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Table of Contents

Agenda 3Minutes

Minutes of 03-20-14 6Monthly Investment Report

Monthly Investment Report 02-14 9Resolution 2014-031

Staff Report 2014-031 11Reso 2014-031 12

Executive Directors ReportExecutive Directors Report 04-14 15

Project Administrators Directors ReportProject Administrators Directors Report 04-14 17

Resolution 2014-032Staff Report 2014-032 21Reso 2014-032 23

Resolution 2014-033Reso 2014-033 25CM3 Solar Budget 27

Hoover Status ReportHoover Status Report 04-14 31

Magnolia Power Project Operations ReportMagnolia Power Project Operations Report 03-14 34

Palo Verde Status ReportPalo Verde Status Report 04-14 39

San Juan Unit 3 Status ReportSan Juan Unit 3 Status Report 04-14 41

Regulatory Affairs Directors ReportRegulatory Affairs Directors Report 04-14 43

Morgan Meguire Monthly ReportMorgan Meguire Monthly Report 04-14 45

Gonzales, Quitana & Hunter Monthly ReportGonzales, Quitana & Hunter Monthly Report 04-14 54

Finance Committee MinutesFinance Committee Minutes 03-03-14 56

Energy Systems Directors ReportEnergy Systems Directors Report 04-14 58

Program Development Directors ReportProgram Development Directors Report 04-14 61Energy Storage Review 65


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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY NOTICE OF MEETING

Board of Directors

NOTICE IS HEREBY GIVEN by the undersigned, as the Executive Director of the Southern California Public Power Authority, that a regular meeting of the Board of Directors is to be held as follows:

Date: Thursday, April 17, 2014

Time: 10:00 AM

Place: Southern California Public Power Authority 1160 Nicole Court

Glendora, CA 91740 (626) 793-9364

The following matters are the business to be transacted and considered by the Board of Directors:

1. Notice/Agenda and Opportunity for the Public to Address the Board

Any member of the Board may request that items on the agenda be taken out of order, or that items be added to the agenda pursuant to the provisions of Section 54954.2(b) of the California Government Code.

Any member of the public may address the Board on any item of interest to the public before or during the Board's consideration of the item, provided the item is within the subject matter jurisdiction of the Board.

2. CONSENT CALENDAR

All matters listed under the Consent Calendar are considered to be routine and will all be enacted by one motion. There will be no separate discussion of these items prior to the time the Board votes on the motion, unless one or more board members, staff or the public request that specific items be discussed and/or removed for separate discussions or action.

a. Minutes of March 20, 2014

b. Monthly Investment Report 02-14

c. Resolution 2014-031 Los Angeles Trade Technical College (LATTC) Apprenticeship Program

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Notice of Board Meeting Thursday, April 17, 2014 Page 2 STAFF REPORTS

3. Executive Director’s Report

The Executive Director will report on activities since the last Board meeting:

• Executive Directors Report 04-14

4. Project Administration Director’s Report

The Director of Project Administration will report on project-related staff and agent activities:

• Project Administrators Directors Report 04-14

• Resolution 2014-032 Authorization of 6-month true ups to project budgets under certain circumstances.

• Resolution 2014-033 Budget for the Copper Mountain 3 Solar Project for the Fiscal Year July 1, 2013 through June 30, 2014.

• Hoover Status Report 04-14

• Magnolia Power Project Operations Report 03-14

• Palo Verde Status Report 04-14

• San Juan Unit 3 Status Report 04-14

5. Government Affairs Reports

The Director of Regulatory Affairs will report on the regulatory activities at the state level:

• Regulatory Affairs Directors Report 04-14

• Morgan Meguire Monthly Report 04-14

• Gonzales, Quitana & Hunter Monthly Report 04-14

6. Finance and Accounting Director’s Report

The Director of Finance and Accounting will report on the status of current financing activities:

• Finance Committee Minutes 03-03-14

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Notice of Board Meeting Thursday, April 17, 2014 Page 3 7. Energy Systems Director’s Report

The Director of Energy Systems will report on the status of current activities, including renewable energy project development and resource planning issues:

• Energy Systems Directors Report 04-14

8. Program Development Director’s Report

The Director of Program Development will report on current activities, including public benefits and smart grid issues:

• Program Development Directors Report 04-14

• Resolution 2014-034 Professional Services Agreement with the Electric Power Research Institute (EPRI).

• Resolution 2014-035 Professional Services Agreement with Navigant Consulting, Inc. (Navigant).

9. NEW BUSINESS

New topics may be introduced in order to be added to the next meeting agenda for future consideration and action by the Board.

10. CLOSED SESSION

• Public Employment: Work review and performance evaluation of the Executive Director of the Authority

pursuant to Section 54957 of the California Government Code.

• Potential Litigation: Conference with legal counsel regarding the potential initiation of litigation pursuant to subdivision (c) of Section 54956.9 of the California Government Code (one potential case).

• Potential Litigation: Conference with legal counsel regarding significant exposure to litigation pursuant to subdivision (b) of Section 54956.9 of the California Government Code (one potential case).

Dated: April 10, 2014

______________________________________

BILL D. CARNAHAN Executive Director

Southern California Public Power Authority

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MINUTES OF THE MARCH 20, 2014 REGULAR MEETING OF THE

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY

A regular meeting of the Board of Directors was held on March 20, 2014, at the offices of the Authority, 1160 Nicole Court, Glendora, California. The meeting was called to order at 10:01 a.m. by Vice President Mason. The following Board members (M) and alternates (A) were present and acting in their capacity as representative for their utility: Dukku Lee, Anaheim (M); George Morrow, Azusa (M); Fred Mason, Banning (M); Frederick Fletcher, Burbank (A); Vince Brar, Cerritos (A); David Kolk, Colton (M); Steve Zurn, Glendale (M); Belen Valenzuela, IID (A); Randy Howard, LADWP (A); Phyllis Currie, Pasadena (M); Steve Badgett, Riverside (A); Todd Dusenberry, Vernon (A). Staff members present were: SCPPA staff members Executive Director Bill D. Carnahan, Daniel Hashimi, Richard Morillo, Steven Homer, Kelly Nguyen, Julie Felipe, Salpi Ortiz, Bryan Cope, Tanya DeRivi, and Therese Savery, SCPPA Accounting. Attorneys and consultants present included: Stephen Cole, Fulbright & Jaworski. 1. Notice/Agenda Opportunity for the Public to Address the Board

Vice President Mason afforded the public an opportunity to address the Board. 2. Consent Calendar

The following matters were considered routine and were enacted by a single motion.

a. Minutes: Approval of the Minutes of the Board of Directors meeting held February 20, 2014.

b. Investment Reports: for the month of January 2014.

c. Financial Reports: Unaudited financials for the period ending December 31, 2013

d. Resolution 2014-018: Approving a training course by AVO Training Institute.

e. Resolution 2014-019: Approving a training course on GE’s Positive Sequence Load flow software, Fundamentals & Mechanics of Steady-State Analysis.

f. Resolution 2014-020: Approving a training course on GE LM6000 aeroderivative engine familiarization.

g. Resolution 2014-021: Authorizing training on FERC Order 764.

Draft of 4/10/14 1

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h. Resolution 2014-022: Consulting services on landfill gas processing.

i. Resolution 2014-023: Approving an agreement for geothermal exploratory well drilling with Geothermal Resources Group.

j. Resolution 2014-024: Authorizing termination of an interest rate swap agreement relating to the Magnolia 2009 Bonds.

k. Resolution 2014-025: Authorizing extension of two letters of credit relating to the Magnolia Project 2009 Bonds.

l. Resolution 2014-026: Approving a Residential Thermal Energy Storage Demonstration Program.

m. Resolution 2014-027: Approving an agreement with Black & Veatch to perform Energy Storage System Evaluations.

Mr. Morrow moved that the matters on the consent calendar be approved. The motion was seconded by Mr. Lins and unanimously approved.

3. Executive Director’s Report Mr. Carnahan referenced his written report and discussed the highlights. Mr. Carnahan reported on the recent APPA legislative rally in Washington, D.C. Mr. Carnahan reported on the results of an RFQ for a recruiting firm, and recommended hiring the firm of Mycoff, Fry & Prouse. Ms. Currie moved that the firm be hired. The motion was seconded by Mr. Kolk and unanimously approved. Ms. Ortiz discussed meeting arrangements for the upcoming SCPPA dinner at the CMUA conference in Napa.

4. Regulatory Affairs Director’s Report Ms. DeRivi reported on developments of interest at the California Energy Commission, the California Public Utilities Commission, the California Air Resources Board, and the Federal Energy Regulatory Commission.

5. Finance and Accounting Director’s Report Mr. Rozanski reported on the closing of the Hoover Visitors’ Center debt defeasance, updated the Board on the results of the Apex Power Project financing, and discussed the A&G budget process. He noted there will be a Budget Workshop on April 15.

Draft of 4/10/14 2

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6. Energy Systems Director’s Report Ms. Nguyen discussed the Resource Planning Request for Information regarding generation replacement and future resources, the Renewables RFP, and updated the Board on solar project development in the country, and SCPPA projects in particular.

7. Program Development Director’s Report Mr. Cope presented Resolution 2014-030, authorizing participation in a Case Study Development for 2016/19 Title 24 Enhancements. Ms. Currie moved that Resolution 2014-030 be approved. The motion was seconded by Mr. Fletcher and unanimously approved. Mr. Cope updated the Board on activities related to Public Benefits, Energy Storage, and Rate Design. Mr. Cope discussed plans for solar carports in the SCPPA parking lot.

8. Project Administration Director’s Report

Mr. Homer discussed Hoover rates, and Visitors’ Center debt restructuring/defeasance, and presented the Budget Comparisons for the quarter ending December 31, 2013. Mr. Homer discussed the issues contributing to significant year-end overbillings, and committed to bring a recommended solution(s) to the Budget Workshop.

There being no further business, the meeting was adjourned at 11:42 a.m.

Respectfully submitted, Mario Ignacio Assistant Secretary

c: Board of Directors

Draft of 4/10/14 3

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SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY Board of Directors Meeting

AGENDA ITEM STAFF REPORT

MEETING DATE: April 17, 2014 RESOLUTION NUMBER: 2014-031 CONSENT X DISCUSSION RENEWAL X NEW Place an X in box next to the appropriate consideration(s) above.

FROM: METHOD OF SELECTION: Finance Competitive Energy Systems X Cooperative Purchase Program Development Sole Source X Regulatory/Legislative Single Source Project Administration Other Legal If other, please describe: Place an X in box next to the appropriate consideration(s) above.

Approved By Executive Director:

INITIAL MEMBER PARTICIPANTS: Anaheim

Colton LADWP Azusa Cerritos Pasadena X Banning Glendale X Riverside Burbank X IID Vernon

Place an X in box next to the applicable Member(s) shown above.

SUBJECT: Los Angeles Trade Technical College (LATTC) Apprenticeship Program RECOMMENDATION: Approve a renewal of an agreement with LATTC for the Electrical Lineman and Electrical Cable Splicer Apprenticeship Programs. BACKGROUND: Burbank, Glendale, and Pasadena arranged through SCPPA to have LATTC provide supplemental instruction and other services to apprentices registered in the Electrical Lineman and Electrical Cable Splicer Apprenticeship Program. This program was selected based on its vicinity and past experience with the apprentices that have come out of it. FISCAL IMPACT: Based on the number of attendees from each participating member and will be billed through their Palo Verde billings. The courses are normally offered in Fall and Spring with the annual cost expected to be $32,000 for a class of 20.

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RESOLUTION NO. 2014-031

RESOLUTION OF THE BOARD OF DIRECTORS OF THE SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE AN AGREEMENT WITH LOS ANGELES TRADE TECHNICAL COLLEGE (LATTC), AND PROVIDING FOR ADDITIONAL CONTRIBUTIONS TO THE AUTHORITY’S REVOLVING GENERAL FUND, AND TAKING CERTAIN RELATED ACTION (RESTRUCTURING)

WHEREAS, the Southern California Public Power Authority (“SCPPA” or “the Authority”) owns interests in various generation and transmission projects, the output or services of which has been sold to Members of the Authority (Members); and WHEREAS, certain SCPPA member utilities (“Members”) are engaged in the generation, transmission, and distribution of electrical energy to retail customers, including assisting such customers with the efficient use of said energy; and

WHEREAS, certain Members have a need for providing related and supplemental instruction and other services to apprentices registered in the Electrical Lineman and Electrical Cable Splicer Apprenticeship Programs (“Services”); and WHEREAS, LATTC is well qualified to provide such Services; and

WHEREAS, the Authority is willing and able to (i) retain LATTC to provide the Services and (ii) bill all expenses and costs for the Services including costs for retaining LATTC to the Members receiving said Services; and WHEREAS, the Board of Directors of the Authority, in its Resolution No. 1990-15, established a revolving general fund (the General Fund) for the payment of costs and expenses incurred by the Authority from time to time in carrying out its purposes; and WHEREAS, the Board of Directors of the Authority, in its Resolution No. 1992-1, provided for the continuation of the General Fund and established a procedure to be followed with respect to additional contributions to the General Fund; and WHEREAS, the Board of Directors of the Authority, in its Resolution No. 1995-2, provided for a separate bank account (the Joint Planning Account) to hold and disburse the additional contributions to the General Fund with respect to joint planning matters; and WHEREAS, the Board of Directors of the Authority, in its Resolution No. 1995-13, changed the name of the Joint Planning Account to the Restructuring Account; and WHEREAS, the Board of Directors of the Authority wishes to provide for additional contributions to the General Fund, and certain Members of the Authority are willing to make such additional contributions.

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NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Authority as follows: 1. The Executive Director is authorized and directed to retain LATTC at the request of

Member(s) of the Authority, provided that such Member(s) agree, in writing, to bear all costs and expenses associated with Services provided to Member(s), respectively.

2. The Board of Directors hereby provides for additional contributions to the General Fund.

Notwithstanding anything to the contrary in Resolution No. 1992-1, such additional contributions:

a) shall be solely for the purpose of paying costs and expenses incurred by the Authority

with respect to Services provided by LATTC, and pending application for such purpose the contributions shall not be expended to pay costs or expenses properly allocable to one or more projects as provided in Section 3 of Resolution No. 1992-1;

b) with respect to each invoice SCPPA receives from LATTC, each such invoice shall

be billed to the Members that have received services from LATTC with respect to such invoice, with the amount of each such Member’s bill to be based upon the services performed by LATTC for the benefit of such Member; and

c) such invoice shall be billed and collected by adding the amounts provided above to

the Authority’s Hoover Uprating Project billings to Anaheim (if applicable), and to the Authority’s Palo Verde Project billings to the other applicable Members, with such amounts designated as “Resolution No. 2014-031 Charge.”

3. Although the amounts to be contributed under this Resolution and related income shall

constitute part of the General Fund, they shall be held and accounted for in a separate subaccount within the existing Restructuring Account. The Executive Director of the Authority is hereby directed to establish a subaccount (the LATTC Subaccount) within the Restructuring Account for the purpose of holding contributions and related income, and making disbursements, under this Resolution. The President, Vice President, Secretary, any Assistant Secretary and the Executive Director of the Authority are each authorized to execute checks drawn on the Restructuring Account from time to time.

4. Amounts contributed to and held in the General Fund and the LATTC Subaccount pursuant to this Resolution will not be contributed or held for the purposes of any project for which the Authority has obtained any form of external financing. Such amounts shall not constitute (a) Revenues, or (b) revenues, income, rents or receipts derived by the Authority from or attributable to Authority Capacity (or to the payment of the costs thereof) or the ownership or operation of any Project. As used herein, “Revenues”, “Authority Capacity” and “Project” shall have the respective meanings set forth in the indentures of trust and other instruments governing the external financing arrangements entered into from time to time by the Authority.

5. The President, Vice President, Secretary, any Assistant Secretary, Executive Director and any other officer of the Authority are each hereby authorized to execute and deliver any

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and all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for carrying out the transactions contemplated by this Resolution.

6. This Resolution shall become effective immediately.

THE FOREGOING RESOLUTION is approved and adopted by the Authority this 17th day of April, 2014.

PRESIDENT


ATTEST: ASSISTANT SECRETARY Southern California Public Power Authority

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TO: Board of Directors FROM: Bill D. Carnahan SUBJECT: Executive Director’s Report DATE: April 10, 2014

I. FINANCE COMMITTEE The regular meeting of the Finance Committee scheduled for April 7th was canceled in favor of holding the 2014-15 SCPPA Budget Work Session on April 15th. The Draft 2014-15 Budget was presented to the Executive Committee on March 28th for comment and recommended approval. The next stop is the Work Session mentioned above followed by presentation to the Board at the April 17th Board meeting with final approval at the May Board meeting. The Draft Budget totals approximately $870 Million and covers 23 project budgets as well as the activities of the Glendale and SCPPA/LADWP staff.

II. SCPPA HAPPENINGS

SCPPA held a successful dinner for the SCPPA delegation during the CMUA Annual Conference in Napa. In addition to the dinner being a success, the overall Conference, hosted by CMUA President Phyllis Currie was a success as well. If things proceed on schedule, by the time of the Board meeting construction will be underway for the solar carports at the Glendora SCPPA office. Bad news is parking may be limited on Board day so we apologize ahead of time if you have to park on the street. The project consists of a carport with spaces for 29 vehicles and a 30 KW PV system for generation of electricity. Construction will take about 30 days.

III. STAFF REPORT/PRESENTATION HIGHLIGHTS Bryan Cope, Director of Program Development, will cover in his written report regarding the various activities of the Public Benefit Committee, Energy Storage Working Group, Rate Design Working Group, EV Working Groups. The Public Benefits Group received a report that the POU Technical Reference Manual, collectively prepared with CMUA and NCPA, is complete. Also, the CMUA sub-committee continues to work to develop a better working relationship with the CEC staff with a meeting in the near future scheduled with key CEC staffers. Energy Storage Working Group continues to work on finalizing the Summary Review of the Technological Capabilities and Economics of Energy Storage Development. The Group also has been reviewing analytical tools related to energy storage cost-

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effectiveness. There may be a resolution related to this effort. Rate Design Working Group is reviewing a spreadsheet model, prepared by Bryan, to evaluate the fixed and variable cost recovery components of the current residential and small commercial rates for members. EV Working Group received good news with the announcement by the CEC of the approval of SCPPA’s grant application for $500,000. At its April 16th meeting the Group will begin the discussion of the implementation and use of the funding to install additional electric vehicle charging units for identified SCPPA members. Steve Homer, Director Project Administration, has been very busy with the San Juan negotiations as well as preparation of the 23 SCPPA Project Budgets. will present reports on various projects, including: Palo Verde – work continues with representation on the E&O and L&N Committees for both transmission and generation. San Juan Unit 3 Project – in what is becoming the norm lately, Steve has been spending a considerable amount of time in New Mexico working with the other project participants to craft an exit strategy for the California participants including participating in mediation sessions. Hoover Uprating Project – retirement for us and refinancing for others of the Visitor’s Center debt has been completed. Kelly Nguyen, Director of Energy Systems – will report on the following: 1) Resource Planning sharing among the members of the status of their integrated resource planning efforts. Renewable Energy Working Group – including the retention of Venture Engineering to do Phase 1 of a land-fill gas to biomethane project. Efforts continue on renewable project analysis and negotiations. T&D E&O Working Group – Kelly will discuss the current recommended Working Group’s recommended plan for the reliability metrics benchmarking study. Preliminary discussions are underway in reviewing Mutual Aid agreements and obligations. Intern Program – the Board will be provided an update of member participation in the SCPPA intern program. Tanya DeRivi, Director of Regulatory Affairs, is expected to report on several regulatory issues of interest in the Regulatory Working Group; including, the CEC SB1 Solar Report and SCPPA’s efforts to coordinate the preparation of the July 1st annual report date. ARB Climate Change Scoping Plan Update comments were drafted by SCPPA and coordinated by CMUA. CFTC/”Swap Dealer” Relief – CFTC issued a no-action letter solving our concerns about the $25 Million special entity de minimis sub-threshold exemption from the definition of a ‘swap dealer’.

