+Hb Gross Balance of RECs above the PQR (274) (1,002) 895 926 4,841 9,297 14,655 14,704 18,329

Ia Planned Application of RECs above the PQR towards RPS Compliance - - - - - - - - -

Ib Planned Sales of RECs above the PQR9 - - - - - - - - - (1,619) - (616) (2,235) (1,769) (2,069) (2,069) (2,069) (7,976) (2,069) (2,069) (2,069) (6,207) (2,069) (2,069) (2,069) (6,207) (2,069) (2,069) (2,069) (6,207) (2,069) (2,069) (2,069) (6,207)

J H-Ia-Ib H-Ia+Ib Net Balance of RECs above the PQR6 (274) (1,002) 895 926 4,841 9,297 14,655 14,704 18,329

J0 Category 0 RECs - - - - 657 1,237 2,019 2,067 2,067

J1 Category 1 RECs - - 895 926 4,184 8,060 12,636 12,636 16,261

J2 Category 2 RECs - - - - - - - - -

Expiring Contracts

K RECs from Expiring RPS Contracts10 N/A N/A N/A N/A N/A N/A N/A - - 98 444 710 1,253 966 3,380 4,080 4,357 12,784 4,420 4,901 5,112 14,434 5,164 5,642 5,667 16,474 5,992 6,535 7,680 20,207 9,272 10,335 11,317 30,924

Net RPS Position (Optimized Net Short)

La Ga + Ia – Ib – Hc Ga + Ia + Ib Annual Net RPS Position after Bank Optimization (GWh) 11 (274) (728) 1,928 926 3,980 4,482 5,381 13,843 3,699

Lb (F + Ia – Ib – Hc)/A (C + La) / A Annual Net RPS Position after Bank Optimization (%) 11, 1219.6% 19.0% 22.5% 20.4% 27.0% 29.5% 32.9% 29.7% 33.0%

General Table Notes: Values are shown in GWhs. Fields in grey are protected as Confidential under CPUC Confidentiality Rules.

(2) (Row D) As a portion of the Bank will be used as VMOP, Row D will remain zero. See Draft 2018 RPS Plan for a description of PG&E's VMOP.(3) (Row Fa) "Online Generation" includes forecasted volumes from replacement contracts (i.e. ReMAT contracts replacing QF contracts) for facilities that are already online.

(4) (Row Fb) "In Development" includes forecasted volumes from phase-in projects. This is consistent with labeling in the RPS Database (which labels phase-in projects as "In Development" under "Overall Project Status").

(5) (Row F) Row F has subtracted 134 GWh of RECs associated with 2011 generation from the Hay Canyon Wind Facility and the Nine Canyon Wind Phase 3. These RECs are not being used for RPS compliance because they were not retired within the RPS statute’s 36-month REC retirement deadline.(6) (Rows Ha and J) As PG&E's Alternative RNS incorporates additional risk-adjustments to the results from the Physical Net Short, the Bank sizes indicated in Rows Ha and J may differ from Rows Ha and J of the Alternative RNS, which shows the stochastically-adjusted Bank size.(7) (Rows Ha) At the beginning of each compliance period Row Ha subtracts previous compliance non-bankable volumes from the previous compliance period net balance of RECs. For example, the 2021 forecast for Row Ha is equivalent to the Row J in CP3 minus Row Hc in CP3.(8) (Row Hc) Since PG&E elected to comply early in the 2017-2020 period with the banking rules established in D.17-06-026, PG&E has modeled the new banking rules for the current and future compliance periods.(9) (Row Ib) The annual RPS sales volume forecast assumption is based on actual RPS sales completed in 2017 and is included for RPS position planning purposes. Row Ib is reduced by executed REC sales volumes included on Row Fd.(10) (Row K) Row K now includes only expiring volumes from contracts as of June 2018. (11) (Rows La and Lb) Rows La and Lb incorrectly subtract the non-bankable volumes. Although these volumes can not be carried forward, per Decision 12-06-038, these volumes could be used towards meeting compliance in the current period. Therefore, the non-bankable volumes should be included in the Annual Net RPS Position after Bank Optimization.(12) (Row Lb) Row Lb incorrectly calculates the Annual Net RPS Position after Bank Optimization.

