October 5, 2017 Advice Letter 3488-E

Transcription

1 STATE OF CALIFORNIA PUBLIC UTILITIES COMMISSION SAN FRANCISCO, CA REVISED Edmund G. Brown Jr., Governor October 5, 2017 Advice Letter 3488-E Russell G. Worden Director, Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, CA Subject: Bilateral Resource Adequacy Capacity Agreements Between SCE and AES Alamitos, LLC, AES Huntington Beach, LLC and AES Redondo Beach, LLC, to Meet Local Resource Adequacy Requirements Dear Mr. Worden: Advice Letter 3488-E is effective as of September 28, 2017 per Resolution E-4888 Ordering Paragraphs. Resolution E-4888 approves the AES Alamitos contract and the AES Huntington Beach contract but denies the AES Redondo Beach contract. Sincerely, Edward Randolph Director, Energy Division

2 Russell Worden Managing Director, State Regulatory Operations October 10, 2016 ADVICE 3488-E (U 338-E) PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ENERGY DIVISION SUBJECT: Bilateral Resource Adequacy Capacity Agreements Between Southern California Edison Company and AES Alamitos, L.L.C., AES Huntington Beach, L.L.C. and AES Redondo Beach, L.L.C. to Meet Local Resource Adequacy Requirements I. INTRODUCTION A. Purpose of the Advice Letter Pursuant to Decision ( D. ) and Appendix I 2 of its Assembly Bill ( AB ) 57 Bundled Procurement Plan ( BPP ), Southern California Edison Company ( SCE ) submits this Advice Letter seeking California Public Utilities Commission ( Commission or CPUC ) approval of three bilateral Resource Adequacy ( RA ) capacity purchase agreements (together, the RA Contracts ) between Southern California Edison Company ( SCE ) and AES Alamitos, L.L.C. ( AES Alamitos ), AES Huntington Beach, L.L.C. ( AES Huntington Beach ), and AES Redondo Beach, L.L.C. ( AES Redondo Beach ) (together AES Southland ). The following table summarizes the RA Contracts: 1 D at 72 (Ordering Paragraph ( OP ) 3.a) (The IOUs are authorized to sign power purchase agreements with power plants using once through cooling, but those agreements may not commit to purchases beyond the applicable State Water Resources Control Board compliance deadline, and those agreements must be submitted to the Commission for approval via a Tier 3 advice letter for contracts of more than two years but less than five years. ). 2 SCE s Conformed 2014 AB 57 Bundled Procurement Plan, Appendix I: Contract Limitations With Power Generation Facilities Utilizing Once-Through Cooling, reiterates the requirements for power purchase agreements with power plants using once through cooling technology in D P.O. Box Rush Street Rosemead, California (626) Fax (626)

3 ADVICE 3488-E (U 338-E) October 10, 2016 Contract Seller Generation Type Generating Units RA Capacity / Contract Quantity by Unit Product Term of Delivery by Unit Alamitos RA Contract Huntington Beach RA Contract Redondo Beach RA Contract AES Alamitos AES Huntington Beach AES Redondo Beach Gas-fired generation Gas-fired generation Gas-fired generation Alamitos Unit 1 Alamitos Unit 2 Alamitos Unit 3 Alamitos Unit 4 Alamitos Unit 5 Alamitos Unit 6 Huntington Beach Unit 1 Huntington Beach Unit 2 Redondo Beach Unit 5 Redondo Beach Unit 6 Redondo Beach Unit 7 Redondo Beach Unit Megawatts ( MW ) MW RA RA MW RA MW RA MW RA MW RA MW RA MW RA MW RA MW RA MW RA MW RA June 2018 December 2019 June 2018 December 2019 June 2018 December 2020 June 2018 December 2020 June 2018 December 2020 June 2018 December 2019 June 2018 December 2019 June 2018 December 2020 June 2018 December 2020 June 2018 December 2020 June 2018 September 2019 June 2018 December 2020 As discussed below and in the confidential Appendix A to this Advice Letter, the Commission should approve the RA Contracts because they will provide local RA capacity that will fill a forecasted need (the resources will also provide system and flexible RA). SCE respectfully requests that the Commission issue a resolution containing findings in the form requested in this Advice Letter within six (6) months (April 10, 2017).

4 ADVICE 3488-E (U 338-E) October 10, 2016 In accordance with General Order ( GO ) 96-B, the confidentiality of information included in this Advice Letter is described below. This Advice Letter contains both confidential and public appendices as listed below. Confidential Appendix A: Confidential Appendix B: Confidential Appendix C: Confidential Appendix D: Public Appendix E: Public Appendix F: Confidential Advice Letter Information Alamitos RA Contract Huntington Beach RA Contract Redondo Beach RA Contract Confidentiality Declaration Proposed Protective Order B. General Project Descriptions 1. Alamitos Units 1 through 6 Alamitos Units 1 through 6 are gas-fired steam boiler generating units located in Long Beach, California. The generating units are interconnected through SCE s 230 kv system at the Alamitos substation. The facilities are once-through cooled with ocean water. If approved, the Alamitos RA Contract would result in SCE purchasing RA capacity only and AES would be obligated to ensure the generating units are bid into the California Independent System Operator ( CAISO ) market consistent with the CAISO Tariff through the remainder of the currently expected operating life of the Alamitos units. 2. Huntington Beach Units 1 and 2 Huntington Beach Units 1 and 2 are gas-fired steam boiler generating units located in Huntington Beach, California. The generating units are interconnected through SCE s 230 kv system at the Ellis substation. The facilities are once-through cooled with ocean water. If approved, the Huntington Beach RA Contract would result in SCE purchasing RA capacity only and AES would be obligated to ensure the generating units are bid into the CAISO market consistent with the CAISO Tariff through the remainder of the currently expected operating life of the Huntington Beach units. 3. Redondo Beach Units 5 through 8 Redondo Beach Units 5 through 8 are gas-fired steam boiler generating units located in Redondo Beach, California. The generating units are interconnected through SCE s 230 kv system at the Redondo Beach substation. The facilities are once-through cooled with ocean water. If approved, the Redondo Beach RA Contract would result in SCE purchasing RA capacity only and AES would be obligated to ensure the generating

