Flexible Capacity Requirement

1. Flexible Capacity Requirement CPUC RA Workshop March 30, 2012 Mark Rothleder Executive Director Market Analysis and Development

2. What is a flexible resource? The degree of flexibility each resource has is determined by: • How fast the resource can ramp up or down; • How long the resource can sustain an upward or downward ramp; • How quickly the resource can change its ramp direction; • How far the resource can reduce output and not encounter emission limitations; • How quickly the resource can start; and • How frequently the resource can be cycled on and off Slide 2

3. Flexible capacity must support ISO operational needs and align with existing market structures. Three Categories of Flexible Capacity: ► Maximum continuous ramping • The megawatt amount and duration by which the net load (load minus wind and solar) is expected to change continuously in a given direction within a month ► Load Following (≤ 60 minutes) • The maximum megawatts the net load is expected to change in a given hour of a given month ► Regulation (≤ 5 minutes) • The maximum megawatts the net load is expected to change between intra 5-minute dispatch intervals Slide 3

4. How maximum continuous ramping is determined. For 2011, the maximum continuous upward-load ramp occurred in August and reached 18,181 megawatts over approximately 11 hours (ramp rate of 27 MW/min)

5. How maximum continuous ramping is calculated. For resources that have a startup time ≥ longest ramp duration: min((NQC-Pmin), ramp duration*RRavg) For resources that have a startup time < longest ramp duration: min(Pmin + (longest ramp duration-SUT)*RRavg, NQC) Where: • SUT is the start-up time; and • RRavg is the weighted average ramp-rate, where the MW/min weighting is based on a resources ramp-rate segments.

6. Maximum continuous Load Ramps- 2006, 2010 & 2011 Slide 6

7. Max continuous load ramp rates- 2006, 2010 & 2011 Slide 7

8. How load following is determined. For resources that have a startup time ≥ 60-minutes: min((NQC-Pmin), 60-minutes * RRavg) For resources that have a startup time < 60-minutes: min(Pmin + (60-SUT)*RRavg, NQC) Where: • SUT is the start-up time; and • RRavg is the weighted average ramp-rate, where the MW/min weighting is based on a resources ramp-rate segments.

9. Max 1-hour change comparison- 2006, 2010 & 2011 Slide 9

10. 5-minute ramp comparison- 2006, 2010 & 2011 Slide 10

11. 2011 flexible RA resource ramping capability Slide 11

12. Summary of flexible capacity needs based on 2011 1-minute net load data. Slide 12

13. Flexible Capacity Requirement CPUC RA Workshop March 30, 2012 John Goodin Regulatory Policy Lead Market and Infrastructure Policy

14. Path Forward: 2013 RA Compliance Year • No express flexible capacity requirement in 2013; • Agreement on the three flexible capacity categories and the calculation methodology; • 12-month RA showing to assess procurement relative to flexible capacity categories; • Risk of retirement backstop procurement authority (CAISO stakeholder process); and • Support for a new RA proceeding (or track) to establish a flexible capacity requirement in 2014 and advance discussion on multi-year RA procurement.

15. Path Forward: 2014 Compliance Year • CPUC RA flexible capacity requirement established against the three flexible capacity categories; • CAISO flexible capacity backstop procurement authority (CAISO stakeholder process); and • Advance discussion on multi-year RA.