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STATE OF CALIFORNIA GAVIN NEWSOM, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

August 19, 2019

Advice Letter 4037-E

Gary A. Stern

Director, State Regulatory Operations

Southern California Edison Company

8631 Rush Street

Rosemead, CA 91770

SUBJECT: Southern California Edison Company's Request to Conclude the 2018-

2019 Distribution Investment Deferral Framework Request for Offers

without Selecting Offers

Dear Mr. Stern:

Advice Letter 4037-E is effective as of August 14, 2019.

Sincerely,

Edward Randolph

Deputy Executive Director for Energy and Climate Policy/

Director, Energy Division

P.O. Box 800 8631 Rush Street Rosemead, California 91770 (626) 302-9645 Fax (626) 302-6396

Gary A. Stern, Ph. D Managing Director, State Regulatory Operations

July 15, 2019

ADVICE 4037-E (U 338-E)

PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ENERGY DIVISION

SUBJECT: Southern California Edison Company’s Request to Conclude the 2018-2019 Distribution Investment Deferral Framework Request for Offers without Selecting Offers

I. INTRODUCTION A. Purpose of Advice Letter

Pursuant to Decision (D.) 18-02-004 (Decision), Southern California Edison Company (SCE) submits this Advice Letter seeking California Public Utilities Commission (Commission or CPUC) approval to conclude the 2018-2019 Distribution Investment Deferral Framework (DIDF) Request for Offers (RFO) without selecting any offers from distributed energy resource (DER) providers to defer specific traditional distribution projects identified in SCE’s Advice Letter 3904-E (Advice Letter)1 and approved on February 5, 2019 via disposition letter.

B. Background

On February 15, 2018, the Commission issued D.18-02-004. The Decision adopted a Distribution Investment Deferral Framework (DIDF) and established an annual Distribution Resources Plan (DRP) process to solicit cost effective DERs that could defer traditional distribution infrastructure projects. Consistent with the Decision, SCE submitted Advice 3904-E on November 28, 2018 requesting approval to launch the 2018-2019 DIDF RFO and submitted Supplemental Advice Letter 3904-E-A on December 7, 2018 requesting approval to modify the Newhall Project. On February 5, 2019, the Commission approved SCE’s Advice Letter 3904-E and Supplemental AL 3904-E-A. On March 7, 2019, SCE held its market awareness webinar and launched

1 This Advice Letter was approved on February 5, 2019 via disposition letter. In the Advice

Letter, SCE stated that “[w]ithin two months of concluding the solicitation, SCE will submit a Tier 2 Advice Letter requesting Commission approval of any executed contracts.” Although SCE did not select any offers or execute any contracts, SCE submits this Advice Letter to inform the Commission of the results of SCE’s RFO.

ADVICE 4037-E (U 338-E) - 2 - July 15, 2019

the DIDF RFO for the Mira Loma and Sun City Projects. On March 12, 2019, SCE submitted Advice 3965-E-A requesting to remove Nogales and Newhall Projects from the DIDF solicitation, which was approved via disposition letter. On May 14, 2019, SCE presented the shortlisting results of the solicitation to its Cost Allocation Mechanism (CAM) group indicating that SCE was not recommending to proceed with shortlisting any of the offers received since the offers received did not meet the need at Mira Loma and the offers received were not cost-effective at Sun City. These results are described in more detail within this Advice Letter.

II. 2018-2019 DIDF Solicitation

SCE conducted its 2018-2019 DIDF RFO consistent with the solicitation description included in Advice Letter 3904-E and approved by the Commission. The DIDF RFO was open to DERs that would be able to successfully defer the Mira Loma and Sun City distribution projects. Eligible projects needed to be new build or otherwise incremental to existing installations, and use proven, commercially available technology that is scalable to the project size. SCE’s DIDF RFO sought the following product types:

• Energy Efficiency • Demand Response (including Energy Storage (ES) behind-the-meter (BTM)) • Renewable Distributed Generation (BTM) • Renewable Distributed Generation (In-Front of Meter (IFOM)) • ES (IFOM) Resource Adequacy (RA) Only and RA with Energy Put Option • Renewable Distributed Generation paired with ES (BTM) • Renewable Distributed Generation paired with ES (IFOM) • Permanent Load Shift (PLS)

SCE used the recently approved Technology-Neutral Pro Forma (TNPF) as a basis for the solicitation, such that potential bidders could understand the expected obligations of both parties; however, since SCE ended the solicitation process after shortlisting, SCE did not commence any negotiations on the TNPF with any parties.

SCE’s DIDF RFO Instructions described the deferral need and time period for each distribution deferral project location. During the market awareness webinar, SCE provided customer demographic information, including aggregated load profiles, the number of service accounts by sector, and the number of service accounts that participate in various SCE programs, such as Net Energy Metering (NEM) and Peak-Time Rebate Summer Discount Plan (with information aggregated at certain locations to conform with customer privacy rules). Upon execution of a Non-Disclosure Agreement (NDA) with bidders, SCE also provided a list of addresses that were eligible for participation for BTM projects at each location. Customer composition information was also provided at the market awareness webinar and the presentation was posted to the RFO website. The RFO Instructions included various information for RFO participants including information on incrementality, required development security and performance assurance, the RFO process, and detailed requirements for each product.

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To encourage bidder participation, SCE undertook the following activities:

• Issued a Market Pre-Notification on December 18, 2018 announcing SCE’s intention to launch the DIDF RFO and the proposed locations;

• Maintained a public website that included information potential bidders need to navigate the DIDF RFO process;

• Sent a launch notification message to SCE’s internal list of contacts that SCE maintains of organizations that have ever participated, or expressed an interest in participating in solicitations;

• Hosted RFO materials on SCE’s PowerAdvocate site, allowing registered users to discover and register for the opportunity;

• Hosted a market awareness webinar on March 7, 2019 to provide details on the DIDF RFO and answer any questions; and

• Posted a complete RFO Instructions document at RFO launch that included information bidders needed to formulate a response, including information on the distribution deferral needs.

III. RESULTS OF 2018-2019 DIDF RFO

In the 2018-2019 DIDF RFO, SCE was seeking to defer two planned distribution upgrade projects, Mira Loma and Sun City. SCE recommended that no offers would be shortlisted for either project and that the solicitation end without final offer submittal.

Each distribution project had specific locational, energy and power requirements for DERs. The forecasted distribution needs existed at the substation and the circuit level for the Sun City project and existed at the circuit level for the Mira Loma project. Descriptions of the need, including peak demand reduction displayed by forecasted hourly profiles by year, season for required demand reduction, and the estimated frequency for demand reduction occurrences by month and year were provided to prospective bidders to assist them in creating their offers.2

The Sun City project could be deferred if the Sun City substation and each identified circuit’s need from all three circuits were met. These three circuits were the Equinox 12KV circuit under Sun City Substation and the Bradley 12kV and Lusk 12kV circuits

2 See SCE RFO Instructions (available at

https://www.poweradvocate.com/sourcingIntel/bidEventDocument/88719?filename=DIDF_2019_RFO_Instructions.docx&bidPhase=BID); SCE Market Awareness Webinar Deck Presented on March 7, 2019.

ADVICE 4037-E (U 338-E) - 4 - July 15, 2019

under Newcomb Substation. To meet the specific circuit needs, DERs were required to interconnect downstream of specified minimum interconnection points and to meet distribution needs of each identified circuit. 3 Among the distribution needs, the Equinox 12kV circuit had the largest energy need of over 60 MWh with 12-hour duration starting 2024.

The Mira Loma project could be deferred only if each identified circuit’s need from both circuits were met. These circuits were the Brewer 12kV and Matterhorn 12kV under Mira Loma Substation. Among the circuits’ needs, the Brewer 12kV had up to 17 hours of energy need starting in 2022 and did not have sufficient capacity to allow charging from the grid. Accordingly, solutions that require charging could only be installed at Brewer 12kV if paired with another DER technology for offsetting generation or load reduction.

After receiving Offers, SCE performed a screening in order to test feasibility of a DER deferral solution for each deferral project. SCE found that a subset of Offers that bid into the Sun City project could meet the entire project need; however, Offers received for the Mira Loma project could not solve the need—even when considering all of the submitted Mira Loma Offers.

SCE then valued each offer using SCE’s Least Cost Best Fit (LCBF) methodology described in the Section III.A below and compared the offers to the cost-effectiveness cap of the Sun City project. The economics of the DERs compared very unfavorably against the traditional distribution upgrades for the Sun City Project and significantly exceeded the cost-effectiveness cap.

SCE also examined multiple alternative scenarios to attempt to achieve feasibility and cost-effectiveness for both the Sun City and Mira Loma projects. These alternatives did not prove to be feasible or to be cost-effective. Additional information is included in Confidential Appendix B.

A. SCE’S LCBF METHODOLOGY AND EVALUATION

Consistent with the Competitive Solicitation Framework adopted in D.16-12-036 and described in Advice Letter 3904-E, SCE used LCBF principles in the evaluation process for the DIDF RFO. SCE’s LCBF methodology considers the quantitative and qualitative attributes associated with offers to obtain the best value and the most cost-effective solutions for customers. In addition, SCE used three principles adopted by the Commission in D.16-12-036 during the DIDF RFO evaluation process: (1) considering the potential services beyond what is asked in the solicitation and other conceivable benefits and costs provided by DERs as qualitative factors, (2) continuing to refine the evaluation method and integrate lessons learned, and (3) avoiding double counting of benefits and costs.