5 ADVICE 3488-E (U 338-E) October 10, 2016 units are bid into the CAISO market consistent with the CAISO Tariff through the remainder of the currently expected operating life of the Redondo Beach units. II. BENEFITS OF THE RA CONTRACTS A. The RA Contracts Will Help Meet a Forecasted Need for Local RA The Alamitos, Huntington Beach, and Redondo Beach contracts are RA-only contracts that will benefit bundled load customers as the resources will meet a portion of SCE s forecasted local RA need. Moreover, SCE s Los Angeles Basin ( LA Basin ) local RA requirements cannot be met without a significant portion of the capacity provided by these important generating resources being under contract. Appendix A includes data supporting this assertion. Non-compliance with the local RA requirement is not a viable option as the CAISO would almost certainly utilize its backstop procurement authority through its capacity procurement mechanism ( CPM ) tariff language to contract for these resources at a potential much greater cost to SCE s bundled ratepayers. Furthermore, SCE would face the CPUC defined penalty structure for a local RA deficiency, 3 increasing administrative costs significantly. The RA Contracts will also provide more certainty around the continued operations of crucial LA Basin generating units subject to State Water Resources Control Board ( SWRCB ) requirements for once-through-cooling ( OTC ) facilities 4 until the new projects that SCE contracted for through its Local Capacity Requirements ( LCR ) request for offers ( RFO ) for the Western LA Basin become operational and replace the subject OTC facilities. As a secondary point, CAISO s local area requirements for the LA Basin will likely not be met without a significant portion of these generating resources being under contract with one or more load-serving entities ( LSEs ). SCE s service territory makes up approximately 85% of the LA Basin, and the CAISO relies on SCE as the largest LSE in the LA Basin to meet local area RA requirements. Therefore, if SCE does not meet its local RA requirements, which it cannot do without a significant portion of the capacity provided by the AES units, it is likely that CAISO s local area requirements for the LA Basin will not be met. Additionally, based on the critical locations of some of these resources, and a recent experience in 2015 with a cumulative deficiency in the Big- Creek/Ventura local area, SCE can reasonably anticipate that the CAISO may find that 3 The penalty price for a Local deficiency is $3.33/kw-mo. For those deficiencies not cured within five business days, D continues to apply. D extended the Local RA penalty structure to flexible RA deficiencies. 4 California Energy Commission s Tracking Progress, Once-Through Cooling Phase-Out (last updated on February 17, 2015) at 6 (table listing the compliance dates of the OTC plants in the LA Basin, including: Huntington Beach 1 & 2; Redondo Beach 5, 7; Redondo Beach 6,8; Alamitos 1,2; Alamitos 3,4; and Alamitos 5,6) available at pdf.

6 ADVICE 3488-E (U 338-E) October 10, 2016 the totality of all LSEs local RA compliance showings (even after each individual LSE has met its local RA requirement) are still cumulatively deficient at the sub-local area without a very large portion of the RA capacity from the Alamitos, Huntington Beach, and Redondo Beach generating units (the AES Units, as identified in the table in Section I) being under contract. Such a determination could also lead to backstop procurement by the CAISO through its CPM at an expected additional cost to bundled customers. The short turn-around time 5 allotted to potentially cure a cumulative local deficiency, coupled with the limitations on SCE s ability to contract with generating units subject to once-through-cooling compliance policies without Commission approval, further increases the chance that the CAISO will utilize its backstop procurement authority to alleviate a local area requirement constraint. Finally, procurement of the entire fleet of AES LA Basin resources in lieu of procuring only certain units or partial capacity from all twelve units gives SCE a hedge against the potential shift in CAISO effectiveness factors attached to each generating unit. 6 Effectiveness factors, while not explicitly considered in the CPUC s administrative RA construct, are taken into account during CAISO s yearly LCR study and CAISO s decision making process when identifying local deficiencies. To support SCE s LCR RFO, CAISO published effectiveness factors for each generating unit in the LA Basin. At that time, the southernmost units, Huntington Beach 1 & 2, were considered the most effective. No guarantee exists that these same effectiveness factors will persist through 2020; thus, contracting for the entire fleet allows SCE to ensure that SCE has procured resources that SCE expects to be highly effective for local reliability. It is in the best interest of SCE s customers to contract now and bilaterally for the Alamitos, Huntington Beach, and Redondo Beach resources for the time periods described above to ensure the continued reliability of the grid. This will provide certainty to the CAISO and SCE planners on the availability of important generation resources in maintaining local area reliability in the LA basin. Commission approval of the RA Contracts, and a subsequent showing by SCE of the Alamitos, Huntington Beach, and Redondo Beach generating units within the RA process, will also mitigate the risk of a CPM designation and the potential costs of such CPM designation to SCE s customers. III. NEGOTIATION OF THE RA CONTRACTS SCE currently has a contract to receive capacity from the Alamitos, Huntington Beach, and Redondo Beach generating units through May SCE considered several 5 Last year the CAISO published the market notice of cumulative local deficiency on November 18, 2015 and revised plans were due a month later on December 18, While individual LSEs may all meet their local RA area requirements, the CAISO, due to a variety of factors, including the effectiveness of the fleet of resources LSEs have shown to meet local contingencies, may still have a need for additional local resources. In such circumstances, the CAISO utilizes the CPM backstop procurement process to ensure that sufficient resources are available to meet a variety of reliability needs, including insufficient resources within a local area, significant event, and exceptional dispatch.

