1. MTS Working Group Webinar Mtg
April 9, 2015

2. Agenda Introduction - Paul De Martini DRP Methodology - Mark Esguerra
Q Plan - Paul De Martini

3. Optimal Location Values & Methodology

4. Distribution Planning Process
Annual Distribution Plan For Each DPA & Substations/Feeders
Bi-Annual DRP & Integration Capacity Analyses
DRP Locational Value Methodology
Identification of Optimal Locations
Geographical Areas
Not Required for
“Walk” Phase

5. Value Analysis: Avoided Costs and Benefits
Illustrative
Benefits
Avoided Costs
Note: Analysis excludes some avoided costs/benefits that do not have a locational dimension. Therefore, analysis is not intended to estimate full stack of avoided costs and benefits associated with DER “Integration Costs”. These include investments to realize locational benefits such as grid modernization, procurement, and other related costs.

6. Final CPUC Guidance on Optimal Location Benefit Analysis
Requirements:
IOU Unified Locational Net Benefits methodology
Based on E3 Cost-Effectiveness Calculator, but enhanced to include following location-specific values (minimum):

7. MTS Identified DER Value Components (1/2)
For reference, yellow highlighted value components relate MTS defined values to CPUC Final Guidance for initial DRPs
Societal & Environmental value components left to IOUs to identify locational linkage
Value Component
Definition
Wholesale
WECC Bulk Power System Benefits
Regional BPS benefits not reflected in System Energy Price or LMP
CA System Energy Price
Estimate of CA marginal wholesale system-wide value of energy
Wholesale Energy
Reduced quantity of energy produced based on net load
Resource Adequacy
Reduction in capacity required to meet Local RA and/or System RA reflecting changes in net load and/or local generation
Flexible Capacity
Reduced need for resources for system balancing
Wholesale Ancillary Services
Reduced system operational requirements for electricity grid reliability including all existing and future CAISO ancillary services
RPS Generation & Interconnection Costs
Reduced RPS energy prices, integration costs, quantities of energy & capacity
Transmission Capacity
Reduced need for system & local area transmission capacity
Generation/DER Deliverability
Increased ability for generation and DER to deliver energy and other services into the wholesale market
Transmission Congestion + Losses
Avoided locational transmission losses and congestion as determined by the difference between system marginal price and LMP nodal prices
Wholesale Market Charges
LSE specific reduced wholesale market & transmission access charges
Make distribution capacity more granular

8. MTS Identified DER Value Components (2/2)
Definition
Distribution
Subtransmission, Substation & Feeder Capacity
Reduced need for local distribution system upgrades
Distribution Losses
Value of energy due to losses between wholesale transaction and distribution points of delivery
Distribution Steady-state Voltage
Improved steady-state (generally >60 sec) voltage, voltage limit violation relief, reduced voltage variability, compensating reactive power
Distribution Power Quality
Improved transient voltage and power quality, including momentary outages, voltage sags, surges, and harmonic compensation  
Distribution Reliability + Resiliency+ Security
Reduced frequency and duration of outages & ability to withstand and recover from external natural, physical and cyber threats
Distribution Safety
Improved public safety and reduced potential for property damage
Customer, Environmental
& Societal
Customer Choice
Customer & societal value from robust market for customer alternatives
CO2 Emissions
Reductions in federal and/or state carbon dioxide emissions (CO2) based on cap-and-trade allowance revenue or cost savings or compliance costs
Criteria Pollutants
Reduction in local emissions in specific census tracts utilizing tools like CalEnviroScreen. Reduction in health costs associated with GHG emissions
Energy Security
Reduced risks derived from greater supply diversity
Water Use
Synergies between DER and water management (electric-water nexus)
Land Use
Environmental benefits & avoided property value decreases from DER deployment instead of large generation projects
Economic Impact
State and/ or local net economic impact (e.g., jobs, investment, GDP, tax income)
Make distribution capacity more granular

9. E3 Cost Effectiveness Methodology
Utilize E3’s Distributed Energy Resources Avoided Cost Model (DERAC)
But, Current DERAC model has “system level” values that need to be modified/replaced with relevant locational specific values.
E3 Value Components
System/Local
E3 DERACT Method
Generation Energy
System
Forward market prices based on fixed and variable operating costs of CCGT.
Losses
System loss factors
Generation Capacity
Residual capacity value for a new simple-cycle combustion turbine
Ancillary Services
Percentage of generation energy value
T&D Capacity
Marginal system-wide sub-transmission and distribution costs from utility ratemaking filings
Environment
Synapse Mid-level carbon forecast developed for use in electricity sector IRPs
Avoided RPS
Cost of marginal renewable resource less the energy market and capacity value associated with that resource

10. Proposed Adaptation of E3 DERACT for Locational Benefits Analysis
Value Components
E3 DERACT
CPUC Guidance
Recommendation
DERACT Values
Generation Energy
System
N/A
Losses
Generation Capacity
Flexible RA
Use MTS Method in DERACT based on Local Capacity Requirement
Ancillary Services
T&D Capacity
Yes, Local
Use MTS Method in DERACT
Environment
Avoided RPS
Additional Values
Transmission Capacity
None
Dist. Voltage & Power Quality
Dist. Reliability, Resiliency & Security
Safety
Renewable Integration Costs
Yes, System

11. MTS Recommendations
Utilize E3’s DERACT model as starting point, but leverage MTS locational methods in lieu of system values as applicable
For example, Local RA will be used for Generation Capacity value
Generation related integration costs incorporated using interim integration adder adopted by CPUC – System value
Societal & Public Safety will be included as qualitative factors until quantitative data is available.
Review and compare T&D deferral benefit calculations among the IOUs
For all categories, DERs may increase cost (e.g., integration systems cost). Net Benefit for specific technologies will account for any increased costs.

