SUBJECT: Submission of the Garland Contract for Procurement of Renewable Energy from SCE's 2014 RPS Solicitation

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1 STATE OF CALIFORNIA Edmund G. Brown Jr., Governor PUBLIC UTILITIES COMMISSION 505 VAN NESS AVENUE SAN FRANCISCO, CA December 7, 2015 Advice Letters: 3273-E Russell G. Worden Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, California SUBJECT: Submission of the Garland Contract for Procurement of Renewable Energy from SCE's 2014 RPS Solicitation Dear Mr. Worden: Advice Letter 3273-E is effective as of November 5, 2015, per Resolution E-4742 Ordering Paragraphs. Sincerely, Edward Randolph, Director Energy Division

2 ADVICE LETTER (AL) SUSPENSION NOTICE - Corrected ENERGY DIVISION Utility Name: Southern California Edison Utility Number/Type: U 338-E Advice Letter Number(s): 3273-E Date AL(s) Filed: September 21, 2015 Utility Contact Person: Darrah Morgan Utility Phone No.: (626) Date Utility Notified: September 28, 2015 [X ] ed to: AdviceTariffManager@sce.com ED Staff Contact: Scarlett Liang-Uejio ED Staff scarlett.liang-uejio@cpuc.ca.gov ED Staff Phone No.: (415) [X] INITIAL SUSPENSION (up to 120 DAYS from the expiration of the initial review period) This is to notify that the above-indicated AL is suspended for up to 120 days beginning September 22, 2015 for the following reason(s) below. If the AL requires a Commission resolution and the Commission s deliberation on the resolution prepared by Energy Division extends beyond the expiration of the initial suspension period, the advice letter will be automatically suspended for up to 180 days beyond the initial suspension period. [X] A Commission Resolution is Required to Dispose of the Advice Letter [X] Advice Letter Requests a Commission Order [X] Advice Letter Requires Staff Review The expected duration of initial suspension period is 120 days [ ] FURTHER SUSPENSION (up to 180 DAYS beyond initial suspension period) The AL requires a Commission resolution and the Commission s deliberation on the resolution prepared by Energy Division has extended beyond the expiration of the initial suspension period. The advice letter is suspended for up to 180 days beyond the initial suspension period. If you have any questions regarding this matter, please contact Scarlett Liang-Uejio at scarlett.lianguejio@cpuc.ca.gov. cc: Energy Division Tariff Unit * Note: reference Decision D , dated February 21, 2002, and Rule 7.5 in appendix A of D.O

3 Russell G. Worden Managing Director, State Regulatory Operations September 21, 2015 ADVICE 3273-E (U 338-E) PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ENERGY DIVISION SUBJECT: Submission of the Garland Contract for Procurement of Renewable Energy From SCE s 2014 Renewables Portfolio Standard Solicitation I. INTRODUCTION A. Purpose of the Advice Letter Southern California Edison Company ( SCE ) submits this Advice Letter pursuant to California Public Utilities Code Section et seq. (the RPS Legislation ) seeking approval of a Renewables Portfolio Standard ( RPS ) power purchase agreement between SCE and RE Garland LLC (the Garland Contract ). The following table summarizes the Garland Contract: Seller RE Garland, LLC Generation Type Solar Photovoltaic ( PV ) Single-axis tracking Size (MW) Estimated Average Energy (GWh/Yr) Forecasted Commercial Operation Date Term of Agreement (Years) April 1, SCE requests that the California Public Utilities Commission ( Commission or CPUC ) issue a resolution containing findings in the form requested in this Advice Letter as soon as possible, but in any event no later than within six months (March 21, 2016). The resolution will be critical in order to achieve timely completion of construction of the facility in 2016 and to secure the Federal Business Energy Investment Tax Credit ( ITC ). P.O. Box Rush Street Rosemead, California (626) Fax (626)

4 ADVICE 3273-E (U 338-E) September 21, 2015 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: Consistency with Commission Decisions and Rules and Project Development Status 2014 Solicitation Overview Confidential/Public Appendix C: Independent Evaluator Report Confidential Appendix D: Confidential Appendix E: Confidential Appendix F: Contract Summary Comparison of the Garland Contract with SCE s 2014 Pro Forma Renewable Power Purchase and Sale Agreement Garland Contract Confidential/Public Appendix G: Renewable Net Short Calculations Appendix H: Appendix I: Confidentiality Declaration Proposed Protective Order B. Subject of the Advice Letter The project that is contemplated by the Garland Contract (the Garland Project ) is a proposed MW solar PV facility. The Garland Project is to be located in Kern County, California near the city of Rosamond, California, on the intersection of Avenue A and 220 th Street West (the Site ), and will interconnect at a 220 kv bus at the Whirlwind Substation. The Whirlwind Substation is part of the California Independent System Operator ( CAISO ) Balancing Authority Area. The seller under the Garland Contract is RE Garland LLC ( Seller or Garland ), a Delaware limited liability company that is wholly-owned by Recurrent Energy, LLC ( Recurrent Energy ). The Garland Contract is for a new facility that originated from SCE s 2014 RPS solicitation.