7 ADVICE 3488-E (U 338-E) October 10, 2016 factors when determining whether to bilaterally negotiate for capacity from the AES units, which are discussed in confidential Appendix A. After a series of negotiations with AES Southland, which are discussed in more detail in confidential Appendix A, SCE entered into the RA Contracts at issue. IV. EVALUATION METHODOLOGY AND RESULTS A. Evaluation Methodology Due primarily to the term of the RA Contracts, SCE did not have relevant offer data from prior RFOs and therefore relied on a recent bilateral transaction and CAISO CPM cost data to compare to the cost of the RA Contracts. By comparing the RA Contract price against a similar bilaterally negotiated contract price, SCE confirmed that the AES offer was competitive and representative of the market. Furthermore, SCE calculated the net present value ( NPV ) of the AES offer using its forecast of net capacity value and found that the AES offer resulted in a positive NPV value when netting the RA benefit received and the capacity and debt equivalence costs. B. Benefits of the RA Contracts The Alamitos, Huntington Beach, and Redondo Beach contracts are RA-only contracts. Bundled load customers will therefore benefit from these RA Contracts as the resources will help meet local, system and flexible RA requirements. As discussed above, if SCE had not contracted for capacity from the AES units, outstanding local RA needs could have resulted in backstop procurement of these resources by the CAISO, through its CPM, at higher costs to SCE s bundled customers. If the CAISO local area reliability process led to CPM backstop procurement, SCE s customers would expect to pay their share of the CPM cost. This could be as much as 100 percent of the cost if SCE did not meet its LA Basin requirement, or a pro-rata bundled customer load share within SCE s service territory if the CAISO identified a cumulative deficiency. The CAISO recently approved changes to the CPM price and process at the Federal Energy Regulatory Commission ( FERC ). The changes allow resources to bid into the new CPM process up to a soft offer cap of $6.31/kW-month. Commission approval of the RA Contracts, and a subsequent showing by SCE of the Alamitos, Huntington Beach, and Redondo Beach generating units within the RA process, will mitigate the risk of a CPM designation. The RA Contracts would also continue to have value in meeting the system RA need for bundled load customers. More information regarding CPM can be found in Section 43 of the CAISO Tariff. Additional confidential information is included in confidential Appendix A. V. CONSISTENCY WITH OTC PROCUREMENT REQUIREMENTS The RA Contracts are for capacity from OTC generating units. D requires that power purchase agreements with power plants using OTC technology that exceed

8 ADVICE 3488-E (U 338-E) October 10, 2016 two years but are less than five years must be submitted to the Commission for approval via a Tier 3 advice letter. 7 Each of the RA Contracts is for capacity from multiple units at the same location, and the terms for some of the units exceed two years. D also requires that power purchase agreements that terminate one year or less prior to the applicable SWRCB OTC compliance deadline must be submitted to the Commission for approval via a Tier 3 advice letter that includes a showing that the agreement helps facilitate compliance with the SWRCB policy regarding OTC. 8 SCE addresses the requirement to show how the agreement helps facilitate compliance with the SWRCB policy for OTC facilities below. In D , the Commission implemented additional requirements for contracts with power plants using OTC technology. Specifically: In order to provide guidance to Energy Division in evaluating these agreements and the utilities in preparing and submitting these agreements, the applicable criteria shall include the following: 1) how the contract helps facilitate compliance with the SWRCB OTC policy, or at a minimum why it does not delay compliance; 2) the expected operation of the OTC facility under normal load (1 in 2) and high load (1 in 10) conditions, including number of starts and run time after each start; 3) the LCR net position with and without the OTC facility over the contract duration and two years beyond the contract duration; and 4) how any other available generation resources compare under these criteria. 9 SCE addresses the four criteria set forth in D below. 1) How the contract helps facilitate compliance with the SWRCB OTC policy, or at a minimum why it does not delay compliance. The SWRCB OTC final compliance deadline for the Alamitos, Huntington Beach, and Redondo Beach generating units is December 31, SCE consulted with AES and confirmed that the RA Contracts will not delay compliance with SWRCB requirements. 2) The expected operation of the OTC facility under normal load (1 in 2) and high load (1 in 10) conditions, including number of starts and run time after each start The contracts at issue are RA only contracts and SCE will only be able to count the resources for RA purposes. The resources are obligated to a must-offer obligation with the CAISO under all of the CAISO tariff rules. As such, SCE will 7 D at 72 (Ordering Paragraph ( OP ) 3.a). 8 Id. (OP 3.b). 9 Id. at 25.