Table 1: Renewable Net Short Calculation as of June 2018Net Short Calculation Using PG&E Bundled Retail Sales Forecast In Near Term (2018 ‐ 2022) and LTPP Methodology (2023 ‐ 2036)

(1) (Row A) Forecasts of retail sales through 2022 are reflective of PG&E's internal bundled retail sales forecast less interdepartmental (metered usage at PG&E-owned facilities) and GTSR sales.

Forecasts post-2022 use the 2017-2018 IRP Cycle forecast (successor to LTPP proceeding planning process).

A.1-1


APPENDIX H1

PG&E’S ALTERNATIVE RENEWABLE

NET SHORT CALCULATION



APPENDIX H2

PG&E’S ALTERNATIVE RENEWABLE

NET SHORT CALCULATION

(PUBLIC VERSION)

VariableCalculation in Energy

Division RNS Calculation Template

Revised Calculation Correcting Apparent Errors in Energy Division

TemplateItem 2011 Actuals 2012 Actuals 2013 Actuals 2011-2013 2014 Actuals 2015 Actuals 2016 Actuals 2014-2016 2017 Actuals 2018 Forecast 2019 Forecast 2020 Forecast 2017-2020 2021 Forecast 2022 Forecast 2023 Forecast 2024 Forecast 2021 - 2024 2025 Forecast 2026 Forecast 2027 Forecast 2025 - 2027 2028 Forecast 2029 Forecast 2030 Forecast 2028 - 2030 2031 Forecast 2032 Forecast 2033 Forecast 2031 - 2033 2034 Forecast 2035 Forecast 2036 Forecast 2034 - 2036

Forecast Year - - - CP1 - - - CP2 - - - - CP3 - - - - CP4 - - - CP5 - - - CP6 - - - CP7 - - - CP8

Annual RPS Requirement

A Bundled Retail Sales Forecast (Alternate)1 74,864 76,205 75,705 226,774 74,547 72,113 68,441 215,101 61,397 37,069 33,826 32,643 32,242 32,201 32,351 32,477 97,029 32,671 33,045 33,440 99,156 33,980 34,592 35,269 103,841 36,028 36,887 37,820 110,734

B RPS Procurement Quantity Requirement (%)2 20.0% 20.0% 20.0% 20.0% 21.7% 23.3% 25.0% 23.3% 27.0% 29.0% 31.0% 33.0% 30.0% 34.8% 36.5% 38.3% 40.0% 37.4% 41.7% 43.3% 45.0% 43.3% 46.7% 48.3% 50.0% 48.3% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0%

C A*B Gross RPS Procurement Quantity Requirement (GWh) 14,973 15,241 15,141 45,355 16,177 16,802 17,110 50,089 16,577 11,491 12,346 12,486 12,897 13,428 14,008 14,615 42,050 15,257 15,961 16,720 47,938 18,689 19,026 19,398 57,112 19,815 20,288 20,801 60,904

D Voluntary Margin of Over-procurement3 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

E C+D Net RPS Procurement Need (GWh) 14,973 15,241 15,141 45,355 16,177 16,802 17,110 50,089 16,577 11,491 12,346 12,486 12,897 13,428 14,008 14,615 42,050 15,257 15,961 16,720 47,938 18,689 19,026 19,398 57,112 19,815 20,288 20,801 60,904

RPS-Eligible Procurement

Fa Risk-Adjusted RECs from Online Generation4 14,699 14,513 17,212 46,424 20,207 21,285 22,551 64,042 22,345 20,520 20,700 20,428 83,993 20,076 17,608 16,856 16,578 71,118 16,417 15,883 15,627 47,927 15,570 14,999 14,928 45,497 14,164 13,620 12,384 40,168 11,120 10,013 9,333 30,467