12. Final Commission Guidance and MTS WG Recommendations

13. Q MTS WG Scope

14. MTS WG 2015 Structure Q2 2015 Activity
Advisory Board (Quarterly, or as needed)
MTS Working Group (Monthly – webinar)
Technical sub-groups (as needed virtual & in person)
Complete discussion on alignment of DPP with CA planning and CPUC ratemaking
Define initial services (incl. functional requirements) for deferred capital, voltage/reactive power management and reliability/resilience. Plus identify sourcing structures related to these services (e.g., procurement, tariffs, programs, other)
Define incremental operational functions to integrate and optimize DER related to the values identified in the CPUC final guidance. This includes identifying technology and new processes leveraging industry practices and CA developments (incl. measurement, ISO/IOU coordination processes, information protocols, etc.)

15. DRP Methods Background

16. Avoided Sub-transmission, Substation and Feeder Capital & Operating Expenses
Definition
Avoidable costs incurred to increase capacity on sub- transmission, substation and/or distribution feeders to ensure system can accommodate forecast load growth
Value Calculation Approach
Use utility capacity 10-year plans by substation and/or future plans that result from the DRP that include enhanced ICA analysis and locational benefits methodologies.
Benefit/Avoided Cost is the deferred cost of capital value of deferring capacity work
Examples
Substation upgrades
Transformer upgrades
Distribution feeder reconductoring/reconfiguration

17. Avoided Distribution Voltage and Power Quality Capital and Operating Expenses
Definition
Avoidable costs incurred to ensure power delivered is within required operating specifications (i.e. voltage, flicker, etc.)
Value Calculation Approach
Use existing information in conjunction with DRP scenarios analysis to identify projected avoided overloads of distribution transformers and services, and any reactive requirements that cannot be met by smart inverters alone.
Examples
Breakdown maintenance investments that result from historical and projected customer complaints, or information from smart meters.
Best achievable avoided cost in this category are unnecessary transformer and service replacements due to overloading.

18. Avoided Distribution Reliability and Resiliency Capital & Operating Expenses
Definition
Avoidable costs incurred to proactively prevent/mitigate routine outages (reliability) and major outages (resiliency)
Avoidable costs incurred in responding to routine outages (reliability) and major outages (resiliency)
Distribution Resiliency costs defined as spending needed to meet reliability expectations that are above/beyond distribution planning criteria to address major outage events.
Value Calculation Approach
Avoided costs to improve reliability/resiliency based on statistics (i.e. SAIDI, CAIDI, SAIFI) by substation/local area
Examples:
Reduction of O&M expenses due to reduced duration of outages and labor required for restoration
Forecasted future capital reductions based on longer equipment replacement life cycles (better system efficiency)
Reduced outages due to the use of microgrids
Note: In order to achieve improved reliability, more investments are needed in areas for microgrid development, control and communications with DER technologies for a portfolio solution, DMS, DERMS, advanced protection, etc.

19. Avoided Transmission Capital and Operating Expenses
Definition
Avoidable costs incurred to increase capacity on transmission line and/or substations to ensure system can accommodate forecast load growth
Value Calculation Approach
Use existing CAISO TPP plan by substation and/or
Perform load forecasting vs. capacity analysis to forecast needed capacity upgrades before exceeding NERC reliability criteria
Benefit/Avoided Cost is value of deferring transmission capacity work
Examples
Substation upgrades
Transformer upgrades
Transmission line reconductoring/reconfiguration
Voltage regulation investments

20. Avoided Flexible Resource Adequacy Procurement
Flexible RA determined at system level.
Instead of Flexible RA, recommend using Local RA.
Alternate Definition (Avoided Local RA Procurement)
Avoidable incremental costs incurred to procure Resource Adequacy (RA) in CAISO-identified local areas (e.g. LCR)
Value Calculation Approach
Use latest CAISO local capacity requirements to identify incremental capacity needs beyond current generation and identify deficient sub- areas.
Benefit/Avoided Cost is value of deferred Local Capacity or transmission
Examples
Local RA Procurement
PG&E: Needs to purchase Bay Area Local RA at a premium in area to fulfill Local RA requirements

21. Avoided Renewable Integration Costs
Renewable Integration determined at system level.
Not location specific
Definition
Avoidable incremental costs to integrate renewables onto electric system.
Value Calculation Approach
Current cost calculation is an interim method for calculating renewable integration costs at a system level, which is to be replaced in 2015.
Utilities to coordinate efforts with development of the updated RPS Calculator and Renewables Integration Charge to factor in locational specific values

22. Societal Avoided Costs
Definition
Avoidable incremental costs that are borne by the public, as well as environmental benefits (improvements in air and water quality and land impacts) that can be clearly linked to deployment of DERs.
Value Calculation Approach
Until more data is available in this area, qualitatively identify societal value of a location
Use CalEnviro Screening tool as a qualitative method
In some cases, DERs impose costs on society, such as increased taxes for those not participating with DERs
Examples
Criteria Pollutant Emissions/Local Air Assessments/ Health Impacts

23. Avoided Public Safety Costs
Definition
Avoidable incremental public safety related costs that can be clearly linked to deployment of DERs.
Cost Calculation Approach
Until more data is available in this area, qualitatively describe the Public Safety Benefits
In some cases DER could potentially increase costs and hazards for safety related items
Note:
Safety is a fundamental consideration in distribution planning related to ageing infrastructure replacement, capacity additions and reliability/resiliency. Not clear at this time if there is a discrete locational avoided cost element. Also, due to the ongoing replacement of ageing infrastructure the inherent safety aspects of the distribution system are improving.