9 ADVICE 3488-E (U 338-E) October 10, 2016 not have any control over the bids submitted by the resource and cannot predict, based upon another entities unknown bids, the number of starts and the expected operation of the resources under any conditions including 1 in 2 and 1 in 10 conditions. 3) The LCR net position with and without the OTC facility over the contract duration and two years beyond the contract duration. Information on the LCR net position with and without the OTC facilities for 2018 through 2019 is in confidential Appendix A and the information for 2020 through 2022 is in the following table: 1 Compliance Month Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 2 Residual Net Short Position without AES 3,433 3,425 3,426 3,428 2,732 2,020 2,013 2,032 2,037 2,102 2,080 2,070 3 Sum AES units 2,241 2,241 2,241 2,241 2,241 2,241 2,241 2,241 2,241 2,241 2,241 2,241 4 Residual Net Short Position including AES 1,191 1,184 1,185 1, (222) (229) (210) (204) (139) (162) (172) 5 Compliance Month Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 6 Residual Net Short Position without AES 3,433 3,425 3,426 3,428 2,732 2,020 2,013 2,032 2,037 2,102 2,080 2,070 7 Sum AES units Residual Net Short Position including AES 3,433 3,425 3,426 3,428 2,732 2,020 2,013 2,032 2,037 2,102 2,080 2,070 9 Compliance Month Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec Residual Net Short Position without AES 2,002 1,948 1,952 1,953 1,900 1,829 1,920 1,939 1,944 2,015 1,986 1, Sum AES units Residual Net Short Position including AES 2,002 1,948 1,952 1,953 1,900 1,829 1,920 1,939 1,944 2,015 1,986 1,977 Note: All capacity positions are provided in MW increments 4) How any other available generation resources compare under these criteria. The RA Contracts were bilaterally negotiated and reasonably compare to other bilateral contracts and expected RA costs for needed local area resources. VI. CONSULTATION WITH PROCUREMENT REVIEW GROUP SCE briefed its Procurement Review Group ( PRG ) on the proposed RA Contracts on August 9, The PRG includes the following non-market participants: Office of Ratepayer Advocates, CPUC Energy Division Staff, The Utility Reform Network, Sierra Club, Union of Concerned Scientists, California Department of Water Resources, and Coalition of California Utility Employees. 10 VII. SAFETY CONSIDERATIONS The Alamitos, Huntington Beach, and Redondo Beach generating units are existing and operational facilities. Therefore, the RA Contracts do not raise any incremental safety implications. 10 The Office of Ratepayer Advocates and Energy Division Staff participated in the August 9, 2016 PRG meeting.

10 ADVICE 3488-E (U 338-E) October 10, 2016 VIII. CONFIDENTIALITY SCE requests confidential treatment of Appendices A through D to this Advice Letter. The confidential information is entitled to confidentiality protection pursuant to the Investor-Owned Utility Matrix adopted by the Commission in D and modified by D Appendix E contains a Confidentiality Declaration specifying why the information for which SCE is seeking confidential treatment is confidential market sensitive information consistent with Commission decisions. It also identifies the period for which SCE seeks confidential treatment. It is appropriate to accord confidential treatment to the information for which SCE requests confidential treatment in the advice letter process because such information is entitled to confidentiality protection pursuant to D as modified by D , and is required to be filed by advice letter as part of the process for obtaining Commission approval of the RA Contracts. SCE objects to the disclosure of the confidential information in an aggregated format. In accordance with GO 96-B, Appendix F contains a proposed Protective Order modeled on the Model Protective Order submitted in Advice Letter 3304-E, which was approved by Energy Division on November 2, Upon adoption of this Protective Order by the Commission, any appropriate party signing the Non-Disclosure Certificate attached to the Protective Order can obtain access to the confidential information. Until the Commission adopts the Protective Order, the attached confidential materials will be made available to appropriate parties (in accordance with SCE s Proposed Protective Order) upon execution of a non-disclosure agreement. Parties wishing to obtain access to the confidential version of this Advice Letter may contact Tristan Reyes Close in SCE s Law Department at Tristan.ReyesClose@sce.com or (626) to obtain a copy of a non-disclosure agreement. IX. REQUEST FOR COMMISSION APPROVAL The terms of the RA Contracts are conditioned on the occurrence of final CPUC Approval, as it is described in the RA Contracts. In order to satisfy that condition with respect to the RA Contracts, SCE requests that the Commission issue a resolution no later than April 10, 2017, prior to SCE s 2017 RA RFO, containing: 1. Approval of the RA Contracts in their entirety; 2. A finding that the RA Contracts, and SCE s entry into the RA Contracts, are reasonable and prudent for all purposes, including, but not limited to, recovery in rates of payments made pursuant to the RA Contracts, subject only to further review with respect to the reasonableness of SCE s administration of the RA Contracts; and 3. Any other and further relief as the Commission finds just and reasonable.