3 Id.

ADVICE 4037-E (U 338-E) - 5 - July 15, 2019

SCE’s DIDF RFO evaluation process, like SCE’s other RFO evaluations, involved three steps: (1) initial screen, (2) quantitative valuation, and (3) selection of offers with consideration of qualitative factors.

In the first step, once offers were received, an initial review was performed for the completeness and conformity of the offers with the solicitation protocol. If bidders lacked any of the requirements, SCE allowed a reasonable cure period to bidders and worked directly with them to remedy those deficiencies. Once the cure period was over, the data of all the complete and conforming offers was gathered and made ready for subsequent steps of evaluation.

In the second step, SCE assessed the quantitative components of each complete and conforming offer by calculating each offer’s net present value (NPV). The NPV analysis entailed: (1) projecting various benefits and costs streams over the life of the offer, (2) applying the time value of the money, and (3) estimating total NPV as present value of benefits minus present value of costs. SCE developed various market price forecasts using proprietary models for ascribing value to attributes such as RA capacity, electrical energy, ancillary services, and deferral value. The quantity of these attributes was projected based on offer specifications, guidance from Commission and CAISO rules, and dispatch models or generation profiles. For load reducing non-supply side resources, the quantity of these attributes was estimated on their ability to reduce load.

In the third step, various portfolios of resources were created to either meet or try to meet the distribution need for each project. The NPV of each DER portfolio which met the distribution need was weighed against the traditional solution’s deferral value using a real economic carrying charge method to measure the portfolio’s cost-competitiveness. Furthermore, additional qualitative attributes of the portfolios were considered, including, but not limited to, portfolio diversity, seller concentration, and interconnection status. The qualitative components were taken into consideration along with quantitative results during the selection process.

1. Quantitative Factors: Benefits

The quantitative factors considered in the valuation process included the following benefits.

a. RA Value Benefit

The RA benefit amount attributed to each resource was established under the guidance of current net qualifying capacity (NQC) counting rules. As new rules are implemented, the methodologies to determine the NQC for the given resource type are replaced by the new guidance. If a resource’s operational capabilities generally fall under a category described by the Commission for RA counting rules, the rules are applied directly. When no such category is identified, SCE uses program/technology specific studies/proceedings to estimate the contribution of that resource towards RA requirements. Resources that act as load reducers receive adjustments to their RA quantity benefits for avoided transmission and distribution losses and avoided RA

ADVICE 4037-E (U 338-E) - 6 - July 15, 2019

reserve margin procurement requirements. SCE develops the RA price forecast based on its RA price outlook from recent market transactions in the short run and net cost of new entry (CONE) in the long run. The planning reserve margin studies are performed to inform the resource balance year to transition short run value into long run value. There is inherent uncertainty in the RA price forecasts; therefore, there is no guarantee that the ascribed RA value to an offer during the time of the solicitation will actually be realized in the future. The Commission issued D.18-01-003 on multiple-use application (MUA) issues where the Commission held that SCE and the other Utilities must reflect the rules set forth in Appendix A of the decision in all procurement processes in which storage is procured, including the DIDF RFO. Rule 5 of the Commission’s MUA rules provides that if one of the services provided by a storage resource is a reliability service, then that service must have priority. Rule 6 states that “[p]riority means that a single storage resource must not enter into two or more reliability service obligation(s) such that the performance of one obligation renders the resource from being able to being unable to perform the other obligation(s).” Given that distribution deferral and RA are both reliability services and that the RA capacity is assessed at the monthly level, according to D.18-01-003, Rules 5 and 6 imply that offers providing distribution reliability services in a month cannot also provide a system reliability service. Accordingly, SCE considered the NPV of each offer without RA value in the months with identified distribution deferral need.

b. Energy Value Benefit

To calculate the expected energy benefit, SCE produced forecasts for energy prices and energy delivery (or load reduced) for each resource. The expected energy benefit is produced by multiplying the corresponding energy prices with expected energy deliveries. The energy price forecast is established using a combination of market data and fundamental prices produced by a security-constrained dispatch model. Forecasts for energy congestion and loss adders are applied to produce the various locational forecasts at representative pricing and aggregate pricing nodes. The expected energy amount attributed to must-take resources was based on the offer’s expected generation delivery profile. For dispatchable resources, operations of the resource were projected using the economic dispatch principle based on offer’s operating characteristics, operating costs, and market services offered. The resources that act as load reducers received adjustments to their energy quantity benefits to reflect avoided losses. As discussed in the RA Value Benefit section above, there is inherent uncertainty in the energy price forecasts; therefore, the energy value ascribed to an offer at the time of the solicitation may be higher or lower than what will be realized in the future.

c. Ancillary Services (A/S) Value Benefit

ADVICE 4037-E (U 338-E) - 7 - July 15, 2019

The A/S amount was projected by first determining if a resource can provide A/S. If the resource can provide A/S, then the same methodology as the energy forecast was used to co-optimize A/S amount from the resource. The A/S price forecast is based on statistical model calibrated on historical AS prices, and their relationship with energy prices and supply resource mix in the system.

d. Renewable Energy Credit (REC) Benefit

SCE calculated a REC benefit amount for each eligible renewable DER that would count towards SCE’s Renewables Portfolio Standard (RPS) compliance requirements. The REC benefit was calculated by taking the resource’s expected generation profile and multiplying by SCE’s forecast of REC prices. SCE develops its REC price forecast using a combination of third-party vendors’ outlooks of REC prices and SCE’s own evaluation of REC prices from its RPS portfolio.

e. Reduced Greenhouse Gas (GHG) Emissions Benefit

The load-reducing DER and renewable distributed generation offers received the benefit of not having any combustion-related GHG compliance obligation and corresponding costs. There is no separate quantification of this benefit as DERs receive the value of avoiding GHG emissions via avoided energy prices. The emission costs are embedded into CAISO’s locational marginal prices.

f. Distribution Deferral Value

The capital expenditure estimates of traditional distribution upgrades were converted into deferral value ($) using a real economic carrying charge (RECC) method. This methodology is also called an economic deferral method and is consistent with the method used by SCE for converting capital investments into equivalent annual costs for General Rate Case (GRC) purposes. The deferral value was calculated for a deferral period ranging from one year to the maximum number of distribution planning years. The total deferral need (MWh) was estimated by summing the capacity need (MW) over each hour of the expected duration of the deferral (h) for the total length of the deferral. Deferral values were attributed on a portfolio level when a portfolio of DERs was able to meet the deferral need.

g. RA value considerations for load reducing BTM resources located in an expected CCA area

Since the costs associated with the distribution deferral resources are recovered through the Distribution Deferral Contract Costs Balancing Account (DDCCBA), the costs are recovered by all SCE distribution customers based on load share. However, the values are realized by Load Serving Entity (LSE). For example, if a BTM resource is part of another LSE, that LSE will receive all benefits from the load reducing BTM resource and that LSE’s customers. SCE’s bundled customers do not realize the value of that load reduction. To properly account for the allocation of value, load reducing

ADVICE 4037-E (U 338-E) - 8 - July 15, 2019

BTM resources which are located in an expected Community Choice Aggregation (CCA) service territory will not receive RA and energy value.

The location of the Mira Loma project (City of Eastvale) was included in the Western Community Energy (WCE) CCA implementation plan to begin service starting in 2020. In light of the above, the Mira Loma Project’s BTM load reducing offers were not assigned energy and RA value.

2. Quantitative Factors: Costs

The quantitative factors considered in the valuation process include the following costs:

a. Contract Payment Costs

The contract costs were composed of capacity payments and/or energy payments, i.e., fixed costs and/or variable costs. The contract payment costs were calculated from each offer’s price and its expected generation profile or estimated economic dispatch.

b. Debt Equivalents Cost

Debt equivalents is the term used by credit rating agencies to describe the fixed financial obligation resulting from long-term purchased power contracts. Pursuant to D.04-12-048, the Commission permits the Utilities to recognize in their valuation process the costs associated with the effect debt equivalents could have on the Utilities’ credit quality and cost of borrowing. Additionally, D.08-11-008 authorized the Utilities to continue recognizing the balance sheet impact of debt equivalents when valuing power purchase agreements. Accordingly, SCE considered debt equivalents in its valuation process.

c. Transmission and Distribution Network Upgrade Costs

For projects that do not have an existing interconnection to the electric system or that have an existing interconnection but not for a proposed expansion of an existing facility, system transmission upgrade costs were based on a Phase 1 Interconnection Study (as defined in the California Independent System Operator (CAISO) Tariff) (or equivalent study), or later study for generator interconnection procedures applications. For projects with no interconnection study, but with an offer providing SCE the right to terminate if system transmission upgrade costs exceed a specified amount, system transmission upgrade costs were based on the specified transmission upgrade amount. SCE used the reimbursable part of these costs in the NPV calculation of the offers.

d. Renewable Integration Cost/Reduced Cost

Renewable resource integration requires flexible resources that the utility and/or the CAISO can control to manage and firm-up intermittent output. For the renewable distributed generation offers where renewable integration costs were applicable, SCE

ADVICE 4037-E (U 338-E) - 9 - July 15, 2019

generally employed the Renewable Integration Cost Adder (RICA) methodology from the RPS proceeding. Certain DERs can reduce the cost of integrating intermittent renewable generation by providing the operational flexibility that the system needs. By providing such flexibility, the system operation costs are reduced, which otherwise have been incurred in acquiring flexible resources. SCE captures this value in its flexible RA and A/S price forecasts. Therefore, this flexible attribute is valued in SCE’s approach, and not double counted.

e. Expected Incremental Administrative Costs

Incremental expected administrative costs incurred after the launch of the DIDF RFO were included in the quantitative assessment of the DER portfolios. The administrative costs were not applied to each offer but equally divided among each feasible project within the RFO.