Faa Forecast Failure Rate for Online Generation (%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Fb Risk-Adjusted RECs from RPS Facilities in Development5 - - - - - - - - - 26 588 769 1,384 985 981 977 974 3,916 968 963 959 2,889 956 950 945 2,851 941 939 932 2,811 563 501 384 1,447

Fbb Forecast Failure Rate for RPS Facilities in Development (%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Fc Pre-Approved Generic RECs - - - - - - - - - - 0 91 92 360 631 764 862 2,616 957 1,037 1,102 3,095 1,108 1,104 1,103 3,316 1,102 1,103 1,099 3,304 1,098 1,097 1,098 3,293

Fd Executed REC Sales - - (142) (142) (50) - (60) (110) (2,069) (450) (3,179) (1,453) (7,151) (300) - - - (300) - - - - - - - - - - - - - - - -

F Fa + Fb +Fc - Fd Total RPS Eligible Procurement (GWh)6 14,699 14,513 17,069 46,281 20,157 21,285 22,491 63,932 20,276 20,096 18,109 19,836 78,318 21,120 19,220 18,597 18,414 77,351 18,341 17,883 17,687 53,911 17,635 17,053 16,976 51,664 16,207 15,662 14,415 46,284 12,781 11,611 10,815 35,207

F0 Category 0 RECs 14,651 13,049 14,163 41,863 16,899 17,408 17,914 52,222 14,804 13,873 10,985 12,447 52,109 13,284 11,199 10,903 10,675 46,060 10,556 10,046 9,816 30,418 9,768 9,240 9,195 28,204 8,524 8,420 7,789 24,733 7,158 6,711 6,701 20,569

F1 Category 1 RECs 48 1,464 2,906 4,418 3,257 3,876 4,577 11,710 5,471 6,224 7,124 7,390 26,209 7,837 8,022 7,694 7,738 31,291 7,785 7,837 7,871 23,494 7,866 7,812 7,781 23,460 7,683 7,242 6,625 21,551 5,623 4,900 4,114 14,637

F2 Category 2 RECs - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

F3 Category 3 RECs - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Step 1 Result: Physical Net Short7

Ga F-E Annual Gross RPS Position (GWh) (274) (728) 1,928 926 3,980 4,482 5,381 13,843 3,699 6,618 6,874 6,111 5,517 4,913 3,875 3,073 11,861 2,377 1,092 256 3,725 (2,482) (3,363) (4,983) (10,829) (7,034) (8,677) (9,986) (25,697)

Gb F/A Annual Gross RPS Position (%) 19.6% 19.0% 22.5% 20.4% 27.0% 29.5% 32.9% 29.7% 33.0% 48.9% 56.8% 57.0% 57.1% 57.0% 55.3% 54.5% 55.6% 54.0% 51.6% 50.8% 52.1% 47.7% 45.3% 40.9% 44.6% 35.5% 31.5% 28.6% 31.8%

PG&E's Alternative RNS Table - Stochastic-Adjustment (2018-2033)8

VariableCalculation in Energy

Division RNS Calculation Template

Revised Calculation Correcting Apparent Errors in Energy Division

TemplateItem 2011 Actuals 2012 Actuals 2013 Actuals 2011-2013

Actuals 2014 Actuals 2015 Actuals 2016 Actuals 2014-2016 2017 Actuals 2018 Forecast 2019 Forecast 2020 Forecast 2017-2020 2021 Forecast 2022 Forecast 2023 Forecast 2024 Forecast 2021 - 2024 2025 Forecast 2026 Forecast 2027 Forecast 2025 - 2027 2028 Forecast 2029 Forecast 2030 Forecast 2028 - 2030 2031 Forecast 2032 Forecast 2033 Forecast 2031 - 2033