11 ADVICE 3488-E (U 338-E) October 10, 2016 X. TIER DESIGNATION This Advice Letter is submitted with a Tier 3 designation (effective upon Commission approval). XI. EFFECTIVE DATE This Advice Letter will become effective upon Commission approval. XII. NOTICE Anyone wishing to protest this advice filing may do so by letter via U.S. Mail, facsimile, or electronically, any of which must be received no later than 20 days after the date of this advice filing. Protests should be submitted to: CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, California EDTariffUnit@cpuc.ca.gov Copies should also be mailed to the attention of the Director, Energy Division, Room 4004 (same address above). In addition, protests and all other correspondence regarding this advice letter should also be sent by letter and transmitted via facsimile or electronically to the attention of: Russell G. Worden Managing Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, California Telephone: (626) Facsimile: (626) AdviceTariffManager@sce.com Michael R. Hoover Director, State Regulatory Affairs c/o Karyn Gansecki Southern California Edison Company 601 Van Ness Avenue, Suite 2030 San Francisco, California Facsimile: (415) Karyn.Gansecki@sce.com With a copy to:

12 ADVICE 3488-E (U 338-E) October 10, 2016 Tristan Reyes Close Senior Attorney Southern California Edison Company 2244 Walnut Grove Avenue, 3rd Floor Rosemead, California Facsimile: (626) Tristan.ReyesClose@sce.com There are no restrictions on who may file a protest, but the protest shall set forth specifically the grounds upon which it is based and must be received by the deadline shown above. In accordance with General Rule 4 of GO 96-B, SCE is serving copies of this advice filing to the interested parties shown on the attached GO 96-B, R , R , and R service lists. Address change requests to the GO 96-B service list should be directed by electronic mail to AdviceTariffManager@sce.com or at (626) For changes to all other service lists, please contact the Commission s Process Office at (415) or by electronic mail at Process_Office@cpuc.ca.gov. Further, in accordance with Public Utilities Code Section 491, notice to the public is hereby given by filing and keeping the advice filing at SCE s corporate headquarters. To view other SCE advice letters filed with the Commission, log on to SCE s web site at For questions, please contact Dawn Anaiscourt at (415) or by electronic mail at Dawn.Anaiscourt@sce.com. Southern California Edison Company RGW:da:jm Enclosures /s/ Russell G. Worden Russell G. Worden

13 CALIFORNIA PUBLIC UTILITIES COMMISSION ADVICE LETTER FILING SUMMARY MUST BE COMPLETED BY UTILITY (Attach additional pages as needed) Company name/cpuc Utility No.: Southern California Edison Company Utility type: Contact Person: Darrah Morgan ELC GAS Phone #: (626) PLC HEAT WATER Disposition Notice to: EXPLANATION OF UTILITY TYPE ELC = Electric GAS = Gas PLC = Pipeline HEAT = Heat WATER = Water (Date Filed/ Received Stamp by CPUC) Advice Letter (AL) #: 3488-E Tier Designation: 3 Subject of AL: Bilateral Resource Adequacy Capacity Agreements Between Southern California Edison Company and AES Alamitos, L.L.C., AES Huntington Beach, L.L.C. and AES Redondo Beach, L.L.C. to Meet Local Resource Adequacy Requirements Keywords (choose from CPUC listing): Compliance, Agreements, Procurement AL filing type: Monthly Quarterly Annual One-Time Other If AL filed in compliance with a Commission order, indicate relevant Decision/Resolution #: Decision Does AL replace a withdrawn or rejected AL? If so, identify the prior AL: Summarize differences between the AL and the prior withdrawn or rejected AL 1 : Confidential treatment requested? Yes No If yes, specification of confidential information: See Appendix E Confidential information will be made available to appropriate parties who execute a nondisclosure agreement. Name and contact information to request nondisclosure agreement/access to confidential information: Tristan Reyes Close, Law Department, (626) , Tristan.ReyesClose@sce.com Resolution Required? Yes No Requested effective date: Upon Commission Approval Estimated system annual revenue effect: (%): Estimated system average rate effect (%): No. of tariff sheets: -0- When rates are affected by AL, include attachment in AL showing average rate effects on customer classes (residential, small commercial, large C/I, agricultural, lighting). Tariff schedules affected: None Service affected and changes proposed 1 : Pending advice letters that revise the same tariff sheets: N/A 1 Discuss in AL if more space is needed.

14 Protests and all other correspondence regarding this AL are due no later than 20 days after the date of this filing, unless otherwise authorized by the Commission, and shall be sent to: CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Ave., San Francisco, CA Russell G. Worden Managing Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, California Telephone: (626) Facsimile: (626) Michael R. Hoover Director, State Regulatory Affairs c/o Karyn Gansecki Southern California Edison Company 601 Van Ness Avenue, Suite 2030 San Francisco, California Facsimile: (415) With a copy to: Tristan Reyes Close Senior Attorney 2244 Walnut Grove Avenue Rosemead, California Facsimile: (626) Tristan.ReyesClose@sce.com

15 CONFIDENTIAL Appendix A Confidential Advice Letter Information Confidential Protected Materials Public Disclosure Prohibited