3. Qualitative Factors

The qualitative factors considered in the DIDF RFO included, among other factors, delivery term, DER project viability, DER deferral solution viability, and seller concentration.

B. SCE’S COST-EFFECTIVENESS CAP

As indicated in Advice 3904-E, SCE applied a cost effectiveness cap to ensure cost-effective procurement of DERs. SCE submitted its initial cost-effectiveness cap and methodology in Confidential Appendix B of Advice 3904-E, updated the cap via a letter to Energy Division submitted on March 28, 2019, and shared the results of the RFO offers against the cost-effectiveness cap at its Cost Allocation Mechanism (CAM) meeting on May 14, 2019.

IV. CONFIDENTIALITY

SCE is requesting confidential treatment of Confidential Appendices B and C to this Advice Letter. The information for which SCE is seeking confidential treatment is identified in the Confidentiality Declarations attached as Appendix D. 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 Matthew Dwyer in SCE’s Law Department at [email protected] or 626-302-6521 to obtain a non-disclosure agreement. In accordance with General Order (GO) 96-B, a copy of SCE’s Proposed Protective Order is attached as Appendix E. 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

ADVICE 4037-E (U 338-E) - 10 - July 15, 2019

such information is entitled to confidentiality protection pursuant to D.06-06-066,4 and is required to be submitted by advice letter as part of the process for obtaining Commission approval to launch the Incentive Pilot solicitation. SCE would object if the information were disclosed in an aggregated format. V. APPENDICES

Appendix A

Confidential Appendix B

Confidential Appendix C

Appendix D

Appendix E

Independent Evaluator Report

Independent Evaluator Report: Appendix A

Valuation Overview

Confidentiality Declaration

Proposed Protective Order

VI. REQUEST FOR COMMISSION APPROVAL

SCE requests that the Commission approve this Advice Letter to conclude the 2018-2019 DIDF RFO without executing any DER contracts for the aforementioned reasons.

VII. TIER DESIGNATION

Pursuant to GO 96-B, Energy Industry Rule 5.2 and D.18-02-004 this Advice Letter is submitted with a Tier 2 designation.

VIII. EFFECTIVE DATE

This Advice Letter will be effective upon August 14, 2019, the 30th day after the date submitted.

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 in accordance with the Energy Division’s schedule. Protests should be submitted to:

4 D.06-06-066 at 80 (Ordering Paragraphs 1 and 2).

ADVICE 4037-E (U 338-E) - 11 - July 15, 2019

CPUC, Energy Division Attention: Tariff Unit 505 Van Ness Avenue San Francisco, California 94102 E-mail: [email protected]

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:

Gary A. Stern, Ph. D Managing Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, California 91770 Telephone (626) 302-9645 Facsimile: (626) 302-6396 E-mail: [email protected] Laura Genao Managing Director, State Regulatory Affairs c/o Karyn Gansecki Southern California Edison Company 601 Van Ness Avenue, Suite 2030 San Francisco, California 94102 Facsimile: (415) 929-5544 E-mail: [email protected]

There are no restrictions on who may submit 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 letter to the interested parties shown on the attached GO 96-B, R.14-10-003, and R.14-08-013 service lists. Address change requests to the GO 96-B service list should be directed by electronic mail to [email protected] or at (626) 302-3719. For changes to all other service lists, please contact the Commission’s Process Office at (415) 703-2021 or by electronic mail at [email protected].

Further, in accordance with Public Utilities Code Section 491, notice to the public is hereby given by submitting and keeping the advice letter at SCE’s corporate headquarters. To view other SCE advice letters submitted with the Commission, log on to SCE’s web site at https://www.sce.com/wps/portal/home/regulatory/advice-letters.

ADVICE 4037-E (U 338-E) - 12 - July 15, 2019

For questions, please contact Ally Guilliatt at (626) 302-4885 or by electronic mail at [email protected].

Southern California Edison Company

/s/ Gary A. Stern Gary A. Stern, Ph. D

RGW:ag/md:cm Enclosures

ADVICE LETTER S U M M A R YENERGY UTILITY

Company name/CPUC Utility No.:

Utility type:Phone #:

EXPLANATION OF UTILITY TYPE

ELC GAS

PLC HEAT

MUST BE COMPLETED BY UTILITY (Attach additional pages as needed)

Advice Letter (AL) #:

WATERE-mail: E-mail Disposition Notice to:

Contact Person:

ELC = ElectricPLC = Pipeline

GAS = GasHEAT = Heat WATER = Water

(Date Submitted / Received Stamp by CPUC)

Subject of AL:

Tier Designation:

Keywords (choose from CPUC listing):AL Type: Monthly Quarterly Annual One-Time Other:If AL submitted in compliance with a Commission order, indicate relevant Decision/Resolution #:

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:

Confidential treatment requested? Yes NoIf yes, specification of confidential information: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:

Resolution required? Yes No

Requested effective date: No. of tariff sheets:

Estimated system annual revenue effect (%):

Estimated system average rate effect (%):

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:

Service affected and changes proposed1:

Pending advice letters that revise the same tariff sheets:

1Discuss in AL if more space is needed.

CPUC, Energy DivisionAttention: Tariff Unit505 Van Ness AvenueSan Francisco, CA 94102 Email: [email protected]

Protests and all other correspondence regarding this AL are due no later than 20 days after the date of this submittal, unless otherwise authorized by the Commission, and shall be sent to:

Name:Title:Utility Name:Address:City:State:Telephone (xxx) xxx-xxxx:Facsimile (xxx) xxx-xxxx:Email:

Name:Title:Utility Name:Address:City:State:Telephone (xxx) xxx-xxxx: Facsimile (xxx) xxx-xxxx:Email:

Zip:

Zip:

mailto:EDTariffUnit%40cpuc.ca.gov?subject=

ENERGY Advice Letter Keywords

Affiliate Direct Access Preliminary StatementAgreements Disconnect Service ProcurementAgriculture ECAC / Energy Cost Adjustment Qualifying FacilityAvoided Cost EOR / Enhanced Oil Recovery RebatesBalancing Account Energy Charge RefundsBaseline Energy Efficiency ReliabilityBilingual Establish Service Re-MAT/Bio-MATBillings Expand Service Area Revenue AllocationBioenergy Forms Rule 21Brokerage Fees Franchise Fee / User Tax RulesCARE G.O. 131-D Section 851CPUC Reimbursement Fee GRC / General Rate Case Self GenerationCapacity Hazardous Waste Service Area MapCogeneration Increase Rates Service OutageCompliance Interruptible Service SolarConditions of Service Interutility Transportation Standby ServiceConnection LIEE / Low-Income Energy Efficiency StorageConservation LIRA / Low-Income Ratepayer Assistance Street LightsConsolidate Tariffs Late Payment Charge SurchargesContracts Line Extensions TariffsCore Memorandum Account TaxesCredit Metered Energy Efficiency Text ChangesCurtailable Service Metering TransformerCustomer Charge Mobile Home Parks Transition CostCustomer Owned Generation Name Change Transmission LinesDecrease Rates Non-Core Transportation ElectrificationDemand Charge Non-firm Service Contracts Transportation RatesDemand Side Fund Nuclear UndergroundingDemand Side Management Oil Pipelines Voltage DiscountDemand Side Response PBR / Performance Based Ratemaking Wind PowerDeposits Portfolio Withdrawal of ServiceDepreciation Power Lines

Appendix A

Independent Evaluator Report

_________________________ Sedway Consulting, Inc. _________________________

ii

Sedway Consulting, Inc.

INDEPENDENT EVALUATION REPORT

FOR SOUTHERN CALIFORNIA EDISON’S 2019 DISTRIBUTION INVESTMENT

DEFERRAL FRAMEWORK REQUEST FOR OFFERS

Submitted by:

Alan S. Taylor Sedway Consulting, Inc.