Step 2 Result: Stochastically-Adjusted Net Short (Physical Net Short + Stochastic Risk-Adjustment)9

Gd Stochastically-Adjusted Annual Gross RPS Position (GWh) (274) (728) 1,928 926 3,980 4,482 5,381 13,843 3,699

Ge Stochastically-Adjusted Annual Gross RPS Position (%) 19.6% 19.0% 22.5% 20.4% 27.0% 29.5% 32.9% 29.7% 33.0%

Application of Bank

Ha H - Hc (from previous year) J - Hc (from previous year) Existing Banked RECs above the PQR (The Bank at Beg. Of Period) 10,11 - (274) (1,033) - 861 4,815 9,274 861 14,630 18,200

Hb RECs above the PQR added to Bank (274) (728) 1,928 926 3,980 4,482 5,381 13,843 3,699

Hc Non-bankable RECs above the PQR - 31 34 65 26 23 25 74 129 2 - - 132 - - - - - - - - - - - - - - - - -

H Ha+Hb Gross Balance of RECs above the PQR (274) (1,002) 895 926 4,841 9,297 14,655 14,704 18,329

Ia Planned Application of RECs above the PQR towards RPS Compliance - - - - - - - - -

Ib Planned Sales of RECs above the PQR 12 - - - - - - - - - (1,619) - (616) (2,235) (1,769) (2,069) (2,069) (2,069) (7,976) (2,069) (2,069) (2,069) (6,207) (2,069) (2,069) (2,069) (6,207) (2,069) (2,069) (2,069) (6,207)

J H-Ia-Ib H-Ia+Ib Net Balance of RECs above the PQR (The Bank at End of Period) 10 (274) (1,002) 895 926 4,841 9,297 14,655 14,704 18,329

J0 Category 0 RECs - - - - 657 1,237 2,019 2,067 2,067

J1 Category 1 RECs - - 895 926 4,184 8,060 12,636 12,636 16,261

J2 Category 2 RECs - - - - - - - - -

Expiring Contracts

K RECs from Expiring RPS Contracts13 N/A N/A N/A N/A N/A N/A N/A - - 98 444 710 1,253 966 3,380 4,080 4,357 12,784 4,420 4,901 5,112 14,434 5,164 5,642 5,667 16,474 5,992 6,535 7,680 20,207

Step 3 Result: Stochastically-Optimized Net Short (Stochastically-Adjusted Net Short + Application of Bank)14

La Ga + Ia – Ib – Hc Gd+Ia+Ib Annual Net RPS Position after Bank Optimization (GWh)14 (274) (728) 1,928 926 3,980 4,482 5,381 13,843 3,699

Lb (F + Ia – Ib – Hc)/A (C + La) / A Annual Net RPS Position after Bank Optimization (%)1419.6% 19.0% 22.5% 20.4% 27.0% 29.5% 32.9% 29.7% 33.0%

General Table Notes: Values are shown in GWhs. Fields in grey are protected as Confidential under CPUC Confidentiality Rules.