16 CONFIDENTIAL Appendix B Alamitos RA Contract Confidential Protected Materials Public Disclosure Prohibited

17 CONFIDENTIAL Appendix C Huntington Beach RA Contract Confidential Protected Materials Public Disclosure Prohibited

18 CONFIDENTIAL Appendix D Redondo Beach RA Contract Confidential Protected Materials Public Disclosure Prohibited

19 PUBLIC Appendix E Confidentiality Declaration

20 DECLARATION OF OLA HEUM REGARDING THE CONFIDENTIALITY OF CERTAIN DATA I, Ola Heum, declare and state: 1. I am a Contract Manager in the Energy Contracts Department at Southern California Edison Company ( SCE ). As such, I have reviewed the Advice Letter and related Appendices seeking California Public Utilities Commission ( Commission or CPUC ) approval of the three bilateral Resource Adequacy ( RA ) capacity agreements between SCE and AES Alamitos, L.L.C., AES Huntington Beach, L.L.C. and AES Redondo Beach, L.L.C.. I make this declaration in accordance with Commission Decisions ( D. ) and D , issued in Rulemaking I have personal knowledge of the facts and representations herein and, if called upon to testify, could and would do so, except for those facts expressly stated to be based upon information and belief, and as to those matters, I believe them to be true. 2. Listed below are the data in this Advice Letter and related Appendices for which SCE is seeking confidential protection and the categories of the Matrix of Allowed Confidential Treatment Investor Owned Utility ( IOU ) Data ( Matrix ) appended to D to which these data correspond: Confidential Advice Letter Information Data Page Matrix Category Confidential Appendix A VI.A. Utility Bundled Net Open (Long or Short) Position for Capacity (MW) VII.B. Contracts and power purchase agreements between utilities and nonaffiliated third parties (except RPS) Limitations on Confidentiality Specified in Matrix Front three years of forecast data confidential. Contract summaries public, including counterparty, resource type, location, capacity, expected deliveries, delivery point, length of contract and online date. Other terms confidential for three 1

21 years from date contract states deliveries to begin; or until one year following expiration, whichever comes first. VIII.A. Bid Information Total number of projects and megawatts bid by resource type public after final contracts submitted to CPUC for approval. Alamitos RA Contract, Huntington Beach RA Contract, and Redondo Beach RA Contract Confidential Appendices B, C & D VIII.B. Specific quantitative analysis involved in the scoring and evaluation of participating bids VII.B. Contracts and power purchase agreements between utilities and nonaffiliated third parties (except RPS) Evaluation guidelines should be public. Other information confidential for three years after winning bidders selected. Contract summaries public, including counterparty, resource type, location, capacity, expected deliveries, delivery point, length of contract and online date. Other terms confidential for three years from date contract states deliveries to begin; or until one year following expiration, whichever comes first. 3. I am informed and believe that SCE is complying with the limitations on confidentiality specified in the Matrix that pertain to the data listed in the table above. 4. I am informed and believe and thereon allege that the data in the table in paragraph 2 above cannot be aggregated, redacted, summarized, masked or otherwise 2

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23 PUBLIC Appendix F Proposed Protective Order

24 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Submission of the Bilateral Resource Adequacy Capacity Agreements Between Southern California Edison Company and AES Alamitos, L.L.C., AES Huntington Beach, L.L.C. and AES Redondo Beach, L.L.C. to Meet Local Resource Adequacy Requirements Advice 3488-E PROPOSED PROTECTIVE ORDER 1. Scope. This Protective Order shall govern access to and the use of Protected Materials, produced by, or on behalf of, any Disclosing Party (as defined in Paragraph 2 below) in this proceeding. 2. Definitions. In addition to the terms defined and capitalized in other sections of this Protective Order, the following terms are defined for the purposes of this Protective Order: A. For purposes of this Protective Order, the term Protected Materials means: (i) trade secret, market sensitive, or other confidential and/or proprietary information as determined by the Disclosing Party in accordance with the provisions of Decision ( D. ) and subsequent decisions, General Order 66-C, Public Utilities Code section 454.5(g), or any other right of confidentiality provided by law; or (ii) any other materials that are made subject to this Protective Order by the Assigned Administrative Law Judge ( Assigned ALJ ), Law and Motion Administrative Law Judge ( Law and Motion ALJ ), Assigned Commissioner, the California Public Utilities Commission ( Commission ), or any court or other body having appropriate authority. Protected Materials also include memoranda, handwritten notes, spreadsheets, computer files and reports, and any other form of information (including 1

25 information in electronic form) that copies, discloses, incorporates, includes or compiles other Protected Materials or from which such materials may be derived (except that any derivative materials must be separately shown to be confidential). Protected Materials do not include: (i) any information or document contained in the public files of the Commission or any other state or federal agency, or in any state or federal court; or (ii) any information that is public knowledge, or which becomes public knowledge, other than through disclosure in violation of this Protective Order or any other nondisclosure agreement or protective order. B. The term redacted refers to situations in which Protected Material in a document, whether the document is in paper or electronic form, have been covered, blocked out, or removed. C. The term Disclosing Party means a party who initially discloses any specified Protected Material in this proceeding. D. The term Requesting Party means any party that is requesting receipt of Protected Material from a Disclosing Party. E. The term Party refers to the Requesting Party or the Disclosing Party and the term Parties refers to both the Requesting Party and the Disclosing Party. F. The term Market Participant refers to a Requesting Party that is: 1) A person or entity, or an employee of an entity, that engages in the wholesale purchase, sale or marketing of energy or capacity, or the bidding on or purchasing of power plants, or bidding on utility procurement solicitations, or consulting on such matters, subject to the limitations in 3) below. 2) A trade association or similar organization, or an employee of such organization, a) whose primary focus in proceedings at the Commission is to advocate for persons/entities that purchase, sell or market energy or capacity at wholesale; bid on, own, or purchase power plants; or bid on utility procurement solicitations; or 2

