1. California’s Renewable Energy Transmission Initiative Anne Gillette Renewable Energy Policy Analyst California Public Utilities Commission August 12, 2008

2. California’s clean energy goals and “The Transmission Problem” Transmission permitting at the CPUC The Renewable Energy Transmission Initiative (RETI) Lessons Learned from RETI Presentation Outline

3. California’s clean energy goals and “The Transmission Problem” Transmission permitting at the CPUC The Renewable Energy Transmission Initiative (RETI) Lessons Learned from RETI Presentation Outline

4. California’s Clean Energy Future Renewables Portfolio Standard: –Retail energy sellers must procure an additional 1% of their retail sales from renewables each year until they reach 20% by 2010 –California is considering a further renewable energy goal of 33% by 2020 California Global Warming Solutions Act of 2006 (AB 32) –2020: Emissions at 1990 levels –2050: Emissions at 80% below 1990 levels –Draft Scoping Plan lists a 33% by 2020 RPS as one of 5 “key elements” needed in order to realize the 2020 emissions goal

5. Note: California has little control over this barrier Transmission is a major barrier to RPS project development in California

6. Why is transmission a barrier? Many of California’s most valuable renewable resources are far from load centers Existing transmission lines are often congested Significant transmission expansion is required to bring more renewable resources to market Chicken-and-egg problem: utilities don’t want to build transmission until generation development is confirmed; developers don’t want to commit to generation projects unless transmission access is confirmed Permitting a transmission lines is a rigorous and often contentious process

7. CPUC Work to Address “The Transmission Problem” Streamlining the application process Implementing Backstop Cost Recovery Working with California Independent System Operator (CAISO) on interconnection queue reform Addressing outstanding issues through CPUC RPS Transmission Investigation/ Rulemaking Anticipating needs in the permitting process – the Renewable Energy Transmission Initiative (RETI)

8. California’s clean energy goals and “The Transmission Problem” Transmission permitting at the CPUC The Renewable Energy Transmission Initiative (RETI) Lessons Learned from RETI Presentation Outline

9. The CPCN Process CPUC must issue a Certificate of Public Convenience and Necessity (CPCN) for major transmission projects proposed by California Investor-Owned Utilities (IOUs) –Note: municipal utilities have their own permitting processes, but joint muni-IOU lines might be cost-effective CPCN review has two components: –Determination of need –Environmental review

10. CPCN: Determination of Need A transmission project can be justified by the CPUC on the basis of: –Economics: CPUC has given the CAISO a “rebuttable presumption” on the economic analysis of a line, provided certain criteria are met –Reliability OR –Renewable energy goals

11. CPCN: Environmental Review CPUC must analyze impacts of proposed line pursuant to the California Environmental Quality Act (CEQA); must consider alternatives that meet project objectives A project crossing federal land will also require federal environmental review –CPUC prepares joint environmental documents with federal agencies to address both CEQA and the National Environmental Policy Act (NEPA) –Federal agency involvement often means delay

12. Permitting takes time CPCN review takes ~18 months if all goes well CEQA review alone generally requires over a year because of biological surveys, etc. Public can comment on scope of environmental review, propose alternatives to the project NIMBY issues and environmental concerns can create public opposition and result in project delay

13. RPS goals have dramatically changed the transmission game Pre-2002 (prior to RPS legislation) – transmission planning and permitting focused on addressing system reliability. Post-2002 – Devers-Palo Verde 2 approved based on economics; Tehachapi approved based on need to interconnect renewables – and more to come. Today – Given aggressive RPS goals, CA needs to proactively identify and evaluate multiple renewable transmission projects.

14. Which “renewable lines” are the best? What counts as a “renewable” line? Should some sort of economic test also be applied? CPUC must ensure development of cost-effective renewable transmission and generation –CPUC both oversees IOU renewable procurement and permits IOU transmission lines. –Pursuant to statute, IOUs must procure the most cost-effective renewable resources, accounting for transmission and other costs. CPUC needs to consider system reliability, economic benefits and renewables when permitting multiple transmission projects

15. California’s clean energy goals and “The Transmission Problem” Transmission permitting at the CPUC The Renewable Energy Transmission Initiative (RETI) Lessons Learned from RETI Presentation Outline

16. Renewable Energy Transmission Initiative Statewide collaborative study effort to identify the transmission needed to access and deliver the most cost-effective renewable resources in CA and neighboring states Participants: CPUC, California Energy Commission, CAISO, IOUs, munis, developers, environmental advocates, other interested parties Commitment to open, inclusive, transparent process on an expedited schedule Goals: –Answer the question, Which lines are best? –Facilitate the planning and permitting of the “best” lines

17. RETI Objectives Provide a common forum for permitting agencies, utilities, and developers, and stakeholders to examine the location and timing of new generation/transmission projects; Develop common information, tools and analytical methodologies to objectively evaluate renewable development potential; and Support existing transmission planning institutions.