Boulder, Colorado

July 12, 2019


i

TABLE OF CONTENTS

INTRODUCTION AND BACKGROUND ....................................................................... 1

ROLE OF THE INDEPENDENT EVALUATOR ............................................................. 6

SCE’S OUTREACH ACTIVITIES .................................................................................... 8

Receipt and Evaluation of Offers .......................................................................... 9

LEAST COST BEST FIT METHODOLOGY ................................................................. 10

Description of Evaluation Process ..................................................................... 10

FAIRNESS OF BIDDING AND SELECTION PROCESS ............................................. 12

Description of Selection Process ........................................................................ 13

Description of Sedway Consulting’s Parallel Evaluation Process ..................... 13

ADDITIONAL ISSUES ................................................................................................... 14

Lessons Learned.................................................................................................. 14

CONCLUSION ................................................................................................................. 16

CONFIDENTIAL APPENDIX A: RFO ISSUES AND EVALUATION RESULTS


1

Introduction and Background On March 7, 2019, Southern California Edison (SCE) issued its 2019 Distribution Investment Deferral Framework (DIDF) Request for Offers (RFO) seeking distributed energy resources (DERs) to defer two traditional distribution system upgrades. The RFO was mandated by the California Public Utilities Commission (CPUC) Decision 18-02-004. The purpose of the solicitation was to explore whether or not DERs could cost-effectively defer distribution system upgrades in targeted locations of the utility’s territory. Circuits on two substations were identified as affording appropriate opportunities for SCE’s 2019 DIDF RFO1:

Sun City: a substation and surrounding area near Sun City, California where three distribution circuits (Equinox, Bradley, and Lusk) and the Sun City substation itself needed minimum amounts of DERs to be deployed in appropriate locations to avoid overload conditions in the summer months that would otherwise need to be addressed with traditional distribution system upgrades. The three distribution circuits required the delivery of sufficient DER capacity and energy (or load reduction) in the late afternoon and evening hours of a subset of days in the June-October summer period, starting in 2022. The Sun City substation need was also for the summer months but did not start until 2023. If DERs were to defer the distribution system upgrade through the end of the deferral period (i.e., 2028), there would need to be at least 9.6 MW of 2028 DER capacity deployed at or near the Sun City substation itself and 7.5 MW, 4.8 MW, and 1.5 MW of DER capacity on the Equinox, Bradley, and Lusk circuits, respectively, at or before 2028. For the Equinox circuit, the frequency of DER calls was expected to be daily by 2023, and the need was spread across 13 hours by 2024. For the Bradley and Lusk circuits, the frequency of DER calls was expected to be up to 15 times per month and 75 times per year in 2022 but rising to essentially daily calls by 2028 for the Bradley circuit. All three circuits and the substation had to have each of their maximum capacity, hourly energy, and monthly/annual frequency requirements met in each year in order for the distribution upgrade to be deferred. In other words, a partial solution where DERs only addressed the Bradley and Lusk needs, for example, would not allow SCE to defer the distribution system upgrade.

1 SCE’s initial DIDF advice letter had included two other potential substations/locations that might be

candidates for the consideration of DERs in deferring proposed distribution system upgrades – the Nogales project (near the City of Industry, CA) and the Newhall project (near Saugus, CA) – both of which were later determined not to be appropriate candidates for the 2019 DIDF RFO prior to its launch.


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Mira Loma, a pair of circuits (Brewer and Matterhorn) and surrounding area near Ontario, California where two distribution circuits needed minimum amounts of DERs to be deployed on each of them to avoid overload conditions in the summer months (June-October) that would otherwise need to be addressed with traditional distribution system upgrades. To defer such upgrades, the Mira Loma area required the delivery of sufficient DER capacity and energy (or load reduction) across a very broad time period (13-17 hours in the 6:00am through midnight time frame on the Brewer circuit) during half or more of the days each month, starting in 2021. If DERs were to defer the distribution system upgrade through the end of the deferral period, there would need to be at least 3.1 MW and 1.2 MW of DER capacity available on the Brewer and Matterhorn circuits, respectively, in interim or final years of the deferral period. Both circuits had to have each year’s needs met (i.e., maximum capacity, hourly energy, and monthly/annual frequency requirements) in order for the distribution upgrade to be deferred. For the Brewer circuit, the frequency of DER calls in the early years was expected to be up to 15 times per month, rising to 25 times per month by 2028. For the Matterhorn circuit, the dispatch frequency was expected to be 10 calls per month. Note that the RFO specified that “…the Brewer 12kV circuit has limited charging capability for new projects. As such, SCE will not be accepting offers at the Brewer circuit for standalone IFOM or BTM Energy Storage that is not paired with another offer for offsetting generation or load drop that will facilitate charging of the energy storage project.”

For these two project locations, tables in the RFO Instructions’ Attachment C provided each year’s details on the hourly capacity need and the expected monthly and annual dispatch or call frequency (i.e., days/month and days/year) that SCE anticipated DERs to be called on to address local distribution needs. This information was provided for each year, starting in 2021 or 2022 (depending on the circuit) and going through 2028. This information is summarized in Tables 1 and 2. The hourly needs are depicted in hour-ending (HE) format for Pacific Prevailing Time (PPT). For example, HE14 represents the summer hour from 1:00pm to 2:00pm. SCE needed the minimum requirements for 2021 (for the Mira Loma circuits) or 2022 (for the Sun City circuits) to be met for it to be in a position to defer the distribution upgrades for that year but was willing to explore any range of years through 2028 that DERs might be able to defer the investment. The cost-effectiveness test for the best portfolios of proposed DERs would compare the costs of the DER contracts (and some additional administrative costs and utility incentive payments) to the economic value of deferring the distribution system investment, with greater years of deferral translating into greater economic deferral benefits.


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Table 1 Sun City DIDF Needs for All Circuits and Substation

Expected Dispatch Hourly Need (MW in Hour Ending, HE PPT) Year Monthly

(days/mo) Annual

(days/yr) 12 13 14 15 16 17 18 19 20 21 22 23 24

Sun City Substation 2022 0 0 - - - - - - - - - - - - -

2023 10 50 - - - 3.4 6.1 6.0 4.1 - - - - - -

2024 10 50 - - - 4.4 6.7 5.5 3.1 - - - - - -

2025 10 50 - - - 3.6 6.4 7.4 3.7 - - - - - -

2026 10 50 - - 1.0 6.0 8.1 7.1 4.4 - - - - - -

2027 10 50 - - 1.2 7.4 8.9 8.2 5.2 - - - - - -

2028 10 50 - - - 6.1 9.4 9.6 8.0 2.3 1.0 1.1 - - -

Equinox Circuit 2022 20 100 - - 0.5 1.0 1.6 2.2 2.8 2.6 2.4 2.0 0.9 - -

2023 30 151 - 1.2 2.3 3.3 4.0 4.8 5.3 5.0 4.4 4.1 2.9 1.0 -

2024 31 158 0.6 2.2 3.7 4.9 6.1 7.1 7.5 7.1 6.5 6.0 4.8 3.0 1.5

2025 31 158 0.5 2.1 3.6 4.9 6.1 7.0 7.5 7.2 6.6 6.2 5.0 3.3 1.6

2026 31 158 - 1.5 3.0 4.3 5.7 6.9 7.5 7.2 6.7 6.2 5.0 3.3 1.6

2027 31 158 0.9 2.5 3.7 4.7 5.4 6.5 7.4 7.5 6.8 6.3 5.0 2.9 1.3

2028 31 159 0.6 2.4 3.6 4.8 5.8 6.8 7.4 7.2 6.5 6.1 4.9 2.7 1.5

Bradley Circuit

2022 15 75 - 0.6 1.7 2.4 2.4 1.8 1.1 - - - - - -

2023 20 100 - 1.1 2.3 3.0 2.9 2.4 1.7 0.5 - - - - -

2024 20 100 - 1.3 2.5 3.2 3.3 2.7 2.0 0.8 0.1 - - - -

2025 20 101 - 1.7 2.9 3.7 3.6 3.2 2.4 1.2 0.5 0.1 - - -

2026 25 127 0.5 2.2 3.1 3.8 4.0 3.3 2.6 1.2 0.5 - - - -

2027 25 127 0.7 2.4 3.4 4.1 4.4 3.5 2.8 1.5 0.7 - - - -

2028 30 152 0.8 2.6 3.9 4.8 4.8 4.3 3.5 2.2 1.5 1.1 - - -

Lusk Circuit 2022 15 75 - 0.5 1.1 1.6 1.4 1.0 0.8 - - - - - -

2023 15 75 - 0.6 1.3 1.8 1.6 1.3 1.0 0.1 - - - - -

2024 10 50 - 0.5 1.2 1.6 1.4 1.0 0.7 - - - - - -

2025 20 100 - 0.6 0.9 1.2 1.5 1.5 0.9 - - - - - -

2026 10 50 - 0.1 0.9 1.4 1.4 1.2 0.6 - - - - - -

2027 10 50 - - 0.7 1.2 1.3 1.0 0.5 - - - - - -

2028 10 50 - 0.1 0.7 1.2 1.1 0.8 0.6 - - - - - -


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Table 2

Mira Loma DIDF Needs for Both Substations/Circuits

Expected Dispatch

Hourly Needs (MW in Hour Ending, HE PPT)

Year days/mo

days/yr

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Brewer Circuit2021 15 75 - 0.2 0.9 1.1 1.3 1.8 1.8 1.5 1.7 1.6 0.9 0.3 0.6 1.1 1.0 - - -