5 ADVICE 3273-E (U 338-E) September 21, 2015 C. General Project Description Project Name Garland Technology Solar PV Single-axis Tracking Capacity (MW) Capacity Factor (Term Year 1) 34% Expected Generation (GWh/Year) Initial Commercial Operation Date April 1, 2017 Date Contract Delivery Term Begins April 1, 2017 Delivery Term (Years) 15 Vintage (New / Existing / Repower) Location (City and State) Control Area (e.g., CAISO, BPA) Nearest Competitive Renewable Energy Zone ( CREZ ) as identified by the Renewable Energy Transmission Initiative ( RETI ) Type of cooling, if applicable New Rosamond, California CAISO CREZ 52 N/A D. Project Location The Garland Project is to be located in the city of Rosamond, California, on the intersection of Avenue A and 220 th Street West. The Site is currently used for agriculture. Garland has site control for the entire Site. Refer to Exhibit B of the Garland Contract (attached as Appendix F) for a map of the Garland Project s location. 1 See Appendix D, Section D under Capacity for further details on the Garland Project s capacity. 2 This expected generation represents the annual average of degraded generation that SCE expects to make payments on over the contract term.

6 ADVICE 3273-E (U 338-E) September 21, 2015 E. General Deal Structure The Garland Contract is based on SCE s 2014 Pro Forma Renewable Power Purchase and Sale Agreement, which was accepted by the Commission in Decision ( D. ) on November 20, SCE is purchasing all electric energy produced by the Garland Project throughout the contract term, net of station use (if any), and all green attributes, capacity attributes, and Resource Adequacy benefits generated by, associated with, or attributable to the Garland Project. The delivery point is the first point of interconnection with the CAISO-controlled grid at a 220 kv bus at the Whirlwind Substation ( Common Bus ). The Garland Project will share interconnection facilities with Garland s affiliate, RE Garland A, which is a 20 MW project with a power purchase agreement with SCE that will deliver to the same bus as the Garland Project. The Garland Project and RE Garland A were studied for Full Capacity Deliverability Status under the CAISO s generator interconnection process and have an executed LGIA with the CAISO. The Garland Project met the eligibility requirements and is consistent with the preferred project characteristics for SCE s 2014 Request for Proposals ( RFP ), which are described in further detail in Sections II.A.2 and II.A.3. The Garland Project is expected to deliver a portfolio content category 1 ( Category 1 ) 4 product, and has a first point of interconnection within a California Balancing Authority. Additional information regarding the Garland Contract is provided in Appendix D. F. RPS Statutory Goals and Requirements By providing renewable energy from an eligible renewable energy resource ( ERR ) as defined in the RPS Legislation, the Garland Contract is consistent with, and contributes to, the RPS program s statutory goals. Pursuant to Public Utilities Code Section (b), the Legislature determined that procurement of electricity products from ERRs, such as the Garland Project, provides unique benefits to California including, among other things, displacing fossil fuel consumption within the state, reducing air pollution in the state, meeting the state s climate change goals by reducing emissions of greenhouse gases associated with electrical generation, and meeting the state s need for a diversified and balanced energy generation portfolio. Based on SCE s analysis of its renewable net short ( RNS ) position prior to executing 2014 RPS solicitation contracts, SCE projected a long-term renewable 3 D at 124 (Ordering Paragraph 1). 4 As defined in Public Utilities Code Section (b)(1) and D

7 ADVICE 3273-E (U 338-E) September 21, 2015 procurement need in the third compliance period and beyond. Consistent with that need, the Garland Contract is expected to provide long-term RPS Category 1-eligible energy over a 15-year term starting in SCE s RNS calculations are included in Appendix G. G. Confidentiality SCE is requesting confidential treatment of Appendices A, B, D through F, and the confidential versions of Appendices C and G, to this Advice Letter. The information for which SCE is seeking confidential treatment is identified in the Confidentiality Declaration attached as Appendix H. The confidential version of this Advice Letter will be made available to appropriate parties (in accordance with SCE s Proposed Protective Order, as discussed below) upon execution of the required non-disclosure agreement. Parties wishing to obtain access to the confidential version of this Advice Letter may contact Allan D. Johnson in SCE s Law Department at Allan.Johnson@sce.com or to obtain a non-disclosure agreement. In accordance with GO 96-B, a copy of SCE s Proposed Protective Order is attached as Appendix I. It is appropriate to accord confidential treatment to the information for which SCE requests confidential treatment in the first instance in the advice letter process because such information is entitled to confidentiality protection pursuant to D , 5 and is required to be filed by advice letter as part of the process for obtaining Commission approval of RPS power purchase and sale agreements. SCE would object if the information were disclosed in an aggregated format. The information in this Advice Letter for which SCE requests confidential treatment, the pages on which the information appears, and the length of time for which the information should remain confidential, are provided in Appendix H. This information is entitled to confidentiality protection pursuant to D (as provided in the Investor-Owned Utility ( IOU ) Matrix). 6 The specific provisions of the IOU Matrix that apply to the confidential information in this Advice Letter are identified in Appendix H. 5 D at 80 (Ordering Paragraphs 1 and 2). 6 Id., Appendix 1.

