Solar Energy in Washington State and Executive Order All Stakeholder Workgroup Jake Fey Director, WSU Energy Program December 8, 2014

Today’s Stakeholder Meeting 1:00 pm – Welcome and Introductions 1:10 pm – Review of Past Meetings and Timeline 1:15 pm – Review of Proposed Program Design and Administration Elements 1:45 pm – Presentation of Proposed Changes –Program Size and Adjustment Mechanisms –Community Solar 2:30 pm – Further Discussion of Utility Proposal for Net- Metering Flexibility regarding Rate Design 3:00 pm - Adjourn

2014 Stakeholder Process Timeline June 30 1 st All Stakeholder Meeting Aug 14 1 st Framework Workgroup Meeting October 8 1 st Program Design Workgroup Meeting Oct 13 2 nd Program Design and 1 st Utility - Centered Workgroup Meetings Oct 3 2 nd All- Stakeholder Meeting Oct 29 3 rd Program Design and 2 nd Utility- Centered Meetings Nov 12 4 th Program Design and Third Utility- Centered Meetings Nov 24 5 th Program Design and 4 th Utility- Centered Meetings Aug 26 2 nd Framework Workgroup Meeting Dec 8 3 rd All Stakeholder Meeting

Major Program Elements Implement an incentive structure that pays participating customers based on kWh production for a fixed 12-year period from installation. Implement a total program cap of 150 MW of capacity over 8 years, allowing for growth in all sectors of the solar marketplace while limiting total budgetary impact. Also consider a maximum biennial allocation to mitigate impact. Remove the $5,000 cap per participant to allow greater commercial ownership. Remove the WA State and Local Sales Tax exemptions for solar equipment and labor. Remove the annual utility PUT credit limit, allowing solar development to continue to occur in the service areas of utilities with high customer demand.

Defining Sectors for Incentive Rates Four Sectors: Defined by system size and ownership structure SectorSystem SizeOwnership StructureInitial Rate Residential Scale Less than 10 kWCustomer-Generator$0.14/ kWh Commercial Scale 10 kW – 500 kWCustomer-Generator$0.10/ kWh Third-Party Owned Solar 0kW – 500kW Commercial Entity other than Customer- Generator $0.10/ kWh Community Solar0kw – 500 kWStructured to involve broad community investment by utility customers, Organized by Utility $0.14/ kWh (Note: Utilities reserve the right to determine if systems larger than 100 kW are eligible for net metering.)

Performance- Based Incentive Model Block Rates - 12 Year Incentive Term Target Rates with Annual Review of Future Block Rates

Community Solar Program Qualifications Sector: Community Solar SubjectObjectiveSolution Entities Eligible as Sponsor Provide opportunity for range of utility customers with interest in participation Eligible Organizer -Utility Ownership structure to be determined by utility Rate Received Provide reasonable incentives with similar value as residential ownership First Block Rate of $0.24 / Kwh for In-State Modules, $0.14 / kWh for Standard systems Locations Eligible for Site Hosting of Community Solar Installation Lower costs and increase opportunity for participation - All Location restriction removed - Direct Utilities to seek partnership opportunities with low-income housing providers Participation Levels Promote broad participation, allowing for site hosts to benefit as well in program -Minimum Participation Number (TBD) -Maximum percentage by any single participant (TBD) System Size Allow for larger system size, and promote greater customer participation in Community Solar Model Maximum system size 500 kW

Performance- Based Incentive Model Block Rates -12 Year Incentive Term Target Rates with Annual Review of Future Block Rates

Third-Party Ownership Qualifications Sector: Third Party Ownership SubjectObjectiveSolution Entities Eligible Provide opportunity for new participants in solar services market -Lease or Power Purchase Agreement Third-Party providers -Commercial or Residential customers -Utility-Owned, Customer-Sited systems Rate Received Provide reasonable incentives for customers who choose TPO entity structure First Block Rate of $0.10 / Kwh Assignability Limit administrative burden and direct incentives to customers Incentive is paid to customer-generator, but can be transferred in contract between TPO and Customer Regulation Provide for Market Oversight and Consumer Protection Clarify that TPO must register with State, regulated by UTC and AG for consumer protection, but are exempt from economic regulation

Administration : Major Roles in Incentive Application Intake and Qualification - Develop Application Forms -Receive Applications from Customers/Installers -Qualify Systems’ Incentive Levels and communicate with Utility and Customer Oversight and Incentive Level Steps - Implement Tracking Database for Applications and Market Activity - Qualify Manufacturers for Made-In WA Incentives - Communicate with Solar Industry about Incentive Level Steps - Provide Regular Reporting on Program Incentive Payment - Collect Annual Generation Information -Provide Payment to Customer - Track payment information, report to DoR, and collect PUT credit Tax – Related Issues - Receive PUT Credit Information and PBI Payment amounts from Utilities - Account for Revenue Associated with Sales Tax and Provide Tax Credit and Budget Impact Reporting Program Administrator Utility DoR

Contacts and Additional Information Project website : Jake Fey – Questions about Stakeholder Workgroups: Jaimes Valdez –