1 Transmission Needs for 33% RPS Barry Flynn May 16, 2012

2 Introduction  Overview of importance of transmission costs  Enough transmission approved to reach 33% RPS goal  Deliverability upgrades - one major driver of new transmission

3 Transmission Costs Are On Pace to Increase Significantly Over the Next 10 Years Represents 10-15% increase in electric bills

4 Approval Status of Key New Renewable Transmission Facilities $5.5 B (Renewable w Permit shown in slide 3) $2.1 B (Renewable w/o Permit shown in slide 3)

5 Renewable Capacity in CAISO’s Generator Interconnection Queue versus Need for 33% RPS Source: CAISO Board of Governors Briefing Memo, May 9, 2012

6 Illustrative Annual Wind Generation Profile

7 Illustrative Deliverability Analysis Renewables will not be fully deliverable due to transmission constraints. Case 1 (N-2): One hour in every 10 years; Case 2 (N-1/N-2): Nine hours a year

8 Contracting Capacity from 3P/Market is Significantly Less Costly than Building DNUs Capital Cost for Building Delivery Network Upgrades to Accommodate Renewables Incremental Renewable Capacity (MW)3,000 Delivery Network Upgrades Capital Cost (M$) $2,500 Annualized DNU Cost (M$/Yr)$250 Cost of Contracting Third Party/Market Capacity for Solar Generation Incremental Renewable Capacity (MW) 3,000 Net Qualifying Capacity (MW)2,250 RA Capacity Cost ($/kW-Yr)$50 Total Annual Cost of Contracting RA Capacity from 3P (M$/Yr) $112 Cost of Contracting Third Party/Market Capacity for Wind Generation Incremental Renewable Capacity (MW) 3,000 Net Qualifying Capacity (MW)300 RA Capacity Cost ($/kW-Yr)$50 Total Annual Cost of Contracting RA Capacity from 3P (M$/Yr) $15

9 Concluding Remarks  Transmission costs are becoming a major component of total electric supply costs.  The current process will probably lead to building transmission beyond that needed to meet 33% goals.  The CAISO has excessively stringent criteria to determine renewable resource deliverability.  The State needs to find more cost effective ways to meet Resource Adequacy goals.