26 b) a majority of whose members purchase, sell or market energy or capacity at wholesale; bid on, own, or purchase power plants; or bid on utility procurement solicitations; or c) formed for the purpose of obtaining Protected Materials; or d) controlled or primarily funded by a person or entity whose primary purpose is to purchase, sell or market energy or capacity at wholesale; bid on, own, or purchase power plants; or bid on utility procurement solicitations. 3) A person or entity that meets the criteria of 1) above is not a Market Participant for purpose of access to Protected Materials unless the person/entity seeking access to Protected Materials has the potential to materially affect the price paid or received for electricity if in possession of such information. An entity will be considered not to have such potential if: a) the person or entity s participation in the California electricity market is de minimis in nature. In the resource adequacy proceeding (R ) it was determined in D that the resource adequacy requirement should be rounded to the nearest megawatt (MW), and load serving entities (LSEs) with local resource adequacy requirements less than 1 MW are not required to make a showing. Therefore, a de minimis amount of energy would be less than 1 MW of capacity per year, and/or an equivalent of energy; and/or b) the person or entity has no ability to dictate the price of electricity it purchases or sells because such price is set by a process over which the person or entity has no control, i.e., where the prices for power put to the grid are completely overseen by the Commission, such as subject to a standard offer contract or tariff price. A person or entity that currently has no ability to dictate the price of electricity it purchases or sells under this section, but that will have such ability within one year because its contract is expiring or other circumstances are changing, does not meet this exception; and/or c) the person or entity is a cogenerator that consumes all the power it generates in its own industrial and commercial processes, if it can establish a legitimate need for Protected Materials. G. The term Non-Market Participant refers to a Requesting Party that does not meet the definition of Market Participant. 3

27 H. Reviewing Representatives are limited to person(s) designated in accordance with Paragraph 5 who meet the following criteria: 1) Reviewing Representatives may not currently be engaged in: (a) a transaction for the purchase, sale, or marketing at wholesale of electrical energy or capacity or natural gas (or the direct supervision of any employee(s) engagement in such a transaction); (b) the bidding on or purchasing of power plants (or the direct supervision of any employee(s) engagement in such a transaction); or (c) knowingly providing electricity or gas marketing consulting or advisory services to others in connection with a transaction for the purchase, sale, or marketing at wholesale of electrical energy or capacity or natural gas or the bidding on or purchasing of power plants (or the direct supervision of any employee(s) engagement in such a transaction or consulting). 2) Reviewing Representatives may not be an employee of a Market Participant. If the Market Participant or Non-Market Participant chooses to retain outside attorneys, consultants, or experts in the same law firm or consulting firm to provide advice in connection with marketing activities, then the attorney, consultant, or expert serving as a Reviewing Representative must be separated by an ethics wall consistent with the ethics wall requirements in D , as that decision may be subsequently modified or changed by the Commission, from those in the firm who are involved in wholesale commercial dealings. 3) Reviewing Representatives shall use Protected Materials only for the purpose of participating in the Commission proceeding in which they received the information. 4) Reviewing Representatives are permitted to participate in regulatory proceedings on behalf of Market Participants and Non-Market Participants. 5) All Reviewing Representatives are required to execute the Nondisclosure Certificate attached to this Protective Order and are bound by the terms of this Protective Order. I. The term Authorized Reviewers refers to: (1) a Requesting Party that is a Non-Market Participant; or (2) a Reviewing Representative of a Requesting Party. A 4

28 Requesting Party that is a Market Participant is not an Authorized Reviewer but it may designate a Reviewing Representative in accordance with Paragraph 5. J. The term Nondisclosure Certificate refers to the Nondisclosure Certificate attached as Appendix A. 3. Designation, Filing, and Service of Protected Materials. When filing or providing in discovery any documents or items containing Protected Materials, a party shall physically mark such documents (or in the case of non-documentary materials such as computer diskettes, on each item) as PROTECTED MATERIALS SUBJECT TO PROTECTIVE ORDER, or with words of similar import as long as one or more of the terms Protected Materials or Protective Order is included in the designation to indicate that the materials in question are Protected Materials. All materials so designated shall be treated as Protected Materials unless and until: (a) the designation is withdrawn pursuant to Paragraph 14 hereof; (b) an Assigned ALJ, Law and Motion ALJ, Assigned Commissioner, or the Commission makes a determination that: (i) the document does not contain Protected Materials or does not warrant confidential treatment or (ii) denies a motion to file the document under seal; or (c) the document or information becomes public knowledge, other than through disclosure in violation of this Protective Order or any other nondisclosure agreement or protective order. However, the Disclosing Party has the burden of showing that the documents are Protected Materials, and merely marking a document Protected Materials is insufficient to meet that burden. All documents containing Protected Materials that are tendered for filing with the Commission shall be placed in sealed envelopes or otherwise appropriately protected and shall be tendered with a motion to file the document under seal pursuant to Rule 11.4 of the Commission s Rules of Practice and Procedure. All documents containing Protected Materials that are served on parties in a proceeding shall be placed in sealed envelopes or otherwise 5