2022 15 75 0.1 0.2 0.9 1.2 1.5 1.8 2.0 1.5 1.7 1.7 1.1 0.4 0.7 1.2 1.1 0.1 0.1 -

2023 15 77 - - 0.5 0.9 1.4 2.3 2.3 1.9 2.2 2.2 1.6 1.4 0.6 0.6 0.5 - - -

2024 15 75 - - 0.3 0.7 1.4 2.0 1.9 1.6 1.9 2.4 1.8 1.2 0.4 0.4 0.3 - - -

2025 15 78 - - 0.8 1.2 1.9 2.6 2.6 2.2 2.5 2.3 2.0 1.7 0.9 0.9 0.8 0.2 0.1 -

2026 20 105 - - 0.9 1.4 2.1 2.7 2.7 2.3 2.6 2.2 1.9 1.9 1.1 1.1 1.0 0.4 0.2 -

2027 20 108 - 0.1 1.1 1.5 2.3 2.9 2.9 2.5 2.8 2.4 2.0 2.1 1.3 1.3 1.2 0.5 0.4 -

2028 25 135 - 0.4 1.3 1.7 2.2 3.1 3.0 2.6 2.9 2.9 2.4 2.2 1.5 1.5 1.5 0.8 0.7 0.2

Matterhorn Circuit 2021 0 0 - - - - - - - - - - - - - - - - - -

2022 10 50 - - - - - - - - 0.7 0.9 1.0 1.0 0.2 0.2 0.3 - - -

2023 10 50 - - - - - - - - 0.8 1.1 1.1 1.2 0.3 0.3 0.4 - - -

2024 10 50 - - - - - - - - 0.8 1.0 1.1 1.1 0.3 0.3 0.4 - - -

2025 10 50 - - - - - - - - 0.8 1.0 1.1 1.1 0.3 0.3 0.4 - - -

2026 10 50 - - - - - - - - 0.8 1.0 1.0 1.1 0.3 0.2 0.4 - - -

2027 10 50 - - - - - - - - 0.8 1.0 1.0 1.1 0.2 0.2 0.4 - - -

2028 10 50 - - - - - - - - 0.7 1.0 1.0 1.1 0.2 0.2 0.3 - - -

SCE’s 2019 DIDF RFO sought “new or otherwise incremental eligible resources to provide Renewable Energy, Energy Storage, Capacity, Load Reduction, Resource Adequacy, Ancillary Services and/or Green Attributes (as applicable for each product).” The RFO sought cost-effective offers that either (a) met the entire need for a circuit (or substation) or (b) met a portion of the need (whereby portfolios of offers might be assembled that would meet the circuit’s entire need). Offers could be for projects that would be located either in-front-of-the-meter (IFOM) or behind-the-meter (BTM) and had to provide at least a minimum amount of capacity, as show in the eligible product list below. Eligible product types included the following:

Demand Response (DR) (100 kW minimum)


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Renewable Distributed Generation (DG) o BTM (100 kW minimum) o IFOM (250 kW minimum)

Energy Storage (ES, 500 kW minimum) o IFOM (Resource Adequacy [RA] Only) o IFOM (RA with Energy Put Option)

Renewable Distributed Generation paired with Energy Storage o BTM (100 kW minimum) o IFOM (250 kW minimum)

Permanent Load Shift (100 kW minimum) Energy Efficiency (100 kW minimum).

The CPUC has issued several decisions that require California’s investor-owned utilities to retain an Independent Evaluator (IE) in resource solicitations.2 In January 2019, in compliance with these CPUC decisions, SCE retained Sedway Consulting, Inc. (Sedway Consulting) as an IE to monitor SCE’s 2019 DIDF RFO, provide an independent evaluation of SCE’s process and the offers it may receive, and help the CPUC and SCE’s Cost Allocation Mechanism (CAM) Group and/or Procurement Review Group (PRG) participants by providing them with information and assessments to ensure that the solicitation was conducted fairly and that the best resources, if reasonably cost-effective, were acquired. This IE report provides an assessment of SCE’s 2019 DIDF solicitation from the initial phase of the solicitation (i.e., preparing for the issuance of the RFO documents) through the decision to terminate the solicitation because there were no cost-effective offers to shortlist. Table 3 provides the timeline that the RFO followed. Although the March dates in Table 3 match or are close to the original schedule published in the RFO Instructions, the notification of the offerors regarding their shortlisting status was delayed from the originally expected date of April 26, 2019 until May 14, 2019 to explore additional evaluation sensitivities.

Table 3

SCE 2019 DIDF RFO Schedule SCE issues “save the date” pre-issuance notice March 1, 2019 SCE issues RFO March 7, 2019 Bidders Conference March 7, 2019 Deadline for uploading indicative offers to SCE March 28, 2019 Deadline for IE to receive indicative offers March 29, 2019 Presentation of results to CAM Group May 14, 2019 Notification to offerors of final status May 14, 2019

2 D.04-12-048 (Findings of Fact 94-95, Ordering Paragraph 28) and D.06-05-039 (Finding of Fact 20,

Conclusion of Law 3, Ordering Paragraph 8).


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Sedway Consulting concluded that SCE conducted a fair solicitation in its 2019 DIDF RFO and made a reasonable decision to end the RFO after initial offers were thoroughly evaluated. Outreach activities conducted by SCE generated a sufficiently robust market response and the RFO process was fairly designed and administered, with no offeror or technology being advantaged or disadvantaged relative to other offerors or technologies. Sedway Consulting believes that SCE treated all interested counterparties consistently and fairly and made a reasonable decision in selecting no offers/contracts for shortlisting or execution. This report includes a confidential appendix that provides Sedway Consulting’s evaluation results and confidential assessments of specific areas of the RFO process. The material in the confidential appendix is being afforded confidential treatment for a couple of reasons. First, it is important to protect counterparties from having their product pricing provided to competitors. Second, this material is being afforded confidential treatment in line with the CPUC’s Decision 06-06-066 (issued on June 29, 2006) which included guidelines for defining what constitutes confidential versus public information in California utility electricity procurement and related activities. Pursuant to Public Utilities Code Section 583 and the above decision, score sheets, analyses, and evaluations of proposed transactions are deemed confidential.3 The remainder of this report follows the template that was issued by the CPUC as part of R.06-02-013 (Attachment A: CPUC Independent Evaluator Template [Short Form], and as has been subsequently updated) to organize and structure Independent Evaluation reports regarding solicitations for long-term power supplies undertaken by California utilities. That template includes question/topic areas that are depicted in boxes in this report.

Role of the Independent Evaluator

1. Describe in detail the role of the IE throughout the solicitation and negotiation process.

Sedway Consulting was provided access to all appropriate materials and was able to parallel SCE’s process with its own receipt and evaluation of all offers. Sedway Consulting reviewed SCE’s RFO documents, outreach efforts, evaluation processes,

3 “Interim Opinion Implementing Senate Bill No. 1488, Relating to Confidentiality of Electric Procurement

Data Submitted to the Commission”, June 29, 2006, Appendix 1, page 17.


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modeling methodologies, communications with offerors, and evaluation and selection results. Members of the IE team:

participated in SCE’s initial RFO project kick-off call on January 30, 2019, reviewed SCE’s 2018 Distribution Deferral Opportunity Report (from the utility’s

September 4, 2018 filing) reviewed and commented on SCE’s market notification emails and outreach

activities, participated in internal planning calls to discuss offer valuation issues, reviewed and commented on the RFO Instructions and associated documents prior

to issuance, participated in bidders’ webinar on March 7, 2019, reviewed requests for information from potential offerors and answers from SCE, discussed evaluation methods and processes with SCE, joining in many of the

utility’s planning and evaluation meetings, reviewed estimated revenue requirements and deferral values for the targeted

distribution system upgrades, monitored email communications with all offerors, received indicative offer materials directly from offerors,4 performed an independent review and evaluation of all offers, conferred with SCE on seeking clarified and/or revised offers from offerors, discussed offer evaluation issues with SCE and cross-checked SCE’s evaluation

results, conferred with SCE regarding shortlisting decisions, participated in executive-level Financial Risk Management (FRM) Committee

meetings in which offer shortlisting and RFO termination decisions were made, participated in all CAM Group calls in which the DIDF RFO launch, process,

offers, and RFO termination results were discussed, and participated in debriefing calls with offerors whose projects were not shortlisted.

Sedway Consulting requested SCE to provide all evaluation assumptions and parameters prior to the receipt of offers. This, in essence, allowed Sedway Consulting to review, lock down, and archive the basic evaluation parameters for the process. Such information included SCE’s forecasts for forward hourly energy and ancillary service prices, forward monthly capacity prices, discount rate, distribution project deferral value assumptions, and other market assumptions.

4 Offerors were instructed to provide physical delivery of a USB thumb drive with their offer materials to

Sedway Consulting for receipt no later than one business day following the deadline for uploading such materials to SCE’s web-platform. This ensured that the IE had materials directly from each offeror without any possibility of interference or corruption of information through SCE’s web-platform process and allowed Sedway Consulting to ensure that what had been uploaded to SCE was indeed what each offeror had intended to submit.


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Sedway Consulting was provided access to all necessary materials and meetings and was able to parallel SCE’s process with its own evaluation of the offers, as documented in this IE report. In the CAM Group meetings, the IE was available to confirm and supplement SCE’s statements regarding offer rankings and negotiation updates, affirm the fairness of the process’ design and administration, and answer CAM Group participant questions as necessary. Sedway Consulting’s activities are described in more detail in relevant sections of this report and in this report’s Confidential Appendix A.