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TO: Board of Directors FROM: Steven L. Homer SUBJECT: Director of Project Administration’s Report DATE: April 9, 2014 _________________________________________________________________

The following is a summary of the activities of the Project Administrator from March 14 through April 11, 2014. GENERAL: • Draft budgets for FY 2014-15 were prepared for 22 projects, totaling over $850

million. Budgets will be reviewed at the Budget Workshop on April 15, and submitted to the Board in May for approval.

PALO VERDE PROJECT: • Work continues representing Participants in Transmission E&O Meetings and

Switchyard Legal and Negotiating (L&N) Committee meetings, and attending the Generating Station E&O Committee meetings.

• The Institute of Nuclear Power Operations (INPO) completed a biennial review of

plant operations. Palo Verde received the highest rating.

• Unit 2 began its 18th refueling outage on April 6, scheduled for 30 days.

SAN JUAN UNIT 3 PROJECT: • Work continues (with Anaheim and M-S-R) reviewing and participating in the

negotiations regarding the San Juan coal budget. • Work is continuing on a new interconnection agreement with Tucson Electric

Power. Accumulated inadvertent balances will be addressed following completion of the interconnection agreement.

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• In order to address regional haze and comply with Best Available Retrofit Technology (BART), the State of New Mexico has issued a State Implementation Program (SIP), recommending Selective Non-Catalytic Reduction.

• The EPA has issued a Federal Implementation Program (FIP) recommending full

Selective Catalytic Reduction on all four units. Various appeals are under way, supported by the State of New Mexico and the Navajo Nation.

• The EPA issued a 90-day stay to allow the parties to explore solutions other than

SCR or SNCR. New Mexico Environmental Department held public forums prior to meeting with the parties. The stay and an extension expired November 29, 2012.

• On October 9, 2012, the State of New Mexico announced a provisional term sheet

for a revised State Implementation Program, which included shut down of Units 1 & 2, and other requirements of PNM to mitigate economic impacts on the area. The EPA did not accept the proposal, stating that their visibility improvement standards were not met.

• The San Juan owners met to develop alternative proposals, including shutdown of

1, 2, or 3 units, with the California owners possibly exiting the project.

• PNM has signed an EPC contract for installation of 4-unit SCR and balanced draft. The contract can be cancelled at any time if an alternate plan is approved. Funding of the work has not yet been approved by the owners.

• The EPC contract was placed in suspension on January 4, 2013, pending

resolution of an alternate proposal from the State of New Mexico to the EPA.

• The State of New Mexico, the EPA, and PNM signed a term sheet in February 2013. Units 2 & 3 will close at the end of 2017, and Units 1 & 4 will be retrofitted with SNCR.

• The New Mexico Environmental Improvement Board approved the State

Implementation Plan in August 2013. The plan now goes to the EPA for public review and approval, which is expected in October 2014.

• The owners continue to meet to negotiate terms to allow the California owners to

exit the project.

HOOVER UPRATING PROJECT • Contractors from Arizona, Nevada and California met for two years to negotiate

terms for renewal of the contracts, which expire in 2017. Legislation was

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proposed to both houses of Congress in December 2009, and was signed by the President in December 2011.

• Meetings are being held among Western and the existing Contractors to discuss

the process for negotiating new electric service contracts and selection of new contractors.

• A series of capacity reductions have been implemented in response to low lake

levels. Current capacity is 1753 MW. Full capacity is 1951 MW.

• Refinancing/retirement of the Visitors’ Center debt was completed March 12, 2014.

MEAD-ADELANTO • A proposal to convert the project to DC is being evaluated.

SCPPA COORDINATION: The following is a listing of major meetings attended during the period: On March 17 and 18, Mr. Homer participated in mediation sessions with the San Juan owners to negotiate exit terms, in Albuquerque. On March 20, Mr. Homer participated in the regularly scheduled meeting of the SCPPA Board of Directors. On March 24, Mr. Homer participated in a conference call with the San Juan Exiters to discuss the latest proposal. On March 25, Mr. Homer participated in the meeting of the SCPPA Natural Gas Committee. On March 26, Mr. Homer participated in the meeting of the Palo Verde Engineering & Operating Committee, in Phoenix. On March 28, Mr. Homer participated in the meeting of the San Juan Fuels Committee, in Albuquerque. On March 28, Mr. Homer participated in a teleconference with the San Juan Working Group to discuss exit term proposals. On April 1, Mr. Homer participated in a teleconference with the Windy Point Participants to discuss payment for unused BPA transmission. 3

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On April 1, Mr. Homer participated in a teleconference to discuss implementation of accounting procedures for the new Apex Power Project. On April 3, Mr. Homer participated in a teleconference with the San Juan Working Group to discuss a proposal. On April 8, Mr. Homer participated in a teleconference with SCPPA Mead-Adelanto Participants to discuss the proposal to convert to DC. On April 10, Mr. Homer participated in the meeting of the Mead-Adelanto Engineering & Operating Committee in Phoenix. The operating budget for FY 2014-15 was approved. On April 10, Mr. Homer participated in the meeting of the Mead-Phoenix Engineering & Operating Committee in Phoenix. The operating budget for FY 2014-15 was approved.

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MEETING DATE: April 17, 2014 RESOLUTION NUMBER: 2014-032 CONSENT DISCUSSION x RENEWAL NEW x Place an X in box next to the appropriate consideration(s) above.

FROM: METHOD OF SELECTION: Finance Competitive Energy Systems Cooperative Purchase Program Development Sole Source Regulatory/Legislative Single Source Project Administration x Other Legal If other, please describe: Place an X in box next to the appropriate consideration(s) above.


INITIAL MEMBER PARTICIPANTS: Anaheim x

Colton x LADWP x Azusa x Cerritos x Pasadena x Banning x Glendale x Riverside x Burbank x IID x Vernon

x Place an X in box next to the applicable Member(s) shown above.

SUBJECT: Authorization of 6-month true ups to project budgets under certain circumstances. RECOMMENDATION: Approve BACKGROUND: Conservative budgeting often results in large overcollections, which are refunded as part of an annual true up to actual for each project. In order to reduce the size of overcollections at year-end, an interim true up could be conducted at the 6-month point for only those projects which have a significant overcollection at 6 months, and which do not have expected higher cash flow requirements in the second half of the fiscal year. Project staff would analyze each project at 6 months, and recommend a 6-month true if appropriate. The Finance Committee and/or Project Participants could then request the interim true up.

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FISCAL IMPACT: Reduces the size of overcollections at the end of the fiscal year, and reduces the amount of money held at SCPPA.

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RESOLUTION OF THE SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY AUTHORIZING 6-MONTH TRUE UPS

WHEREAS, the Southern California Public Power Authority (the Authority) owns interests in various generation and transmission projects (each a “Project”), the output of which has been sold to Members of the Authority; and WHEREAS, the monthly billings to each Member for each project in which the Member participates are controlled by the annual Project budgets; and WHEREAS, an annual true up to actual costs is conducted at the end of each fiscal year for each Project; and WHEREAS, conservative budgeting practices often result in sizeable overcollections by the end of a fiscal year; and WHEREAS, the Members wish to limit the size of the overcollections. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Authority as follows:

1. The Executive Director or his designee is authorized to conduct an additional true up for any Project as of the mid-point of a fiscal year if: a) The 6-month Budget Comparison Report shows an

overcollection for a Project that is significant in the opinion of the Executive Director, acting on the advice of staff (including, where applicable, SCPPA/LADWP Accounting) and the Members participating in the Project;

b) The Executive Director concludes that the overcollection can be refunded without causing negative cash flow for the Project in the second half of the fiscal year; and

c) The Members participating in the Project request that all or a portion of the overcollection be refunded at that time.

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2. Any resulting refund will be credited to the Member on subsequent Project bills until fully refunded except as otherwise directed by the Member.

3. Nothing in this Resolution shall authorize the Executive Director to amend the budget for a Project without approval of the Board of Directors.


THE FOREGOING RESOLUTION is approved and adopted by the

Authority this 17th day of April, 2014. _________________________ PRESIDENT Southern California Public Power Authority

ATTEST:

______________________ SECRETARY Southern California Public Power Authority

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(Roll Call Vote) Los Angeles

Burbank


RESOLUTION OF THE SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY APPROVING THE ANNUAL BUDGET FOR COPPER MOUNTAIN 3 SOLAR PROJECT

FOR THE FISCAL YEAR JULY 1, 2013 THROUGH JUNE 30, 2014

BE IT RESOLVED by the Board of Directors of the Southern California Public Power Authority (the “Authority”) that: 1. The budget for the Copper Mountain 3 Solar Project for the Fiscal Year July 1, 2013 through June 30, 2014, submitted to this Board of Directors, is hereby approved. The Executive Director is hereby authorized and directed to place the budget so approved in final form, with such changes as shall be necessary or advisable to comply with the Copper Mountain 3 Solar Project Power Sales Contract; and the budget hereby approved, in such final form, shall constitute the Authority’s Annual Budget for Fiscal Year July 1, 2013 through June 30, 2014.


THE FOREGOING RESOLUTION is approved and adopted by the Authority, this 17th day of April 2014.

_________________________ PRESIDENT Southern California Public Power Authority

ATTEST:

______________________ ASSISTANT SECRETARY Southern California Public Power Authority

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MEETING DATE: April 17, 2014 RESOLUTION NUMBER: 2014- CONSENT DISCUSSION x RENEWAL NEW x Place an X in box next to the appropriate consideration(s) above.

FROM: METHOD OF SELECTION: Finance Competitive Energy Systems Cooperative Purchase Program Development Sole Source Regulatory/Legislative Single Source Project Administration x Other Legal If other, please describe: Place an X in box next to the appropriate consideration(s) above.



Colton LADWP x Azusa Cerritos Pasadena Banning Glendale Riverside Burbank x IID Vernon


SUBJECT: Approval of initial budget for the Copper Mountain 3 Solar Project. Test energy is about to start flowing, and funds will be needed to pay for energy and administrative costs. RECOMMENDATION: Approve BACKGROUND: CM3 is a product of the Renewable RFP and is about to start production. Located outside Las Vegas, near Hoover and Mead substation. It will be ramping up gradually from zero to 250 MW capacity between now and March 2015. FISCAL IMPACT: Billing to LADWP and Burbank will start in May.

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SCPPA BOARD MEETING APRIL 17, 2014

HOOVER UPRATING PROJECT STATUS REPORT

• Scheduled maintenance and preventive maintenance activities are continuing both

at the plant and the Visitors Center. • The reduced level of Lake Mead caused the power plant capacity to be reduced.

Due to seasonal fluctuations in lake level, current capacity was reduced or increased as follows:

Date Capacity* (MW)

Increase or Decrease

December 2009 1,656 MW

January 28, 2010 1,667 MW +11 MW

February 4, 2010 1,676 MW + 9 MW

February 18, 2010 1,688 MW +12 MW

April 9, 2010 1,680 MW - 8 MW

May 19, 2010 1,657 MW - 23 MW

June 21, 2010 1,640 MW -17 MW

July 21, 2010 1,617 MW -23 MW

October 4, 2010 1,591 MW -26 MW

January 12, 2011 1,603 MW +12 MW

January 20, 2011 1,615 MW +12 MW

January 26, 2011 1,627 MW +12 MW

February 9, 2011 1,639 MW +12 MW

June 17, 2011 1,668 MW +29 MW

July 13, 2011 1,721 MW +53 MW

July 28, 2011 1,732 MW +11 MW

August 16, 2011 1,747 MW +15 MW

August 30, 2011 1,771 MW +14MW September 13, 2011 1,779 MW +8 MW

October 5, 2011 1,794 MW +15 MW

October 17, 2011 1,810 MW +16 MW

November 3, 2011 1,819 MW +9 MW November 16, 2011 1,828 MW +9 MW

November 25, 2011 1,837 MW +9 MW

December 6, 2011 1,846 MW +9 MW

31

December 13, 2011 1,855 MW +9 MW

December 20, 2011 1,864 MW +9 MW

January 28, 2012 1,885 MW +21 MW

April 4, 2012 1,861 MW -24 MW

April 24, 2012 1,849 MW -12 MW

May 18, 2012 1,829 MW -20 MW

June 19, 2012 1,802 MW -20 MW

January 4, 2013 1,819 MW +17 MW

January 30, 2013 1,829 MW +10 MW

April 8, 2013 1,809 MW -20 MW

May 1, 2013 1,774 MW -35 MW

May 24, 2013 1,753 MW -21 MW

July 5, 2013 1737 MW -16 MW

April 11, 2014 1700 MW * Full capacity is 2,074 MW.

• Capacity reductions or increases are applied pro rata to both Schedule A and

Schedule B Contractors. • Lake Mead is currently at 1,100 feet of elevation, down 6 feet from the March report.

• The Hoover Power Act of 2011 was signed by President Obama in December 2011.

This authorizes renewal of the contracts for current Contractors for 50 years, and opens up 5% of capacity and energy for new entrants.

• New applicants have until March 31, 2014 to submit applications.

• Contractors are meeting to develop recommendations for new contracts.

• Contractors agreed to fund 3 additional low-head turbines in July 2012, following

successful testing of the pilot unit. The new turbines are more efficient at low lake levels, and have a smaller rough zone. Coupled with recent control improvements, when all four are completed, fewer units will have to be spinning to provide requested capacity levels.

• Total increased capacity at low lake levels from all recent improvements is 104 MW.

• Contractors concluded their effort to pay off/refinance the debt on the Visitors’

Center. The transaction was completed March 12, 2014, and is expected to reduce Hoover cost going forward by over 5%.

32

Ron S. Maxwell Phone (818) 238-3631

April 17, 2014

MAGNOLIA POWER PROJECT STATUS REPORT

March 2014

Reporting Period

March 1-31, 2014

Workforce Safety Statistics

There were zero (0) lost time accidents in March and zero (0) year-to-date (YTD).

There were zero (0) reportable incidents in March and zero (0) YTD.

Plant Performance Information

Availability: 100.0% in March, 96.6% fiscal year-to-date (FYTD), 95.0% YTD (A table showing monthly plant availability for the past 15 months is attached.)

Unit Capacity Factor (240 MW): 81.2% in March, 83.3% FYTD, 80.8% YTD

Fired Factored Hours: 744.0 hours in March

Statistics: Details are provided in the attached monthly production report entitled “Year-to-Date Summary of Statistics for FY 2013-2014 & CY 2014.”

Plant Outage Summary and Other Actions taken by Operating Agent

There were no plant trips or outages during March 2014. A table entitled “Outage Summary” is attached; it shows the list of planned and forced outages that have occurred over the past twelve months. The “2011-2015 Scheduled Inspection Plan” also is attached showing the calendar for past and future planned outages at the Magnolia Power Plant (MPP).

The gas cooler (heat exchanger) on the Fuel Gas Compressor “A” skid developed tube leaks that contaminated the closed cooling water system. This compressor was removed from service temporarily to inspect the heat exchanger and plug several leaking (carbon steel) tubes. Testing of the gas cooler on the Fuel Gas Compressor “B” skid indicated no failed heat exchanger tubes. BWP is procuring new/upgraded heat exchanger (stainless steel) bundles to provide a long-term solution to this reliability issue. It is estimated to take eleven weeks for the supplier to fabricate and deliver the two new/upgraded exchanger bundles.

34

2013 2013 2013 2013 2013 2013 2014 2014 2014 2014 2014 2014

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun FYTD YTD

MWH 100,465 102,167 80,635 98,362 98,741 105,206 87,453 92,599 93,791 859,419 273,843MWH 59,018 60,142 47,962 57,701 57,228 59,972 50,390 53,287 56,594 502,294 160,271MWH 159,483 162,309 128,597 156,063 155,969 165,178 137,843 145,886 150,385 1,361,713 434,114

MWH 5,650 5,640 4,533 5,508 5,455 5,556 4,698 4,658 5,454 47,152 14,810MWH 7 7 427 107 6 7 353 6 7 927 366MWH 153,833 156,669 124,064 150,555 150,514 159,622 133,145 140,928 144,931 1,314,261 419,004

% 86.2% 87.7% 71.8% 84.3% 87.0% 89.4% 74.6% 87.4% 81.2% 83.3% 80.8%

BTU/KWh 11,133 11,067 11,196 11,119 11,059 10,946 10,994 10,994 11,318 11,408 11,512BTU/KWh 7,014 6,985 7,025 7,008 7,012 7,036 6,975 6,980 7,058 7,137 7,262BTU/KWh 7,271 7,236 7,282 7,264 7,266 7,281 7,221 7,225 7,324 7,394 7,524

Hours 744.0 744.0 720.0 744.0 721.0 744.0 744.0 672.0 744.0 6,577 2160.0Hours 744.0 744.0 612.2 736.5 721.0 744.0 635.9 672.0 744.0 6,354 2,051.9Hours 1.0 28.3 8.4 0.0 2.7 20.1 0.0 4.4 0.0 65 4.4

% 100.0% 100.0% 85.0% 99.0% 100.0% 100.0% 85.5% 100.0% 100.0% 96.6% 95.0%Hours 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Hours 0.0 0.0 102.4 0.0 0.0 0.0 108.1 0.0 0.0 210.5 108.1Hours 0.0 0.0 5.4 7.5 0.0 0.0 0.0 0.0 0.0 12.9 0.0

% 0.0% 0.0% 0.8% 1.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.0%Hours 0.0 0.0 0.0 7.5 0.0 0.0 108.1 0.0 0.0 115.6 108.1Hours 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Hours 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Hours 744.0 744.0 612.2 736.5 721.0 744.0 635.9 672.0 744.0 6,354 2,051.9Hours 21,899 21,155 20,543 19,806 19,085 18,341 17,705 17,033 16,289 - -

Estimated Date of Next Major Outage March 2016

DTH 1,118,460 1,130,640 902,790 1,093,680 1,091,969 1,151,587 961,477 1,018,037 1,061,487 9,530,127 3,041,001DTH 105 3,045 630 0 1,638 10,574 0 175 0 16,167 175

MMSCF 0.1 2.9 0.6 0.0 1.6 10.1 0.0 0.2 0.0 16 0.2MMSCF 570.0 567.1 566.5 566.5 564.9 554.8 554.8 554.6 554.6 - 554.6

DTH 1,118,565 1,133,685 903,420 1,093,680 1,093,607 1,062,161 961,477 1,018,212 1,061,487 9,446,294 3,041,176BTU/SCF 1,026 1,025 1,026 1,023 1,023 1,026 1,030 1,030 1,050 1,029 1,037

(FFH) From Steam Injection

Gas Btu (HHV)

Duct Burner Fuel RemainingTotal Plant Usage

Total Factored Fired Hours

Duct BurnerDuct Burner

(FFH) Before Next Inspection

FUEL USAGE AND QUALITYCombustion Turbine

ENERGY

MAGNOLIA MONTHLY PRODUCTION REPORTYear-to-Date Summary of Statistics

FY 2013-2014 & CY 2014

AVAILABILITY

Combustion Turbine (Gross)Steam TurbinePlant Generation (Gross)

Plant Auxiliaries (Unit Aux.)Plant Auxiliaries (Reserve)Plant Generation (Net)Capacity Factor (240 MW net)

Total Plant (Net)

THERMAL EFFICIENCYCombustion Turbine (Gross)Total Plant (Gross)

Off-line yet Available Hours

Forced OutageTotal Hours Off-LineForced Derated Hours

Hours in the MonthPlant Operating HoursDuct Burner Operating HoursPlant Availability

Forced Outage HoursPlanned Outage Hours

35

Magnolia Power Plant - Outage Summary

Outage # Start Date/Time End Date/Time Hours

None

Forced (FO) or Planned

Outage (PO)Start Date End Date Hours

PO November 21, 2012 March 9, 2013 2580.1 Down for Scheduled Inspection & Repair after 48,000 hrs of operation.FO March 9, 2013 April 29, 2013 1224.8 Forced extension of planned outage for STG HP Rotor repairs.PO April 30, 2013 May 3, 2013 71.2 Maintenance outage taken for cut-in of new abradable seals in the ST.PO June 21, 2013 June 24, 2013 59.9 CT water washFO June 24, 2013 June 25, 2013 17.1 Down to repair steam leak from the HP steam isolation valve packing.PO September 20, 2013 September 25, 2013 102.4 CT water wash and borescope inspection.FO September 30, 2013 October 1, 2013 12.9 ST tripped on controller i/o card failurePO January 3, 2014 January 8, 2014 108.1 CT water wash, ST borescope inspection, and boiler inspection

Outages during the reporting period March 1-31, 2014Comments

Cause

Summary of Outages during the Past Twelve Months

36

Magnolia Power Plant - Availability Summary Table

Monthly Quarterly Semi-Annual AnnualJan-130.0%Feb-13 Q1 '130.0% 0.0%Mar-130.0% H1 '13Apr-13 26.7%3.2%May-13 Q2 '1392.8% 62.1%Jun-1389.3% Yr '13Jul-13 64.6%

100.0%Aug-13 Q3 '13

100.0% 95.1%Sep-1385.0% H2 '13Oct-13 97.4%

99.0%Nov-13 Q4 '13

100.0% 99.7%Dec-13

100.0%Jan-1485.5%Feb-14 Q1 '14

100.0% 95.0%Mar-14

100.0%

37

(29) January 2014

Off-line 10:00 PM 09/14/2012

Start-Up 6:00 AM 09/18/2012 Shut down due to trip

(30)* April 2014

Off-line 5:00 AM 03/5/2012 Start-Up 6:00 AM 03/8/2012

Ops. Shut down due to gas leak

Off-line 6:00 PM 11/21/2012 Start-Up 6:00 AM 4/28/2013 STG Steam Seal replacement,

STG Protection Relay 48,000 Major

Water Wash-#26 Combustion Inspection-#3

Hot Gas Path-#2 Major Inspection-#1

(36)* November 2015

(21) Off-line 6:00 PM 10/21/2011 Start-Up 6:00 AM 11/07/2011

CT fuel nozzle replacement to resolve lean blow outs.