(1) (Row A) PG&E uses its March 2018 internal bundled retail sales forecast less interdepartmental (metered usage at PG&E-owned facilities) and GTSR sales for its procurement decisions.(2) (Row B) PG&E has included a voluntary 55% RPS target beginning in 2031 in its RPS position modeling for planning purposes.(3) (Row D) As a portion of the Bank will be used as VMOP, Row D will remain zero. See Draft 2018 RPS Plan for a description of PG&E's VMOP.(4) (Row Fa) "Online Generation" includes forecasted volumes from replacement contracts (i.e. ReMAT contracts replacing QF contracts) for facilities that are already online.(5) (Row Fb) "In Development" includes forecasted volumes from phase-in projects. This is consistent with labeling in the RPS Database (which labels phase-in projects as "In Development" under "Overall Project Status").(6) (Row F) Row F has subtracted 134 GWh of RECs associated with 2011 generation from the Hay Canyon Wind Facility and the Nine Canyon Wind Phase 3. These RECs are not being used for RPS compliance because they were not retired within the RPS statute’s 36-month REC retirement deadline.(7) (Step 1 Result: Physical Net Short) Rows Ga and Gb represent PG&E’s physical net short based on PG&E’s internal bundled retail sales forecast, as opposed to the IRP forecast provided in the RNS. (8) The stochastic model optimizes from 2018 to 2033(9) Step 2 Result: Stochastically-Adjusted Net Short (Physical Net Short+ Stochastic Risk-Adjustment) PG&E added rows Gd and Ge to the Alternative RNS in order to show the stochastically-adjusted physical net short, which incorporates the risks and uncertainties addressed in the stochastic model. For more details on PG&E's stochastically modeled risks, see the 2017 RPS Plan. This is prior to any application of the Bank. (10) (Rows Ha and J) As PG&E's Alternative RNS incorporates additional risk-adjustments to the results from the Physical Net Short, the Bank sizes indicated in Rows Ha and J appear smaller than they are in Rows Ha and J of the RNS, which shows the non-stochastically-adjusted Bank size.(11) (Rows Ha) At the beginning of each compliance period Row Ha subtracts previous compliance non-bankable volumes from the previous compliance period net balance of RECs. For example, the 2021 forecast for Row Ha is equivalent to the Row J in CP3 minus Row Hc in CP3.(12) (Row Ib) The annual RPS sales volume forecast assumption is based on actual RPS sales completed in 2017 and is included for RPS position planning purposes. Row Ib is reduced by executed REC sales volumes included on Row Fd.(13) (Row K) Row K now includes only expiring volumes from contracts as of June 2018.(14) (Step 3 Result: Stochastically-Optimized Net Short (Stochastically-Adjusted Net Short + Application of Bank))

(a) Rows La and Lb represent the optimized net short that results from taking Row Gd (Step 2 Result) and then applying Bank usage. Bank can be used for either (i) compliance purposes (row Ia) or (ii) sales (Row Ib).(b) Row La in the Alternative RNS does not match Row La in the RNS, because the RNS does not include Row Gd (Stochastically-Adjusted Net Short).

*Stochastic Results in Rows Gd-Lb reflect a July 2018 stochastic modeling vintage.

Table 2: Alternative Renewable Net Short Calculation as of June 2018Stochastically‐Optimized Net Short Calculation Using PG&E Bundled Retail Sales Forecast and Corrections to Formulas

A.2-1

Confidentiality Protected Under D.06-06-066 Appendix 1 or PU Code Section 454.5(g)

APPENDIX I

CONFIDENTIALITY

DECLARATION & MATRIX

1

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA


DECLARATION OF MARK MURANISHI

SEEKING CONFIDENTIAL TREATMENT FOR CERTAIN DATA AND INFORMATION CONTAINED

IN ADVICE LETTER 5360-E

I, Mark Muranishi, declare:

1. I am an Expert Analyst in Competitive Solicitations within the Energy Policy

and Procurement organization at Pacific Gas and Electric Company (PG&E). In this position,

my responsibilities include negotiating the purchase and sale of Renewables Portfolio Standard

(RPS) energy as well as designing and administering solicitations for the purchase and sale of

energy and energy-related products. This declaration is based on my personal knowledge of

PG&E’s practices and my understanding of the Commission’s decisions protecting the

confidentiality of market-sensitive information.

2. Based on my knowledge and experience, and in accordance with Decisions 06-06-066, 08-04-023, and relevant Commission rules, I make this declaration seeking

confidential treatment for certain data and information contained in the attachments to

Advice Letter 5360-E.