8 ADVICE 3273-E (U 338-E) September 21, 2015 II. CONSISTENCY WITH COMMISSION DECISIONS A. SCE s 2014 RPS Procurement Plan 1. SCE s 2014 RPS Procurement Plan Was Approved by the Commission and SCE Adhered to Commission Guidelines for Filing and Revisions SCE filed its 2014 RPS Procurement Plan on June 4, On August 20, 2014, SCE filed an amended 2014 RPS Procurement Plan. In D , the Commission conditionally accepted SCE s 2014 RPS Procurement Plan, including the solicitation materials for SCE s 2014 RPS solicitation. 7 The Commission also ordered SCE to make certain changes to its 2014 RPS Procurement Plan and to file a final plan by December 8, On December 8, 2014, SCE filed its final 2014 RPS Procurement Plan. Consistent with the schedule set forth in D , SCE issued its 2014 RFP on December 18, Summary of SCE s Assessment of Portfolio Needs and Preferred Project Characteristics As explained in SCE s 2014 RPS Procurement Plan, SCE had a long-term need for renewable energy in the third compliance period and beyond. Since the filing of its final 2014 RPS Procurement Plan, SCE updated its forecasted RNS with more current information to provide a more accurate depiction of need, and weigh that need against current market trends when formulating its approach for the 2014 RPS solicitation. In the 2014 RPS Procurement Plan, SCE received approval to conduct a targeted solicitation to meet its need for renewable resources. In its 2014 RPS RFP, SCE accepted proposals for projects with commercial operation dates of January 1, 2016 or later, and limited its procurement to Category 1 products and long-term portfolio content category 3 ( Category 3 ) 8 unbundled renewable energy credit ( REC ) products. SCE stated that prior to the start of the term of the contract with SCE, sellers may, at their discretion, deliver energy, capacity or other attributes of the project: (1) through the CAISO market, (2) to a balancing authority, or (3) to a third-party off-taker. SCE also stated that it may, but is not obligated to, purchase any Resource Adequacy benefits attributed to a project while it is delivering energy prior to the commencement of the term of the contract with SCE. 7 D at 124 (Ordering Paragraph 1). 8 As defined in Public Utilities Code Section (b)(3) and D

9 ADVICE 3273-E (U 338-E) September 21, 2015 SCE required that projects have either a Phase II Interconnection Study or equivalent, a signed interconnection agreement, or an equivalent or better interconnection study, agreement, process, or exemption in order to submit a proposal. Additionally, if the California Environmental Quality Act ( CEQA ) or the National Environmental Policy Act ( NEPA ) applies to the project and a lead agency has been designated under the applicable law, then SCE considered proposals from such projects only if the project had achieved, at a minimum, an application deemed complete (or equivalent) status under the land use entitlement process by the agency designated by CEQA or NEPA as the lead agency. Projects with a contract capacity of 500 kw or greater were eligible to participate in SCE s 2014 RPS RFP. SCE indicated that it continued to solicit ERR generating facilities in the Western Los Angeles sub-area of the Los Angeles basin local reliability area to meet local capacity requirements and, specifically, resources that are interconnected to SCE s distribution system in the Johanna and Santiago sub-station area to meet SCE s Preferred Resources Pilot goals. For in-state 9 generating facilities that are, or will be, interconnected to the CAISO, SCE required the delivery point to be the point where the generating facility connects to the CAISO-controlled grid. For in-state generating facilities that are, or will be interconnected to a California Balancing Authority other than the CAISO, SCE required the delivery point to be the intertie point where the seller s transmission provider ties to the CAISO. For out-of-state 10 generating facilities, sellers had to reasonably demonstrate to SCE that the output of the proposed generating facility can in fact be scheduled on an hourly or sub-hourly basis into a California Balancing Authority, without substituting electricity from another source, or dynamically transferred into a California Balancing Authority. Per the power purchase agreement, sellers must secure a Dynamic Scheduling Host Balancing Authority Operating agreement as defined in the CAISO Tariff prior to the initial synchronization of the project. Sellers were required to have firm transmission rights to the delivery point within 9 A generating facility was considered in-state if such generating facility s first point of interconnection is, or will be, to the transmission or distribution system of a California Balancing Authority, and the generating facility delivers Category 1 or Category 3 product. 10 A generating facility was considered out-of-state if such generating facility s first point of interconnection is not, or will not be, to the transmission or distribution system of a California Balancing Authority but the generating facility is delivering Category 1 or Category 3 product. Sellers are required comply with all requirements pertaining to Out-of-State Facilities as set forth in the California Energy Commission ( CEC ) RPS Eligibility Guidebook.