Off-line 6:00 PM 05/10/2011 Start-Up 6:00 AM 05/24/2011

HMI UPGRADE, AUTO TUNE GENERATION RELAY PROTECTION

Off-line 6:00 PM 03/04/2011 Start-Up 6:00 AM 03/31/2011 Shutdown for economic reasons

(18) Off-line 6:00 PM 12/21/2010

Start-Up 6:00 AM 01/31/2011 (Remove & test NOx & CO catalyst coupons, Inspect & Revise Hangers,

Borescope Inspection, ST Turbine/Genbearing inspection, New stg LO pumps

2011-2015

Magnolia Power PlantScheduled Inspection Plan

INSPECTIONS

( 5,006 hrs) 2011 Total Fired Hours

PROJECTED ANNUALY

Offline Water Wash*

90 day intervals @ 2160 hours

CombustionInspection &Hot Gas PathEvery 24,000 Hrs

Requires a 21 Day Outage

Major Every 48,000 Hrs

Actual End of Year

Total Timer Hours 2011

57,100.5 hrs

as of April 1, 2014

2012

(7,325 hrs) 2012

Water Wash

Combustion Inspection

Hot Gas Path Inspection

Major Inspection

March 2012

June 2012

January 2012 37,039.5

March 2011

January 2011

37,823.2

May 201138,000.0

40809.0 October 2011


Generation Protection Relay Trip Triennial Source Testing

08/02/2011 - ONLINE 100% Load With No Duct Burners 08/03/2011 - ONLINE 100% Load With Duct Burners

42,706.1 22 Off-line 6:00 PM 01/25/2012 Start-Up 6:00 AM 01/30/2012

Boiler inspection

2013

(6,120 hrs) 2013

June 2013

2014

( 8,352 hrs) 2014

(31)* July 2014

2015

( 8,304 hrs) 2015

(33)* January 2015

(34)* April 2015

(32)* October 2014

(35)* July 2015

Nov 2012 49,370.0

43,411.5(23)


(24) 46,003.5

48,163.5 Sept 2012

(25)

42,106.1


ST Overspeed Trip Test


Gland Seal Borescope




HMI Upgrade




Start-Up 6:00 AM 4/28/2013

Continuation of Major Outage

* Future Outage date are subject to

change.

50,619.0


52,704.0 Sept 2013Off-line 6:00 PM 9/20/2013 Start-Up 6:00 AM 9/25/2013

CT Borescope Inspection R1/S0 Inspection

(28)

55,105.0

38

SCPPA BOARD MEETING APRIL 17, 2014

PALO VERDE NUCLEAR GENERATING STATION STATUS REPORT

Plant Operations: Following is the status of the plant as of April 9, 2014: • Unit 1 is operating at full power and is on its 346th day of continuous operation. • Unit 2 is on the 4th day of its refueling and maintenance outage which started on April 5,

2014 and is scheduled to be completed on May 4, 2014. • Unit 3 is operating at full power and is on its 134th day of continuous operation. Through March 2014, the year-to-date capacity factors of the units and the station are as follows:

Capacity Factor Unit 1 99.5% Unit 2 100.2% Unit 3 99.7% Station 99.8%

Budget: Through February 2014, the year-to-date cost report is summarized as follows:

(In $millions) Year-to-Date Budget Actual Variance

O&M 92.5 90.6 (1.9) Capital 34.9 25.8 (9.1)

Fuel 105.8 80.7 (25.1) Total 233.2 197.1 (36.1)

The year-to-date underrun in the O&M budget was due to the budget timing of some O&M modifications and projects, Water Reclamation Facility’s equipment, maintenance and contractor support; partially offset by payroll and staffing, online site overtime, and the early milestone payment for Unit 2’s Steam Generator Eddy Current Testing. The year-to-date underrun in the Capital budget was due to budget savings realized from the WRF projects and budget timing related to the new West End infrastructure. The year-to-date underrun in the Fuel budget was due to favorable uranium market conditions, the delay of spent fuel cask procurement, and the advancement of uranium purchase from 2014 to 2013. The year-end budget projection is as follows:

1 39

(In $millions) Year-End Budget Forecast Variance

O&M 638.0 635.5 (2.5) Capital 235.0 235.0 0.0

Fuel 325.6 303.6 (22.0) Total 1,198.6 1,174.1 (24.5)

The year-end goal is to achieve an O&M budget underrun of at least $2.5M. The year-end Fuel budget underrun is due to the lower-than-budgeted uranium prices. Other Issues The # 2 Station Blackout Generator (SBOG) tripped on February 23, 2014 due to high vibrations and was unavailable until March 27, 2014. A decision was made to replace the SBOG instead of repairing the equipment due to the extent of the damage. The expedited replacement was also necessary to restore SBOG availability to support the planned Unit 2’s Diesel Generator ‘B’ Super Outage which was delayed until repair work on the SBOG was completed. The outage which involved maintenance work on the Diesel Generator, the Diesel fuel oil system, the Essential Cooling Water system, and the Spray Pond system, as well as, the installation of an Auto Voltage Regulator (AVR) modification was finally completed on April 1, 2014. For the 22nd consecutive year, Palo Verde was considered the nation’s largest power producer, generating 31.4M MWh in 2013. Palo Verde remains the only U.S. generating facility to ever produce more than 30M MWh in a year – an operation accomplishment the plant has achieved on nine separate occasions. According to industry data, Unit 2 produced more electricity than any other reactor in the United States and was the second most productive in the world in 2013. The unit also achieved a 94.78% capacity factor, the highest of all plants in the world top 10 rankings. Palo Verde Unit 1 ranked third in the U.S. and the seventh in the world, despite a scheduled refueling outage in Spring 2013. Unit 3, which also underwent a scheduled refueling outage in Fall 2013, ranked 16th in the U.S. and 28th in the world. Other 2013 accomplishments accomplished included a record refueling outage in which Unit 1’s Spring 2013 outage was completed in only 29 days, 18 hours; and outstanding simultaneous operation of all three units for 160 days, the second-longest continuous run in plant history. In response to the Fukushima accident, the Nuclear Regulatory Commission has required U.S. facilities to further strengthen the plants’ ability to withstand extreme events by acquiring more backup emergency equipment, ensuring sufficient cooling water supply, installing additional instruments to monitor used fuel storage pools, and revisiting seismic and flooding hazards, among others. In addition to purchasing additional backup power equipment, Palo Verde has recently completed its designs for required mechanical modifications that include additional connections/tie-ins from water tanks to the reactors and steam generators. The design for the spent fuel level instrumentations is scheduled for completion sometime in early April while further analyses and assessments are being performed for the seismic and flooding hazard evaluations required by NRC. Because these Fukushima-related modifications would require significant capital funding, several capital projects, such as power uprate efforts have been deferred indefinitely.

2 40

Michael J. Taylor Phone: (760) 339-0506 Mar. 31, 2014

SAN JUAN UNIT 3 STATUS REPORT

April 2014 EQUIVALENT AVAILABILITY FACTOR February 2014: 88.64% 2014 Y-T-D: 80.05% UNIT CAPACITY FACTOR February 2014: 83.80% 2014 Y-T-D: 75.55% OPERATIONAL NOTES (Unit Outages/Significant De-rates)

02/01/2014: De-rated 24 MW for approximately 3:06 hours due to SO2 removal. 02/01/2014: De-rated 44 MW for approximately 0:43 hours due to SO2 removal. 02/02/2014: De-rated 44 MW for approximately 24:00 hours due to SO2 removal problems. 02/03/2014: De-rated 44 MW for approximately 15:33 hours, due to SO2 removal problems. 02/03/2014: De-rated 44 MW for approximately 7:45 hours due to SO2 removal problems. 02/04/2014: De-rated 69 MW for approximately 17:22 hours due to SO2 removal problems. 02/04/2014: De-rated 44 MW for approximately 4:02 hours due to SO2 removal problems. 02/05/2014: De-rated 44 MW for approximately 19:21 hours due to SO2 removal problems. 02/05/2014: De-rated 34 MW for approximately 4:38 hours due to SO2 removal problems. 02/06/2014: De-rated 34 MW for approximately 24:00 hours due to SO2 removal problems. 02/07/2014: De-rated 34 MW for approximately 11:00 hours due to SO2 removal problems. 02/07/2014: De-rated 64 MW for approximately 7:04 hours due to SO2 removal problems. 02/07/2014: De-rated 44 MW for approximately 3:22 hours due to SO2 removal problems. 02/07/2014: De-rated 34 MW for approximately 2:33 hours due to SO2 removal problems. 02/08/2014: De-rated 34 MW for approximately 8:30 hours due to SO2 removal problems. 02/08/2014: De-rated 234 MW for approximately 14:19 hours due to 3B clinker grinder failure. 02/08/2014: De-rated 34 MW for approximately 1:10 hours due to SO2 removal problems. 02/09/2014: De-rated 44 MW for approximately 3:33 hours due to SO2 removal problems. 02/09/2014: De-rated 34 MW for approximately 4:25 hours due to SO2 removal problems. 02/09/2014: De-rated 19 MW for approximately 5:04 hours due to SO2 removal problems. 02/09/2014: De-rated 54 MW for approximately 2:15 hours due to SO2 removal problems. 02/09/2014: De-rated 44 MW for approximately 1:50 hours due to SO2 removal problems. 02/09/2014: De-rated 34 MW for approximately 0:37 hours due to SO2 removal problems. 02/09/2014: De-rated 24 MW for approximately 6:15 hours due to SO2 removal problems. 02/10/2014: De-rated 24 MW for approximately 8:59 hours due to SO2 removal problems. 02/10/2014: De-rated 54 MW for approximately 6:12 hours due to SO2 removal problems. 02/10/2014: De-rated 34 MW for approximately 8:48 hours due to SO2 removal problems. 02/11/2014: De-rated 34 MW for approximately 1:56 hours due to SO2 removal problems. 02/11/2014: De-rated 224 MW for approximately 9:41 hours due to clinker in bottom ash. 02/11/2014: De-rated 34 MW for approximately 8:23 hours due to SO2 removal problems. 02/11/2014: De-rated 154 MW for approximately 1:35 hours due to 3C stock feeder plugged. 02/11/2014: De-rated 34 MW for approximately 1:35 hours due to SO2 removal problems. 02/11/2014: De-rated 144 MW for approximately 0:49 hours due to 3D coal silo bridged over. 02/12/2014: De-rated 144 MW for approximately 2:30 hours due to 3D coal silo bridged over. 02/12/2014: De-rated 34 MW for approximately 11:00 hours due to SO2 removal problems. 02/12/2014: De-rated 204 MW for approximately 2:15 hours due to clinker in bottom ash. 02/12/2014: De-rated 34 MW for approximately 8:14 hours due to SO2 high emissions.

41

Michael J. Taylor Phone: (760) 339-0506 Mar. 31, 2014

02/13/2014: De-rated 34 MW for approximately 7:38 hours due to SO2 high emissions. 02/13/2014: De-rated 144 MW for approximately 1:33 hours due to clinker in bottom ash hopper. 02/13/2014: De-rated 204 MW for approximately 1:34 hours due to clinker in bottom ash hopper. 02/13/2014: De-rated 224 MW for approximately 1:58 hours due to clinker in bottom ash. 02/14/2014: De-rated 224 MW for approximately 3:23 hours due to clinker in bottom ash. 02/14/2014: De-rated 224 MW for approximately 0:16 hours due to 3B boiler feed pump leak. 02/15/2014: De-rated 224 MW for approximately 24:00 hours due to 3B boiler feed pump leak. 02/16/2014: De-rated 224 MW for approximately 24:00 hours due to 3B boiler feed pump leak. 02/17/2014: De-rated 224 MW for approximately 2:09 hours due to 3B boiler feed pump leak. 02/19/2014: De-rated 44 MW for approximately 4:51 hours due to RATA testing for CO2. 02/21/2014: De-rated 24 MW for approximately 7:35 hours due to C Mill unavailable. 02/22/2014: De-rated 44 MW for approximately 6:14 hours due to C Mill unavailable. 02/23/2014: De-rated 44 MW for approximately 24:00 hours due to C Mill unavailable. 02/24/2014: De-rated 44 MW for approximately 24:00 hours due to C Mill unavailable. 02/26/2014: De-rated 44 MW for approximately 0:27 hours due to slagging in SSH section of boiler. 02/26/2014: De-rated 164 MW for approximately 1:01 hours due to slagging in SSH section of boiler. 02/27/2014: De-rated 344 MW for approximately 3:31 hours due to slagging in SSH section of boiler. 02/27/2014: De-rated 164 MW for approximately 4:28 hours due to slagging in SSH section of boiler. 02/27/2014: De-rated 144 MW for approximately 9:42 hours due to slagging in SSH section of boiler. 02/27/2014: De-rated 119 MW for approximately 6:18 hours due to slagging in SSH section of boiler. 02/28/2014: De-rated 119 MW for approximately 3:29 hours due to slagging. 02/28/2014: De-rated 94 MW for approximately 1:59 hours due to slagging. 02/28/2014: De-rated 44 MW for approximately 18:29 hours due to slagging.

SAN JUAN PROJECT UPDATE Monthly Operating Report and O&M Update • SCPPA’s variance to budget cost (less fuel) for the San Juan Project year-to-date through January 2014 was

$135,109 or 4.77% under plan. • The average bus bar energy cost for Unit 3 year-to-date through February 2014 was $32.40 per MWH. This was

due primarily to an insurance reimbursement/recovery for damages caused by the 2012 coal fire. • The equivalent forced outage rate for Unit 3 year-to-date through February 2014 was 18.08%. This compares to

an equivalent forced outage rate for 2013 of 20.31%. • The year-to-date OSHA Recordable Injury Rate for the San Juan Generating Station through February 2014

was 3.66. The year-to-date OSHA Lost Time Injury Rate through February 2014 was 0.0.

42

TO: Board of Directors FROM: Tanya DeRivi, Director of Regulatory Affairs SUBJECT: Regulatory Update DATE: April 9, 2014 Numerous staffing changes in recent weeks at both ARB and the Energy Commission have and will likely continue to impact program implementation in coming months. This includes ARB’s climate change programs and CEC’s RPS program. This memorandum includes updates on the following regulatory matters: • CEC SB 1 POU Report; • ARB Climate Change Scoping Plan; and • Summary of Federal items of interest.

CEC SB 1 SOLAR REPORT A joint CMUA/NCPA/SCPPA staff response to the CEC staff’s draft POUs’ Compliance with SB1 report has been submitted. We are expecting to meet with CEC staff leads soon to review issues and concerns outlined in our letter to clarify POU progress towards meeting our SB 1 goals. We have initially committed to providing a more robust annual report by the July 1 deadline. SCPPA is coordinating the preparation of that report in a two-step process to first collect any prior-year data corrections and individualized programmatic information for comparison and analysis purposes (e.g., installation v. expenditure goal(s), rebate levels, rates); then to request new 2013 data. Lead Commissioner David Hochschild had requested an evaluation of POU progress toward meeting SB 1 solar goals. He is interested in knowing why progress has been slow and what barriers are preventing POUs’ ability to meet the goals. A number of utilities questioned the accuracy of the CEC staff’s report numbers. ARB CLIMATE CHANGE SCOPING PLAN UPDATE SCPPA drafted CMUA-coordinated comments to be submitted by the April 28 deadline. The final update is expected to be considered at the May 22 ARB Board Meeting. The comments will emphasize the need for further consideration to: 1) determine whether interim and long-term emissions reduction targets are technologically feasible, adequately demonstrated, and can be implemented in a cost-effective manner; 2) develop a cost-containment plan as soon as possible; and 3) provide that electric utilities should continue to receive an allocation of allowances under the current allocation methodology if a post-2020 Cap-and-Trade Program is implemented.

43

FEDERAL UPDATE • OSHA/Power Line Safety Standards. A long-awaited final rule to update OSHA

construction standards for transmission and distribution installations will become effective on July 10. The revised rule has been under development for a decade – to update standards issued forty years ago. APPA had long urged that utilities be provided additional time to implement the more complicated elements of the standard; the compliance deadline for some provisions on fall protection, minimum approach distances, and arc-flash protection was extended to April 1, 2015. OSHA staff acknowledged the difficulty utilities will face in addressing those provisions within a short timeframe.

• CFTC/“Swap Dealer” Relief: CFTC’s Division of Swap Dealer and Intermediary Oversight issued a no-action letter on March 21 providing relief from certain requirements of the $25 million special entity de minimis sub-threshold exception from the definition of a “swap dealer.” This re-establishes the ability of municipal utilities to be counterparties on swaps with IOUs, natural gas distributors, and independent power generators – once again on par with the IOUs and rural electric co-ops. An entity will be allowed to deal in utility operations-related swaps and not be required to register as a swap dealer, provided that the aggregate gross notional amount of swap dealing does not exceed $8 billion per year (instead of just $25 million per year). APPA is still urging that CFTC make the decision permanent, which Commissioner Mark Wetjen has now committed to do through a formal rulemaking.

44

Morgan Meguire LLC

Memorandum

TO: Bill Carnahan, Executive Director FROM: Lori J. Pickford, Executive Vice President DATE: April 8, 2014 RE: April Legislative Report

I. Dodd-Frank Update

CFTC Issues No Action Letter on Sub-Threshold On March 21, the Commodity Futures Trading Commission (CFTC) issued a temporary No-Action Letter that effectively implements the changes sought by the “Public Power Risk Management Act.” On April 3, Acting Chairman Mark Wetjen released a draft rule proposing to make the changes permanent for public power utilities seeking to hedge their operations-related risks with swaps. “The Commission must continue to remain open to revisiting certain rules and making adjustments as necessary,” Acting Chairman Wetjen said. (His full statement is here.) The No Action letter and formal rule proceeding are welcome news for public power, and the industry remains cautiously optimistic that the development could bring lost counterparties back to the table immediately. However, because it is not codified in law, APPA and others will continue to push for enactment of S. 1802/H.R. 1038 on Capitol Hill.

