Countywide Community Choice Aggregation Task Force Meeting

1. Countywide Community Choice Aggregation Task Force Meeting Thursday, June 9, 2016; 10:00 am – 12:00 pm Environmental Service Center at Exposition Park 700 Exposition Park Dr., Los Angeles, CA 90037

2. Agenda • Business Plan Update 40 Minutes • Overview of Each Section • Summary/Conclusions • Financing Section • High-Level Schedule Update 40 Minutes • Discussion of Next Steps/Activities • Critical Path • Review of Pilot Phases • Regulatory Update 15 Minutes • Governance Update 15 Minutes • Close 10 Minutes

3. Los Angeles Community Choice Energy (LACCE) June 9, 2016 Prepared by EES Consulting, Inc. A registered professional and management consulting firm with offices in Portland and Seattle areas

4. Overview of Business Plan’s Financial Metrics • Economic Development Potential • GHG Reduction Potential • Risk Assessment • Business Plan Conclusions • Next Steps Agenda

5. Customers and Load

6. Power Supply Costs (70-80% of Total Costs) • Non-Bypassable Charges • Power Cost Indifference Charge (PCIA) • Franchise Fee • Department of Water Resources Bond Charge (DWRBC) • Competitive Transition Charge (CTC) • CCE Operating Costs • Staffing • Technical Assistance • Operating Costs • SCE Billing and Metering Fees • Debt Service • Uncollectable Operating Costs

7. LACCE Portfolios • LACCE Purchase on Behalf of All Customers/Participating Cities • Customer/Cities Choose the Amount of Renewable to Receive • LACCE Meets the Portfolio Objective for the Combined Load • Options Modeled • Renewable Portfolio Standard (currently 28%, 30% by 2020, 50% by 2030) • 50% Renewable as Soon as Possible • 100% Renewable as Soon as Possible Power Supply Options

8. Portfolio Costs

9. Organization Chart

10. Rate Comparison (Based on SCE System Average Rate)

11. LACCE Will • Create More Disposable Income for Residents • Create Greater Revenue for Businesses • Encourage Local Development in Distributed Resources • Direct and Indirect Effects of These Changes • Modeled in IMPLAN and JEDI • Employment Impacts (Number of Jobs Added) • Labor Income Impacts (Increase in Salary and Wages) • Value Added (Production Value Paid to Labor and Capital) • Output Added (Total Economic Value of the Project in the Local Economy) Economic Development

12. Economic Development(cont’d) • Direct Effect: Direct Impacts Refer to the Dollar Value of Economic Activity Available to Circulate Through the Economy • Indirect Effect:Spending by the Local and Regional Companies as a Result of Direct Effects • Induced Effect: The Induced Impacts Refer to the Impacts of Additional Spending by Employees of Companies Experiencing Increased Economic Activity • $20M Savings Likely at the Beginning of Phase 3 • Phase 3 Build-Out Savings Should be at Least $100M/Year

13. Economic Development • LACCE Will Need Roughly 1,500 – 2,000 MW of Renewable at Phase 3 Build-Out

14. GHG Reductionsfor Phase 2 The 50% Green portfolio saves between 2.2 and 4.0 million tons of GHG compared to the RPS portfolio between 2016 and 2030. • Phase 3 Reductions Should be 4 – 6 X Greater

15. PCIA Increases Markedly • Load Forecast for LACCE Too High • Market Prices Drop Significantly from Current Levels Risks

16. LACCE Can Offer Cheaper Power Supply than SCE • LACCE Power Supply Portfolio Will Offer More Green Power than SCE • Significant Macroeconomic and GHG Improvements are Attributable to LACCE • Risks of Forming LACCE are Manageable Business Plan Conclusions

17. Setup JPA • Obtain Funding • Initial Estimate is $10 Million in Initial Funding • File Implementation Plan • Get CPUC Approval • Power Supply • Obtain Power Supply Consultant • Contract for Power Supply • Data Management • Obtain Data Management Consultant • Coordinate with SCE on Data Sharing and Process • Infrastructure • Hire Initial Staffing • Get Office and Setup • Communication with Customers • Develop Rates • Launch LACCE Initial Tasks

19. CCA Regulatory Update June 9, 2016 Prepared by EES Consulting, Inc. A registered professional and management consulting firm with offices in Portland and Seattle areas

20. CPUC Proceedings of Interest • Distributed Energy Resources (R.14-10-003) • Energy Storage & PCIA (A.15-12-003 & A.15-12-004) • IRP and Long-Term Procurement Planning (R.16-02-007) • Energy Efficiency (R.13-11-005) Proceedings of Interest

21. Summary – Create Consistent Framework to Plan and Evaluate Distributed Energy Resources (DER) • Pending Proposals and Next Steps • DER Incentive: Proposed pilot program would create incentives for utilities investing in DER when those projects defer or displace other infrastructure investments • Next Step – Commission workshop on June 13thto educate stakeholders, understand utility perspectives, and determine next steps • Revised Cost-Effectiveness Framework: Proposed new methodology to evaluate cost-effectiveness that will be more technology neutral (i.e., better value the benefits of DER) • Next Step – This proposal is on the consent agenda for the CPUC voting meeting today June 9th Distributed Energy ResourcesR.14-10-003

22. Summary – SCE and PG&E Requested Approval for Proposed Energy Storage Contracts and Associated Cost-Recovery Mechanisms • Why This Matters • The IOUs propose treating energy storage resources like conventional generation assets and thus eligible resources to pass on all above-market energy storage costs to CCAs as a PCIA • CCAs want energy storage resources to be treated like renewables in receive a “cost adder”, effectively reducing CCA’s PCIA charges related to energy storage resources • Actions – CCAs Submitted a Joint Comment 5/2/16 and a Reply Brief 6/8/16 on This Proceeding • Next Steps – A Proposed Decision is Scheduled to be Issued for Comment on July 29th Energy Storage PCIAA.15-12-003/4

23. Summary – Develop a Revised Electricity Integrated Resource Planning (IRP) Framework That Will Optimize Resource Portfolios so as to Reduce GHG Emissions in Accordance with California Senate Bill 350 • Under Debate – What Modeling Methodology is Appropriate for Future IRP Processes? • Relevant to CCAs – How Will IOUs Forecast Their Load in the Future? • Schedule • July 2016 – Final decision on modeling methodology • December 2016 – Proposal with guidance on IRP process IRP and LTTPR.16-02-007

24. Summary – Proceeding Intended to Reform How the State’s IOUs Administer Energy Efficiency (EE) Portfolios • Why Its Relevant – CCAs Such as MCE are Interested in Entering the EE Program Space; Future CCA EE Programs May be Influenced by CPUC Decisions in this Proceeding • Next Steps – On May 24, 2016, the CPUC Requested Input on Two Questions Regarding CCAs • How should any Commission requirements for state-wide and/or third-party approaches apply to non-utility program administrators (e.g., community choice aggregators (CCAs), CAEATFA, the Regional Energy Networks (RENS), CSE, etc.)? • Should there be any guidelines or limitations on the extent to which non-lead administrators (including other utilities, CCAs, or Regional Energy Networks) could incur expenses to coordinate, monitor, and/or otherwise engage with state-wide programs? • Comments Due • June 17 – Initial comments due • June 27 – Reply comments due Energy EfficiencyR.13-11-005

25. LA County and Energy • LA County Internal Energy Management • American Recovery and Reinvestment Act • CPUC/Southern CA Regional Energy Network • Property Assessed Clean Energy (PACE)