10 ADVICE 3273-E (U 338-E) September 21, 2015 the CAISO or to the respective CAISO intertie for the duration of the term of the power purchase agreement. SCE decided on the total projected contract energy it signed based on several factors, including projected long- and short-term needs, the impact of reducing federal tax credits, variation in the performance of SCE s existing portfolio, technology resource risk, risk of delay of new projects, risk of new projects not performing as expected, and variation in bundled retail sales, among other factors. 3. The Garland Contract Is Consistent with SCE s 2014 RPS Procurement Plan, Portfolio Needs, and Preferred Project Characteristics The Garland Contract aligns with the portfolio needs identified in SCE s 2014 RPS Procurement Plan. Specifically, the Garland Contract will provide renewable energy from a new MW solar PV facility starting in 2017 for a 15-year term, consistent with SCE s long-term renewable procurement need in the third compliance period and beyond. The Garland Project also met the eligibility requirements and is consistent with the preferred project characteristics for SCE s 2014 RFP. The Garland Project s first point of interconnection will be with the CAISO, and thus the Garland Contract is expected to provide a Category 1 product. Additionally, the Garland Project s MW contract capacity is consistent with SCE s 500 kw minimum size requirement. The Garland Project also met the requirement to have a Phase II Interconnection Study or the equivalent or better. Furthermore, the Garland Project will satisfy the delivery requirements for SCE s 2014 RFP because the project s delivery point will be the point where the project connects to the CAISO-controlled grid. Additional information is included in Appendix A. 4. The Garland Contract is Consistent with SCE s Portfolio Optimization Strategy As described in detail in SCE s 2014 RPS Procurement Plan, the objective of SCE s renewables portfolio optimization strategy is to minimize costs to its customers while ensuring that RPS procurement goals are met or exceeded. SCE determines the procurement target for each RPS solicitation based in part on its assessment of SCE s renewable procurement position and need, i.e., SCE s RNS. This includes a calculation of SCE s net short or long renewables position and SCE s bank. SCE carefully evaluates its renewable procurement need by assessing bundled retail sales, the performance and variability of existing generation, the likelihood of new generation achieving commercial operation, expected commercial on-line dates, technology mix, expected curtailment, and the impact of pre-approved procurement programs, among other factors.

11 ADVICE 3273-E (U 338-E) September 21, 2015 The Garland Contract meets the primary objectives of SCE s portfolio optimization strategy. The Garland Contract is expected to start deliveries in April 2017, which will help meet SCE s renewable procurement need in the third compliance period and beyond. Additional information is included in Appendix A. B. Least-Cost, Best-Fit ( LCBF ) Methodology and Evaluation SCE evaluates and ranks proposals based on LCBF principles that comply with criteria set forth by the Commission in D and D (the LCBF Decisions ). 11 The goal of SCE s evaluation and selection criteria and processes is to provide decision metrics so that SCE can procure renewable energy economically, while providing the most value to its customers. The LCBF analysis evaluates both quantitative and qualitative aspects of each proposal to estimate its value to SCE s customers and its relative value in comparison to other proposals. Although assumptions and methodologies have evolved slightly over time, the basic components of SCE s evaluation and selection criteria and process for RPS contracts were established by the Commission s LCBF Decisions. Consistent with those LCBF Decisions, the three main steps undertaken by SCE in its evaluation and selection process were: (1) initial data gathering and validation, (2) a quantitative assessment of proposals, and (3) adjustments to selections based on proposals qualitative attributes. SCE applied these criteria to the proposals received in its 2014 RPS RFP in order to establish a shortlist of proposals from sellers with whom SCE would engage in contract negotiations. Prior to receiving proposals, SCE finalized the shortlist selection criteria with the Independent Evaluator ( IE ). SCE then finalized the major assumptions and methodologies that underlie SCE s valuation, including power price forecast, SCE s existing and forecast resource portfolio, capacity value forecast, renewable integration cost adder ( RICA ) methodology, and capacity limits at interties. SCE also finalized and published congestion adders for sellers to use in preparing their proposals. Once proposals were received, SCE began an initial review of proposals for completeness and conformity with the solicitation protocol. The review included an initial screen for required submission criteria such as a Phase II interconnection study or equivalent, evidence of application deemed complete land use entitlement process status as required by the Commission, Geographic Information Systems files as required by the Commission, all SCE required attestations, and other items necessary to deem a proposal complete and conforming. Sellers lacking any of these items were allowed a reasonable cure period to remedy any deficiencies. Following this check for conformity, SCE 11 The Commission has also made rulings on various evaluation criteria in its decisions on the IOUs RPS Procurement Plans.

12 ADVICE 3273-E (U 338-E) September 21, 2015 conducted an additional review to determine the reasonableness of proposal parameters such as generation profiles and capacity factors. SCE worked directly with sellers to resolve any issues and ensure the data was ready for evaluation. After these reviews, SCE calculated the Renewable Premium and the Net Market Value ( NMV ) 12 for each complete and conforming proposal and ranked the proposals based on this quantitative assessment of costs and benefits. Benefits were composed of separate capacity, energy, curtailment (if applicable), and congestion components (congestion reduction if applicable). Costs included the contract payments, debt equivalents, congestion cost, RICA, and transmission cost. SCE discounted the annual benefit and cost streams to a common base year. The result of the quantitative analysis was a merit order ranking of all complete and conforming proposals by NMV that helped define the shortlist. Following the quantitative analysis, SCE conducted an initial assessment of the qualitative attributes of the top proposals with a competitive NMV. This analysis utilized the Project Viability Calculator to assess certain factors, including the company/development team, technology, and development milestones. Additional attributes such as portfolio fit of commercial operation date, contract term, significant transmission network upgrade costs for projects outside of the CAISO but within California, seller concentration, and resource diversity were also considered in the qualitative analysis. These qualitative attributes were then considered to either eliminate proposals or add projects to the shortlist of proposals, or to break ties, if any. Following its analysis, SCE consulted with its Procurement Review Group ( PRG ) regarding SCE s proposed final shortlist and specific evaluation criteria. SCE then negotiated with the shortlisted sellers. At the end of the contract negotiation period, SCE sought to execute contracts with the shortlisted sellers with which SCE successfully completed negotiations. SCE s 2014 RPS Shortlist Report was submitted to the Commission on April 23, 2015 in Advice 3209-E. SCE filed a supplement to Advice 3209-E to correct the locations of two projects on May 28, On July 14, 2015, the Commission issued Draft Resolution E-4726 approving SCE s 2014 RPS solicitation shortlist with modifications. 13 On September 3, 2015, SCE filed a second supplemental 12 Renewable Premium is calculated by subtracting benefits from costs. NMV is calculated by subtracting costs from benefits. The corresponding ranking results are identical, with numerical values only different by sign (positive or negative). SCE generally refers to the NMV throughout the remainder of this Advice Letter. 13 The draft resolution directs SCE to re-evaluate proposals from its 2014 solicitation that were interconnected to the Imperial Irrigation District s electrical system such that the differences between the CAISO Tariff and Imperial Irrigation District Open