CFTC Hosts Roundtable on Energy End-User Issues Also on April 3, the CFTC held a public roundtable focused on energy end-user issues, including a panel focused on the special entity “sub-threshold,” which was the subject of a March 21 No-Action Letter implementing the changes sought by public power. At the roundtable, Acting CFTC Chairman Wetjen announced he had just released a draft rule proposing to make the changes permanent. The sub-threshold panelists, which included Randy Howard of LADWP, Patty Dondanville of Reed Smith law firm and the author of the public power petition for relief, and an officer from the Bonneville Power Administration, among others, thanked the commissioners for the No-Action Letter and their efforts toward a rulemaking. They described the sub-threshold’s impact on their systems and the resulting loss of counterparties.

1

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http://www.cftc.gov/PressRoom/SpeechesTestimony/wetjenstatement040314

Two other panels discussed changes to the CFTC’s Rule 1.35, which requires certain entities to record and make searchable scores of written and oral communications regarding transactions, and the regulatory distinction between swaps and contracts with embedded volumetric optionality.

House Ag Leaders Introduce Bill to Protect End-Users On April 7, House Agriculture Committee Chairman Frank Lucas (R-OK) and Ranking Member Collin Peterson (D-MN) unveiled a bipartisan CFTC reauthorization bill – the “Customer Protection and End-User Relief Act” (H.R. 4413) – that the panel will mark up April 16. Included in the bill is a provision identical to the legislative language in the “Public Power Risk Management Act” (H.R. 1038), supported by SCPPA. The bipartisan bill would go beyond the narrow scope of H.R. 1038 to ensure that all end users, or non-financial companies that use derivatives to hedge risks, would be largely exempt from the new regulations on derivatives implemented under the Dodd-Frank law, according to CQ Roll Call’s Ben Weyl. Morgan Meguire will review additional provisions in the bill and report as appropriate. II. Cyber Security Update

Senate Energy Leaders Seek Answers to Leaked FERC Documents

On March 27, Senate Energy and Natural Resources (ENR) Chair Mary Landrieu (D-LA) and Ranking Member Lisa Murkowski (R-AK) sent a letter asking the DOE Inspector General(IG) Gregory Friedman to investigate the apparent leak of sensitive information at the Federal Energy Regulatory Commission (FERC) regarding grid vulnerabilities. The report said that attacks on nine critical substations could potentially shut down the U.S. electric grid for 18 months or more. This information was first highlighted in a March 7 article in the Wall Street Journal. “Whoever is the source of this leak – and it appears to be someone with a great deal of access to highly sensitive, narrowly distributed FERC documents – is clearly putting our nation at risk. If his or her actions are not illegal, they should be,” Sen. Murkowski said. “If the IG determines that there was no breach of existing regulations… we will consider introducing legislation to make sure that the unauthorized disclosure of non-public information about energy infrastructure that puts our nation at risk is a violation of federal law,” the senators wrote. In related news, the Senate ENR committee will hold an oversight hearing on April 10 to review developments affecting the cyber and physical security of the electric grid. Sue Kelly, President and CEO of APPA, will testify on behalf of the electric sector. Other invited witnesses include FERC, the North American Electric Reliability Corporation (NERC) and the National Association of Regulatory Utility Commissioners.

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http://agriculture.house.gov/sites/republicans.agriculture.house.gov/files/pdf/legislation/CustomerProtectionandEndUserReliefAct.pdf

http://beta.congress.gov/search?q=%7B%22congress%22%3A%22113%22%2C%22source%22%3A%22legislation%22%2C%22search%22%3A%22hr%204413%22%7D

http://beta.congress.gov/search?q=%7B%22congress%22%3A%22113%22%2C%22source%22%3A%22legislation%22%2C%22search%22%3A%22hr%201038%22%7D

FERC Issues Directive on Physical Security Standards

On March 7, FERC had given NERC 90 days to develop physical security standards for critical facilities. FERC anticipates that number of such critical facilities will be relatively small – not all Bulk Power System (BPS) facilities. The standards will require owners and operators to: 1) perform a risk assessment of their system; 2) identify critical facilities as defined in the order; and 3) develop and implement a security plan to protect those assets against potential threats and vulnerabilities to their physical security. A plan must be verified by a third party – which could be NERC, a regional entity or other entity. FERC said it is not proposing any specific requirements or pre-judging what NERC may submit. In supporting the directive, Commissioner John Norris cautioned that security efforts must be balanced against affordability. Acting FERC Chair Cheryl LaFleur called the leak and subsequent reporting “irresponsible,” and called for an investigation into how the report was leaked.

Markey, Waxman Introduce Grid Security Bills On March 26, Sen. Ed Markey (D-MA) and Rep. Henry Waxman (D-CA) introduced companion grid security bills in the Senate and House. The legislation would expand Federal Power Act (FPA) authority of FERC to provide emergency authority to direct utilities to take action in the event of a presidentially-declared “imminent threat” of a geomagnetic storm, or a cyber, physical, or electromagnetic pulse attack on the grid. It would also expand FERC’s authority to address “vulnerabilities” of the grid, including generation, transmission and distribution assets used to serve defense critical infrastructure facilities. Markey and Waxman championed a similar 2010 bill in the House Energy and Commerce Committee, where they both held senior seats, winning Republican support on the way to eventual House passage. The bill died, however, in the Senate.

NERC Releases GridEx II Report NERC on March 12 released an “After Action Report” on the Grid Security Exercise (GridEx II) it conducted on Nov. 13 and 14, 2013. The exercise, a simulated, coordinated cyber and physical attack on the BPS, was designed to promote coordination between and among utilities, NERC, law enforcement, and government and to highlight urgent issues the industry faces. Key objectives were to:

• Exercise the current readiness of the electricity industry to respond to a security incident; • Review existing command, control, and communication plans and tools for NERC and its

stakeholders; and • Identify potential improvements in cyber and physical security plans, programs, and

responder skills.

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Over 234 organizations participated in GridEx II, with more than 2000 individuals from key BPS functions, and well as officials from the Departments of Energy and Homeland Security, and the FBI. The report describes lessons learned and recommendations, based on a review of the exercise and after-action survey of participants. They include: 1) continue to enhance information sharing; 2) continue to enhance NERC coordination; 3) clarify reporting roles and functions within entities in event of a combined cyber/physical event; 4) continue improvement of incident response; and 5) continue improvement of situational awareness content. The review concluded that the GridEx program has matured since GridEx 2011, and noted that participants want that growth to continue with programmatic and scope-related enhancements for GridEx III in November 2015. III. Energy Update

House Passes Targeted Energy Efficiency Bills On March 5, the House passed H.R. 2126, the “Energy Efficiency Improvement Act”, sponsored by Reps. David McKinley (R-WV) and Peter Welch (D-VT). The bill incorporated four separate bills into one package and passed by a bipartisan vote of 375-36. Of interest to public power is a modification to DOE requirements for electric grid-connected water heaters used for demand response and energy storage. Though H.R. 2126 is narrower in scope than the recently-reintroduced efficiency bill S. 1392 from Sens. Jeanne Shaheen (D-N.H.) and Rob Portman (R-Ohio), the bills have many provisions in common.

Quadrennial Energy Review Meetings Announced

DOE has announced that it will hold the first in a series of public meetings on April 11 to discuss the Quadrennial Energy Review (QER). The first meeting will be held in Washington, DC on the topic of Infrastructure Resilience and Vulnerabilities (Cyber, Physical, Climate, and Interdependencies). On Jan. 9, the QER was initiated through a Presidential Memorandum to address the needs of infrastructure for transmitting, transporting and delivering energy. DOE’s new Office of Energy Policy and Systems Analysis (EPSA) has been assigned to lead the QER Task Force to accomplish the goals of the Review. Upcoming meetings will cover topics including: Infrastructure Constraints (New England); Infrastructure Constraints (Bakken, North Dakota); Electricity Transmission, Storage & Distribution (Portland, OR); Petroleum Product Transmission and Distribution (Louisiana); and Rail, Barge, and truck Transportation (Chicago, Illinois).

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House Republicans Question Eastern RTOs about System Reliability House Energy and Commerce Committee Republican leaders continued their oversight of RTO/ISO markets with March 26 letters to the CEOs of PJM, MISO, NYISO and ISO-NE, expressing concern about how the bitterly cold winter affected electric generation, deliverability, and prices. Committee Chair Fred Upton (R-MI), Energy and Power Subcommittee Chair Ed Whitfield (R-KY), and three other senior Committee Republicans asked the RTO/ISOs how higher-than-originally anticipated coal plant closures will affect grid reliability, and what would have happened this winter if coal-fired units, other fossil-fueled units, or nuclear power plants that have announced retirements had not been available. For each RTO/ISO system, the legislators asked specific questions about their operating reserves, capacity that failed to produce when called upon, electricity imports from other systems, unplanned loss of load, generation outages or curtailments due to lack of fuel, and adjustment to generation dispatch or commitments due to natural gas system conditions - affected their performance this winter. With regard to future grid reliability, the Members asked how many units ran this winter, how the RTO/ISOs plan to replace the capacity provided by the retiring units, anticipated use of natural gas replacement plants and whether there is sufficient natural gas pipeline capacity to serve anticipated new natural gas plants. The letters coincided with the technical conference FERC held on April 1, to examine how the eastern markets performed this winter. The letters also echo concerns expressed by Senate ENR Ranking Member Murkowski, in her recent Electricity White Paper. IV. Tax Update

Administration’s FY15 Budget Caps Municipal Bond Interest

On March 4, President Obama released his Administration’s $3.9 trillion FY 2015 budget, which contains a $250 billion increase over what was enacted for FY14. Among the tax increases in the document is the proposal to cap municipal bond interest, estimated to raise $598 billion over the next 10 years. The new revenue would offset the cost of additional spending and tax breaks proposed in the budget.

Senate Finance Committee Reports Tax Extension Package

Senate Financial Services Chairman Ron Wyden (D-OR) and Ranking Member Orrin Hatch (R-UT) moved a $67 billion “extenders” package, called the “EXPIRE Act of 2014,” which would provide two-year extensions to many tax breaks that expired at the end of last year.

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The wind industry’s Production Tax Credit (PTC) did not make Wyden’s original package, but was added as an amendment by Sen. Chuck Grassley (R-IA) to the revised bill approved by the Committee on April 3. While Wyden has a track record as a strong supporter of the PTC, he reportedly left the provision out of his original draft in order to win the support of Sen. Hatch. The Committee-approved extenders package also included extensions of other energy tax incentives, such as tax deductions for energy-efficient commercial buildings. Other energy-related amendments to the package were withdrawn, including a proposal by Sens. Michael Bennett (D-CO) and Dean Heller (R-NV) to allow solar projects under construction to benefit from the investment tax credit. The tax-extension bill is likely to trigger vigorous debate when it gets to the Senate floor, as Members fight over which provisions to extend and which to allow to expire. This is a change from past extenders packages which historically have been viewed as “must-pass” but have become less and less popular as concerns about the fiscal health of the country became more prevalent. This will be the first retroactive extenders package to be considered in several years. A day prior to the announcement of the tax-extension proposal, four governors including Jay Inslee (D-WA), John Kitzhaber (D-OR), Terry Branstad (R-IA) and Dennis Daugaard (R-SD), sent a letter to congressional leaders urging them to extend the PTC. In the House, Ways and Means Committee Chair Dave Camp (D-MI) announced he will start hearings in April on which provisions should be permanently extended, and eliminate the remainder. He criticized the practice of short-term extensions, and challenged his colleagues to a serious debate that he hopes will “provide certainty to the American taxpayers.” Chairman Camp also announced on March 31 his plan to retire at the end of this congress.

V. Water Update

EPA, Army Corps Release Proposed Definition of “Waters of the U.S.”

On March 25, the Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers announced a joint proposed rule that purports to establish a regulatory definition of the “waters of the U.S.” for the purposes of the Clean Water Act (CWA). The agencies have been developing the rule for several years, after the legal definition of which bodies of water are subject to CWA was called into question in two Supreme Court cases. Under the joint proposal, wetlands near rivers and streams would be subject to CWA regulations, as would streams that only appear part of the year or are dependent on rainfall. Sixty percent of U.S. stream miles flow only seasonally or after rain, according to EPA Administrator Gina McCarthy. The agencies would still need to perform a case-by-case analysis for “other waters,” such as ponds and wetlands that are more free-standing and may not have an impact on downstream

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water quality. The agencies are requesting comments, due 90 days after publication in the Federal Register, on several alternative approaches to group other waters. The proposal continues traditional exemptions for irrigation ditches and other agricultural waters, and excludes some types of waters for the first time, saying, “Waters in a watershed in which there is no connection to traditional navigable water, interstate water, or territorial seas would not be ‘waters of the United States.’” Congressional reaction to the rule was positive from Democrats such as Senate Environment and Public Works Chair Barbara Boxer (D-CA), but it drew harsh remarks from new Senate ENR Chair Mary Landrieu (D-LA), who called the rule an “overreach.” Landrieu said her home state residents “understand the need to strike a balance that allows us to develop natural resources that power our nation and also protect our wildlife, waterways and wetlands.” Her statement continued, “Unfortunately, the EPA seems unable or unwilling to find any balance in its decision making. I will work with colleagues on both sides of the aisle to find a legislative solution to reverse this unfair, unwise and unnecessary decision.” Similarly, House Transportation and Infrastructure Chairman Bill Shuster (R-PA) said he intends to hold a hearing on the proposal in the next few weeks. VI. Power Marketing Administrations

House Hearing on Power Marketing Administrations’ Budget Priorities On March 24, the House Subcommittee on Water and Power held an oversight hearing on the FY15 budget request for the federal power marketing administrations (PMAs), the Bureau of Reclamation, and the U.S. Geological Survey’s (USGS) Water Program. The hearing featured testimony from Administrators of all four PMAs, Acting Commissioner of Reclamation (Reclamation) Lowell Pimley, and Dr. Jerad Bales, the Acting Associate Director for Water at USGS. As in prior years, Subcommittee Chair Tom McClintock (R-CA) hammered the Reclamation witness for the Administration’s focus on water conservation, instead of developing new water storage capacity. McClintock repeated that the Subcommittee is tasked with “charting a roadmap to abundance” in the production of hydropower and development of water storage. Western Area Power Administration’s (WAPA) Mark Gabriel told the panel that his agency is not changing its mission, rather exploring how that mission can be best implemented in a changing industry. He said WAPA’s focus is on three areas: maintaining and repairing existing infrastructure, preparing and managing for new and existing demands on the system and fiscal responsibility. “There is no doubt the system has to be operated different than in the past,” Gabriel said. In written testimony Gabriel said, “The existing system has served well for more than 50 years, but it was not designed to handle large-scale, intermittent generation in real time…To be ready for that future, we must prepare today.”

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Rep. Scott Tipton (R-CO) asked Gabriel about a recent letter from Wild Earth Guardians, threatening to sue the agency over its implementation of the Integrated Resource Planning (IRP) requirement. Gabriel responded that he believes WAPA “more than complies” with the National Environmental Policy Act (NEPA) on IRP. Tipton asked what the impact on customers would be if the group decides to sue; Gabriel said any costs that Western pays to defend a lawsuit would have to be passed onto customers. Rep. Paul Gosar (R-AZ) asked WAPA and Reclamation about the number of jobs at risk from the EPA’s delay in resolving the regional haze issues at Navajo Generating Station (NGS). Both said they would supply the answer for the record. Gosar mentioned the importance of NGS to the Central Arizona Project and said that it was “outrageous” of EPA to impose costs on the plant for greenhouse gas emission when Congress has not passed a carbon tax. McClintock asked Reclamation what statutory authority the agency has to integrate wind and solar, when the mission of the PMAs is to deliver power at the lowest possible cost. Pimley responded that there was no specific authority. McClintock repeated that he believes Reclamation is violating its mission by increasing costs to irrigators through integrating renewable resources. WAPA Solicits Transmission Projects to Finance WAPA on April 7 issued a Federal Register Notice seeking new applications from project developers interested in obtaining a loan from the agency under the Transmission Infrastructure Program (TIP) to “construct new or upgrade transmission lines and related facilities that promote the delivery of clean, renewable power.” The TIP was established in the 2009 Recovery Act with a $3.25 billion revolving Treasury fund by Senate Majority Leader Harry Reid (D-NV). The program has been controversial and Republicans like House Natural Resources Committee Chairman Doc Hastings (R-WA) and Water and Power Subcommittee Chairman Tom McClintock (R-CA) have tried to repeal it. Some federal power customers are concerned that there are not enough TIP projects underway to cover the administrative expenses of WAPA’s overhead on the program. . VII. FERC Update

NE Senators Ask White House to Re-nominate LaFleur

In an April 1 letter, a bipartisan group of seven New England Senators urged President Obama to nominate Acting FERC Chair LaFleur for another five-year term on the Commission. LaFleur’s current term expires in June, but she could stay through the end of the year if she is not renominated. “Since her confirmation, Acting Chairman LaFleur has focused much of her time on improving reliability and grid security, promoting regional transmission planning and supporting a clean and diverse power supply for the country,” the senators wrote. “We believe it is vital to nominate

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https://www.federalregister.gov/articles/2014/04/07/2014-07700/transmission-infrastructure-program

someone with knowledge of the energy issues impacting the United States... her expertise in energy and competitive wholesale markets give her a thorough understanding of how regulators’ decisions affect real customers.” LaFleur was nominated to the Commission by President Obama and confirmed in 2010. She took over as Acting Chair following the Nov. 13 departure of former Chairman John Wellinghoff.

VIII. Environmental Protection Agency

EPA Will Propose Limits on GHG Emissions from Modified Plants

On March 12, the EPA announced that it will release a rule limiting greenhouse gas emissions from modified power plants in the Spring. The rule will be separate from the New Source Performance Standards (NSPS) for new power plants EPA proposed last fall, and from limits due to be proposed in June that will limit GHGs from existing plants. A modified plant rule was not among the initiatives laid out by President Obama’s Climate Action Plan, which does include the new- and existing-plant rules. The move also comes as a surprise, because the agency had specifically denied that the stringent GHG limits set by its NSPS for new plants would be triggered by plant modifications, as it is for other types of emissions. In making the announcement, EPA Air and Radiation Chief Janet McCabe said at a House Science Committee hearing that while it would likely be a direct limit on individual plants, “we are looking at those facilities which are existing in a different way than we look at brand-new, un-built power plants,” meaning that the rule would not require carbon capture and storage technology as a consequence of modifications. It is unclear what ends are achieved by promulgating a separate rule for modified plants, since the existing source rule, when final, will impose limits on plants whether they make modifications or not. However, EPA may view the statutory “trigger” from plant modifications, which it denied would take place in the NSPS, as a legal weakness of that rule. The NSPS rule is expected to be litigated.

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MONTHLY REPORT State Advocacy

April 2014

I. Legislative Updates

a. General Legislative Update

Following the February 21st bill introduction deadline, many pieces of legislation moved to hearings in policy committees. The Legislature will begin its Spring Recess upon adjournment on Thursday, April 10, and policy and fiscal committee hearings will resume on April 21st.

