Making Clean Local Energy Accessible Now 11 November 2015 Transmission Access Charges (TAC) Massive Market Distortion That Harms Local Renewables

Making Clean Local Energy Accessible Now 2 Clean Coalition Mission and Advisors Board of Advisors Jeff Anderson Co-founder and Former ED, Clean Economy Network Josh Becker General Partner and Co-founder, New Cycle Capital Jeff Brothers CEO, Sol Orchard Jeffrey Byron Vice Chairman National Board of Directors, Cleantech Open; Former Commissioner, CEC Rick DeGolia Senior Business Advisor, InVisM, Inc. John Geesman Former Commissioner, CEC Eric Gimon Independent Energy Expert Patricia Glaza Principal, Arsenal Venture Partners Mark Z. Jacobson Director of the Atmosphere/Energy Program & Professor of Civil and Environmental Engineering, Stanford University Dan Kammen Director of the Renewable and Appropriate Energy Laboratory at UC Berkeley; Former Chief Technical Specialist for RE & EE, World Bank Fred Keeley Treasurer, Santa Cruz County, and Former Speaker pro Tempore of the California State Assembly Felix Kramer Founder, California Cars Initiative Amory B. Lovins Chairman and Chief Scientist, Rocky Mountain Institute L. Hunter Lovins President, Natural Capitalism Solutions Ramamoorthy Ramesh Founding Director, DOE SunShot Initiative Governor Bill Ritter Director, Colorado State University’s Center for the New Energy Economy, and Former Colorado Governor Terry Tamminen Former Secretary of the California EPA and Special Advisor to CA Governor Arnold Schwarzenegger Jim Weldon Technology Executive R. James Woolsey Chairman, Foundation for the Defense of Democracies; Former Director of Central Intelligence ( ) Kurt Yeager Vice Chairman, Galvin Electricity Initiative; Former CEO, Electric Power Research Institute Mission Mission To accelerate the transition to renewable energy and a modern grid through technical, policy, and project development expertise.

Making Clean Local Energy Accessible Now 3 Agenda Market Distortion Overview & Fix Significance of Market Distortion TAC Campaign Details

Making Clean Local Energy Accessible Now 4 Introduction to TAC Remote generation is delivered via transmission Distributed generation connects close to loads

Making Clean Local Energy Accessible Now 5 Introduction to TAC “low voltage” transmission <200kV High Voltage Transmission >200kV Distributed generation connects here

Making Clean Local Energy Accessible Now 6 TAC Should Be Based on Cost Causation TAC now assessed on customer load (for PTO utilities) Based on cost causation, assess TAC on transmission load Distributed generation connects here

Making Clean Local Energy Accessible Now 7 Problem: Local Energy Subsidizes Transmission Local renewables’ avoided cost artificially low Transmission demand artificially inflated CAISO tariff assesses TAC on “Gross Load” TAC Base Power RPS, Other Avoided cost ($/kWh) of local renewables

Making Clean Local Energy Accessible Now 8 Goal: Level Playing Field, Minimize Ratepayer Costs Level playing field for generation grows local energy Optimal transmission demand minimizes ratepayer costs CAISO tariff assesses TAC on transmission load Base Power Avoided cost ($/kWh) of local renewables TAC RPS, Other

Making Clean Local Energy Accessible Now 9 Agenda Market Distortion Overview & Fix Significance of Market Distortion TAC Campaign Details

Making Clean Local Energy Accessible Now 10 TAC Market Distortion is Significant Issue

Making Clean Local Energy Accessible Now 11 TAC Market Distortion Threatens $80 Billion Benefit Business as Usual TAC Growth TAC 0 Depreciated Avoided TAC Opportunity from DG 2015 TAC Rate (TAC 0 ) = 1.8¢/kWh Business As Usual TAC Growth Business as Usual 20 Year Levelized TAC = 3¢/kWh TAC 0 O&M Level Alternative Paths For Meeting California GHG Goals - PG&E Example Generation on Distribution Grid Only

Making Clean Local Energy Accessible Now 12 Fixing TAC Helps Unleash a Virtuous Cycle

Making Clean Local Energy Accessible Now 13 WDG: TAC Double-Charges for Grid Usage Distribution Grid Project Size Behind the Meter Central Generation Serves Remote Loads Wholesale DG Serves Local Loads Retail DG Serves Onsite Loads Transmission Grid 5 kW 50+ MW 500 kW Current TAC assessment Proper TAC assessment

Making Clean Local Energy Accessible Now 14 Agenda Market Distortion Overview & Fix Significance of Market Distortion TAC Campaign Details

Making Clean Local Energy Accessible Now 15 Precedents for Goal of TAC Campaign FERC Principles of Transmission Cost Allocation Order 1000: Costs must be allocated in a way roughly commensurate with benefits Costs may not be allocated involuntarily to those who do not benefit Costs may not be allocated involuntarily to a region outside the facility’s location

Making Clean Local Energy Accessible Now 16 Getting Involved Clean Coalition will file comments with CAISO Nov. 13 Stay updated Contact to receive copies of Clean Coalition filings, and notifications about upcoming opportunities to participate in the TAC