Presentation Title SOUTHERN CALIFORNIA EDISON® SM SOUTHERN CALIFORNIA EDISON® SM Integrated Planning & Environmental Affairs Energy Agencies in California How the PUC, CEC, and CalISO work in Harmony

Group Name SOUTHERN CALIFORNIA EDISON SM Integrated Planning & Environmental Affairs SM SOUTHERN CALIFORNIA EDISON® CA Energy & Environmental Goals California’s energy and environmental goals are among the most ambitious in the nation –Energy Efficiency –Renewable Portfolio Standard –Greenhouse Gas Emission Reductions Challenges to meeting energy and environmental goals include: –Once Through Cooling –Air Emission Credits California’s Energy Agencies must coordinate their efforts to achieve the state’s energy and environmental goals while ensuring safe, reliable, affordable electric service

Group Name SOUTHERN CALIFORNIA EDISON SM Integrated Planning & Environmental Affairs SM SOUTHERN CALIFORNIA EDISON® CA Clean Energy Future – Distributed Generation, Accessed July 2012www.cacleanenergyfuture.org

Group Name SOUTHERN CALIFORNIA EDISON SM Integrated Planning & Environmental Affairs SM SOUTHERN CALIFORNIA EDISON® CA Energy Agencies – Goals and Progress CA Energy & Environmental Goals CA Energy Agencies –History & Structure –Mission & Vision CA Clean Energy Future –Goals GHG, EE, DR, DG, RPS, OTC –Today’s Challenges Flexible Capacity Needs Preferred Resources Forward Capacity Mechanism

Group Name SOUTHERN CALIFORNIA EDISON SM Integrated Planning & Environmental Affairs SM SOUTHERN CALIFORNIA EDISON® CA Energy Agencies - History and Structure CPUC CEC CAISO History In 1911, the PUC was established by Constitutional Amendment as the Railroad Commission. In 1912, the Legislature passed the Public Utilities Act, expanding the Commission's regulatory authority to include natural gas, electric, telephone, and water companies as well as railroads and marine transportation companies. Section 5 Article 12 provides that the Legislature has plenary power, unlimited by the other provisions of this constitution, to confer additional authority and jurisdiction upon the commission 1974 Warren-Alquist State Energy Resources Conservation and Development Act created the Commission. The Act required that, prior to constructing or modifying an electric generating plant, the Commission was to certify the need for the plant and the suitability of the site of the plant Electrical Industry Restructuring Act created the Independent System Operator to ensure efficient use and reliable operation of the transmission grid The legislature found that in order to achieve meaningful wholesale and retail competition, it was essential to separate monopoly utility transmission functions from competitive generation functions, through development of independent, third-party control of transmission access Created as a nonprofit public benefit corporation regulated by FERC Structure Five commissioners each serve staggered six-year terms Commissioners are appointed by the governor and confirmed by the Senate. Five commissioners each serve staggered five-year terms Commissioners are appointed by the governor and confirmed by the Senate. Five governors each serve staggered three- year terms on the board Board of Governors are appointed by the governor and confirmed by the Senate. Purpose Rates NeedCompetition / Reliability Indicates (re)appointment by Governor Brown

Group Name SOUTHERN CALIFORNIA EDISON SM Integrated Planning & Environmental Affairs SM SOUTHERN CALIFORNIA EDISON® So how can agencies with different goals work together? Cal ISO has to keep the lights on CEC and CPUC have responsibility for determining how much generation and additional transmission is needed and where –They both have public processes for making their determination –Input comes from the Utilities, Environmental Groups, Business, other state agencies, academia etc. But when the lights go out, the utilities get blamed These three agencies actually do work very well to develop a consistent policy and coordinate with other state resource agencies. 5

Group Name SOUTHERN CALIFORNIA EDISON SM Integrated Planning & Environmental Affairs SM SOUTHERN CALIFORNIA EDISON® California Energy Commission Mission and Vision “It is the California Energy Commission's mission to assess, advocate and act through public/private partnerships to improve energy systems that promote a strong economy and a healthy environment.” “It is the vision of the California Energy Commission for Californians to have energy choices that are affordable, reliable, diverse, safe and environmentally acceptable.”