3. Attached to this declaration is a matrix identifying the data and information for

which PG&E is seeking confidential treatment. The matrix specifies that the material PG&E

is seeking to protect constitutes confidential market sensitive data and information covered by

Public Utilities Code section 454.5(g), D.06-06-066, D.08-04-023 and/or relevant Commission

rules. The matrix also specifies why confidential protection is justified. Further, the data and

information: (1) is not already public; and (2) cannot be aggregated, redacted, summarized or

PACIFIC GAS AND ELECTRIC COMPANY (U 39 E) Advice Letter 5360-E

August 17, 2018

IDENTIFICATION OF CONFIDENTIAL INFORMATION

1

Redaction Reference

Category from D.06-06-066, Appendix 1, or Separate

Confidentiality Order That Data Corresponds To

Justification for Confidential Treatment Length of Time

Appendix A, Consistency

with Commission

Decisions and Rules and

Project Development

Status

Item VII(G): Renewable Resource Contracts under RPS

program - Contracts without SEPs

Item VII (un-numbered

category following VII(G)): Score sheets, analyses,

evaluations of proposed RPS projects

Item V(C): LSE Total Energy Forecast -- Bundled Customer

(MWh)

VI(B): Utility Bundled Net Open (Long or Short) Position

for Energy (MWh)

May 21, 2014 Administrative Law Judge’s

Ruling on Renewable Net Short issued in Rulemaking 11-05-005 (“May 21, 2014

ALJ Ruling”)

Item VIII(A): Bid Information

Item VIII(B): Specific quantitative analysis involved

This appendix contains information regarding the confidential terms and conditions of the power purchase and sale agreements (“PPSAs”) that seek to sell RPS-eligible products. Disclosure of this information would provide valuable market sensitive information to market participants regarding the contracts and could be damaging to PG&E’s future negotiations with other counterparties for similar products. Therefore, this information should remain confidential. This appendix also contains details regarding PG&E’s confidential RPS Sales Framework, its Alternative Renewable Net Short (“RNS”) calculation, and the impact of the sales under the PPSAs on PG&E’s RPS compliance position. This information is expressly deemed confidential by the May 21, 2014 ALJ Ruling. Additionally, this information could be used to determine PG&E’s net open position for RPS-eligible products and its internal and proprietary forecast of its bundled customer total energy requirements, and also constitutes analysis and evaluation of proposed RPS projects, including sales or transactions intended to create or manage a compliance bank. In addition, if other market participants learned of market sensitive information concerning PG&E’s sales strategy, they could change their bidding behavior and affect market pricing. This could detrimentally impact PG&E’s customers. Finally, this appendix contains confidential bid information and specific bid evaluations from PG&E’s solicitation. If released publicly, this information would provide valuable market sensitive information to market participants; therefore, this information should remain confidential.

For Item VII(G): Three years from date contract

states deliveries to begin, or one year after expiration

(whichever is sooner)

For Item VII (un-numbered category following VII(G)):

Three years

For Items V(C) and VI(B): Front three years of forecast

data confidential

May 21, 2014 ALJ Ruling: Indefinite

For Items VIII(A) and

VIII(B): Three years after winning bidders selected

Public Utilities Code § 454.5(g): Three years


August 17, 2018


2

Redaction Reference




in scoring and evaluation of participating bids

Public Utilities Code § 454.5(g)

Appendix B, Solicitation Overview

Item VII (un-numbered category following VII(G)):

Score sheets, analyses, evaluations of proposed RPS

projects Item VIII(A): Bid Information

Item VIII(B): Specific

quantitative analysis involved in scoring and evaluation of

participating bids

Public Utilities Code section 454.5(g)

May 21, 2014 ALJ Ruling

This appendix contains confidential bid information and bid evaluations from PG&E’s solicitation and discusses confidential negotiations between PG&E and counterparties. If released publicly, this information would provide valuable market sensitive information to market participants, could be damaging to future PG&E contract negotiations and ultimately detrimental to PG&E’s customers, and could create a disincentive to do business with PG&E and other regulated utilities. Therefore, this information should remain confidential. This appendix also contains information relating to PG&E’s confidential RPS Sales Framework, which is deemed confidential by the May 21, 2014 ALJ Ruling. In addition, if other market participants learned of market sensitive information concerning PG&E’s sales strategy, they could change their bidding behavior and affect market pricing. This could detrimentally impact PG&E’s customers.