SCE’s Outreach Activities

2. How did the IOU conduct outreach to bidders, and was the solicitation robust?

Sedway Consulting believes that SCE pursued reasonable and adequate procedures for notifying potential interested parties. As required by the CPUC’s Decision 16-12-036, SCE participated in a three-investor-owned-utility forum (i.e., with Pacific Gas & Electric and San Diego Gas & Electric) by convening a Distribution Planning Advisory Group (DPAG) in the spring of 2017 to discuss the Integrated Distributed Energy Resources (IDER) pilot RFO process – a predecessor to the DIDF RFO process. The utilities invited any and all interested developers and stakeholders to be members of the DPAG, a group that met several times to discuss solicitation plans, and specific distribution system locations/upgrades that might be candidate areas for the utilities’ future distribution deferral RFOs. It is Sedway Consulting’s understanding that the DPAG members were included on the service lists and/or otherwise notified of SCE’s filings related to the utility’s 2019 DIDF RFO activities. In addition, on March 1, 2019, SCE emailed over 3,000 industry contacts (compiled from previous power supply solicitations, regulatory service lists, etc.) a “save the date” notification of the 2019 DIDF RFO’s upcoming launch and bidders’ webinar on March 7, 2019. This same email distribution list was used to notify all potentially interested parties of the formal launch of the RFO on March 7, 2019. In its notices, SCE indicated that its RFO would be managed through a PowerAdvocate® web-platform and required offerors to register on that platform in order to be able to submit offers. On March 7, 2019, SCE held a bidders’ webinar to provide an overview of the DIDF solicitation. The webinar provided potential counterparties an opportunity to learn more about the solicitation, hear presentations, and ask questions. Sedway Consulting participated in this webinar. There were additional opportunities to ask questions via email following the webinar. Also, Energy Division participants subsequently pointed out the need for SCE to provide offerors with the latest cost estimates for the distribution upgrade projects – which SCE did prior to the offer submission deadline.


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Sedway Consulting concluded that SCE did a good job of publicizing its 2019 DIDF RFO and complying with the CPUC’s DIDF RFO requirements. Receipt and Evaluation of Offers On March 28, 2019, SCE received a reasonable number of offers (via the PowerAdvocate web-platform), with Sedway Consulting receiving offers directly from offerors via flash-drive (or with direct email updates) following that deadline, as required in the RFO Instructions. Table 4 provides an overview of the offer submissions.

Table 4

Overview of Offer Submissions in SCE’s 2019 DIDF RFO

Product/Technology Type Number of Projects Number of MWs Energy Efficiency (EE) 9 2.25 IFOM ES – RA Only 4 24.5 BTM ES/Permanent Load Shift 1 1.0 BTM PV+ES 1 2.0

Both SCE and Sedway Consulting performed their quantitative and qualitative analyses during the weeks after offers were received. Where necessary, a number of clarifying questions were emailed to offerors during the evaluation period, with Sedway Consulting copied on all exchanges. Sedway Consulting performed a parallel evaluation of the offers (using its own proprietary models) and participated in discussions with SCE that culminated with the utility’s decision to not shortlist any offerors/offers as none were found to be cost-effective in addressing the Sun City or Mira Loma needs. As further addressed in this report’s Confidential Appendix A, Sedway Consulting concluded that the degree of RFO participation was adequate in light of the relatively small MW need. That said, it is worth noting that the three-week period between the launch of the RFO (on March 7, 2019) and the offer submission deadline (March 28, 2019) was a little tight. One reason for that was the compressed timeline for the overall RFO that was required by the CPUC DIDF Decision. In addition, SCE’s earlier DIDF filings had provided some information about the likely locations and needs that the RFO would attempt to address. IE Recommendation #1: In any case, Sedway Consulting encourages SCE to consider lengthening the offer development window by perhaps an additional week, if possible, in future DIDF RFOs.


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Least Cost Best Fit Methodology

3. Describe the IOU’s Least Cost Best Fit (LCBF) methodology. Evaluate the strengths and weaknesses of the IOU’s LCBF methodology. (This should include a thorough analysis of the RFO results.)

Description of Evaluation Process The initial stage of SCE’s evaluation process entailed screening the offers for compliance with and general responsiveness to the RFO. All offers were found to be conforming, passed the screening stage, and were candidates for evaluation. The evaluation results for all offers are provided in this report’s Confidential Appendix A. The quantitative analysis focused on net market value – namely, the value of a resource’s energy, ancillary services, and capacity benefits (if applicable, depending on the product offered, and valued using SCE’s forecasts of future power prices) minus fixed and variable offer-related costs. Fundamentally, this was the same across all resource types. Although different models were used to evaluate the different products, the models performed the same basic cost-benefit process. The following provides a summary of the evaluation process for those product types that were submitted as offers.

1. IFOM Energy Storage (ES) Resources – RA Only. For the RA-only contract, the Seller had full control and responsibility for bidding/scheduling the ES resource’s energy and ancillary services capabilities into the CAISO markets for the entire term of the contract (except for a limited number Local Resource Constrained Days each year that SCE could designate on short notice to address the DIDF distribution needs and take actions to ensure that the resource was dispatched). In all cases though, the Seller would retain all CAISO market revenues and bear all costs associated with the operation of its facility. The Seller was simply selling the RA capacity to SCE, and as such, the RA product evaluation was very straight-forward. The evaluation entailed the simple calculation of the proposed capacity payments plus debt equivalence costs minus the capacity benefits that were based on the forward capacity price curve.

2. Permanent Load Shift (PLS) Resources. Offerors of PLS products provided non-dispatchable load modification profiles that SCE and Sedway Consulting valued by using forward energy prices to develop energy benefits and forward capacity prices to value the monthly expected capacity savings associated with the profile and projected over the life of the contract. Because PLS resources were BTM, the profile represented the expected customer load reduction, and the offer


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received distribution loss and reserve margin benefits and multipliers in the calculation of its capacity benefits (i.e., the offer’s capacity value was increased for beneficial reductions in distribution system losses as well as an additional 115% multiplier to account for reserve margin benefits). Likewise, the energy benefits were based on the market energy prices during the hours of generation/load reduction and were increased for beneficial reductions in distribution system losses. Each PLS offer’s capacity and energy benefits were netted with the proposed contract payments and debt equivalence costs to arrive at a net market value.

3. BTM Hybrid Solar PV/ES Resources. The evaluation of these resources involved the valuation of a non-dispatchable hourly profile of expected generation/load reductions that was provided by the offeror. These hourly profiles were valued by using forward energy prices to develop energy benefits and forward capacity prices to value the implicit capacity savings associated with the profile. For BTM offers, the profile represented the expected customer load reduction, and the offer received distribution loss and reserve margin benefits and multipliers in the calculation of its energy and capacity benefits. Contract payments were a simple product of the contract $/MWh pricing and the expected generation. The hybrid resource’s benefits were netted with these contract payments and associated debt equivalence costs.

4. EE. Offerors were required to provide a typical year’s hourly profile of projected energy savings associated with the installation of proposed EE measures, along with an expected completion date for the installation of such measures and the commencement of savings, the expected useful life of the EE measures, and a $/kWh price for achieving the expected load reductions. The contract costs would be paid to the counterparty over five years, allowing SCE to adjust payments based on periodic inspections and the resulting determination of the persistence of the savings. The hourly savings were valued based on forward energy prices (adjusted/increased for beneficial reductions in distribution system losses associated with EE) and the capacity savings based on RA-window savings and forward capacity prices (again, adjusted/ increased for beneficial reductions in distribution system losses as well as an additional 115% multiplier to account for reserve margin benefits). These benefits were netted with the proposed payment schedule, including the costs of debt equivalence impacts.

In Sedway Consulting’s analysis, the same forward energy prices and capacity prices were used consistently in the evaluation of all product types. Sedway Consulting believes that SCE’s evaluation process complied with the CPUC’s “Least Cost Best Fit” (LCBF) criteria. All offers and portfolios of offers that would defer the wires investments were evaluated.


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Sedway Consulting believes that the evaluation process was fairly designed and reasonably administered such that all counterparties and product types were treated consistently and fairly and had equal opportunity to be shortlisted and selected by SCE for contract negotiation and final offer/contract execution.

Fairness of Bidding and Selection Process

4. Please evaluate the fairness of the IOU’s bidding and selection process (i.e., quantitative and qualitative methodology used to evaluate the bids, consistency of evaluation methods with criteria specified in the bid documents, etc.).

Sedway Consulting concluded that SCE’s evaluation design and administration was unbiased and fair. In evaluating the fairness of SCE’s process, Sedway Consulting employed the following principles:

1. Did the design and/or administration of the RFO inappropriately favor one offeror or product over another?

2. Were the selection criteria flexible enough or structured in a way to facilitate SCE acquiring sufficient capacity to meet distribution system needs as specified in the RFO?

3. Were all components of an offer’s quantified metric calculated consistently so as to avoid introducing discontinuities that might distort the results and lead to incorrect offer selection?