13 ADVICE 3273-E (U 338-E) September 21, 2015 advice filing to Advice 3209-E to correct its valuation analysis and results. On September 17, 2015, the Commission adopted Resolution E-4725 with no substantive changes to the earlier version. Using SCE s LCBF methodology, the Garland Project compared favorably to other proposals received in the 2014 RPS RFP, as well as other procurement options available to SCE. Additional information is included in Appendix A. C. Compliance With Standard Terms and Conditions In D , the Commission established a number of modifiable and nonmodifiable standard terms and conditions to be used by retail sellers when contracting for RPS-eligible resources. 14 In D , the Commission reduced the number of non-modifiable terms to the following four terms: (1) CPUC Approval; (2) RECs and Green Attributes; (3) Eligibility; and (4) Applicable Law. 15 The remaining non-modifiable terms were converted to modifiable terms. 16 In D , as modified by D , the Commission added two new non-modifiable standard terms and conditions for both bundled contracts and REC-only contracts: (1) Transfer of Renewable Energy Credits; and (2) Tracking of RECs in WREGIS. 17 The Commission also added a new version of the non-modifiable CPUC Approval standard term and condition for REC-only contracts, and held that the non-modifiable Applicable Law standard term and condition also applies to REC-only contracts. 18 In D , the Commission updated the non-modifiable RECs and Green Attributes term to a modifiable Bioenergy Transactions term. 19 The Garland Contract includes all non-modifiable standard terms and conditions for bundled contracts without change as indicated in the table below. Access Transmission Tariff are considered. If the draft resolution is adopted by the Commission, SCE will complete this re-evaluation. 14 D at 20 (Ordering Paragraph 1), Appendix A. 15 D at 33 (Ordering Paragraph 1.a). 16 Id. at 34 (Ordering Paragraph 1.b). Subsequently, in D , the Commission compiled the standard terms and conditions in one document and deleted the modifiable standard term and condition on supplemental energy payments. 17 D at 46 (Ordering Paragraph 4.P). 18 Id. at (Ordering Paragraph 4.Q). 19 D at 24-25, 70 (Ordering Paragraph 6).

14 ADVICE 3273-E (U 338-E) September 21, 2015 NON-MODIFIABLE TERM STC 1: CPUC Approval CONTRACT SECTION NUMBER Exhibit A (See also Section 2.01(a)) CONTRACT PAGE NUMBER Exhibit A, page 5 (Section 2.01(a) is on page 8) STC 6: Eligibility 10.02(b) 61 STC 17: Applicable Law STC REC 1: Transfer of RECs 10.02(c) 61 STC REC 2: WREGIS Tracking of RECs 10.02(e) 61 A comparison of the Garland Contract against SCE s 2014 Pro Forma Renewable Power Purchase and Sale Agreement is included as Appendix E. D. Portfolio Content Category Claim and Upfront Showing In D , the Commission found that [a] retail seller claiming that procurement for compliance with the California renewables portfolio standard from a procurement contract or ownership agreement signed... on or after June 1, 2010 counts in the portfolio content category described in Pub. Util. Code (b)(1), must provide information to the Director of Energy Division sufficient to demonstrate that the generation facility from which the electricity is procured is certified as eligible for the California renewables portfolio standard. 20 Additionally, retail sellers claiming procurement counts as a Category 1 product must provide information to the Energy Division Director sufficient to demonstrate that the generating facility from which the electricity is procured meets the statutory definition of Category 1 products set forth in Public Utilities Code Section (b)(1). 21 One way to make this demonstration is to show that the facility has its first point of interconnection to the Western Electricity Coordinating Council transmission grid within the metered boundaries of a California balancing authority area. 22 Another way is to show the generation from that facility is scheduled into a California balancing authority pursuant to a dynamic transfer agreement between the balancing authority where the generation facility is located and the California balancing authority into which the 20 D at (Ordering Paragraph 1). 21 Id. 22 Id. at 76 (Ordering Paragraph 1).