18. RETI is an inclusive, transparent process CPUC needs an effective way to compare relative benefits of renewable development in various regions of CA, neighboring areas Stakeholder participation critical to ensuring accurate representation of a project’s economic and environmental implications RETI will provide objective, consistent, publicly-vetted resource and cost information to supplement the record in CPUC transmission proceedings Transparency needed if used in CPCN proceeding

19. Three-Phased Process Phase 1 – Identification and ranking of Competitive Renewable Energy Zones (CREZs) Phase 2 – Refinement of CREZ analysis for priority zones and development of statewide conceptual transmission plan Phase 3 – Detailed transmission planning for CREZs identified to be developed

20. Phase 1 – Scope of Work Identify developable renewable resources in California and neighboring areas through engineering review (slope, road access, land use constraints, etc.) Analyze the economics of development in each area, including: –Costs: Generation and Transmission –Value: Energy and Capacity Identify and rank high-value CREZs based on geography, development timeframe, shared transmission constraints, additive economics of specific resources Evaluate environmental impact of development in each CREZ Final Phase 1 Report due in October 2008

21. Phase 1 – Environmental Working Group Significant and very positive development For first time, environmental organizations and developers representing all renewable technologies working on project siting in a systematic, collaborative, proactive manner EWG has: –Identified and mapped “black-out areas” where generation development precluded by law or policy –Identified and mapped “yellow areas” where generation development is restricted or will be environmentally difficult –Developed a methodology for rating CREZs according to their environmental impact and combining that rating with the economic CREZ ranking to develop RETI’s final CREZ “short- list”

22. Phase 1 – Important Points Not reinventing the wheel – pulling together and building on pre- existing work, relevant regulatory decisions and agency priorities Focusing on actual commercial potential Applying consistent assumptions across the region Stakeholders drive process by validating the work of an independent consultant (Black & Veatch) through consensus input Goal is to rank CREZs through stakeholder consensus to reflect commercial potential, economics, and hard to quantify environmental and other concerns

23. Phases 2 and 3 – Scope of Work Phase 2 –Transmission owners and other interested parties develop conceptual transmission plans for the highest ranking CREZs in collaboration with existing transmission planning organizations/institutions –Draft planned for December, 2008; may be iterative Phase 3 –Existing transmission planning organizations collaboratively design transmission plans of service that result in applications to construct new transmission infrastructure to meet RPS goals –~ 8 month-long process; may be iterative

24. RETI Organization / Roles Coordinating Committee –Oversees the overall RETI process –Ensures development of needed information –Keeps the process on schedule Stakeholder Steering Committee –Primary working group –Key stakeholder representatives –~30 members Plenary Stakeholder Group –Reviews Steering Committee work –Provides feedback, “ground- truthing” –All stakeholders and the public

25. California’s clean energy goals and “The Transmission Problem” Transmission permitting at the CPUC The Renewable Energy Transmission Initiative (RETI) Lessons Learned from RETI Presentation Outline

26. Lessons Learned… Don’t reinvent the wheel Make transparency a priority Maintain a website to facilitate transparency – post all presentations, minutes of work-group meetings, etc. Use technology to facilitate participation in meetings Recognize that all stakeholders are very busy; make participation easy; have consultant develop straw proposals, etc. Provide schedule, process at beginning

27. …and More Lessons Learned Try for agreement from key stakeholders on guiding principles at start Ensure that stakeholder representatives understand and agree to their obligations Active facilitation of work groups and stakeholder meetings is key RETI has benefited from a Coordinating Committee responsible for keeping the process on track and coordinating with other processes Decision-making agencies must be clear about what they want/need from process Put processes and understandings in writing

28. More Information RETI Mission Statement, Frequently Asked Questions, meeting minutes and presentations, etc. available at: www.energy.ca.gov/reti/ www.energy.ca.gov/reti/ Questions: Anne Gillette aeg@cpuc.ca.gov 415-703-5219