Sedway Consulting concluded that SCE’s evaluation process was designed to treat all offerors fairly, employing a consistent methodology that did not favor or disadvantage any offeror or product. Sedway Consulting’s parallel evaluation allowed the IE to confirm and cross-check SCE’s evaluation results, provide suggested course corrections and/or consistent messaging where necessary, and ensure that all offerors’ proposals were being evaluated fairly and consistently with the evaluation criteria specified in the bid documents (and/or anchored with the IE prior to the receipt of offers). Sedway Consulting was copied on all email communications with offerors and ensured that consistent information was being provided to all.


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Description of Selection Process As described above, SCE was willing to consider any offer or combination of offers that could defer physical upgrades at the Sun City or Mira Loma distribution areas and had costs that were less than (or close to) the value of deferral. Sedway Consulting completed its own quantitative evaluation, cross-checked the net market value results of all offers, and confirmed that no portfolio of offers would cost-effectively meet the needs identified in the RFO. Sedway Consulting’s evaluation results for all offers are presented in Confidential Appendix A. In reviewing the final valuation results and the conclusion that there were no cost-effective offers, some members of the SCE evaluation team noted that the utility’s RA price forecast was likely to be revised in the near future and questioned whether such a revision might reverse the no-shortlisting decision regarding these long-term DIDF contracts. Specifically, potential shifts in the load forecast to have annual peaks occurring in September (rather than August or July, when solar resources are in a position to provide greater generation) resulted in the California Independent System Operator (CAISO) system going from being long in RA to being short in the near term. SCE’s original RA price forecast (which was anchored prior to the submission of offers) was based on this long assumption. If SCE found that the CAISO system would be short on RA in the near term, it could affect SCE’s view of RA prices. While Sedway Consulting as a rule prefers that all evaluation assumptions be locked down prior to the receipt of offers, the IE found it commendable that SCE was willing to explore sensitivity analyses that included late-breaking information that might benefits DERs in its DIDF RFO. Thus, SCE decided to delay the notification of offerors and perform additional analyses using two revised RA price forecasts (a high forecast and a low forecast). Sedway Consulting was provided with these sensitivity forecasts and paralleled SCE’s additional analyses. The high revised RA price forecast indeed improved the valuation of the long-term offers that had been ascribed RA benefits. The low revised price forecast did not. However, even focusing just on the high price forecast sensitivity case, the improvement in the valuation was not enough to yield any portfolios that were cost-effective. Thus, the decision not to shortlist any offers stood. Sedway Consulting agreed with this decision. On May 14, 2019, SCE notified the CAM group that none of the offers or portfolios of offers had met the hurdle of having a net cost that was less than that of the deferral value for traditional distribution upgrades. Description of Sedway Consulting’s Parallel Evaluation Process Sedway Consulting conducted a parallel review and evaluation of the offers, using its own proprietary models. Sedway Consulting reviewed and discussed RFO compliance issues with SCE, calculated the net market value of each offer, developed feasible portfolios under the most optimistic offer assumptions, and compared the net market


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value of the best offers or portfolios of offers to the deferral values associated with the Sun City and/or Mira Loma distribution capital improvements. Sedway Consulting concluded that SCE administered its evaluation and selection process fairly. The fact that Sedway Consulting conducted a parallel, independent bid receipt and evaluation process allowed it to confirm SCE’s results and verify that the utility fairly and appropriately evaluated all offers and employed an appropriate and fair selection process. Sedway Consulting commends SCE for expanding the scope of its valuation process and performing additional sensitivities; this reflected a desire on SCE’s part to ensure that DERs were valued with the best potential assumptions. Sedway Consulting concurred with SCE’s economic results and the decision not to shortlist any offers or counterparties.

Additional Issues Lessons Learned A number of offers that were received were for substantially less than the need at the substation and/or circuit where the offer was located. This required SCE and Sedway consulting to create portfolios of offers to attempt to meet the need at the relevant circuit/substation. IE Recommendation #2: Sedway Consulting recommends that SCE emphasize in future distribution deferral RFO Instructions and Offerors’ Webinars that any offeror with a resource that does not meet a location/project need from the starting year and throughout the term of the need is placing their chances of being selected in the hands of other offerors (with whom they will need to be combined to form a complete DER package). While that may seem obvious, it deserves highlighting. Offerors should be encouraged to put in at least one offer that covers a location’s entire need, if they are able. RA valuation is an important component in any offer’s benefit analysis. For most types of products/resources, to qualify for RA capacity, a resource must be able to provide its capacity for at least four hours in the 5-hour RA window over three consecutive days. Thus, offers that do not provide RA capacity in the 4PM-9PM RA window – although they may address DIDF need time periods – do not qualify for RA benefits and therefore lose significant value in the valuation analysis. Although this was not a factor in SCE’s 2019 DIDF RFO valuation decisions, it is worth underscoring in all future DIDF RFOs to help DER offerors potentially maximize the value of their offers. IE Recommendation #3: Sedway Consulting recommends that SCE emphasize in future distribution deferral RFO Instructions and Offerors’ Webinars that offerors should strive to meet RA counting requirements – and clearly list those requirements, including


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the fact that the four-hour capability must be offered in a five-hour window from 4PM to 9PM. Failure to provide that will result in zero RA benefits. To avoid any potential confusion regarding the exact time and alignment of project needs, hourly information in offer spreadsheets, and hourly price forecasts, SCE should endeavor to clearly state in the relevant documents (e.g., RFO Instructions Attachment C needs tables) whether stated times are in Pacific Standard Time (PST), Pacific Daylight Time (PDT), or Pacific Prevailing Time (PPT). IE Recommendation #4: It could be helpful if the PST, PDT, or PPT specifics of all hourly information in a distribution deferral RFO were aligned, with all times being stated in a common time framework.

5. Describe project-specific negotiations. Highlight any areas of concern including unique terms and conditions.

SCE’s 2019 DIDF RFO did not result in a short list. Thus, there were no negotiations.

6. If applicable, describe safeguards and methodologies employed by the IOU to compare affiliate bids or UOG ownership proposals. If a utility selected a bid from an affiliate or a bid that would result in utility asset ownerships, explain and analyze whether the IOU’s selection of such bid(s) was appropriate.

There were no affiliate bids or UOG (utility owned generation) DER proposals submitted in SCE’s DIDF RFO. That said, the Sun City/Mira Loma potential distribution investments represented the utility-owned alternatives to the DER proposals. The deferral values of those investments were calculated and submitted to the CPUC and Sedway Consulting prior to the receipt of DER offers and formed the basis for the cost-effectiveness tests. In addition, in response to CPUC and Energy Division direction, SCE provided the updated capital costs for each of the distribution upgrades in a letter that was made available to all potential bidders on March 13, 2019. The letter was posted on the RFO’s PowerAdvocate web-platform, along with updated RFO Instructions and Bidders’ Webinar presentation materials that also included the updated capital cost information.


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7. Based on your analysis of the RFO offers, the offer process, the overall market, and the contract terms and conditions, does the contract merit Commission approval? Explain.

On May 9, 2019, SCE concluded that, even after considering sensitivity cases that included higher RA valuations, none of the offers were found to be cost-effective relative to the deferral value of the distribution upgrades, and the RFO was terminated without moving to the shortlisting stage. Sedway Consulting concurred with the valuation of the offers received by SCE and Sedway Consulting in response to the utility’s 2019 DIDF RFO and the conclusion that it was more cost-effective to move ahead with the traditional distribution system improvements. Pricing information, project descriptions, and other confidential issues are discussed in the Confidential Appendix A to this IE report.

Conclusion Sedway Consulting believes that SCE conducted a fair and effective solicitation and evaluation of the offers that it received in response to its 2019 DIDF RFO. All offers were evaluated consistently, appropriately, and without bias. Sedway Consulting was provided access to all necessary materials and meetings and was able to parallel SCE’s process with its own evaluation of indicative and final offers. Sedway Consulting was given the opportunity to make recommendations along the way to improve the RFO process where appropriate. Sedway Consulting reviewed SCE’s results and did not find any bias for or against any proposals in SCE’s selection decisions. Sedway Consulting monitored the back-and-forth messaging/email traffic between SCE and the offerors and believes that SCE treated all offerors consistently and fairly. Sedway Consulting concludes that SCE made appropriate decisions in its 2019 DIDF RFO administration and in its termination of the RFO without pursuing the negotiation and execution of contracts.

Confidential Appendix B

Independent Evaluator Report:

Appendix A

Confidential Appendix C

Valuation Overview

Appendix D

Confidentiality Declaration

DECLARATION OF MICHAEL FREEMAN REGARDING THE CONFIDENTIALITY OF CERTAIN DATA

I, Michael Freeman, declare and state:

1. I am a Senior Advisor in the Southern California Edison (SCE) in the

PORTFOLIO PLANNING & ANALYSIS DEPARTMENT. As such, I have reviewed the

confidential information submitted in SCE’s Confidential Appendices B and C of Advice Letter

4037-E. I make this declaration in accordance with Commission Decisions (D.) 06-06-066 and

D.08-04-023, issued in Rulemaking 05-06-040. 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 the Advice Letter 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.06-06-066 to which these data

correspond.

