1. 1 Meeting California Policy Goals, Affordable Rates and Why I Volunteered for this Job? Mark Ferron California Public Utilities Commission October 4, 2011

2. 2 Presentation Overview Quick biographical sketch How do I see my role at the Commission Personal observations of key issues Questions and Discussion

3. My resume Degrees in Mathematics and Economics 25 years in Banking & Finance 8 years as COO at DB Global Markets Brown for Governor 2010 Appointed to CPUC on 22 March 3 Geek Show me the money! Foster innovation while controlling risk ?? Assigned Commissioner for RPS, RA, EE, RRIM, QF/CHP and others What it saysWhat it means

4. 4 My initial view of the Commission’s work

5. 5 Quite a lot Not so much Quality and enthusiasm of the people Nature of the work Potential for high impact Brain-drain and demographic time bomb Missing context If I talk to you, then you can’t talk to him Things I like about the CPUC so far

6. The evolving mission of this Office 1.Safety and Reliability cannot be compromised 2.Encourage new innovation and attract new capital 3.Demand Value for Money 4.Promote a healthy environment and economy 5.Look out for the underdog across all stakeholders 6.Expose entrenched, anti-competitive players to market forces Important but not Urgent Urgent but not Important

7. My observations on some key issues 7 Safety Renewables CostsReliability Generation Ownership Energy Efficiency Role of Financing Feed-in Tariffs & DG

8. San Bruno is a game changer 8 Safety

9. Is Electricity “Sticker Shock” inevitable? 9 Growth in Revenue requirement Costs Increase = 50% CAGR = 6% Increase = 58% CAGR = 4.7% Actual and Projected Electricity Costs Total Statewide Expenditure ($bn)

10. Renewables We have added much renewable generation

11. 11 California should get to 33% RPS by 2020 Source: California Public Utilities Commission, 2 nd Quarter 2011 IOU RPS Procurement Forecast With risk weightings based on viability calculator Renewables

12. A Feed-in Tariff is a powerful tool.... 12 PV installed in Germany has skyrocketed…… Feed-in Tariffs & DG California

13. .. But a Feed-in Tariff is not a magic wand 13 The levels of European FiT subsidies are unsustainable Estimated Cost to German Ratepayers: $8 billion per year Feed-in Tariff range Annual MW installed Source: DB Climate Change Advisors “The German Feed-in Tariff for PV” May 2011 Feed-in Tariffs & DG Euros MW

14. 14 California Interconnection Requests have Increased Exponentially Source: California Public Utilities Commission, 1st Quarter 2011 Feed-in Tariffs & DG

15. Independently produced power is essential 15 Generation Ownership Source: CPUC 2010 Electric & Gas Utility Cost Report

16. Reliability and long-term capacity: avoiding the cobweb 16 Reliability Source: California ISO 2011 Summer Assessment

17. 17 Challenges to California’s EE Programs 2010-2012 Funding Source (prior to Gas PPP sweep) 3 yr total= $3.1 Billion Procurement Funds Benefit / Cost (TRC) Portfolio Cycle Declining IOU Portfolio Cost Effectiveness over time (excluding Low Income EE Programs) Public Goods Charge Energy Efficiency

18. What we gonna do when the money runs out? 18 DOE ARRA Funds Granted in California ($m) Role of Financing Source: US Department of Energy

19. Questions and Discussion 19 Mark Ferron, Commissioner mark.ferron@cpuc.ca.gov mark.ferron@cpuc.ca.gov Charlotte Terkeurst: Chief of Staff charlotte.terkeurst@cpuc.ca.gov charlotte.terkeurst@cpuc.ca.gov Sarah Thomas, Legal and Energy Advisor sarah.thomas@cpuc.ca.gov sarah.thomas@cpuc.ca.gov Sara Kamins, Energy Advisor sara.kamins@cpuc.ca.gov sara.kamins@cpuc.ca.gov Michael Colvin, Energy and Water Advisor michael.colvin@cpuc.ca.gov michael.colvin@cpuc.ca.gov