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Pacific Gas & Electric Company

Pacific Gas & Electric Company. April 23, 2010. Methodology for Inferring the cost of RECs.

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Pacific Gas & Electric Company

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  1. Pacific Gas & Electric Company April 23, 2010

  2. Methodology for Inferring the cost of RECs • The Implied REC Value of a transaction containing both REC and energy components may be calculated as the difference between the Cost of the Renewable Contract and the value of a comparable Market-based Brown Energy product. • Cost of the Renewable Contract (“CRC”) = market value busbar energy + cost firm and shaping • Market-based Brown Energy (“MBE”) = market value of Firm Energy + Capacity value • Firm Energy value is computed using forward market prices • Capacity value is based on: • the net economic carrying cost of a new combustion turbine and • the contribution to PG&E’s Resource Adequacy requirements • Implied REC Value (“IRV”) = CRC - MBE • Transaction example: Pacific NW wind energy with firming and shaping delivered to COB • CRC = $60 (busbar energy) + $40 (firming and shaping) = $100 • MBE = $75 (Firm Energy @ COB) + $15 (Capacity Value) = $90 • IRV = $100 - $90 = $10

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