In addition to hearing bills, committees have held a number of informational hearings this month. Of particular note is:

Joint Hearing, Senate Select Committee for California’s Energy Independence and Assembly Select Committee on Renewable Energy Economy in Rural California – April 3, 2014 Informational Hearing on California’s Geothermal Power Resources Co-chaired by Assembly Member V. Manuel Perez and Senator Ben Hueso, this joint informational hearing discussed the policies and trends affecting geothermal energy production in California. The Chairs of the joint select committees were interested in exploring how California can best tap into its vast geothermal potential to meet the state’s RPS requirements. The hearing also considered challenges to the use of geothermal, including transmission barriers. The hearing was a follow up to legislation introduced last year by Assembly Member Perez, AB 177, regarding renewable energy resources in and around the Salton Sea, which SCPPA opposed. The bill died on the Assembly inactive file in February.

b. Bills with Positions

Below is the current status of bills SCPPA has taken positions on: AB 1782 (Chesbro) Summary: Increases the fine from $500 to $50,000 per incident for the unlawful and malicious take down, removal, injury or obstruction of electric lines (and telephone and cable). Position: SUPPORT Current Location – Hearing set in Assembly Public Safety on April 8. SB 456 (Padilla) Summary: Requires IOUs and POUs to include information about storage resources and out of state energy purchases as part of their annual power content label reporting

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Position: WATCH. SCPPA advocates, CMUA and others are actively monitoring the bill and will engage prior to the bill being set in Assembly Utilities & Commerce Committee some time later this spring. Current Location – Assembly Desk, pending referral

c. Bills Under Consideration At its April 10 meeting, the SCPPA Legislative Committee will discuss the following bills for a potential position and action:

i. AB 2188 (Muratsuchi) – Expedited solar permitting by cities ii. AB 2414 (Ting) – Specifies EV charging facilities are not considered a gift of public funds

iii. AB 2516 (Gordon) – Sea level rise reporting for coastal power plants iv. AB 2584 (Nestande) – Increases NEM project size to 1.5 MW for wind projects only on

military bases v. AB 2649 (Mullin) – NEM modifications on military bases

vi. SB 1139 (Hueso) – Mandatory procurement of new geothermal vii. SB 1277 (Steinberg) – Requires CAISO to get sign off from CPUC before establishing a

capacity market viii. SB 1414 (Wolk) – Requires consideration of time variant DR in meeting RA requirements

for IOUs

II. Meetings/Events

a. CMUA Annual Conference CMUA held its annual conference from April 1-3 in Napa, California. The Legislative Committee met on Wednesday, April 2 and discussed key legislation regarding energy related matters. SCPPA members and advocates participated and offered information and insight into proposed positions.

III. 2014 Program Planning

The advocacy team is beginning the planning process for the 2014 Staff Tour, and a Save the Date will go out to select legislative staff in May. A Staff Tour Subcommittee will also begin the work of logistics and agenda planning. A potential Member Tour is also under consideration for 2014, and will be discussed at the April 10 Legislative Committee meeting. Finally, we will also continue discussion of launching a Brown Bag staff briefing programs, selecting dates and topics for these events.

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TO: Board of Directors FROM: Bill D. Carnahan SUBJECT: Finance Committee Report DATE: March 3, 2014 A meeting of the Finance Committee was held on March 3, 2014 at the SCPPA office in Glendora. Committee members present were: Russell Dowell (Anaheim); Bob Liu (Burbank); Rebecca Gallegos (Colton); Mario Ignacio (LADWP); Shari Thomas (Pasadena); Laura Nomura (Riverside); and William Fox (Vernon). Others present were: Stephen Cole (Norton Rose Fulbright); Dan Hartman, Mike Berwanger, and Will Frymann (Public Financial Management); Therese Savery (LADWP/SCPPA); and Bill Carnahan, Robert Rozanski, Richard Morillo, and Daniel Hashimi (SCPPA). The following are the business matters transacted by the Committee:

1. Minutes

The Committee reviewed and approved the minutes for the February 3, 2014 Finance Committee meeting.

2. Investment Report The Committee reviewed the Investment Report for the month ended January 31, 2014 and related Financial Statements for the Quarter Ended December 31, 2013. The Committee recommended forwarding the reports to the Board for receipt and filing.

3. Magnolia Series 2009-1 and 2009-2 Bonds The Committee received a status update by Public Financial Management (PFM) with respect to the outcome of negotiations with providers of replacement letters of credit and remarketing agents for the Magnolia Power Project A, Refunding Revenue Bonds 2009-1 and 2009-2 (Magnolia Bonds). The Committee recommended forwarding a resolution to the Board that, if adopted, will approve: (i) revised fee structures and term extensions (including amendments to the existing letters of credit and amendments to the existing Reimbursement Agreements) with the two current providers of letters of credit for the Magnolia Bonds; (ii) a Supplemental Remarketing Memorandum and remarketing agent agreements with such providers; and (iii) certain amendments to the Magnolia Indenture to accommodate the new remarketing agents.

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The Committee considered the possible termination of one of the two interest rate swaps related to the 2009 Magnolia Bonds, including whether the applicable Magnolia swap (Magnolia Swap) should be terminated with a payment by SCPPA to the related swap counterparty. The Committee recommended forwarding a resolution to the Board that, if adopted, will: (i) provide for termination of the Magnolia Swap with a payment to the swap counterparty in an amount not to exceed $2,000,000; (ii) authorize the Authority to pay the swap termination payment and all other costs (i.e., including payments to the Authority’s consultants) incurred by the Authority in connection with such termination from either moneys on deposit in the Project Stabilization Fund or overcollections from participants of Magnolia Power Project A, and provided further that to the extent such payment and costs are paid from moneys on deposit in the Project Stabilization Fund, the Authority shall replenish the amount withdrawn with savings from the termination of the Magnolia Swap; and (iii) delegate authority to any of the officers of the Authority to execute such transaction.

The Committee received an update by PFM on the results of due diligence performed in connection with an unsolicited proposal from Barclays to convert an existing basis swap to a fixed spread basis swap in connection with the Magnolia Bonds. The Committee did not take any action with respect to such proposal.

4. Market and VRDO Update

The Committee will receive a market and VRDO status report from PFM.

5. Unsolicited Proposals

The Committee reviewed an unsolicited proposal from Citigroup, and did not take any action with respect to such proposal.

THE NEXT REGULARLY SCHEDULED FINANCE COMMITTEE MEETING WILL BE APRIL 7, 2014.

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TO: Bill D. Carnahan FROM: Kelly Nguyen SUBJECT: Director of Energy Systems Report DATE: April 9, 2014 The following is a summary of monthly activities for inclusion in the SCPPA Board package: Resource Planning The Resource Planning Committee held a regularly scheduled meeting (1st Thursday of each month) on 04/03/14. The industry market updates, reporting requirements, and upcoming activities were sent out for information. The other special activities were: • CAISO15-Minute Market implementation has been delayed from April 1st to May 1st; discussed onsite

readiness training from PCI on “Impacts of FERC Order 764 on Bill-to-Bill Workflow for CAISO MRTU and Energy Imbalance Market Participants” held on March 18-19, 2014

• Members shared the Integrated Resources Planning (IRP) process and public outreach efforts; members will present their IRPs in the next coming months

• WAPA will join the June meeting via webinar regarding due date changes for Integrated Resource Plan/Alternative Plan Updates and the Minimum Investment Report requests

• SCPPA will come up with a draft recommendation paper in order to start the dialogue with the CEC on improving the reporting requirements

• Seeking topic suggestions for the next Black & Veatch Quarterly Presentation on June 5, 2014 due by May 1, 2014

• Discussed EPA’s newly proposed power plant rule to reduce carbon emissions • SCPPA will update and distribute the 2014 Reporting Timeline Renewable Energy The Renewable Energy Working Group held regular meetings (the 2nd and 4th Thursday of each month) on 03/13/14 and 03/27/14. We conducted routine discussions on transmission updates for renewable projects, WREGIS, regulatory/legislative updates, legal matters, financial analysis and various renewable projects. The other special activities were:

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• Venture Engineering has been retained by SCPPA to do Phase I of the LFG-to-biomethane project • Working on partial MW true-up procedure and exploring the possibilities of dynamic scheduling for the

Don Campbell Geothermal Project; Transmission Service Agreement has been executed • Started PPA negotiations on an existing landfill gas power generating facility with participation from five

SCPPA members • Compiled Members’ selections to response letters to bidders of the 2013 Renewables RFP • Project proposal presentation on solar power plant with integrated energy storage capability was held • Discussion on energy storage proposals and activities Transmission & Distribution Engineering & Operations (T&D E&O) The T&D E&O Working Group held a regularly scheduled meeting on 04/01/14 (1st Tuesday of each month). The Group conducted routine discussions on benchmarking, best practices and lessons learned. The other special activities were: • Participating members have submitted their data for PA Consulting’s national reliability metrics

benchmarking survey; expect to receive the results in late April • SCPPA internal reliability metrics benchmarking table has been completed in efforts to help each other

improve by sharing information • Sub Group will be meeting before the May 13th meeting on how to best coordinate mutual aid efforts for

SCPPA members via APPA & CUEA and to share best practices and ideas on Emergency Preparedness

• Presentation on Cargill’s FR3 ester fluid will be held at the beginning of the May 13th meeting Generation The Generation Group did not hold a regular meeting (3rd Tuesday of every other month). The March meeting is cancelled due to the WTUI annual conference. The next meeting is scheduled to be on 05/20/14. Transmission The Transmission Working Group did not hold a regular meeting (2nd Thursday of each beginning quarter). The next meeting is rescheduled to be on April 27, 2014. Special Projects • Financing of the Apex Power Project (combined cycle) closed on March 26, 2014 • Research potential training possibilities; negotiate and obtain requested training proposals • Management of various RFP processes • Finalizing agreements for various products and services ranging from training, consulting and

engineering services, project studies and subscription services • Assessing the consideration to set up the framework for a Joint Purchasing Agreement • Reviewing and dispersing information on intern applications received through the SCPPA intern

program and assist in cleaning up the intern summary matrix workbook • Reviewing and working on improving the audio/visual system

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• Working on streamlining internal process, documents, and templates to help meet members’ needs more efficiently; cleaning up SCPPA’s secured ftp site

• Review and maintenance of the Phase II Renewable Development Agreement budget tracking spreadsheet and Reporting Forms Matrix

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TO: Bill D. Carnahan FROM: Bryan Cope SUBJECT: Director of Program Development – Monthly Report DATE: April 8, 2014 The following is a summary of Committee and Working Group activities for inclusion in the SCPPA Board package for April 17, 2014. Public Benefits Committee (PBC) The PBC held its regularly scheduled meeting on the first Wednesday of the month, April 2nd. The key points of discussion and interest are presented below. Blue Earth presented an overview of their newest energy efficiency program using electrically commutated motors (ECMs) in small-scale, fan coil-based air conditioning systems in hotels because the operate more quietly (and cooler) than standard magnetic motors – and can reduce energy consumption by 30 percent or more. Blue Earth is the developer of the Keep Your Cool (KYC) Program that 6 Members participate in that provides large energy savings in the commercial refrigeration sector. KYC includes the use of ECMs in large refrigerators and freezers to reduce the heat addition from motor operations and reduce the associated cooling load. Members expressed increased interest in KYC opportunities and the hotel application possibilities. Blue Earth will prepare and provide program options for Members to review and consider. Members were asked to deliver to SCPPA their FY13 Public Benefits Program (PBP) information that is used to maintain our database of Members’ expenditures in the 4 PBP areas plus administrative costs and the utility’s retail revenue to track the percentage of revenue that is spent on PBPs. The POU Technical Reference Manual (TRM) development with CMUA and NCPA is complete. The contractor (ERS) will be asked to come to SCPPA and we are currently planning a training session ASAP to begin model review and possible use for planning purposes for FY2015 programs. CMUA’s sub-committee that was formed to improve the working relationship with the CEC staff and the Commission on energy efficiency regulations continues to develop the set of talking points and associated PowerPoint presentation that Commissioner McAlister and his staff have asked us for. SCPPA drafted the initial outline and it has now morphed into an FAQ structure to adhere to the CEC’s standard presentation format for such topics. CMUA has scheduled a meeting with key CEC staff to discuss the POU’s SB1037 report and many or all of the topics that wil be covered in the FAQ and discuss potential solutions to these issues or concerns.

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SCPPA’s efforts to participate with NCPA and CMUA in a case study for the 2016 process are moving forward so Members can clearly and equitably claim energy savings from the State’s codes and standards (C&S). Unfortunately, most NCPA and many CMUA Members are balking at participation because they do not fell that C&S savings are “real” or traceable so they do not want to pay for something that is not quantifiable. This is entirely opposed to the position of LADWP (and SMUD) who are most interested in pursuing these savings – and is the driving force behind SCPPA’s advocacy position. CMUA has been slow to “broker a deal” and find middle ground or solutions, primarily because of their annual conference last week, but I am trying to pull CMUA and NCPA together to discuss this because the C&S issue and the impact associated annual energy savings reporting under SB1037 is very large. These are central considerations that have been a part of the FAQ, discussed above, and the impending presentation to the CEC. Resolution of this issue is critical to our presentation and a unified front. Energy Storage Working Group (ESWG) The ESWG held its bi-weekly meetings and two additional special meetings to:

1) Finalize the Summary Review of the Technological Capabilities and Economics of Energy Storage System Development (Review); and

2) Receive presentations from Vendors of cost-effectiveness evaluation tools or models to assess the application of various energy storage systems for or by individual electric utilities.

A copy of the Review is attached for your consideration. In summary, this document was prepared as a primer or introduction of the different potential uses or functions of energy storage to improve utility system operations, the different technologies that are available to serve those functions and ultimately the range of costs to develop and implement various energy storage systems. This Review also included a discussion of the 3 principal cost-effectiveness tools that are commercially available for utilities to evaluate the cost and benefits of storage development. Based on the Group’s collective understanding of the storage market and potential applications in their respective systems, Members agreed to learn more about the cost-effectiveness assessments that are thought to be necessary as a show of good faith/best efforts to the CEC when Members present their storage procurement targets to the CEC on or before October 1. To that end, the ESWG invited EPRI, DNV GL (aka KEMA), and Navigant to present their models and propose prices to for us license, operate and receive support in our use of their respective model. The prices for “relatively” the same services and tools range from $10,000 to $38,000 per Member, depending on how many Members participate in a joint action/collective effort and use the same tool to develop a specific procurement target, as driven by each Member. Consensus has not been reached as of the date of this document. However, Members are continuing to discuss the joint action opportunities and I expect to have a Resolution for the Board’s consideration and approval of a selected Vendor to provide modeling services in support of Members’ development of energy storage system procurement targets by October 1, 2014. Also related to Energy Storage, the review and analysis of Glendale’s potential procurement of 10MW of peak load shift from Ice Energy continued through the month. After the presentation by Ice Energy last month to review financial statements and prospective outlook of their company as part of our due diligence process, we received (today) an updated Balance Sheet from the Company that reflects there just-completed “stock offering” and funding to raise $4+MM in capital and stabilize their operating cash. Michael Berwanger, Robert Rozanski, Lon Peters and I are arranging a meeting to finalize our review and prepare a beefing for you and other interested parties as soon as possible. In parallel, Arup Ltd. has continued to perform the technical review of the Ice Energy technologies that will be used to provide the 10MW of permanent peak load shift for GWP. Arup is expected to complete their study very soon for our review and use.

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Rate Design Working Group (RDWG) The RDWG will hold its 2nd meeting on April 14. In response to the discussion and participants’ topics of interest/concern, I have prepared a spreadsheet model that can be used to evaluate the fixed and variable cost recovery components of the current Residential and Small Commercial rates for all of our Members, individually, and develop alternative rate structures to provide a revenue neutral cost recovery mechanism that serves to reduce energy charges (closer to avoided costs) and raise monthly meter /customer charges to offset the revenue loss form reduced energy rates and stabilize the utility’s fixed cost recovery capabilities. This is an alternative to long, detailed, and expensive cost of service studies that typically serve to estimate the embedded costs of service for utility’s that can be used to derive an estimated fixed and variable cost recovery requirement. However, the alternative method described above allows a utility to begin transition their pricing and cost recovery away from embedded cost to their marginal cost of generation and service to customers. This will be important for utilities that choose to move away from traditional or existing rate designs and into cost-based rates that cannot be seen as conflicting with the Proposition 26 requirement to base all charges on the cost of a given service so as not to be considered as a tax or surcharge. EV Working Group (EVWG) The EVWG will meet on April 16, at its regularly scheduled meeting on the 2nd Wednesday of the month. The primary point of discussion will be the implementation of the $500,000 Grant Award that SCPPA received from the CEC on April 4. Our award was one of 20+ to various applicants, including LADWP and BWP plus Banning, as part of the Western Riverside County Association of Governments. Interestingly, the CEC originally announced that $6 million was available to fund this development program, but ultimately they awarded just over $11 million to applicants. However, not all applications were funded, including SMUD’s whose application was “disqualified” for unspecified reasons. In total, these grant funds should go a long way to significantly increasing the existing charging network throughout the state. Brett Hauser and Rachel Moses, the President and Project Manager of Greenlots, respectively, will be in attendance to introduce themselves to Members. Greenlots was the successful Respondent to SCPPA’s RFP to select a turnkey provider of EV Charger procurement, installation and operational support service. We will discuss and review the procurement and installation processes that we will employ during implementation of the Program. Some of these processes are already in place and functioning well as 3 Members, Vernon, Burbank, and LADWP are already working on and developing separate and distinct Task Orders to purchase various types of EV Charging equipment from Greenlots through SCPPA’s Joint Actions, Goods and Services Agreement with Zeco Systems (dba Greenlots). As part of this Agreement, SCPPA has just received an expanded price list for 2 models of AC Level 2 chargers that are designed for indoor parking lot or garage use, as opposed to the outdoor use specified by the CEC and in our RFP. These chargers are being made available for approximately $500 per unit and can provide simple and inexpensive portals for increased utility sales to customers that desire/need the product. These additional units will be discussed for potential cost-effectiveness evaluations and utilities consideration of enhanced EV deployment programs. Solar Carport Installation The carports’ construction will begin on Friday, April 11 with site preparation to trim trees and perform concrete and asphalt cutting, as needed. Monday, April 14 the materials and the auger/drilling equipment will be delivered on site. The post holes will be dug, inspected and filled by the close of business Wednesday April 16. There will be no construction activity on April 17, the day of the SCPPA Board Meeting – and there should be a nearly full complement of the existing parking for Board Members and other visitors. Thereafter, the installers will erect the carports’ supporting structure, lay the roof panels and mount the solar PV system. The installation is expected to

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be complete by May 12-14. Unfortunately, during many or most days of construction, on-site parking will be limited to as few as 8-10 parking spaces. However, SCPPA staff has agreed to park on Nicole Court during this time to allow visitors access to the available spaces in the lot. With completion of the PV system, SCPPA will be able to submit our application and complete the associated LEED certification processes. In addition and as part of the installation, I have been acquiring competitive bids from qualified developers of Building Energy Management Systems (EMS) to allow us to monitor and display the energy use and production in the SCPPA office including the PV system energy production, the effective peak load shifting from the thermal energy storage systems that work in association with our rooftop air conditioning unit, and other select operating parameters of our building.

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SUMMARY REVIEW OF THE TECHNOLOGICAL CAPABILITIES

AND ECONOMICS OF ENERGY STORAGE SYSTEM DEVELOPMENT

as prepared by:

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY ENERGY STORAGE WORKING GROUP

March 2014

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Table of Contents

PREFACE......................................................................................................................... iii

EXECUTIVE SUMMARY ................................................................................................... 1

INTRODUCTION .............................................................................................................. 3

ENERGY STORAGE FUNCTION OVERVIEW ...................................................................... 4

Bulk Energy Services .......................................................................................................................... 4

Transmission System Services ....................................................................................................... 5

Distribution System Services .......................................................................................................... 6

Customer Energy Management Services .................................................................................. 6

ELECTRIC SYSTEM OPERATION CONSIDERATIONS .......................................................... 7

ENERGY STORAGE TECHNOLOGY CAPABILITIES OVERVIEW ........................................... 9

SPECIFIC STORAGE TECHNOLOGY DESCRIPTIONS ......................................................... 12

ENERGY STORAGE COST OVERVIEW ............................................................................. 13

Batteries ................................................................................................................................................ 13

Flow Batteries ..................................................................................................................................... 14

Flywheels .............................................................................................................................................. 15

Pumped Hydro ................................................................................................................................... 15

Compressed Air .................................................................................................................................. 15

Thermal Storage ................................................................................................................................ 16

COST-EFFECTIVENESS EVALUATION PROCESSES AND TOOLS ....................................... 17

POSTSCRIPT.................................................................................................................. 19

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PREFACE The Southern California Public Power Authority’s Energy Storage Working Group (ESWG) has developed this review of energy storage systems’ technological capabilities and their economics. This was created in response to the State regulations directing electric utilities to consider the use of “cost-effective and viable” energy storage technologies for their respective systems and to understand the continuing changes in the energy storage market.

