Operating a modern renewable-based grid Mary McDonald Director, State Affairs California Independent System Operator Chile-California Clean Energy Conference April 18, 2018

The California ISO: One of nine grid operators in North America: 2/3 of the U.S. is supported by an ISO One of 38 balancing authorities in the western interconnection Uses advanced technology to balance supply & demand every 4 seconds Operate markets for wholesale electricity & reserves Manage new power plant interconnections Plan grid expansions California ISO is part of the interconnected western electric grid, that includes Canada and Baja Mexico There are actually 38 Balancing Areas in the west: Each Balancing Area has a responsibility for: Balancing supply and demand Ensuring grid is secure in case of a contingency event Transmission system is operated within limits Orchestrating restoration in case of a system outage ISO operates the resources selected by the State as is in their jurisdiction ISO is regulated by Federal Energy Regulatory Commission (FERC) because of the interstate nature of the grid California imports and exports energy (Historically we are a net importer) High technology in grid operations is key because energy is produced and consumed instantaneously at the speed of light, a fast automated dispatch is necessary especially as we continue on our growth with renewables Interest this high technological tool by other non- ISO utilities in the western grid RTOs Competition (Phil will cover this largely in his statement, so you will not need to spend a lot of time here)

2/15/2017 Electric industry in the midst of unprecedented change - Driven by fast-growing mix of interrelated issues Fossil Plant Revenues; Retirements Grid Modernization 50% Renewables Gas Storage Challenges Community Choice and/or Retail Choice Fossil Plant Retirements: Between 2011 and 2022, approximately 10,000 MW retired of natural gas and nuclear. New natural gas of approximately 3200 MW in the LA Basin / San Diego area. Grid Modernization: Synchrophasers (provides faster information and helps identify and predict reliability issues), Smart Wires (non-transmission alternative, essentially a flow controller that can redirect flow if needed). Gas storage challenges: In 2015, Aliso was authorized to reinject by DOGGR and CPUC up to a certain level to maintain reliability. There are new safety regulations being developed by DOGGR. CEC has called for retirement within 10 years. Next steps: In SB 380, the CPUC was directed to open a proceeding to examine reducing or eliminating Aliso. There were a number of mitigation measures put into place, through FERC, that limited the amount of gas burn by plants in the LA basin on days when gas supply was in short supply. New CPUC balancing rules have also been helpful. T-D Systems Interface: Historically the ISO and the utility distribution companies (UDCs) have not had to coordinate their operations because power flow was only one-way – from central station power plants on the ISO system down to end-use customers. But now we’re seeing rapid expansion of distributed energy resources (DERs) – particularly solar PV, battery storage and EV charging – and many DERs are seeking to participate in the ISO markets. This is creating new hard-to-predict impacts on distribution systems that affect the ISO grid at the transmission-distribution interfaces. ISO is working with the distribution utilities to implement new real-time coordination procedures to ensure reliability in a high-DER future. Regional Collaboration Consumer-owned Power Transmission & Distribution Systems Interface

Major progress on meeting CA’s renewable goals Currently Installed: 21,000 MW of large-scale renewables 6,000 MW of rooftop solar Additional renewables: 3,300 MW for 50% RPS by 2030* 11,400 MW of consumer rooftop solar by 2030** * 2018 CPUC IRP **2017 CEC IEPR

Net Load of 7,149 MW on February 18, 2018 The duck turns 10 years old: Actual net-load and 3-hour ramps are about four years ahead of the CAISO’s original estimate Typical Spring Day Steeper Ramps Actual 3-hour ramp of 14,777 MW on March 4, 2018 Deeper Belly Net Load of 7,149 MW on February 18, 2018

2017 Curtailment Percentage of Potential Production Increasing trend of renewable curtailment varies with seasonal and hydro conditions 2017 Curtailment Percentage of Potential Production Solar: 2.8% Wind: 1.3%

A suite of solutions are necessary

The Modernization of the Western grid Western Energy Imbalance Market (EIM): Total savings of $288.44 million since start in Nov 2014 520,417 MWh curtailment avoided, displacing an estimated 222,657 metric tons of CO2 Integration of renewables across a larger geographical area Enhances reliability with improved situational awareness Reduces costs through automatic economic dispatch Balancing authorities maintain control and reliability responsibilities Entities exploring future participation: Salt River Project, LADWP, Northwestern Energy, CENACE

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