15 ADVICE 3273-E (U 338-E) September 21, 2015 generation is scheduled. 23 The retail seller must also demonstrate that the renewable energy credits originally associated with the electricity have not been unbundled and transferred to another owner, and that all other requirements for procurement for compliance with the California renewables portfolio standard are met by the procurement. 24 Furthermore, D provides that the utilities, in seeking approval of contracts for procurement, should enable the Commission to evaluate the following: the claimed portfolio content category of the proposed procurement; the risks that the procurement will not ultimately be classified in the claimed portfolio content category; the value to ratepayers of the procurement as proposed and the value to ratepayers if the procurement is not ultimately classified in the claimed portfolio content category. 25 Pursuant to the provisions of the Garland Contract, SCE will procure energy, capacity and associated renewable energy attributes generated from an eligible renewable resource with a first point of interconnection within the CAISO. In addition, per the contract, the Garland Project must obtain and keep current CEC certification as an ERR, 26 as well as perform all actions necessary to effectuate the transfer of RECs to SCE in the Western Renewable Energy Generation Information System ( WREGIS ). The RECs associated with the electricity from the Garland Project are yet to be delivered and therefore have not been unbundled or transferred to another owner. Such RECs will be transferred to SCE pursuant to the terms of the Garland Contract. Accordingly, this is a Category 1 transaction pursuant to the Public Utilities Code Section (b)(1) and D SCE has not identified a risk that the Garland Project will fail to deliver Category 1 RECs. 23 Id. 24 Id. 25 Id. at 80 (Ordering Paragraph 9). 26 The project must qualify and be certified by the CEC as an ERR as such term is defined in Public Utilities Code Section (e). 27 D at (Ordering Paragraph 1).

16 ADVICE 3273-E (U 338-E) September 21, 2015 Forecast of Portfolio Balance Requirements 28 PCC 1 Balance Requirement Compliance Period 2 ( ) GWh CP 2 = 65% of RECs applied to procurement quantity requirement CP 3 = 75% of RECs applied to procurement quantity requirement Quantity of PCC 1 RECs 29 (under contract, not including proposed contract) Quantity of PCC 1 RECs from proposed contract Quantity of PCC 2 RECs Compliance Period 3 ( ) GWh 9,414 49, , Quantity of PCC 2 RECs from proposed contract (under contract, not including proposed contract) 0 0 PCC 3 Balance Limitation CP 2 = 15% of RECs applied to procurement quantity requirement CP 3 = 10% of RECs applied to procurement quantity requirement Quantity of PCC 3 RECs (under contract, not including proposed contract) Quantity of PCC 3 RECs from proposed contract SCE s forecast assumes a 100% success rate for projects in development that are not yet online. 29 The Quantity of PCC 1 RECs (under contract, not including proposed contract) represents the total forecasted energy deliveries for executed RPS-eligible contracts, including 11 other executed contracts from the 2014 RPS solicitation shortlist, minus the forecasted energy deliveries from the Garland Contract.

17 ADVICE 3273-E (U 338-E) September 21, 2015 E. Long-Term Contracting Requirement In D , the Commission held that, [i]n order to count procurement from contracts of less than 10 years duration signed after June 1, 2010 for compliance with the California renewables portfolio standard in a compliance period, a retail seller... must sign in the compliance period in which the short term contract is signed, contracts of at least 10 years in duration with expected generation equal to at least 0.25 percent of its retail sales for the immediately prior compliance period. 30 Since there was not a compliance period prior to the compliance period, the requirement is 0.25 percent of 2010 retail sales for that compliance period. 31 The Garland Contract is a 15-year contract. Therefore, the long-term contracting requirement does not apply. F. Interim Emissions Performance Standard The California Legislature passed Senate Bill ( SB ) 1368 on August 31, 2006, and Governor Schwarzenegger signed the bill into law on September 29, Section 2 of SB 1368 added Public Utilities Code Section 8341(a), which provides, No load-serving entity or local publicly owned electric utility may enter into a long-term financial commitment unless any baseload generation supplied under the long-term financial commitment complies with the greenhouse gases emission performance standard established by the commission, pursuant to subdivision (d), for a load-serving entity.... In order to institute the provisions of SB 1368, the Commission instituted Rulemaking That proceeding resulted in the establishment of a greenhouse gas ( GHG ) emissions performance standard ( EPS ) for carbon dioxide ( CO2 ). In D , the Commission noted, SB 1368 establishes a minimum performance requirement for any long-term financial commitment for baseload generation that will be supplying power to California ratepayers. The new law establishes that the GHG emissions rates for these facilities must be no higher than the GHG emissions rate of a combined-cycle gas turbine ( CCGT ) powerplant. 32 The decision further explains: SB 1368 describes what types of generation and financial commitments will be subject to the EPS ( covered procurements ). Under SB 1368, the EPS applies to baseload generation, but the requirement to comply with it is triggered only if there is a longterm financial commitment by an LSE. The statute 30 D at 98 (Ordering Paragraph 15). 31 Id. at 98 (Ordering Paragraph 16). 32 D at 2-3.

