1. Implications of Energy-Only Procurement on Transmission Planning CPUC Workshop: Revisions RPS Calculator v6.0 Robert Sparks Manager Regional Transmission - South February 11, 2015

2. Implications of Energy-Only Procurement on Transmission Planning The ISO fully supports procurement and planning for energy only generation We have been asked to comment on the potential implications of this, so that we ensure successfully meeting the renewable goal Page 2

3. Deliverability Overview FCDS generation –assumed to displace other remotely located FCDS –does not mean that the new generation can be delivered to the major load pockets. –still expected to result in congestion. EO generation –generation displacing other nearby generation. –expected to substantially add more congestion to the system FCD S Loa d FCD S EO Loa d All Resources Fully Deliverable Combination of Fully Deliverable & Energy Only Resources 3

4. Transmission Planning Traditionally, transmission planning in California focused on the summer peak load level with all transmission facilities in-service Allows transmission facilities to be removed from service for maintenance or upgrades during lower load period It also allows local generation capacity to be unavailable for maintenance conditions during the lower load period Transmission and generation capacity planning have been closely aligned. Generation planning appears to be changing direction Realigning transmission planning adds considerable complexity to the already complex transmission planning challenge. 4

5. Energy Only Transmission Planning Need much more focus on studies of the transmission system under lower load periods with transmission facilities out for routine maintenance or upgrades. Deliverability study process assumes all lines are in- service. Production simulation studies do not monitor the underlying subtransmission system. Reliability studies focus on worst case conditions which in the past are a much more limited set of system operating conditions than what can be expected in a future where generation planning is based on energy Page 5

6. Transmission Planning and System Operations The ISO market and system operating procedures have been proven to work very well under the conditions as they are currently planned Transmission planning is typically based on the assumption that the market and system operating procedures will be able to accommodate the system that will exist in the future The ISO and transmission and generation operators obviously need to ensure that this happens Page 6

7. 33% Transmission Plan Based on renewable generation also contributing to capacity needs, and we have done that successfully to plan on getting to 33% Resulted in the need for much less new transmission than many in the industry expected 7

8. Energy Planning & Procurement Adds considerable complexity ISO is committed to supporting this approach. Expected to be iterative. Production simulation models are reasonably accurate only when they are analyzing system operating conditions that have been thoroughly studied using detailed powerflow and stability study models Generation needs to be studied as a portfolio to reasonably estimate how much of the energy can be expected to be delivered from a particular zone 8