Given these regulations and associated responsibilities, the ESWG has compiled the most current information available on existing and emerging energy storage technologies, to assess and understand:

1) what services or functions these technologies can provide to improve electric system operations; 2) the relative cost of developing and operating these various energy storage technologies; and 3) the methodologies and tools or models that may be available for utilities to evaluate the cost-

effectiveness of energy storage technologies for their respective systems.

The intended product of this work effort is the development of a comprehensive and robust set of assumptions and methodologies for each Member Utility to be able to use in the determination and development of their respective potential energy storage system procurement targets by October 2014, as required by State law. Throughout this study, the ESWG recognized that each Member’s expectations or system need(s) for the addition of energy storage technology or technologies will be widely different – and the “cost-effectiveness” of any given technology would probably not be the same for two different utilities.

The findings and results of the ESWG’s research on energy storage technologies’ capabilities and economics are presented in this review. This review is drawn from two primary sources: DOE/EPRI 2013 Electricity Storage Handbook in Collaboration with NRECA; SANDIA Report SAND2013-5131, July 2013; and EPRI Energy Storage Application and Economics – Costs, Benefits, Revenue; Panel Presentation, April 2011.

The DOE/EPRI 2013 Electricity Storage Handbook (SANDIA Handbook) focuses on electricity storage. However, this is only one form of energy storage. Other forms of energy storage include oil stored in tanks, natural gas in underground reservoirs, thermal energy in chilled water or ice and even the thermal energy stored in thick adobe walls. Because state law requires electric utilities to evaluate and consider the procurement of any energy storage systems that are cost-effective and viable, this review also includes additional consideration of thermal energy storage applications that are not discussed in the SANDIA Handbook.

The opinions, positions and statements contained herein are those of the Principal Author and the ESWG. The ESWG is hopeful that this information can be helpful to readers in understanding the many options that are available to use energy storage as a means for electric utilities to continue to improve the reliable and low-cost service they provide to all of their customers, as well understanding the cost and cost-effectiveness of these technologies.

-- Bryan Cope, SCPPA Director of Program Development – Principal Author

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EXECUTIVE SUMMARY Energy Storage is principally derived through chemical, physical or mechanical media or equipment to “save” energy in one form so that it can be used at a different time to perform work. Energy storage is seen by many industry stakeholders as a critical advancement in the operation of electric utility systems in the near future. This new market is evolving in a number of separate but interrelated ways including, but not limited to: Technological Advances; Commercial/Financial structures to buy and sell storage resources; as well operational improvements to integrate storage applications and improve electric system reliability.

Energy storage developers have been working for many years to improve on existing technologies plus create “new” storage media and equipment, including:

• Advanced chemistries for batteries • Thermal energy storage applications • Compressed air developments • Flywheel technologies • Pumped hydro sites

Each of these technologies can provide distinct functions or services in helping electric utilities improve their system operations at one or more “levels” of the electric system:

• Utility-scale, transmission-connected • Distribution-scale, distribution-connected • Customer-scale, behind-the-meter.

However, not all utility systems will “need” the same services or functional improvements. That is, no two utilities are likely to require the same operational support or find the same storage technologies to be cost-effective. It is imperative for all utilities to assess their system operations to determine what operational constraints or limitations exist to be able to evaluate which storage system(s) might best be able to meet those specific needs.

Energy storage systems can provide a multitude of system support or ancillary services including frequency regulation, voltage support, spinning and non-spinning reserves, black start, and load-following/ramping functions to integrate both large-scale, intermittent renewable resource generation to the grid and variable, distributed generation such as roof top solar to the distribution system. The principal storage candidates that are able to provide some or all of these short-duration ancillary services are batteries and flywheels.

However, if a utility were looking to defer large capital expenditures for transmission (or distribution) system upgrades or generating capacity, they could also consider additional bulk storage systems, such as pumped hydro, compressed air and thermal storage, as means to reduce or shift peak demands that are overloading the system or creating load/resource imbalances. These bulk storage systems are typically larger in scale and size than batteries and flywheels – and provide longer durations of energy cycling of as many as ten or more hours.

Beyond the utility-scale applications of these technologies, many can also be used for customer-sited/behind-the-meter energy storage. These systems can be useful in providing voltage control and other ancillary services as well as long-term peak load shifting and load balancing services for system operating efficiency improvements. In addition to these system operational improvements or benefits for the utility, the customer can receive value from energy and/or peak demand charge savings and power quality improvements. Because of the potential

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mutual benefits of behind-the-meter energy storage, utilities will need to consider the possible partnerships with customers to optimize the value proposition available to all participants in the energy storage system developments. Batteries and thermal storage are the most common storage technologies being deployed behind-the-meter for end-user/customer applications.

The available cost data show that batteries may not be the most cost-effective or least-cost option available to provide such service(s). In addition, the cost data included in this document do not include or reflect the potential environmental or safety-related cost of making, maintaining or disposing of the highly acidic and toxic batteries that are used in today’s industry.

Pumped hydro energy storage is a mature technology that is typically developed at utility-scale with relatively large capital costs and potentially significant environmental impacts or costs. Compressed air systems are a developing technology that, like pumped storage, are typically designed at scale and used to provide bulk system services including the time-shift of energy and as well as capacity. Flywheels are ideally suited to provide instantaneous frequency response and regulation support for utilities. However, their cost may be prohibitive for wide-scale application at this time and there are possible safety issues related to their operation that continue drive up the cost of the flywheels, and particularly the necessary containment vessels.

Thermal energy storage provides the lowest cost energy storage technology available at this time to meet some of the operational services or functions identified above, including bulk load shifting, supply capacity, potentially some ancillary services, T&D system upgrade deferral(s) and customer-sited storage applications. However, these functions do not include frequency regulation or black start capacity because the thermal systems do not directly store or discharge electricity.

One important reason that the costs of thermal energy storage (TES) systems compare very favorably to other traditional electricity storage system technologies is that these behind-the-meter thermal storage systems do not require the detailed and costly interconnection studies for electric system integration that are required for electricity storage systems. Typically, this makes TES “easier and quicker” to install as well.

Based on the range of prices and associated services of the different storage technologies, it will be important for utilities to determine the necessary services and the proper applications of specific storage resources. To help in this analysis, many companies, agencies and individuals have developed computer models to evaluate the deployment of energy storage in utility systems.

Members continue to evaluate and assess the potential use of 3 different models that are commercially available to evaluate the cost-effectiveness of energy storage system development and application by utilities:

• Electric Power Research Institute’s (EPRI) Energy Storage Valuation Tool (EVST) • DNV GL’s Energy Storage Grid • Navigant’s Energy Storage Computational Tool (ESCT)

Regardless of their respective decisions on the use of additional tools or models, the ESWG is confident that Member staffs will be fully prepared and capable of meeting the responsibility of establishing targets for the development of energy storage systems that are found to be cost-effective and viable, with the adoption of any such target by local governing Boards prior to October 1, 2014.

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INTRODUCTION Assembly Bill 2514 (Skinner) was signed into law as Section 2836 of the California Public Utilities Code in September 2010. Section 2836 specifies the requirements for the procurement of cost-effective and viable energy storage systems by electric utilities in the State of California.

Under this law, the California Energy Commission (CEC) was given the responsibility to review the procurement targets and policies that are developed and adopted by publicly-owned utilities (POUs) to ensure that the targets and policies include and reflect the procurement of cost-effective and viable energy storage systems.

The law clearly identifies specific deadlines for POUs’ compliance within the statute. In summary:

1) POUs are responsible to evaluate the cost-effectiveness and viability of energy storage systems in their electric systems. Additionally, POUs may also consider various policies to encourage the cost-effective deployment of energy storage systems. The initial evaluation(s) is or are to occur by October 1, 2014.

2) With this responsibility, POUs also have the authority and discretion to deem any, all or no energy system(s) that are evaluated as being “cost-effective and viable”. With the variability of POUs’ electric system requirements, the cost-effectiveness and viability of energy storage technology options are likely to be different for each POU.

3) At the conclusion of these evaluations, and no later than October 1, 2014, the governing body of each POU is required to adopt a target, if appropriate, for the amount (kW or MW) of energy storage the POU will procure by December 31, 2016. In addition, the governing body is required to adopt an additional target for the amount (kW or MW) of energy storage the POU will procure by December 31, 2021.

4) Each Governing body must reevaluate its procurement targets and policies at least once every three years.

The Southern California Public Power Authority (SCPPA) is a joint powers authority, comprised of the following 12 POUs: the cities of Anaheim; Azusa; Banning; Burbank; Cerritos; Colton; Glendale; Los Angeles; Pasadena; Riverside; Vernon and the Imperial Irrigation District, hereinafter referred to as “Members”. In response to this law, Members’ respective governing bodies opened proceedings for the evaluation and assessment of energy storage in their territories on or before March 1, 2012.

Since that time, Members have been working diligently to meet the required deadline for adoption of the energy storage procurement targets by October 1, 2014. Beyond each utility’s efforts in this regard, SCPPA has been pursuing potential energy storage applications in many different internal Committees and Working Groups, including: Resource Planning; Transmission and Distribution; Smart Grid; Public Benefits; and Renewables. In recognition of the need to focus on the integrated planning for the potential development of energy storage resources, the SCPPA Board of Directors authorized the creation of an Energy Storage Working Group (ESWG) in 2013 that is made up of SCPPA staff and Members’ staff. The general charter of the ESWG is to review the technical capabilities of energy storage technologies and assess the cost-effectiveness of those technologies. These efforts are intended to provide the analytical support necessary for Members to develop the required procurement targets for “cost-effective and viable” energy storage system(s) on their respective electric systems.

This Summary Review of the Technological Capabilities and Economics of Energy Storage Systems Development (Review) is an initial work product of the ESWG. The Review has been developed for Members to use as a resource and reference tool when considering and evaluating energy storage technologies – before adopting any targets for potential development or procurement of cost-effective and viable energy storage systems, as required by State law.

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ENERGY STORAGE FUNCTION OVERVIEW The SANDIA Handbook identifies 18 services or functional uses that are available from various electricity storage devices that can be broken down into 5 groups (presented with no order of importance or preference):

1) Bulk Energy Services 2) Ancillary Services 3) Transmission Infrastructure Services 4) Distribution Infrastructure Services 5) Customer Energy Management Services

Based on this broad range, electricity storage can possibly provide services to all levels of grid operations.

Bulk Energy Services There are 2 primary bulk energy services that can be provided with energy storage systems: 1) time-shift of electric energy consumption; and 2) electric supply capacity.

1) Electric energy time-shift allows utilities to purchase inexpensive electricity and store it for use or sale at a later time when system marginal cost or market prices are higher (i.e., arbitrage). Time shift can also be achieved when excess generation from wind or solar that might otherwise be curtailed is stored for use at a later, high load period. These time shifts can be very short (hourly), but also of longer duration (diurnal swings and seasonal differences).

2) Energy storage can be used to defer and/or reduce the need to build new generation facilities or purchase capacity in the wholesale market to meet system requirements. The use or applicability of storage as supply capacity is very utility-specific and dependent on load/resource balance, climate, and economics.

Pumped hydro, compressed air and thermal energy storage technologies have traditionally been deployed to meet such system needs.

Ancillary Services

Ancillary services represent grid support functions that are available from energy storage. The descriptions and examples presented below are very general in nature and not intended to represent the full complexity of electric utility operations. These services include:

1) Regulation – or the managing of interchange flows between control areas to closely match scheduled flows with the load variations in each balancing authority. Regulation and response is needed to maintain grid frequency and for operators to comply with specific North American Reliability Council (NERC) standards. Battery storage technologies are particularly well-suited for regulation support because of relatively fast response times and ramp rates.

2) Spinning, Non-Spinning, and Supplemental Reserves – are required for grid stability and represent capacity that can be called on when other electric supply resources become unavailable unexpectedly. Spinning reserves include generating capacity that is on-line but unloaded from the system and typically needs to be available and synchronized within 10 minutes. Frequency-responsive spinning reserves need to be available in 10 seconds. Non-spinning reserve is generating capacity that may be off-line but can be

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brought on-line within 10 minutes. Supplemental Reserves are resources that can serve load within 1 hour of system disturbance. Many energy storage technologies can be well-suited to serve any or all of these reserve capacity roles. Ideally, the use of storage to serve as a spinning reserve resource can allow utilities to reduce or eliminate the use of fossil fuel-fired power plants as a spinning reserve resource. In such a scenario, the thermal resource can be held as a non-spinning resource to “take-over” the reserve role initially provided by the storage system.

3) Voltage Support – is the system operators’ requirement to maintain voltages within specified limits. The nominal time needed for voltage support is assumed to be 30 minutes. Voltage control is typically done with specific power plants that are used to generate reactive power to offset fluctuating load and reactance in the grid. The power conversion systems of many, if not all, electricity storage systems on the market are capable of operating at a non-unity power factor and “absorb” or “provide” reactive power or volt-ampere reactive (VARs). Battery and flywheel technologies are generally seen as very good alternatives to typical resources used to provide voltage support.

4) Black Start – is the ability for a resource to provide an active reserve of power to energize transmission or distribution lines or provide station power to bring power plants back on-line after an unplanned/ catastrophic failure or outage. Storage can provide such start-up power if the storage system is suitably sized and there is a clear transmission path from the storage system to the power plant.

5) Load Following and Ramping Support for Renewables – Electricity storage is ideally suited for and is already being used in balancing the variability of wind and solar photovoltaic (PV) systems’ generation and/or large load swings on utility systems. Normally, generation is used for load following. However, there are operational considerations (e.g., ramp rates, efficiency degradation, emissions) that can make the use of thermal resources for load following challenging. Since most electricity storage systems can operate at “partial load” with modest or nominal performance penalties or efficiency loss and they can respond (ramp up – or down) very quickly (as compared to most generation) – storage is a very good fit for load following services.

Transmission System Services Storage may be useful in three key areas of transmission system support: 1) transmission system upgrade deferral, 2) transmission congestion relief, as well as 3) damping support.

1) Deferral or elimination of large capital investments to upgrade a transmission line that is at or near its fully loaded capacity can probably be achieved with a relatively small investment in energy storage downstream from the overloaded transmission node. In addition, assuming the storage system reduces the loading on existing equipment, one result of the energy storage system could be to improve or increase the life of the existing transmission equipment, including transformers and cables.

2) Transmission congestion relief might be achieved by placing storage systems at locations downstream of the congested area(s) on the transmission system, with energy stored during low load periods and discharged during high load periods when the transmission line is congested. This could provide high value for many utilities and customers as congestion costs may be reduced or eliminated.

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3) Storage systems that have sub-second response times can increase the load-carrying capacity of a transmission system by improving the system’s dynamic stability and providing active real and/or reactive power modulation at sub-synchronous resonance frequencies.

Distribution System Services Storage can defer the need for distribution system upgrades (and associated voltage support), similar to effects on transmission systems. Distribution systems are typically designed for 15- to 20-year planning horizons. As systems evolve and grow, upgrades are made to serve load requirements and meet the needs of customers. With the changing utility industry including the deployment of distributed generation resources and electric vehicles, utilities’ distribution systems are experiencing significant changes that were not anticipated when they were designed. However, energy storage systems that are located in circuits and on feeders that are impacted or near full-load capacity can defer or eliminate the need for large capital investments to upgrade the system in that specific region. Similar to the transmission system discussion above, and assuming that the storage system reduces loading on existing equipment, the energy storage system could improve or increase the life of the existing distribution equipment, including transformers and cables.

Customer Energy Management Services Energy storage can be valuable to utilities, as well as directly to customers. It is important for utilities to understand the relative value of site-specific storage applications for customers to ensure that the cost and benefits of energy storage additions are shared equitably among all participants. Below are some of the key areas in which customers can derive value from energy storage technology.

1) Power Quality – protect customer on-site loads that are downstream of the storage against voltage or frequency fluctuations, low power factor, harmonics, and short (partial to full second) interruptions in service;

2) Power Reliability – protect from total loss of power from utility; 3) Retail Energy Time Shift – take advantage of time of day/real-time pricing (arbitrage); 4) Demand Charge Management – shift demand at their facility to avoid peak period demand charges.

Beyond these 4 items, there is an additional benefit or value to customers from energy that is not addressed in the SANDIA Handbook, as it relates to the use of thermal energy storage. Specifically, the application of thermal energy storage systems to shift peak demand of large-scale, chiller-based air conditioning systems and/or small-scale, refrigerant-based systems can provide customers who employ these technologies with improved cooling capacity from their system and an associated, increased level of comfort for occupants.

Each of the services or functions listed above can be provided by the correct energy storage system(s). Each service also presents a specific value proposition for each utility. Some services may not be needed at all while one (or more) may be useful to a particular electric system’s operations. Similarly, and importantly, energy storage can possibly provide great value for customers. For those who may choose to employ location-specific storage applications and take advantage of arbitrage or cost-saving opportunities or improve power

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quality/reliability – the impact will be direct. However, the development and addition of cost-effective energy storage anywhere on the local electric system will provide value for all of the customers/owners of each POU. These storage systems will improve a utility’s operating efficiencies and maintain or reduce costs which will directly flow through to customers as the utility is able to continue to provide low-cost and highly reliable electric service. Determining the need for such services and understanding the value of those services for all participants as we continue to evaluate the changing energy storage market will be important for utilities and potential participating customers.

ELECTRIC SYSTEM OPERATION CONSIDERATIONS Before reviewing or discussing the various energy storage technologies that are identified in this Review, the differences and distinctions among Members’ service territories and systems need to be recognized to fully understand that when evaluating energy storage – “one size or one type does not fit all”.

For example, SCPPA’s 12 Members exist within 3 separate balancing areas. 8 Members are part of the California Independent System Operator (CAISO) balancing area, 3 Members are in the Los Angeles Department of Water and Power’s (LADWP’s) balancing area, and the Imperial Irrigation District controls a stand-alone territory in the desert southwest corner of the state. Based on these relationships, only a few Members have responsibility for transmission system operation and reliability, including, but not limited to, frequency regulation.

Similarly, each Member has a distribution system with different configurations, including capacities, voltages and vintages. Some Members also have varying levels of solar photovoltaic, distributed generation installations in their territories as well as a quickly growing number of electric vehicles. Typically, these conditions were not originally planned for when building the distribution system – and because of these market changes voltage control can be a challenging task for the utilities.

In addition, each Member has a different load/resource balance –

• some with fully resourced portfolios; • some with a potential reliance on the market to meet peak demand and energy requirements; • some with high annual system load factors; and • some with relatively low annual load factors.

Utilities may turn to energy storage for peak demand shifting and load balancing if they want to reduce reliance on the open market for resources – rather than building generating capacity or perhaps if they want to increase operating efficiency/load factor by improving the use of existing electric system assets.

The few examples above demonstrate a potential application for energy storage to improve electric utility operations at the transmission level, on the distribution systems and possibly, “behind-the-meter”, at customer sites. However, the technologies that provide “instantaneous” regulation, control, or other ancillary services are vastly different than those that can shift “hours” of peak demand to off-peak periods.