18 ADVICE 3273-E (U 338-E) September 21, 2015 defines baseload generation as electricity generation from a powerplant that is designed and intended to provide electricity at an annualized plant capacity factor of at least 60%. For baseload generation procured under contract, there is a long-term commitment when the LSE enters into a new or renewed contract with a term of five or more years. 33 The Garland Contract is exempt from EPS regulations because it has an expected annualized capacity factor well below the threshold baseload capacity factor of 60%, above which the EPS rules would apply. 34 G. PRG Participation SCE s PRG was formed on or around September 10, Participants include representatives from various divisions within the Commission, the Office of Ratepayer Advocates, The Utility Reform Network, California Utility Employees, the Union of Concerned Scientists, Sierra Club, and the California Department of Water Resources. SCE consulted with its PRG during each milestone of the 2014 RPS solicitation process. Among other things, SCE informed the PRG of the initial results of its RFP, explained the evaluation process, and updated the PRG periodically concerning the status of contract formation. On March 11, 2015, SCE advised the PRG of its proposed shortlist of proposals for its 2014 RPS solicitation. On July 1, 2015, SCE briefed the PRG on the proposed execution of the Garland Contract. H. IE The IE for the 2014 RPS solicitation was Merrimack Energy Group, Inc. The IE joined and contributed to a number of conference calls and negotiation sessions. In addition, the IE reviewed traffic, the Garland Contract, and other documents exchanged by the parties. The IE also participated in the PRG review. The IE Report is included as Appendix C. 33 Id. at Id., Attachment 7 at 1.

19 ADVICE 3273-E (U 338-E) September 21, 2015 III. PROJECT DEVELOPMENT STATUS 35 A. Company/Development Team The Garland Project is expected to be designed, permitted, constructed, operated, and maintained by Recurrent Energy and/or its designated contractors and affiliates. Recurrent Energy has successfully developed a number of power plants throughout the United States. Recurrent Energy is a wholly-owned subsidiary of Canadian Solar Inc. Recurrent Energy is based in San Francisco, California and has over 100 employees nationwide. Recurrent Energy develop projects including commercial rooftop arrays to utility-scale ground mount power plants. Recurrent Energy employs an experienced, mature team of professionals with decades of experience in the solar and energy industry. Additional information regarding the company/development team is included in Appendix A. The table below summarizes projects the Recurrent Energy s management team has successfully developed and put into service. 35 Some of the information in this section was provided by Garland and not independently verified by SCE.

20 ADVICE 3273-E (U 338-E) September 21, 2015 Project / Program Location Commercial/ Utility MW COD Status U.S. Rooftop Portfolio US Commercial Operating Spanish Rooftop Portfolio Spain Utility Operating SFPUC Reservoir CA Utility Operating Kaiser Portfolio CA Commercial Operating NJ Rooftop NJ Utility Operating Confidential Offtaker AZ Utility Operating SMUD Portfolio CA Utility Operating SCE 2009 RSC Portfolio CA Utility Operating APS SG Program AZ Utility Operating PG&E PV Program CA Utility Operating City of Santa Clara CA Utility Operating SCE 2010 RSC Program CA Utility Operating Ontario FIT Portfolio ON Utility Operating PG&E PV Program II CA Utility Operating CDWR CA Utility Operating SCE RAM II CA Utility Operating SCPPA CA Utility Operating PG&E RAM III CA Utility Operating PG&E 2011 RFO CA Utility Operating Total Operating 700

21 ADVICE 3273-E (U 338-E) September 21, 2015 B. Technology 1. Technology Type and Level of Technology Maturity The Garland Project will use mature and proven solar PV technology from financeable panel, inverter, and racking system manufacturers with proven deployment on utility-scale generation projects. The project will not deploy early stage or unproven technologies. All technologies will be designed for utility-scale operation with significant operating history. 2. Quality of Renewable Resource SCE believes that the Garland Project will be able to meet the terms of the Garland Contract given the quality of the renewable resource, which is substantiated by the project s location. 3. Other Resources Required No additional fuel supply is required for the Garland Project. The water supply is anticipated to be sufficient to cover the project s expected need. C. Development Milestones 1. Site Control The Garland Project will be located in the city of Rosamond, California, on the intersection of Avenue A and 220 th Street West. Garland has site control for the entire Site. Additional information is included in Appendix A. 2. Equipment Procurement As of the filing date of this Advice Letter, Garland indicates that it has not identified any equipment procurement issues that will affect the project s ability to meet the commercial operation date. Additional information is included in Appendix A. 3. Permitting/Certifications Status The table below includes permitting and certification status information regarding the Garland Project.

22 ADVICE 3273-E (U 338-E) September 21, 2015 Description of Permit or Certification Date File CEC Pre-Certification Application. July 13, 2015 File Material Permit Application. February 28, 2016 (expected) Receive Completed Interconnection Facility Study or Phase 2 Complete Interconnection Study. Execute Interconnection Agreement and Transmission May 15, 2015 Agreement Receive FERC Acceptance of Interconnection Agreement and Transmission Agreement Receive CEC Pre-Certification Receive CEC Certification December 31, 2015 (expected) Complete June 30, 2017 (expected) Additional information is included in Appendix A. 4. Production Tax Credits/ITCs Information regarding production tax credits and investment tax credits is included in Appendix A. 5. Transmission The Garland Project will share interconnection facilities with Garland s affiliate, RE Garland A. The Garland Project and RE Garland A were studied for Full Capacity Deliverability Status under the CAISO s generator interconnection process and have an executed LGIA with the CAISO. D. Financing Plan Information regarding financing is included in Appendix A. IV. CONTINGENCIES AND MILESTONES The Garland Project is expected to begin operation under the Garland Contract on April 1, Specific information regarding performance criteria and guaranteed milestones is provided in Appendices D through F. V. SAFETY CONSIDERATIONS SCE is strongly committed to safety in all aspects of its business. Renewable sellers are responsible for the safe construction and operation of their generating facilities and compliance with all applicable safety regulations. SCE has taken several steps to address those issues over which it has the most visibility and control the delivery of renewable electricity products to SCE in a reliable, safe, and operationally sound manner. SCE s 2014 Pro Forma Renewable Power

