SCE Solar PV Program

1. SCE Solar PV Program California Public Utilities Commission Workshop July 31, 2009

2. Agenda • Background and Introduction • Reverse Auction / RFO Process and Criteria • Lunch Break • PPA Terms & Conditions

3. Background • In Decision (D.) 09-06-049, the Commission adopted a Solar PV Program for SCE that will result in 500 MW of new renewable energy generating capacity in SCE’s service territory over five years • SCE’s Solar PV Program consists of the following: • 250 MW DC owned and maintained by SCE (UOG), plus • 250 MW DC owned and maintained by Independent Power Producers (IPPs) • Pursuant to D.09-06-049, on July 20, 2009 SCE filed Advice Letter 2364-E requesting approval of a competitive solicitation process and criteria, and a standard contract

4. Introduction and Program Summary • Today’s workshop will focus on the competitive solicitation process and criteria, and standard contract for the IPP portion of SCE’s Solar PV Program Solicitation Process • Reverse Auction • SCE to provide guidance on preferred locations • Clearly defined short-listing criteria • Standard 20-year contract based on AB 1969 • Minimum of one auction per year the course of five years Market Niche • Primarily 1-2 MW rooftop installations • Up to 10% of capacity ground mounted • All within SCE service territory

5. SCE Procurement Background • SCE will rely upon its experience procuring power through competitive solicitation • Balances needs of all stakeholders (customers, counterparties, and SCE) • The proposed Solar PV Program process and criteria are modeled after the All Source RFO, a reverse auction in which SCE procures several hundred million dollars worth of energy and capacity every year

6. Agenda • Background and Introduction • Reverse Auction / RFO Process and Criteria • Lunch Break • PPA Terms & Conditions

7. Reverse Auction / RFO Process Overview • Develop Reverse Auction / RFO package • Launch Reverse Auction / RFO • Receive indicative offers • Evaluate indicative offers, create short list • Finalize terms, interconnection studies • Receive binding price offers • Evaluate offers and select projects • Accept offers, execute PPAs, CPUC approval

8. 1) Develop Reverse Auction / RFO Package • All documents will be specified in the Procurement Protocol, including: • Complete Reverse Auction / RFO instructions and timeline • Procedures and templates for submitting indicative offers • Conforming criteria for evaluation and selection • Interconnection applications and forms • Instructions for submitting Binding Price Offers Step 1

9. Desirable Locations • SCE is required to “identify locations where distributed solar PV will be desirable, thereby optimizing the locational value of the project sites.”* • A list of zip codes will be posted online • Will be updated as new information becomes available • Will include SCE’s approximation of available capacity for new solar PV generation within each zip code • By providing this data, SCE does not warrant economic project viability or the ability of proposals to pass the interconnection screens or studies without upgrades *See D.09-06-049, p. 42. Step 1

10. Check In -- Discussion Step 1

11. 2) Launch Reverse Auction / RFO • Upon the Reverse Auction / RFO launch, information including a complete timeline of the procurement process will be made public through a dedicated website and other outreach • Q&A information will be updated subsequent to a Reverse Auction / RFO participants’ conference RFO Launch Website information becomes public RFO Publicized Press release SCE emails its renewable energy mailing lists RFO Conference Q&A Session Update Website Post Q&A results Step 2

12. 3) Receive Indicative Offers • The proposal template for indicative offers will include: • A non-binding price in dollars per megawatt hour ($/MWh) • Including estimated interconnection costs and all tax incentives • Forecasted initial operation date • Project sponsors and reference projects • Completed Project Viability Calculator • With adequate information for SCE and the IE to populate a Project Viability Calculator • Physical details of the proposed project • Site location and ownership • Gross and net power ratings • PV technology, mounting and installation area • Single line diagram • SCE may follow up to clarify or obtain any necessary information • See following section for Conforming Criteria Step 3

13. 4) Evaluate Indicative Offers, Create Short List • Select projects will be placed on a short list • Based on Indicative Offers and Conforming Criteria specified in Procurement Protocol • Subject to review by PRG • Complete interconnection application (fast track or otherwise) must be filed and deemed complete within ten business days of short list notification Indicative Offers submitted Indicative Offers which conform to criteria are placed on the short list Short-listed parties are notified of their status Filed interconnection applications must be deemed complete within 10 days Step 4

14. Conforming Criteria • Capacity should be primarily in the 1 to 2 MW range (DC) and built on rooftops • Levelized indicative offer must be below $260/MWh • Within SCE’s service territory and subject to a FERC jurisdictional interconnection agreement • Demonstrated site control by either: • Providing a roof lease • Providing a firm option to lease demonstrating the owner’s agreement that the PV system will be and can be installed Step 4

15. Conforming Criteria (Cont.) • Project must not participate in the California Solar Initiative (CSI) program or net energy metering (NEM) • Signed statement by roof owner acknowledging familiarity with CSI and NEM, committing not to apply for either program with respect to a Solar PV Program project • Must be scheduled to begin operation within 18 months of contract execution • Seller must have sufficient experience with large commercial and industrial roof-mounted PV installations • The system must be a commercially proven PV system and use UL-rated components Step 4

16. Check In -- Discussion Step 4

17. 5) Finalize Terms, Interconnection Studies • To the extent that any variations to the PPA terms are necessary, they will be finalized at this stage • Terms and conditions of the standard 20-year PPA are not intended to be subject to negotiation, but changes will be considered for unique circumstances and within time and resource constraints • Projects must complete an interconnection application and pass nine of ten screens or a completed System Impact Study SCE will only continue past step 5 with proposals that are complete in all respects except for an agreement on price Step 5

18. 6) Receive Binding Price Offers • Eligible parties will submit a Binding Price Offer in response to the SCE reverse auction • One flat price, in $ per MWh (no escalation permitted) • Time-Of-Delivery periods and energy payment allocation factors will be incorporated into payment calculations • SCE reserves the right (but is not obligated) to accept any Binding Price Offer according to the terms presented Step 6

19. Check In -- Discussion Step 6

20. 7) Evaluate Offers and Select Projects • SCE will select the lowest Binding Price Offers, subject to: • Local interconnection constraints • Maximum 10% of program capacity can be ground mounted • 250 MW total program target • Costs including time-of-use factors are not to exceed SCE’s utility owned Solar PV Program’s levelized cost of electricity (LCOE) ($260/MWh) • SCE is considering a multi-round reverse auction • Would give offerors an opportunity to improve prices to acceptable levels by submitting new Binding Price Offers • Offerors would be informed at time of Reverse Auction / RFO launch, through the Procurement Protocol and RFO conference, on exactly how this would operate Step 7

21. 8) Accept Offers, Execute PPAs, CPUC Approval • SCE will execute PPAs with selected projects • SCE will submit all executed PPAs to the CPUC for approval under a single Tier 2 Advice Letter Step 8

22. Timeline • Finalized timeline and dates will be released upon the Reverse Auction / RFO Launch Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8

23. Check In -- Discussion

24. Agenda • Background and Introduction • Reverse Auction / RFO Process and Criteria • Lunch Break • PPA Terms & Conditions

25. Check In -- Discussion

26. Agenda • Background and Introduction • Reverse Auction / RFO Process and Criteria • Lunch Break • PPA Terms & Conditions

27. Solar Photovoltaic (“PV”) Standard PPA • This presentation will address key terms only, not all of the terms and conditions in the Solar Photovoltaic Power Purchase and Sale Agreement (“PPA”) • Based on CREST tariff (AB 1969) approach with modifications to maintain consistency with objectives of SCE’s Utility Owned Generation (“UOG”) Program • The Commission will adopt the final Standard PPA by Resolution • This presentation assumes projects within the expected norms of 1-2 MW, primarily on rooftops • In no instance will SCE review offers for projects greater than 10 MW • Additional contract terms may be required for projects greater than 2 MW

28. Terms, Interconnections, and Obligations • 20-year Term • Term must start within 18 months of CPUC Approval • Producer to comply with California Independent System Operator Tariff (“CAISO”) • Interconnection in SCE’s service territory • No performance assurance obligations • No annual delivery obligations • No energy replacement damage amount • SCE is the Scheduling Coordinator