Location of Data Pages Matrix Category Limitations on

Confidentiality Specified in Matrix

Order Instituting Rulemaking (OIR) 05-06-040 Matrix of Allowed Confidential Treatment Investor Owned Utility (IOU) Data Section VIII.A

Confidential Appendices B and C

Competitive Solicitation (Bidding) Information – Electric – Bid Information

3. I am informed and believe and thereon allege that the data in the tables in

paragraph 2 above cannot be aggregated, redacted, summarized, masked or otherwise protected

in a manner that would allow partial disclosure of the data while still protecting confidential

information, because the Data Request requires that the data be provided in this form.

4. I am informed and believe and thereon allege that the data in the tables in

paragraph 2 above has never been made publicly available.

I declare under penalty of perjury under the laws of the State of California that the

foregoing is true and correct.

Executed on July 11, 2019 at Rosemead, California.

________________________

Michael Freeman

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Appendix E

Proposed Protective Order

2

BEFORE THE PUBLIC UTILITIES COMMISSION

OF THE STATE OF CALIFORNIA

Southern California Edison Company’s Request to Conclude the 2018-2019 Distribution Investment Deferral Framework Request for Offers without Selecting Offers

) )))

Advice 4037-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.”) 06-06-

066 and subsequent decisions, including D.14-10-033 which governs the treatment of market

sensitive greenhouse gas data and information, 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,

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handwritten notes, spreadsheets, computer files and reports, and any other form of information

(including 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

4

energy or capacity at wholesale; bid on, own, or purchase power plants; or bid on utility procurement solicitations; or

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.05-12-013) it was determined in D.06-06-064 § 3.3.2 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.

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G. The term “Non-Market Participant” refers to a Requesting Party that does

not meet the definition of Market Participant. The California Independent System Operator is

deemed a Non-Market Participant for purposes of this Protective Order.

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.11-07-028, 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.

6

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

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

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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

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

8

Materials, the Requesting Party shall identify the additional proposed Reviewing

Representative(s) to the Disclosing Party before the Requesting Party provides Protected

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.06-12-030, 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

9

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

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.

10

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

Reviewer is requested or required by applicable laws or regulations, or in the course of

administrative or judicial proceedings (in response to oral questions, interrogatories, requests for

information or documents, subpoena, civil investigative demand or similar process) to disclose

any of Protected Materials, the Authorized Reviewer shall immediately inform the Disclosing

Party of the request, and the Disclosing Party may, at its sole discretion and cost, direct any

challenge or defense against the disclosure requirement, and the Authorized Reviewer shall

cooperate in good faith with such Party either to oppose the disclosure of the Protected Materials

consistent with applicable law, or to obtain confidential treatment of the Protected Materials by

the person or entity who wishes to receive them prior to any such disclosure. If there are

multiple requests for substantially similar Protected Materials in the same case or proceeding

where an Authorized Reviewer has been ordered to produce certain specific Protected Materials,

the Authorized Reviewer may, upon request for substantially similar materials by another person

or entity, respond in a manner consistent with that order to those substantially similar requests.

9. Return or Destruction of Protected Materials. Protected Materials shall remain

available to Authorized Reviewers until an order terminating this proceeding becomes no longer

subject to judicial review. If requested to do so in writing after that date, the Authorized

Reviewers shall, within fifteen days after such request, return the Protected Materials to the

Disclosing Party that produced such Protected Materials, or shall destroy the materials, except

that copies of filings, official transcripts and exhibits in this proceeding that contain Protected

Materials, and notes of Protected Materials may be retained, if such Protected Materials are

maintained in accordance with Paragraph 8. Within such time period each Authorized Reviewer,

if requested to do so, shall also submit to the Disclosing Party an affidavit stating that, to the best

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of its knowledge, all Protected Materials have been returned or have been destroyed or will be

maintained in accordance with Paragraph 8. To the extent Protected Materials are not returned

or destroyed, they shall remain subject to this Protective Order.

In the event that a Reviewing Representative to whom Protected Materials are disclosed

ceases to be engaged to provide services in this proceeding, then access to such materials by that

person shall be terminated and the Reviewing Representative shall immediately return or destroy

all Protected Materials, or provide an affidavit stating that all Protected Materials and all notes of

Protected Materials will be maintained in accordance with Paragraph 8. Even if a Reviewing

Representative is no longer engaged in this proceeding, every such person shall continue to be

bound by the provisions of this Protective Order and the Nondisclosure Certificate.

10. Access and Use by Governmental Entities.

A. In the event the Commission receives a request from the California Energy

Commission (“CEC”) for a copy of or access to any Party’s Protected Materials, the procedure

for handling such requests shall be as follows. Not less than five (5) business days after

delivering written notice to the Disclosing Party of the request, the Commission shall release

such Protected Materials to the CEC upon receipt from the CEC of an Interagency Information

Request and Confidentiality Agreement (“Interagency Confidentiality Agreement”). Such

Interagency Confidentiality Agreement shall: (i) provide that the CEC will treat the requested

Protected Materials as confidential in accordance with this Protective Order; (ii) include an

explanation of the purpose for the CEC’s request, as well as an explanation of how the request

relates to furtherance of the CEC’s functions; (iii) be signed by a person authorized to bind the

CEC contractually; and (iv) expressly state that furnishing of the requested Protected Materials

to employees or representatives of the CEC does not, by itself, make such Protected Materials

public. In addition, the Interagency Confidentiality Agreement shall include an express

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acknowledgment of the Commission’s sole authority (subject to judicial review) to make the

determination whether the Protected Materials should remain confidential or be disclosed to the

public, notwithstanding any provision to the contrary in the statutes or regulations applicable to

the CEC.

B. In the event the Commission receives a request for a copy of or access to a

party’s Protected Materials from a state governmental agency other than the CEC that is

authorized to enter into a written agreement sufficient to satisfy the requirements for maintaining

confidentiality set forth in Government Code Section 6254.5(e), the Commission may, not less

than five (5) business days after giving written notice to the Disclosing Party of the request,

release such Protected Materials to the requesting governmental agency, upon receiving from the

requesting agency an executed Interagency Confidentiality Agreement that contains the same

provisions described in Paragraph 10.A above.

C. The CEC may use Protected Materials when needed to fulfill its statutory

responsibilities or cooperative agreements with the Commission. Commission confidentiality

designations will be maintained by the CEC in making such assessments, and the CEC will not

publish any assessment that directly reveals the data or allows the data submitted by an

individual load serving entity to be “reverse engineered.”

11. Dispute Resolution. All disputes that arise under this Protective Order, including

but not limited to alleged violations of this Protective Order and disputes concerning whether

materials were properly designated as Protected Materials, shall first be addressed by the parties

through a meet and confer process in an attempt to resolve such disputes. If the meet and confer

process is unsuccessful, either party may present the dispute for resolution to the Assigned ALJ

or the Law and Motion ALJ.

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12. Other Objections to Use or Disclosure. Nothing in this Protective Order shall be

construed as limiting the right of a Party, the Commission Staff, or a state governmental agency

covered by Paragraph 10 to object to the use or disclosure of Protected Materials on any legal

ground, including relevance or privilege.

13. Remedies. Any violation of this Protective Order shall constitute a violation of an

order of the Commission. Notwithstanding the foregoing, the parties and Commission Staff

reserve their rights to pursue any legal or equitable remedies that may be available in the event of

an actual or anticipated disclosure of Protected Materials.

14. Withdrawal of Designation. A Disclosing Party may agree at any time to remove

the “Protected Materials” designation from any materials of such Party if, in its opinion,

confidentiality protection is no longer required. In such a case, the Disclosing Party will notify

all Requesting Parties that the Disclosing Party has agreed to withdraw its designation of

Protected Materials for specific documents or material.

15. Modification. This Protective Order shall remain in effect unless and until it is

modified or terminated by the Commission or the Assigned ALJ. The identity of the parties

submitting Protected Materials may differ from time to time. In light of this situation,

modifications to this Protective Order may become necessary. The Parties shall work

cooperatively to develop such modifications and, to the extent the Parties are able to agree to

modifications, shall file a motion with the Assigned ALJ or the Commission seeking approval of

the modifications. To the extent Parties are unable to agree on modifications after a good faith

effort, each party governed by this Protective Order has the right to seek modifications in it as

appropriate from the Assigned ALJ or the Commission.

16. Interpretation. Headings are for convenience only and may not be used to restrict

the scope of this Protective Order.

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Entered: __________________________________

Administrative Law Judge

Date: __________________________________

APPENDIX A TO PROPOSED PROTECTIVE ORDER

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Southern California Edison Company’s Request to Conclude the 2018-2019 Distribution Investment Deferral Framework Request for Offers without Selecting Offers

) )))

Advice 4037-E

NONDISCLOSURE CERTIFICATE

I hereby certify my understanding that access to Protected Materials is provided to me

pursuant to the terms and restrictions of the Protective Order in this proceeding, that I have been

given a copy of and have read the Protective Order, and that I agree to be bound by it. I

understand that the contents of the Protected Materials, any notes or other memoranda, or any

other form of information that copies or discloses Protected Materials shall not be disclosed to

anyone other than in accordance with that Protective Order. I acknowledge that a violation of

this certificate constitutes a violation of an order of California Public Utilities Commission.

Signed: _______________________ Name ________________________ Title: _________________________ Organization: __________________ Dated: ________________________

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