Therefore, before utilities begin to evaluate the many different energy storage technologies’ operational characteristics and costs, they must first evaluate and understand the specific operating conditions on their systems and if or how the utility is having difficulty meeting those system operating requirements. With that

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assessment and understanding, Members will be better able to save time and focus their attention on specific energy storage resources that may be able to meet their system needs.

Figure 1 presents an illustration of the possible process that should be undertaken in consideration of energy storage system deployments or additions to an electric system. (Source: Sandia National Laboratories Handbook, page 29)

This figure includes references to possible solicitations of Requests for Information (RFIs) and Requests for Proposals (RFPs), as may be necessary to receive full information on any or all storage technologies that may be deemed appropriate for one or more Member(s). SCPPA has issued an open-ended RFP for Energy Storage development with an initial screening and review in April 2014.

FIGURE 1

Preliminary Storage Application Considerations/Requirements

• Identify purpose of storage system

• Estimate discharge durations and cycling frequency

• Determine physical size (footprint) availability

• Determine communication and control requirements

• Estimate power/energy requirements

• Determine appropriate location(s) for system(s)

• Establish interconnection requirements

• Establish Data requirements for monitoring and reporting

Step 1 Issue Request for Information from vendors providing system(s) with the necessary attributes to achieve the services required

Follow-up exchange with Vendors for feedback Develop specifications for formal RFP package

Step 2

Issue Request for Proposals to meet technical specs with price(s) Evaluate Proposals Select Vendor(s)

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ENERGY STORAGE TECHNOLOGY CAPABILITIES OVERVIEW Electricity storage devices must be distinguished by their power and energy relationship. Figure 2, as taken from the Sandia Handbook, illustrates the general range of power and storage discharge duration available from traditional energy storage devices or technologies. Pumped hydro and compressed air are typically very large because of economies of scale, and are capable of discharge periods of ten or more hours (high energy equivalent). In contrast, many batteries and flywheels are designed for shorter discharge periods with high power output.

The comparisons in Figure 2 are very general and presented for illustrative purposes and demonstrate the broad range of possibilities over the full spectrum of energy storage technologies. Thermal energy storage resources have been added for relative representation of size and function to the traditional electricity storage technologies included in the Sandia Handbook.

FIGURE 2

D

ISCH

ARG

E TI

ME

at R

ATED

PO

WER

Se

cond

s

Min

utes

Ho

urs

UPS Power Quality

T&D Grid Support Load Shifting

Bulk Power Management

PUMPED HYDRO

Thermal Compressed Air Energy Storage Flow Batteries: Zinc-Chlor. Zn-Air Zn-Bromine

Vanadium Redox New Chemistries

SodiumSulfur Battery

High-Energy Supercapacitors

Advanced Lead-Acid Batteries SodiumNickelChloride

Battery

Lithium-Ion Battery

Lead-Acid Battery Nickel Cadmium Battery

Nickle Metal Battery High-Power Flywheels

High-Power Supercapacitors Syn.Magnets 1 kW 10 kW 100 KW 1 MW 10 MW 50 - 100 MW 1+GW System Power Ratings, Module Size

Given the broad range of capabilities of these technologies, it is clear that utilities need to know what services are needed and the order of magnitude that these storage services must be delivered in. While each technology will differ in construct and capabilities, there are 5 key operating parameters of storage devices that utilities should evaluate when considering possible energy storage technologies: size, discharge duration, number of charge and

9 76

discharge cycles per day and year, cycle efficiency, as well as the desired and warrantied lifetime. Table 1, as taken from the Sandia Handbook, presents an outline of the relative size or possible range of the parameters for various applications or uses of energy storage in an electric system. Another important factor not included in this table is the energy storage systems’ response time or ramp rate.

TABLE 1

Application Description Size Duration Cycles Desired Lifetime

Wholesale Energy Services

Supply/Peak Shift 10-200 MW 4-8 hr 100-300/yr 15-20 yr Arbitrage 10-300 MW 2-10 hr 300-400/yr 15-20 yr Ancillary Services Highly variable – characteristics/requirements undefinable Frequency Regulation 1-100 MW 15 in. > 8,000/yr 15 yr Spinning Reserve 10-100 MW 1-5 hr. 20 yr

Renewables Integration

Wind Integration: Ramp & Voltage support

1-10 MW (distributed) 100-400 MW (centralized)

15 min. 5,000/yr w/ 10,000 full

energy cycles 20 yr

Wind Integration: Off-peak storage 100-400 MW 5-10 hr. 300-500/yr 20 yr

PV Integration: Time shift, voltage sag, rapid demand support

1-2 MW 15 min - 4 hr > 4,000/yr 15 yr

Stationary T&D Support

Urban and rural T&D deferral /ISO congestion management

10-100 MW 2-6 hr. 300-500/yr 15-20 yr

Transportable T&D Support

Urban and rural T&D deferral /ISO congestion management

1-10 MW 2-6 hr. 300-500/yr 15-20 yr

Distributed Energy Storage

Feeder/substation support, requires 75%-85% ac<-->ac efficiency

25-200 kW 1 phase 25-750 KW 3 phase

Small footprint 2-4 hr. 100-150/yr 10-15 yr

C&I Power Quality

Provide solutions to avoid voltage sags and momentary outages

50 – 500 kW < 15 min. < 50/yr 10 yr

1 MW > 15 min.

C&I Power Reliability

Provide UPS bridge for backup power 50-1,000 kW 4-10 hr. < 50/yr 10 yr

C&I Energy Management

Reduce energy costs & increase reliability (size varies by market)

50-1,000 kW Small footprint 3-4 hr.

400-1,500/yr 15 yr 1 MW 4-6 hr.

Home Energy Management Efficiency & Cost savings 2-5 kW

Small footprint 2-4 hr. 150-400/yr 10-15 yr

Home Backup Reliability 2-5 kW Small footprint 2-4 hr. 150-400/yr 10-15 yr

The information presented in Table 1 is based on EPRI’s generalized performance specifications for certain applications and are presented for broad comparison only. However, using these ranges for the various electric

10 77

system support functions listed in the table will provide the reader with a framework for what attributes are needed from potential energy storage systems to meet the specific needs of a utility.

During the California Public Utilities Commission’s energy storage proceeding (R.10-12-007), a series of storage cases was developed and considered by participants in the proceeding. The primary distinction in the cases was the point of the storage system’s connection to the grid: Transmission, Distribution and Demand-side/Customer, behind-the-meter. Each of these levels was further broken down to specific applications. Table 2, presented below, was developed from these studies to express another comparative table with a little more specificity concerning possible resources used to meet the system needs of each case. Again, the information is presented as a guideline for direction, recognizing that specific applications and equipment could provide different results and performance. This distillation or extension of the connections between the desired utility system operational improvements and the various energy storage technology types presents a very good synopsis of the possible “best fits” to meet these requirements or applications.

TABLE 2

Use Case Primary

Benefit Conventional Technology

Storage Technology

Option

Storage Technology

Option

Storage Technology

Option

Tran

smis

sion

Co

nnec

ted

Peaker Plant Capacity, Energy, AS

Combustion Turbine Battery Flow Battery Thermal

Ancillary Services (AS) only AS Combustion

Turbine Pumped Storage Battery

Base Load Plant Capacity & Energy

Comb. Cycle Gas Turbine Battery CAES Flow Battery

Variable Energy sited support

AS, grid reliability CT Battery Flow Battery Thermal

Dist

ribut

ion

Conn

ecte

d Distributed Peaker Upgrade deferral

Circuit Upgrade & CT Battery Flow Battery

Substation- sited storage

Voltage Support Circuit Upgrade Battery

Community energy storage

Voltage Support Circuit Upgrade Battery

Cust

omer

-site

d be

hind

-the

–m

eter

Behind the meter Bill Mngt, Arbitrage

Circuit Upgrade & CT Battery Flow Battery Thermal

Behind the meter, utility- controlled

Bill Mngt, Arbitrage ,

grid rel.

Circuit Upgrade & CT Battery Flow Battery Thermal

Permanent Load Shift

Capacity, grid rel. CT Thermal Battery

EV Charging Circuit Upgrade Battery

11 78

SPECIFIC STORAGE TECHNOLOGY DESCRIPTIONS This Review is limited in its scope and breadth and does not include descriptions of the many different types of batteries referenced above or the construct and operation of flywheels, compressed air or pumped hydro storage systems. The SANDIA Handbook presents such information in great detail.

To avoid lengthy reading on battery chemistries and other technical characteristics, the chart presented in Appendix 1 depicts a synopsis of the technological information contained in his Review, as drawn from the SANDIA Handbook for the various storage technologies that are typically used to provide certain services or functions for utility system operation improvements. This information can also refine the focus of utilities’ search for the appropriate technology to meet their specific needs.

As shown in these tables, many different battery types (e.g., Lithium-Ion, Sodium Sulfur, Zinc-Bromide) are used to provide Bulk Storage, Frequency Regulation, other Transmission and Distribution level Ancillary Services, Distributed, customer-sited services for both Commercial/Industrial and Residential customers, as well as provide ramping and load following services in support of intermittent renewable resources. Compressed air and pumped hydro both are identified as meeting or serving a subset of these needs. As discussed above, thermal energy storage applications were not directly included in the Handbook because they do not provide electricity storage. However, utilities should recognize that thermal energy storage applications are also able to provide a subset of the functions as well.

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ENERGY STORAGE COST OVERVIEW Various chemistries and configurations allow each battery type to provide different operating characteristics and therefore different “values” to an electric system. Similarly, the other traditional energy storage technologies (flywheels, pumped hydro, compressed air, and thermal storage) offer distinct services and values as well. However, the accrual of any of these values will come with a cost.

Presented below are cost data for some of the energy storage technologies described above. This data does not include or reflect the pricing of every battery type nor does it show the price differences across the entire range or spectrum of the sizes and configurations for any of the technologies. Rather, the data provides the reader with a cross-section of the various technologies to see the specific and relative pricing of the examples included herein. The cost data for electricity storage is taken from the Sandia Handbook, the chiller-based TES cost data are largely drawn from storage systems developed by investor-owned utilities or 3rd party developers, and the refrigerant-based TES cost data is drawn from SCPPA’s experience and contractual arrangements. The cost of capital and development for IOUs and 3rd party, Merchant development could be 5-8 percent higher than POUs. This suggests that some energy storage development by POUs might be slightly less than the data presented below.

For reference, the lowest cost or price data for all samples of each technology are shown in this Review using three industry-standard measurements or units:

1) Installed Cost ($/kW); a measure of the “overnight cost” of installation; 2) Levelized Cost of Operation ($/kW-yr); a measure of the cost of storage capacity over time; and 3) Levelized Cost of Operation ($/MWH); a measure of the cost of storage as an energy resource over time.

For all electric system resource planning purposes, it is critical to compare the levelized cost of operation of storage with other resources that might also provide the same services or functions. Levelized cost accounts for the time value of money. This is because resources (storage or otherwise) have different operating characteristics and cost structures over time, including significant maintenance and/or overhauls to reach the specified or intended operating life of the equipment. Therefore, the installed cost of the equipment is an incomplete assessment of the resource options.

Further, when using a levelized cost of operation for energy storage evaluations and comparisons, it is also important to use a unit of measurement that best correlates with the service or product that energy storage provides. Specifically, many energy storage systems are designed to provide capacity to support the electric system in times when there are capacity shortages. The value of the associated energy provided by these energy storage devices can be negligible, as compared to the value of the capacity they provide – particularly when a large-scale battery system is only operated for a few minutes to stabilize the grid. Therefore, $/kW-yr, is the primary unit of measurement and basis of comparison in this Review. The levelized cost of energy or $/MWH is an industry-standard metric, as discussed above. Because the amount of energy charged or discharged from an energy storage system can be highly variable, using this measurement as a comparison with the cost of traditional resources must continue to be evaluated.

Regardless, all of the price data is recognized as having its own merits and is included in SCPPA’s Storage Cost comparison tool: StorageCostLookup.xls.

Batteries Batteries are the oldest and most common energy storage technology and there are many conventional batteries on the market. Table 1 presents one sample of the cost of five different battery types. These cost data are taken

13 80

from different installations of various sizes and with wide ranging discharge cycle durations. All of the different battery types have been used to serve varying applications, including bulk energy needs, frequency regulation, and other ancillary services, as well as behind-the-meter services for both commercial/industrial customers and residential customers. This table shows the lowest levelized operating cost ($/kW-yr) of all batteries sampled for each respective battery type and that battery’s associated installed cost ($/kW) and levelized cost of energy ($/MWH).

TABLE 1

Batteries Minimum

Levelized Cost ($/kW-yr)

Associated Installed Cost

($/kW)

Associated Levelized Cost

($/MWh)

Advanced Lead-Acid $280 $2,500 $220

Lithium-Ion $210 $1,950 $170

Sodium-Nickel Chloride $450 $4,000 $610

Sodium-Sulfur $643 $5,775 $292

Zinc-Air $355 $3,200 $165

The price structure in Table 1 showing the minimum levelized cost of capacity for each storage technology with the associated installed cost and levelized cost of energy will be used through this Review. Importantly, the energy storage system with the lowest installed cost may not have the lowest levelized cost of capacity (and/or energy).

Flow Batteries The fundamental difference between conventional batteries, as discussed above, and flow batteries is that the energy is stored as the electrode in conventional batteries but as the electrolyte in flow batteries. A key advantage in flow batteries is that they can be almost instantaneously recharged by replacing the electrolyte liquid, while simultaneously recovering the spent material for re-energization. Table 2 presents the minimum levelized cost of capacity for three types of flow batteries, with their respective installed costs and cost of energy.

TABLE 2

Flow Batteries Minimum



($/kW)


($/MWh)

Iron-Chromium $375 $3,100 $195

Vanadium Redox $680 $6,000 $550

Zinc-Bromine $390 $12,000 $1,800

For clarity, the estimated costs of the conventional and flow batteries in Tables 1 and 2 do not include any quantification of the potential environmental or safety-related costs associated with the construction, maintenance or disposal of potentially high acidic and toxic materials.

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Flywheels Flywheels store energy in the form of a spinning mass, called a rotor. The rotor must be contained in a special vessel for safety and performance enhancement purposes. The containment vessel is often placed in a vacuum or filled with a low-friction gas, such as helium, to reduce friction on the rotor. This construct requirement adds complexity and cost to the construction of these systems. Table 3 presents the cost information for a flywheel.

TABLE 3

FLYWHEELS Minimum



($/kW)


($/MWh)

$475 $4,250 $380

Pumped Hydro The pumped hydro energy storage technology is very mature and proven. The cost of developing these utility-scale resources can be very high but the increased operational flexibility that they can provide to an electric system can provide great value. Table 4 includes an example of the operating and installation costs of the resource.

TABLE 4

Pumped Hydro Minimum



($/kW)


($/MWh)

$405 $5,500 $180

Compressed Air There are two, large-scale, first-generation compressed air energy storage (CAES) systems in existence and numerous advanced second-generation compressed air units in operation and development. In essence, CAES uses electricity to compress air and store it in a reservoir, either above ground in tanks or below ground in a cavern. Then, when electricity is needed the air is heated, expanded and run through a turbine-generator to produce electricity. Some second generation installations include a combustion turbine to augment the heat production during expansion for increased overall efficiencies. To date, no significant environmental, safety or other externality-related costs have been identified with compressed air unit development or operation. Table 5 presents the summary cost data for CAES.

TABLE 5

Compressed Air Minimum



($/kW)


($/MWh)

$348 $4,480 $120

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Thermal Storage Thermal energy storage (TES) does not store electricity or produce it directly. Rather, TES systems can be used on varying scales to shift load and provide potentially significant value to both utilities and the end-use customers who deploy or implement the system. TES typically uses water or ice as the storage media but molten salt and other media are being developed. The cost data shown in Table 6 include larger-scale TES used in chiller-based applications and smaller-scale TES in typical direct-expansion, refrigerant-based applications. One of the primary reasons for the cost advantage TES demonstrates over the other energy storage technologies is that TES deployment does not require electric system interconnection studies, as do all of the electricity storage technologies referenced above.

TABLE 6

Thermal Storage Minimum



($/kW)

Minimum Levelized Cost

($/MWh)

Chiller-based $182 $4,544 $99

Refrigerant-based $168 $3,369 $127

Table 7 presents the cost data for all of energy storage technologies discussed above. These data are exemplary in nature and do not represent the full range of all the batteries or other possible storage technologies available in the market. However, this information should allow utilities to refine the necessary analyses, to determine if energy storage technology (or technologies) can be cost-effectively added to their respective system to enhance the electric service provided to all customers.

TABLE 7

All Minimum



($/kW)


($/MWh)

Batteries

Advanced Lead-Acid $280 $2,500 $220

Lithium-Ion $210 $1,950 $170

Sodium-Nickel Chloride $450 $4,000 $610

Sodium-Sulfur $643 $5,775 $292

Zinc-Air $355 $3,200 $165

Flow Batteries

Iron-Chromium (Fe-Cr) $375 $3,100 $195

Vanadium Redox $680 $6,000 $550

Zinc-Bromine (Zn-Br) $390 $12,000 $1,800

Flywheels $475 $4,250 $380 Pumped Hydro $405 $5,500 $180 Compressed Air $348 $4,480 $120 Thermal

Chiller-based $182 $4,544 $99

Refrigerant-based $168 $3,369 $127

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COST-EFFECTIVENESS EVALUATION PROCESSES AND TOOLS The integrated resource planning requirements for utilities to assess the applicability of “energy storage” are comprehensive and must be well-coordinated among all levels of system operations. Many processes can be used to determine if energy storage is needed or how it can be added to an electric system, including:

• Resource planning portfolio studies; • Production cost simulations; • Load flow and stability analyses; and • Simulations of system dynamics.

This Review will not review these technical considerations. Rather, the Review presents:

• Synopsis of a resource screening tool developed for energy storage comparative analyses; • Review of economic evaluation discussions on energy storage; and • Summary of the principal tools or methodologies that can be used to assess the cost-effectiveness of

energy storage.

Many utilities, regulatory agencies, research organizations and other industry stakeholders have prepared documentation and computer models related to energy storage cost-effectiveness evaluations. While each of these has their own particular perspective, the underlying theme in all is that there is probably no single resource that requires as much integrated planning as energy storage. This is largely driven by the fact that energy storage can touch every level of the grid from the Generators to Transmission to Distribution to the Customer.

Another important consideration is that integration of large-scale energy storage is a relatively new concept or practice, and system planners and operators are still trying to understand how to optimize the development and operation of integrated energy storage systems. Analysis of storage options is driven by efforts to integrate large-scale, intermittent renewable resources and small-scale distributed generation facilities while also meeting the needs of a growing electric vehicle transportation market.

Publicly owned utilities hold a responsibility to provide reliable electric service to their customers at the lowest cost possible. Based on this, the standard utility practice has been to develop “least-cost/best-fit” resource plans for utility operations. In essence, this requires the utility to determine the system “needs”, find out what resources can serve those needs, and then determine which one can do it the best, for the least cost.

Ultimately, the “least-cost/best-fit” goal needs to include an evaluation of the utility’s avoided costs – that is, if or when a utility adds energy storage, what financial, environmental or safety costs are not going to be incurred or what costs will the utility “avoid”? This could be represented as a comparison of the cost of (a) building and operating an energy storage system that provides reserve capacity, frequency regulation, and/or voltage control against (b) the cost of installing any and all other resources that can provide one or more of those functions (e.g., combustion turbines, automated demand response programs, power purchase contracts). Presented below are includes discussions that support these practices and provide options for methodologies or tools to complete such cost-effectiveness studies.

17 84

SCPPA has developed a model designed to allow Members to compare the cost of a particular energy storage system against other storage options, traditional supply-side resources, renewable generation, as well as energy efficiency and demand response programs. This tool (ResourceScreeningTool2014.xlsx) provides a comparative analysis based on utility-specific information and industry-accepted, CEC-based, cost data of generating resource costs. As is the case for any and all storage considerations, the results for each SCPPA Member vary.