29. Check In -- Discussion

30. Product, Price, and Payments • SCE buys Product (energy, Green Attributes, Capacity Attributes and Resource Adequacy Benefits) • Product Price is based on competitive offer • SCE makes monthly payment based on metered amounts • Payments adjusted by SCE’s Time-of-Delivery Periods and Energy Payment Allocation Factors • SCE sends payments by the last Business Day of the calendar month following the energy production • Payment made by check unless Parties otherwise agree

31. Interconnection and Delivery • Producer must obtain and maintain all interconnection rights and interconnection agreements • Pursuant to the Procurement Protocol, producers will generally file a WDAT application (fast track or otherwise) with SCE • However, projects connecting to the CAISO-controlled grid will apply directly to the CAISO • Delivery Point is first point of interconnection with CAISO controlled transmission system (aka “PNode”)

32. SCE Responsibilities • SCE will be responsible for turning the Forecast information into Schedules or accept the CAISO’s PIRP Schedules • SCE will handle reporting renewable energy credits to Western Renewable Energy Generation Information System (“WREGIS”)

33. Check In -- Discussion

34. Development Security • $20 per kW of Gross Power Rating • Due within thirty (30) days of the PPA Effective Date • In the form of cash deposit or Letter of Credit • Refunded in whole, or on a prorated basis, based upon Producer installing the Gross Power Rating, or only a portion, before the Term Start Date • Forfeited for failure of Producer to commence Operation by the Term Start Date

35. Insurance • Starting on the Effective Date and continuing until the Term ends, Producer shall maintain in force at its sole expense, valid and collectible insurance • Workers’ compensation insurance • Employer’s liability insurance • Commercial general liability insurance must bear a minimum limit per occurrence of not less than $1,000,000 • Commercial automobile liability insurance covering bodily injury and property damage with a combined single limit of not less than $1,000,000 per occurrence • Excess liability insurance on a following form basis with limits of not less than $4,000,000 per occurrence

36. Check In -- Discussion

37. Other Requirements • Producer responsible for Forecasting Capacity or Energy, including: • 30-day rolling forecast • Weekly updates • Updates 20 minutes before the operating hour • Producer to use commercially reasonable efforts to Operate so production conforms with Forecasts • Producer will comply with NERC reliability standards, as applicable • Producer will provide monthly reports during development period • With limited exceptions, neither Party may disclose Confidential Information

38. Provisions to Match the Benefits of the UOG Program • Waive claims for eligibility for California Solar Initiative (“CSI”) funds and net energy metering for the Generating Facility while the PPA is in effect • Producer required to pay prevailing wage • Producer required to use Electricians with class C-10 licenses and who employ apprentice electricians who have been enrolled in apprentice training programs meeting specified criteria • SCE Buyout Option • At SCE’s sole discretion • At end of the Term • $100/MW of Gross Power Rating

39. Termination Rights SCE • Interconnection study determines system upgrades are required • Term does not begin within 18 months of CPUC approval • Producer fails to take corrective actions specified in Notice • Producer abandons Generating Facility • Electrical output ceases for 12 consecutive months • Producer or owner of the Site applies for or participates in California Solar Initiative or net metering program with respect to the Generating Facility Mutual • Any obligation to make payment when due • Force Majeure, which extends for more than 365 consecutive days, or for more than 365 days in a consecutive 540-day period

40. Check In -- Discussion

41. SCE Solar PV Program Back-Up Slides

42. Payment Calculation TOD PERIOD PAYMENT = A x B x C Where: A = Product Price (in $/kWh) B = Energy Payment Allocation Factor for the TOD Period C = Sum of Metered Amounts for the TOD Period “Holiday” is defined as New Year’s Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day, Veterans Day, Thanksgiving Day, or Christmas Day. When any Holiday falls on a Sunday, the following Monday will be recognized as a Holiday. No change will be made for Holidays falling on Saturday.

43. Payment Calculation(Cont.)