Three years

For Items VIII(A) and VIII(B): Three years after winning bidders selected


May 21, 2014 ALJ Ruling:

Indefinite


August 17, 2018


3

Redaction Reference




Appendix C1, IE Report – grey shaded

sections






Item VIII(A): Bid Information

Item VIII(B): Specific

quantitative analysis involved in scoring and evaluation of

participating bids

Public Utilities Code section 454.5(g)


This appendix contains the IE report, which includes confidential bid information and bid evaluations from PG&E’s solicitation. The confidential IE report also discusses, analyzes and/or evaluates the terms of the PPSAs and confidential negotiations between PG&E and counterparties. If released publicly, this information would provide valuable market sensitive information to market participants, could be damaging to future PG&E contract negotiations and ultimately detrimental to PG&E’s customers, and could create a disincentive to do business with PG&E and other regulated utilities. Therefore, this information should remain confidential. This appendix also contains information relating to PG&E’s confidential RPS Sales Framework, which is deemed confidential by the May 21, 2014 ALJ Ruling. In addition, if other market participants learned of market sensitive information concerning PG&E’s sales strategy, they could change their bidding behavior and affect market pricing. This could detrimentally impact PG&E’s customers.





Three years

For Items VIII(A) and VIII(B): Three years after winning bidders selected


May 21, 2014 ALJ Ruling:

Indefinite


August 17, 2018


4

Redaction Reference




Appendix D, Summary of

Contracts






Item V(C): LSE Total Energy Forecast – Bundled Customer

(MWh)


for Energy (MWh)

Item VIII(B): Specific quantitative analysis involved in scoring and evaluation of

participating bids

This appendix summarizes and analyzes the PPSAs, and contains bid evaluation information. If released publicly, this information would provide valuable market sensitive information to market participants and could be damaging to PG&E’s future negotiations with other counterparties for similar products. Therefore, this information should remain confidential. This appendix also contains information that could be manipulated in conjunction with publicly-available information to determine PG&E’s net open position for RPS-eligible products and its internal and proprietary forecast of its bundled customer total energy requirements.





Three years


data confidential

For Item VIII(B): Three years after winning bidders

selected

Appendices E1-E3, Redline of

PPSAs compared to Pro

Forma



These appendices contain each of the PPSAs for which PG&E seeks approval in this Advice Letter filing. Public disclosure of the terms of the PPSAs would provide valuable market sensitive information to market participants and could be damaging to PG&E’s future negotiations with other counterparties for similar products. Therefore, this information should remain confidential.





August 17, 2018


5

Redaction Reference




Appendices F1-F3, PPSAs



These appendices contain each of the PPSAs for which PG&E seeks approval in this Advice Letter filing. Public disclosure of the terms of the PPSAs would provide valuable market sensitive information to market participants and could be damaging to PG&E’s future negotiations with other counterparties for similar products. Therefore, this information should remain confidential.




Appendices G1 and H1,

Renewable Net Short

Calculations – grey shaded

sections

Item V(C): LSE Total Energy Forecast -- Bundled Customer

(MWh)


for Energy (MWh)


Item VII (un-numbered category following VII(G)):