The model results clearly show that energy efficiency programs are typically the most cost-effective resource for utilities. In addition, it appears that thermal storage could be a cost-effective addition for some utilities’ systems, particularly those with a load/resource imbalance, low annual load factor and/or constrained capacity on a circuit, substation or feeder. Beyond this, some traditional generation resources demonstrate lower levelized costs of operation than most storage technologies. However, this cost comparison does not include or account for the modular capabilities or scalability of many energy storage systems that can be sized and built to meet the incremental needs of changing electric systems.

Beyond this initial screening phase, detailed production cost modeling and comparative analyses will be required to fully assess specific storage applications in each utility system. Southern California Edison developed an extensive White Paper1 describing such a detailed investigation of various energy storage applications at all levels of their system’s operation. This paper stressed the importance of reviewing the system needs and potentially using energy storage to serve or meet the desired improvements to the system. Much of their work is based on a “least-cost/best-fit” planning process. In summary, Edison concluded that there were no storage technologies existing, at that time, which could meet their needs more cost-effectively, than other, more traditional resources. However, certain functions (e.g., peak load shifting and storage located close to the end-user) were scored much higher or given greater potential than other storage applications. Edison also supported the need for ongoing research and evaluation as the market develops and grows.

The Sandia Handbook includes a detailed outline of the Resource Planning Process that can be used “from beginning to end” in energy storage evaluations to support the system analysis, technology screening and detailed evaluations that can yield cost-effective storage options. Beyond these system planning efforts, the Handbook references two primary electricity storage cost-effectiveness evaluation tools or models that are commercially available to assist in this effort:

• Energy Storage Valuation Tool (EVST) by the Electric Power Research Institute (EPRI); and • Energy Storage Computational Tool (ESCT) by Navigant Consulting, Inc., on behalf of the Department of

Energy and the National Energy Technology Laboratory.

Both of these models appear to offer comprehensive analytical capabilities to analyze pre-existing energy storage technologies, based on industry research data but also allow for specification of user-defined systems. One important component of the EVST is EPRI’s incorporation of a combustion turbine for business case (avoided cost) comparisons.

The ESWG will continue to evaluate these models and the Energy Storage Grid Model offered by the international consulting firm, DNV GL, and others to determine their potential usefulness and application for Members.

1 Moving Energy Storage from Concept to Reality: Southern California Edison’s Approach to Evaluating Energy Storage, 2011

18

85

POSTSCRIPT The ESWG is hopeful that the information contained in this Review on energy storage technology and economics will be helpful as Members complete the necessary assessments of the relative value of energy storage systems. The various technologies herein need to be compared to other storage systems and to demand- and supply-side resources that provide the same operational services and functions. With such comparisons, Members will be fully equipped to determine if there are opportunities for cost-effective development of energy storage systems in each of their respective electric systems.

19 86

APPENDIX 1

20 87

Technology Primary Application What We Currently Know Challenges Frequ

ency

Regu

lation

Peak

Shift

ing an

d Firm

ing

Ramp

ing

Rene

wable

Integ

ratioi

n

Black

Start

Load

Shav

ing

Powe

r Qua

lity

Defer

ring T

ransm

ission

Upg

rade

Cong

estio

n Mitig

ation

Regu

lation

, Loa

d Foll

owing

Trans

ient S

tabilit

y,Im

prov

e Sho

rt-Du

ration

Pe

rform

ance

Back

up an

d Sea

sona

l Res

erves

Spinn

ing an

d Non

-Spinn

ing Re

serve

s

Powe

r Qua

lity

Defer

ring D

istrib

ution

Inf

rastru

cture

Upgra

de

Peak

ShIft

ing Do

wnste

am of

Dis

tribu

tion S

ystem

Interm

itten

t Dist

ribut

ed

Gene

ration

Integ

ration

Micr

o-Gr

id Fo

rmati

on

Trans

porta

ble O

utag

e Mitig

ation

Time-o

f-Use

rate

Optim

izatio

n

Interm

itten

t Dist

ribut

ed

Gene

ration

Integ

ration

Micr

o-Gr

id Fo

rmati

on

Powe

r Qua

lity

Back

up Po

wer D

uring

Out

ages

Compressed Air Energy Storage

• Energy management• Backup and seasonal reserves• Renewable integration

• Better ramp rates than gas turbine plants• Establ i shed technology in operation s ince the 1970's

• Geographica l ly l imited• Lower efficiency due to roundtrip convers ion• Slower response time than flywheels or batteries• Environmenta l impact

● ● ● ● ● ○

Pumped Hydro Energy Storage

• Energy management• Backup and seasonal reserves• Regulation service a lso avai lable through variable speed pumps

• Developed and mature technology• Very high ramp rate• Currently most cost effective form of s torage

• Geographica l ly l imited• Plant s i te• Environmenta l impacts• High overa l l project cost

● ● ● ● ● ○

Flywheel Energy Storage

• Load level ing• Frequency regulation• Peak shaving and off peak s torage• Trans ient s tabi l i ty

• Modular technology• Proven growth potentia l to uti l i ty sca le• Long cycle l i fe• High peak power without overheating concerns• Rapid response• High round trip energy efficiency

• Rotor tens i le s trength l imitations• Limited energy s torage time due to high frictional losses

● ● ● ● ● ● ●

Advanced Lead-Acid Batteries

• Load level ing and regulation• Grid s tabi l i zation

• Mature battery technology• Low cost• High recycled content• Good battery l i fe

• Limited depth of discharge• Low energy dens i ty• Large footprint• Electrode corros ion l imits useful l i fe

● ● ● ● ● ● ● ● ● ● ● ● ● ● ●

Sodium-Sulfur (NaS) Batteries

• Power qual i ty• Congestion rel ief• Renewable source integration

• High energy dens i ty• Long discharge cycles• Fast response• Long l i fe• Good sca l ing potentia l

• Operating temperature required between 250⁰ and 300⁰ C• Liqiud conta inment i ssues (corros ion and bri ttle glass sea ls )

● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●

Lithium-Ion Batteries • Power qual i ty• Frequency regulation

• High energy dens i ty• Good cycle l i fe• High charge/discharge efficiency

• High production cost - sca labi l i ty• Extremely sens i tive to over temperature, overcharge and internal pressure bui ldup• Intolerance to deep discharges

● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●

Flow Batteries

• Ramping• Peak shaving• Time shi fting• Frequency regulation• Power qual i ty

• Abi l i ty to perform high number of dischange cycles• Lower charge/discharge efficiencies• Very long l i fe

• Developing technology, not mature for commercia l sca le development• Compl icated des ign• Lower energy dens i ty

● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●

Superconducting Magnetic Energy Storage (SMES)

• Power qual i ty• Frequency regulation

• Highest round-trip efficiency from discharge

• Low energy dens i ty• Materia l and manufacturing cost prohibi tive

●

Electrochemical Capacitors

• Power qual i ty• Frequency regulation

• Very long l i fe• High revers ible and fast discharge

• Currently cost prohibi tive ● ●

Thermochemical Energy Storage/ Thermal Energy Storage/ Generation Storage

• Load level ing and regulation• Grid s tabi l i zation

• Extremely high energy dens i ty • Currently cost prohibi tive ● ● ● ●

Reference: SANDIA Report, DOE/ EPRI 2013 Electric Storage Handbook in Collaboration with NRECA, Grid Energy Storage U.S. Department of Energy December 2013

DISTRIBUTION BEHIND THE METERTRANSMISSION

A-1 88



MEETING DATE: April 17, 2014 RESOLUTION NUMBER: 2014-034 CONSENT DISCUSSION X RENEWAL NEW X Place an X in box next to the appropriate consideration(s) above.

FROM: METHOD OF SELECTION: Finance Competitive X Energy Systems Cooperative Purchase Program Development X Sole Source Regulatory/Legislative Single Source Project Administration Other Legal If other, please describe: Place an X in box next to the appropriate consideration(s) above.



Colton LADWP X Azusa Cerritos Pasadena Banning Glendale Riverside X Burbank IID Vernon


SUBJECT: Professional Services Agreement with the Electric Power Research Institute (EPRI). RECOMMENDATION: Approve the Resolution authorizing SCPPA to enter into a Master Professional Services Agreement with EPRI to procure consulting support and computer modeling tools in support of Members’ efforts to develop energy storage procurement targets. BACKGROUND: EPRI was selected by participating Members as the provider of choice after SCPPA’s solicitation and requests for presentations from 3 firms on their respective computer modeling and associated services related to energy storage system valuation assessments. Other proposals were received by Navigant and DNV GL. Participating Members will pay $12,500 for licensing and use of EPRI’s proprietary model and receive appropriate training and additional support services needed to complete the cost-effectiveness analyses of energy storage system applications on the respective utility systems. FISCAL IMPACT: None. Participating Members will be responsible for ensuring funds are in their respective budgets to fully pay for all goods and services received under this Agreement.

89


RESOLUTION OF THE SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE AN AGREEMENT WITH THE ELECTRIC POWER RESEARCH INSTITUTE TO ACQUIRE COMPUTER MODELING LICENSES AND ASSOCIATED SUPPORT SERVICES TO PEFORM ENERGY STORAGE SYSTEM EVALUATIONS AND PROVIDING FOR ADDITIONAL CONTRIBUTIONS TO THE AUTHORITY'S GENERAL FUND, AND TAKING CERTAIN RELATED ACTIONS (RESTRUCTURING)

WHEREAS, the Southern California Public Power Authority (the Authority) owns interests in various generation and transmission projects, the output of which has been sold to Members of the Authority (Members); and

WHEREAS, certain SCPPA member utilities ("Participants") are engaged in the generation, transmission, and distribution of electrical energy to retail customers, including assisting such customers with the efficient use of said energy; and

WHEREAS, certain Members have a need to evaluate the cost-effectiveness of energy storage systems’ within their service territories; and

WHEREAS, the Electric Power Research Institute (“EPRI”) is qualified to provide the necessary computer modeling tools and associated support services for Members; and

WHEREAS, the Board of Directors of Authority, in its Resolution No. 1990-15, established a revolving general fund (the General Fund) for the payment of costs and expenses incurred by the Authority from time to time in carrying out its purposes; and

WHEREAS, the Board of Directors of the Authority, in its Resolution No. 1992-1, provided for the continuation of the General Fund and established a procedure to be followed with respect to additional contributions to the General Fund; and

WHEREAS, the Board of Directors of the Authority, in its Resolution No. 1995-2, provided for a separate bank account (the Joint Planning Account) to hold and disburse the additional contributions to the General Fund with respect to joint planning matters; and

WHEREAS, the Board of Directors of the Authority, in its Resolution No. 1995-13, changed the name of the Joint Planning Account to the Restructuring Account; and

90

WHEREAS, the Board of Directors of the Authority wishes to provide for additional contributions to the General Fund, and certain Members of the Authority are willing to make such additional contributions.

NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Authority as follows:

1) The Executive Director is authorized and directed to develop a Professional Services Agreement with EPRI at the request of Member(s) of the Authority, provided that such Member(s) agree, in writing, to bear all costs and expenses associated with Services provided to Member(s), respectively.

2) The Board of Directors hereby provides for additional contributions to the General Fund. Notwithstanding anything to the contrary in Resolution No. 1992-1, such additional contributions,

a) shall be solely for the purpose of paying costs and expenses incurred by the Authority with respect to EPRI, and pending application for such purpose the contributions shall not be expended to pay costs or expenses properly allocable to one or more projects as provided in Section 3 of Resolution No. 1992-1;

b) with respect to each bill SCPPA receives from EPRI, shall be billed to the Members that have received services from EPRI with respect to such bill; and

c) shall be billed and collected by adding the amounts provided above to the Authority's Hoover Uprating Project billings to Anaheim (if applicable), and to the Authority's Palo Verde Project billings to the other applicable Members, with such amounts designated as "Resolution No. 2014-034 Charge."

3) Although the amounts to be contributed under this Resolution and related income shall constitute part of the General Fund, they shall be held and accounted for in a separate subaccount within the existing Restructuring Account. The Executive Director of the Authority is hereby directed to establish a subaccount (EPRI Storage Subaccount) within the Restructuring Account for the purpose of holding contributions and related income, and making disbursements, under this Resolution. The President, Vice President, Secretary, any Assistant Secretary and the Executive Director of the Authority are each authorized to execute checks drawn on the Restructuring Account from time to time. Amounts contributed to and held in the General Fund and the EPRI Storage Subaccount pursuant to this Resolution will not be contributed or held for the purposes of any project for which the Authority has obtained any form of external financing. Such amounts shall not constitute (a) Revenues, or (b) revenues, income, rents or receipts derived by the Authority from or attributable to Authority Capacity (or to the payment of the costs thereof) or the ownership or operation of any Project. As used herein, "Revenues," "Authority Capacity" and "Project" shall have the

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respective meanings set forth in the indentures of trust and other instruments governing the external financing arrangements entered into from time to time by the Authority.

4) Notwithstanding paragraphs 2, 3 and 4 of this Resolution, to the extent the services to be provided by EPRI will be in furtherance of a Project or Project Element under the Phase II Renewable Development Project as approved by Resolution No. 2012-008, charges for services provided to a Member may, at the election of the Member, be charged to the Member on its Hoover Uprating or Palo Verde bill as a “Resolution No. 2012-008” charge instead of as a charge pursuant to this Resolution.

5) The President, Vice President, Secretary, any Assistant Secretary, Executive Director and any other officer of the Authority are each hereby authorized to execute and deliver any and all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for carrying out the transactions contemplated by this Resolution.

6) This Resolution shall become effective immediately.


PRESIDENT



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MEETING DATE: April 17, 2014 RESOLUTION NUMBER: 2014-035 CONSENT DISCUSSION X RENEWAL NEW X Place an X in box next to the appropriate consideration(s) above.

FROM: METHOD OF SELECTION: Finance Competitive X Energy Systems Cooperative Purchase Program Development X Sole Source Regulatory/Legislative Single Source Project Administration Other Legal If other, please describe: Place an X in box next to the appropriate consideration(s) above.



Colton LADWP Azusa X Cerritos Pasadena Banning Glendale Riverside Burbank IID Vernon

X Place an X in box next to the applicable Member(s) shown above.

SUBJECT: Professional Services Agreement with Navigant Consulting, Inc. (Navigant). RECOMMENDATION: Approve the Resolution authorizing SCPPA to enter into a Master Professional Services Agreement with Navigant to procure consulting support and computer modeling tools in support of Members’ efforts to develop energy storage procurement targets. BACKGROUND: Navigant was selected by participating Members as the provider of choice after SCPPA’s solicitation and requests for presentations from 3 firms on their respective computer modeling and associated services related to energy storage system valuation assessments. Other proposals were received by EPRI and DNV GL. Participating Members will pay $15,000.00 for licensing and use of Navigant’s computer model and receive appropriate training and additional support services needed to complete cost-effectiveness analyses of energy storage system applications on the respective utility systems. FISCAL IMPACT: None. Participating Members will be responsible for ensuring funds are in their respective budgets to fully pay for all goods and services received under this Agreement.

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RESOLUTION OF THE SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE AN AGREEMENT WITH NAVIGANT CONSULTING, INC. TO ACQUIRE COMPUTER MODELING LICENSES AND ASSOCIATED SUPPORT SERVICES TO PERFORM ENERGY STORAGE SYSTEM EVALUATIONS AND PROVIDING FOR ADDITIONAL CONTRIBUTIONS TO THE AUTHORITY'S GENERAL FUND, AND TAKING CERTAIN RELATED ACTIONS (RESTRUCTURING)

WHEREAS, the Southern California Public Power Authority (the Authority) owns interests in various generation and transmission projects, the output of which has been sold to Members of the Authority (Members); and

WHEREAS, certain SCPPA member utilities ("Participants") are engaged in the generation, transmission, and distribution of electrical energy to retail customers, including assisting such customers with the efficient use of said energy; and

WHEREAS, certain Members have a need to evaluate the cost-effectiveness of energy storage systems’ within their service territories; and

WHEREAS, Navigant Consulting, Inc. (“Navigant”) is qualified to provide the necessary computer modeling tools and associated support services for Members; and

WHEREAS, the Board of Directors of Authority, in its Resolution No. 1990-15, established a revolving general fund (the General Fund) for the payment of costs and expenses incurred by the Authority from time to time in carrying out its purposes; and

WHEREAS, the Board of Directors of the Authority, in its Resolution No. 1992-1, provided for the continuation of the General Fund and established a procedure to be followed with respect to additional contributions to the General Fund; and

WHEREAS, the Board of Directors of the Authority, in its Resolution No. 1995-2, provided for a separate bank account (the Joint Planning Account) to hold and disburse the additional contributions to the General Fund with respect to joint planning matters; and

WHEREAS, the Board of Directors of the Authority, in its Resolution No. 1995-13, changed the name of the Joint Planning Account to the Restructuring Account; and

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WHEREAS, the Board of Directors of the Authority wishes to provide for additional contributions to the General Fund, and certain Members of the Authority are willing to make such additional contributions.

NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Authority as follows:

1) The Executive Director is authorized and directed to develop a Professional Services Agreement with Navigant at the request of Member(s) of the Authority, provided that such Member(s) agree, in writing, to bear all costs and expenses associated with Services provided to Member(s), respectively.

2) The Board of Directors hereby provides for additional contributions to the General Fund. Notwithstanding anything to the contrary in Resolution No. 1992-1, such additional contributions,

a) shall be solely for the purpose of paying costs and expenses incurred by the Authority with respect to Navigant, and pending application for such purpose the contributions shall not be expended to pay costs or expenses properly allocable to one or more projects as provided in Section 3 of Resolution No. 1992-1;

b) with respect to each bill SCPPA receives from Navigant, shall be billed to the Members that have received services from Navigant with respect to such bill; and

c) shall be billed and collected by adding the amounts provided above to the Authority's Hoover Uprating Project billings to Anaheim (if applicable), and to the Authority's Palo Verde Project billings to the other applicable Members, with such amounts designated as "Resolution No. 2014-035 Charge."

3) Although the amounts to be contributed under this Resolution and related income shall constitute part of the General Fund, they shall be held and accounted for in a separate subaccount within the existing Restructuring Account. The Executive Director of the Authority is hereby directed to establish a subaccount (Navigant Storage Subaccount) within the Restructuring Account for the purpose of holding contributions and related income, and making disbursements, under this Resolution. The President, Vice President, Secretary, any Assistant Secretary and the Executive Director of the Authority are each authorized to execute checks drawn on the Restructuring Account from time to time. Amounts contributed to and held in the General Fund and the Navigant Storage Subaccount pursuant to this Resolution will not be contributed or held for the purposes of any project for which the Authority has obtained any form of external financing. Such amounts shall not constitute (a) Revenues, or (b) revenues, income, rents or receipts derived by the Authority from or attributable to Authority Capacity (or to the payment of the costs thereof) or the ownership or operation of any Project. As used herein, "Revenues," "Authority Capacity" and "Project" shall

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have the respective meanings set forth in the indentures of trust and other instruments governing the external financing arrangements entered into from time to time by the Authority.

4) Notwithstanding paragraphs 2, 3 and 4 of this Resolution, to the extent the services to be provided by Navigant will be in furtherance of a Project or Project Element under the Phase II Renewable Development Project as approved by Resolution No. 2012-008, charges for services provided to a Member may, at the election of the Member, be charged to the Member on its Hoover Uprating or Palo Verde bill as a “Resolution No. 2012-008” charge instead of as a charge pursuant to this Resolution.

5) The President, Vice President, Secretary, any Assistant Secretary, Executive Director and any other officer of the Authority are each hereby authorized to execute and deliver any and all documents and instruments and to do and cause to be done any and all acts and things necessary or proper for carrying out the transactions contemplated by this Resolution.

6) This Resolution shall become effective immediately.


PRESIDENT



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