P&G Study on Future Market Potential and Goals

1. February 21, 2019 2019 Potential and Goals Study Workshop

2. Overview and Agenda • Overview • The P&G Study is scoped with developing multiple scenarios of future market potential for energy efficiency programs. • Scenarios inform the CPUCs goal setting process. • Navigant does notmake recommendations on which scenario the CPUC should pick to be the basis for goals. • Agenda Items • Scope • Approach to scenarios • What was done in 2017 • Variables that influence scenarios • Draft 2019 scenarios • Discussion

3. P&G Scenarios Scope • The 2019 P&G study will develop a total of four scenarios that inform the CPUC’s goal setting process. We refer to these as the P&G Scenarios: • One “reference” scenario that stems directly from the calibration process • Three additional alternate scenarios (informed by stakeholder input) • Additional scenario analysis will be conducted as part of the Additional Achievable Energy Efficiency (AAEE) analysis after the P&G study is finalized. AAEE Scenarios: • Feed into the California Energy Commission’s Integrated Energy Policy Report (IEPR) • Are built around the adopted IOU goals and informed by P&G Scenarios • Consider additional variables and policy context • Do not impact IOU goals Today’s discussion focuses on P&G Scenarios, notAAEE Scenarios

4. What’s a Scenario? • Key variables in the P&G model can fall within a range possibilities. Variables are grouped into two categories: • Internally Influenced - policies and program decisions that are under control of the CPUC and IOUs collectively, • Externally Influenced - those that CPUC and IOUs collectively do not have complete control over. • Scenarios allow us to explore different futures based on a combination of assumed policy interventions, program design decisions, and exogenous factors

5. Approach to P&G Scenarios • The Reference Scenario will be primarily informed by current program design and policy. It is meant to best represent “current and known future policy” • The three additional scenarios will be finalized in conjunction with CPUC • Objective of the alternate scenarios: make sure the results are most useful for policy decision making. As such: • P&G scenarios should focus on internally influenced variables • P&G scenarios will fix externally influenced variables to a single setting across all scenarios: • CEC Mid-case forecast for retail rates, population, building stock • Use DEER and workpaper values as is • One set of assumptions about future C&S

6. Scenarios from the 2017 Study • The 2017 P&G Study developed scenarios that were primarily focused around the cost effectiveness screen using different tests and different avoided costs • Focus on C-E tests was due to lack of a final GHG adder to be incorporated into the avoided energy costs • Program engagement was either set to a reference case or an aggressive case (in only one of the scenarios)

7. Candidate Scenario Levers - Descriptions

8. Candidate Scenario Levers - Ranges *Not fully defined by CPUC ** Consistent with 2017 P&G Study

9. Draft 2019 Scenarios This is not intended to be considered final, but an initial proposal for stakeholders to consider and comment on. *If Alternate 1 results in a portfolio that is not cost effective (TRC less than 1.25), threshold will be moved back to 1.25

10. Discussion, Questions and Next Steps • Questions for stakeholder to consider: • What additional scenarios should be considered and why? • Do the majority of scenarios lie within a realistic policy framework under which CPUC could set goals? • What can be done to capture the essence of SB350 (doubling EE) within the scenarios? • What level of certainty is needed for future C&S to be included in IOU goals? • A useful way to submit comments: fill out your own table on slide 9 with your own suggested settings • Comments on due: February 28, 2019 • Access slides and submit comments via the CPUC Public Document Archive (PDA)

11. contacts navigant.com