29 appropriately protected and shall be endorsed to the effect that they are served under seal pursuant to this Protective Order. Such documents shall only be served upon Authorized Reviewers and persons employed by or working on behalf of the Commission. Service upon Authorized Reviewers and persons employed by or working on behalf of the Commission may either be: (a) by electronic mail in accordance with the procedures adopted in this proceeding; (b) by facsimile; or (c) by overnight mail or messenger service. Whenever service of a document containing Protected Materials is made by overnight mail or messenger service, the Assigned ALJ shall be served with such document by the same means and at the same time. 4. Redaction of Documents. Whenever a Party files, serves or provides in discovery a document that includes Protected Materials (including but not limited to briefs, testimony, exhibits, and responses to data requests), such Party shall also prepare a redacted version of such document. The redacted version shall enable persons familiar with this proceeding to determine with reasonable certainty the nature of the data that has been redacted and where the redactions occurred. The redacted version of a document to be filed shall be served on all persons on the service list, and the redacted version of a discovery document shall be served on all persons entitled thereto. 5. Designation of Reviewing Representatives. The Requesting Party shall provide written notice identifying its proposed Reviewing Representative(s) to the Disclosing Party before the Disclosing Party provides any Protected Materials to the Requesting Party s Authorized Reviewers. The written notice shall include the information identified in this paragraph. If the Requesting Party decides to designate any additional Reviewing Representative(s) after the Requesting Party s Authorized Reviewers receive Protected Materials, the Requesting Party shall identify the additional proposed Reviewing Representative(s) to the Disclosing Party before the Requesting Party provides Protected 6

30 Materials to the additional Reviewing Representative(s). Within five (5) business days after receiving written notice of the identity of any Reviewing Representative, the Disclosing Party may provide the Requesting Party with a written objection to a specific Reviewing Representative stating the grounds for the objection. Any dispute concerning whether an identified person or entity is an appropriate Reviewing Representative shall be resolved through the dispute resolution procedures in Paragraph 11 of this Protective Order. If a Disclosing Party objects to a specific Reviewing Representative within five (5) business days after the Reviewing Representative is identified, the Parties shall not provide any Protected Materials to the disputed Reviewing Representative until the Parties are able to resolve the dispute consistent with the dispute resolution procedures in Paragraph 11. Failure by the Disclosing Party to object within five (5) business days does not waive the Disclosing Party s right to later object to the Reviewing Representative, even if Protected Materials has already been disclosed. However, further disclosure of Protected Materials would be stayed until the parties are able to resolve the dispute consistent with the dispute resolution procedures in Paragraph 11. Reviewing Representative(s) have a duty to disclose to the Disclosing Party any potential conflict of interest that puts the Reviewing Representative in violation of D , as modified by subsequent decisions of the Commission. A resume or curriculum vitae is reasonable disclosure of such potential conflicts, and should be the default evidence provided in most cases. 6. Nondisclosure Certificates. A Reviewing Representative shall not inspect, participate in discussions regarding, or otherwise be granted access to, Protected Materials unless and until he or she has first completed and executed a Nondisclosure Certificate, attached hereto as Appendix A, and delivered the signed Nondisclosure Certificate to the Disclosing Party. The Disclosing Party shall retain the executed Nondisclosure Certificates pertaining to the Protected 7

31 Materials it has disclosed and shall promptly provide copies of the Nondisclosure Certificates to Commission Staff upon request. 7. Access to Protected Materials and Use of Protected Materials. Subject to the terms of this Protective Order, Authorized Reviewers shall be entitled to access any Protected Materials and may make copies of Protected Materials, but such copies become Protected Materials. Authorized Reviewers may make notes of Protected Materials, which shall be treated as Protected Materials if such notes disclose any Protected Materials. Protected Materials obtained by a Party in this proceeding may also be requested by that Party in a subsequent Commission proceeding, subject to the terms of any nondisclosure agreement or protective order governing that subsequent proceeding, without constituting a violation of this Protective Order. 8. Maintaining Confidentiality of Protected Materials. Each Authorized Reviewer shall treat Protected Materials as confidential in accordance with this Protective Order and the Nondisclosure Certificate. Protected Materials shall not be used except as necessary for participation in this proceeding, and shall not be disclosed in any manner to any person except: (i) Authorized Reviewers; (ii) an Authorized Reviewer s employees and administrative personnel, such as clerks, secretaries, and word processors, to the extent necessary to assist the Authorized Reviewer, provided that they shall first ensure that such personnel are familiar with the terms of this Protective Order and have signed a Nondisclosure Certificate; and (iii) persons employed by or working on behalf of the Commission. Authorized Reviewers shall adopt suitable measures to maintain the confidentiality of Protected Materials they have obtained pursuant to this Protective Order, and shall treat such Protected Materials in the same manner as they treat their own most highly confidential information. Authorized Reviewers shall be liable for any unauthorized disclosure or use by themselves and/or employees, paralegals, or administrative staff. In the event any Authorized 8