Score sheets, analyses, evaluations of proposed RPS

projects

For Table 1: For rows A, C, E, Ga and Gb, this information shows PG&E's net position for RPS-eligible energy in the periods within the front three years of the forecast. The redacted information in Rows A, C, E, Ga, and Gb could also be manipulated in conjunction with publicly-available information to determine PG&E's internal and proprietary forecast of its bundled customer total energy requirements. The redacted information for rows Ia, Ib, J, J0, J1, J2, La and Lb relates to PG&E’s optimized RNS, including: PG&E’s assumptions for its overall portfolio optimization strategy; any plans to sell forecast RECs above the PQR; application of forecast RECs above the PQR towards a future RPS compliance requirement; and any plan to procure RECs above the PQR in future years. This information is expressly deemed confidential by the May 21, 2014 ALJ Ruling. Additionally, this information could be used to determine PG&E’s net open position for RPS-eligible products and constitutes analysis and evaluation of proposed RPS projects, including sales or transactions intended to create or manage a compliance bank. For Table 2:


data confidential

May 21, 2014 ALJ Ruling: Indefinite


Three years


August 17, 2018


6

Redaction Reference




For rows A, C, E, Ga and Gb, this information shows PG&E's net position for RPS-eligible energy in the periods within the front three years of the forecast. The redacted information in Rows A, C, E, Ga, and Gb could also be manipulated in conjunction with publicly-available information to determine PG&E's internal and proprietary forecast of its bundled customer total energy requirements. The redacted information for rows Gd, Ge, Ha, Hb, H, Ia, Ib, J, J0, J1, J2, La and Lb relates to PG&E’s optimized RNS, including: PG&E’s assumptions for its overall portfolio optimization strategy; any plans to sell forecast RECs above the PQR; application of forecast RECs above the PQR towards a future RPS compliance requirement; and any plan to procure RECs above the PQR in future years. This information is expressly deemed confidential by the May 21, 2014 ALJ Ruling. Additionally, this information could be used to determine PG&E’s net open position for RPS-eligible products and constitutes analysis and evaluation of proposed RPS projects, including sales or transactions intended to create or manage a compliance bank.

PG&E Gas and Electric Advice Filing List General Order 96-B, Section IV

AT&T Downey & Brand Pioneer Community Energy Albion Power Company Ellison Schneider & Harris LLP Praxair Alcantar & Kahl LLP Energy Management Service Regulatory & Cogeneration Service, Inc. Anderson & Poole Evaluation + Strategy for Social

Innovation SCD Energy Solutions

Atlas ReFuel GenOn Energy, Inc. SCE BART Goodin, MacBride, Squeri, Schlotz &

Ritchie SDG&E and SoCalGas

Barkovich & Yap, Inc. Green Charge Networks SPURR Braun Blaising Smith Wynne P.C. Green Power Institute San Francisco Water Power and Sewer CalCom Solar Hanna & Morton Seattle City Light California Cotton Ginners & Growers Assn ICF Sempra Utilities California Energy Commission International Power Technology Southern California Edison Company California Public Utilities Commission Intestate Gas Services, Inc. Southern California Gas Company California State Association of Counties Kelly Group Spark Energy Calpine Ken Bohn Consulting Sun Light & Power Casner, Steve Keyes & Fox LLP Sunshine Design Cenergy Power Leviton Manufacturing Co., Inc. Tecogen, Inc. Center for Biological Diversity Linde TerraVerde Renewable Partners City of Palo Alto Los Angeles County Integrated Waste

Management Task Force Tiger Natural Gas, Inc.

City of San Jose Los Angeles Dept of Water & Power TransCanada Clean Power Research MRW & Associates Troutman Sanders LLP Coast Economic Consulting Manatt Phelps Phillips Utility Cost Management Commercial Energy Marin Energy Authority Utility Power Solutions County of Tehama - Department of Public Works

McKenzie & Associates Utility Specialists

Crossborder Energy Modesto Irrigation District Verizon Crown Road Energy, LLC Morgan Stanley Water and Energy Consulting Davis Wright Tremaine LLP NLine Energy, Inc. Wellhead Electric Company Day Carter Murphy NRG Solar Western Manufactured Housing

Communities Association (WMA) Dept of General Services Office of Ratepayer Advocates Yep Energy Don Pickett & Associates, Inc. OnGrid Solar Douglass & Liddell Pacific Gas and Electric Company

director, regulatory relations pacific gas and electric ... · august 17 , 2018 advice 5360 -e...

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