Group Name SOUTHERN CALIFORNIA EDISON SM Integrated Planning & Environmental Affairs SM SOUTHERN CALIFORNIA EDISON® CEC process Integrated Energy Policy Report (IEPR) –Demand forecast : developed through information provided from utilities. –Project Siting: CEC Licensing (Must demonstrate the ability to obtain all needed permits including air permits –Efficiency Standards for appliances –Zero Net Energy standards for new construction –New IEPR every two years along with an update during the off year. –The IEPR feeds into the CalISO studies on transmission and generation needs and into the Long Term Procurement Plan 7

Group Name SOUTHERN CALIFORNIA EDISON SM Integrated Planning & Environmental Affairs SM SOUTHERN CALIFORNIA EDISON® California Public Utilities Commission (CPUC) Mission and Vision “The California Public Utilities Commission serves the public interest by protecting consumers and ensuring the provision of safe, reliable utility service and infrastructure at reasonable rates, with a commitment to environmental enhancement and a healthy California economy.” “We regulate utility services, stimulate innovation, and promote competitive markets, where possible, in the communications, energy, transportation, and water industries.” “The California Public Utilities Commission betters the lives of all Californians through our recognized leadership in innovative communications, energy, transportation, and water policies and regulation.”

Group Name SOUTHERN CALIFORNIA EDISON SM Integrated Planning & Environmental Affairs SM SOUTHERN CALIFORNIA EDISON® CPUC Process: Independent Power Producers Long Term Procurement Plan (LTPP) –Identify the need (how much) –Identify the Category (What kind of generation) –General location of the needed generation Authorize IOUs to issue a Request for Offer (RFO –Competitive process –Bids are received and analyzed –Once the IOU selects the winning bids, the contracts between the IOUs and the Independent Power Producers are subject final approval by the CPUC 9

Group Name SOUTHERN CALIFORNIA EDISON SM Integrated Planning & Environmental Affairs SM SOUTHERN CALIFORNIA EDISON® Environmental Considerations Policies Support Preferred Resources –Energy Efficiency –Demand Response –Renewables –Combined Heat and Power Storage –Needed due to the intermittency of Renewable Power –New Technology –Cost issues: Storage is still expensive –Amount of response capabilities: There is very limited time available with current storage technologies The higher the MW output, the shorter the duration of power supply 10

Group Name SOUTHERN CALIFORNIA EDISON SM Integrated Planning & Environmental Affairs SM SOUTHERN CALIFORNIA EDISON® CPUC Process: Investor Owned Utility Generation Application for Funding filed by the IOU –Type of Generation –Location –Cost Effectiveness Analysis –Project Cost –Schedule Most recent activity was the approval for 5 peaker units in This was partially a response to the energy crisis in 2001 and was completed very quickly. 11

Group Name SOUTHERN CALIFORNIA EDISON SM Integrated Planning & Environmental Affairs SM SOUTHERN CALIFORNIA EDISON® CA Independent System Operator Mission and Vision “For the benefit of our customers, we: –Operate the grid reliably and efficiently –Provide fair and open transmission access –Promote environmental stewardship –Facilitate effective markets and promote infrastructure development “All through the provision of timely and accurate information.” “The ISO vision for 2020 and beyond drives our strategies for the next five years. During this time, the ISO will work with others in the industry to strike the balance between achieving the state’s clean energy goals and maintaining reliability, efficiency and affordability.”

Group Name SOUTHERN CALIFORNIA EDISON SM Integrated Planning & Environmental Affairs SM SOUTHERN CALIFORNIA EDISON® ISO Process January 2014 Start Planning –Transmission planning –Local Area Need (Using information from the IEPR) –System and Flexible Capacity Needs The results of the planning efforts are data received by the CPUC but the final CPUC decision most likely will not reflect all that the ISO asks for. ISO will seek resources that will reflect a high concern for system reliability. The CPUC must balance that need with other concerns such as environmental impacts. 13

Group Name SOUTHERN CALIFORNIA EDISON SM Integrated Planning & Environmental Affairs SM SOUTHERN CALIFORNIA EDISON® Other Agencies State Water Resources Control Board Air Resources Board Local Air Districts State Lands Commission Coastal Commission Fish and Wildlife Department of Forestry Bureau of Land Management Federal Energy Regulatory Commission ETC. 14

Group Name SOUTHERN CALIFORNIA EDISON SM Integrated Planning & Environmental Affairs SM SOUTHERN CALIFORNIA EDISON® Agency Coordination February 2013, California Energy Commission

Group Name SOUTHERN CALIFORNIA EDISON SM Integrated Planning & Environmental Affairs SM SOUTHERN CALIFORNIA EDISON® Growing Need for Flexibility Starting 2015 February

Group Name SOUTHERN CALIFORNIA EDISON SM Integrated Planning & Environmental Affairs SM SOUTHERN CALIFORNIA EDISON® Make all the pieces of the puzzle fit February

Group Name SOUTHERN CALIFORNIA EDISON SM Integrated Planning & Environmental Affairs SM SOUTHERN CALIFORNIA EDISON® The End Question 18