23 ADVICE 3273-E (U 338-E) September 21, 2015 Purchase and Sale Agreement provides that the seller must operate the generating facility in accordance with Prudent Electrical Practices. 36 Further, these provisions specifically require that all sellers take reasonable steps to ensure that: (a) (b) (c) (d) (e) Equipment, materials, resources, and supplies, including spare parts inventories, are available to meet the Generating Facility s needs; Sufficient Operating personnel are available at all times and are adequately experienced and trained and licensed as necessary to Operate the Generating Facility properly and efficiently, and are capable of responding to reasonably foreseeable emergency conditions at the Generating Facility and Emergencies whether caused by events on or off the Site; Preventive, routine, and non-routine maintenance and repairs are performed on a basis that ensures reliable, long term and safe Operation of the Generating Facility, and are performed by knowledgeable, trained, and experienced personnel utilizing proper equipment and tools; Appropriate monitoring and testing are performed to ensure equipment is functioning as designed; Equipment is not Operated in a reckless manner, in violation of manufacturer s guidelines or in a manner unsafe to workers, the general public, or the Transmission Provider s electric system or contrary to environmental laws, permits or regulations or without regard to defined limitations such as, flood conditions, safety inspection requirements, operating voltage, current, volt ampere 36 Section 3.12(a) of SCE s 2014 Pro Forma Renewable Power Purchase and Sale Agreement. See also Exhibit A for the definition of Prudent Electrical Practices. Prudent Electrical Practices means those practices, methods and acts that would be implemented and followed by prudent operators of electric generating facilities in the Western United States, similar to the Generating Facility, during the relevant time period, which practices, methods and acts, in the exercise of prudent and responsible professional judgment in the light of the facts known at the time a decision was made, could reasonably have been expected to accomplish the desired result consistent with good business practices, reliability and safety. Prudent Electrical Practices includes, at a minimum, those professionally responsible practices, methods and acts described in the preceding sentence that comply with the manufacturer s warranties, restrictions in this Agreement, and the requirement of Governmental Authorities, WECC standards, the CAISO and Applicable Laws...

24 ADVICE 3273-E (U 338-E) September 21, 2015 reactive (VAR) loading, frequency, rotational speed, polarity, synchronization, and control system limits; and (f) Equipment and components are designed and manufactured to meet or exceed the standard of durability that is generally used for electric energy generating facilities operating in the Western United States and will function properly over the full range of ambient temperature and weather conditions reasonably expected to occur at the Site and under both normal and emergency conditions. 37 Consistent with SCE s focus on safety, SCE s 2014 Pro Forma Renewable Power Purchase and Sale Agreement also includes a provision providing that, prior to commencement of any construction activities on the project site, the seller must provide to SCE a report from an independent engineer certifying that the seller has a written plan for the safe construction and operation of the generating facility in accordance with Prudent Electrical Practices. 38 The Garland Contract includes all of these provisions. The section numbers are the same as in SCE s 2014 Pro Forma Renewable Power Purchase and Sale Agreement. VI. REQUEST FOR COMMISSION APPROVAL The terms of the Garland Contract are conditioned on the occurrence of final CPUC Approval, as it is described in the Garland Contract. In order to satisfy that condition with respect to the Garland Contract, SCE requests that the Commission issue a resolution no later than March 21, 2016 containing: 1. Approval of the Garland Contract in its entirety; 2. A finding that the Garland Contract is consistent with SCE s 2014 RPS Procurement Plan; 3. A finding that the Garland Contract is compliant with the Emissions Performance Standard; 4. A finding that any procurement pursuant to the Garland Contract is procurement from an eligible renewable energy resource for purposes of determining SCE s compliance with any obligation that it may have to procure eligible renewable energy resources pursuant to the California 37 Definition of Prudent Electrical Practices in Exhibit A of SCE s 2014 Pro Forma Renewable Power Purchase and Sale Agreement. 38 Section 3.11(e) of SCE s 2014 Pro Forma Renewable Power Purchase and Sale Agreement.

25 ADVICE 3273-E (U 338-E) September 21, 2015 Renewables Portfolio Standard (Public Utilities Code Section et seq.), Decision , or other applicable law; 5. A finding that the Garland Contract, and SCE s entry into it, is reasonable and prudent for all purposes, including, but not limited to, recovery in rates of payments made pursuant to the Garland Contract and administrative costs associated with the Garland Contract, subject only to further review with respect to the reasonableness of SCE s administration of the Garland Contract; and 6. Any other and further relief as the Commission finds just and reasonable. VII. TIER DESIGNATION Pursuant to GO 96-B, Energy Industry Rule 5.3, SCE submits this Advice Letter with a Tier 3 designation (effective after Commission approval). VIII. EFFECTIVE DATE This Advice Letter will become effective upon Commission approval. IX. NOTICE Anyone wishing to protest this Advice Letter may do so by letter via U.S. Mail, facsimile, or electronically, any of which must be received by the Energy Division and SCE no later than 20 days after the date of this advice letter. 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 as above). In addition, protests and other correspondence regarding this advice letter should also be sent by letter and transmitted via facsimile or electronically to the attention of: