Advice Letter Suspension Form - Southern California Edison Note: reference – Decision D.02 ... advice letter is suspended for up to 180 days beyond the initial suspension period

ADVICE LETTER (AL) SUSPENSION NOTICE

ENERGY DIVISION

* Note: reference – Decision D.02-02-049, dated February 21, 2002, and Rule 7.5 in appendix A of D.O7-01-024

Utility Name: SCE

Utility Number/Type: ID U 338-E

Advice Letter Number(s): 3701-E

Date AL(s) Filed: 20 November, 2017

Utility Contact Person: Darrah Morgan

Utility Phone No.: (626) 302-2086

Date Utility Notified: March 27, 2018

[X] E-Mailed to:

[email protected]

ED Staff Contact: David Matusiak

ED Staff Email: [email protected]

ED Staff Phone No.: 415-355-2770

[X] INITIAL SUSPENSION (up to 120 DAYS from the expiration of the initial review period)

This is to notify that the above-indicated AL is suspended for up to 120 days beginning

November 27, 2017 for the following reason(s) below. If the AL requires a Commission resolution and

the Commission’s deliberation on the resolution prepared by Energy Division extends beyond the

expiration of the initial suspension period, the advice letter will be automatically suspended for up to

180 days beyond the initial suspension period.

[] A Commission Resolution is Required to Dispose of the Advice Letter

[] Advice Letter Requests a Commission Order

[] Advice Letter Requires Staff Review

The expected duration of initial suspension period is 120 days

[X] FURTHER SUSPENSION (up to 180 DAYS beyond initial suspension period)

The AL requires a Commission resolution and the Commission’s deliberation on the resolution

prepared by Energy Division has extended beyond the expiration of the initial suspension period. The

advice letter is suspended for up to 180 days beyond the initial suspension period.

_____________________________________________

If you have any questions regarding this matter, please contact David Matusiak at

[email protected]

cc:

EDTariffUnit

mailto:[email protected]

ADVICE LETTER (AL) SUSPENSION NOTICE

ENERGY DIVISION

* Note: reference – Decision D.02-02-049, dated February 21, 2002, and Rule 7.5 in appendix A of D.O7-01-024

Utility Name: SCE

Utility Number/Type: ID U 338-E

Advice Letter Number(s): 3701-E

Date AL(s) Filed: 20 November, 2017

Utility Contact Person: Darrah Morgan

Utility Phone No.: (626) 302-2086

Date Utility Notified: 27 November, 2017

[X] E-Mailed to:

[email protected]

ED Staff Contact: David Matusiak

ED Staff Email: [email protected]

ED Staff Phone No.: 415-355-2770

[X] INITIAL SUSPENSION (up to 120 DAYS from the expiration of the initial review period)

This is to notify that the above-indicated AL is suspended for up to 120 days beginning

November 27, 2017 for the following reason(s) below. If the AL requires a Commission resolution and

the Commission’s deliberation on the resolution prepared by Energy Division extends beyond the

expiration of the initial suspension period, the advice letter will be automatically suspended for up to

180 days beyond the initial suspension period.

[X] A Commission Resolution is Required to Dispose of the Advice Letter

[] Advice Letter Requests a Commission Order

[] Advice Letter Requires Staff Review

The expected duration of initial suspension period is 120 days

[ ] FURTHER SUSPENSION (up to 180 DAYS beyond initial suspension period)

The AL requires a Commission resolution and the Commission’s deliberation on the resolution

prepared by Energy Division has extended beyond the expiration of the initial suspension period. The

advice letter is suspended for up to 180 days beyond the initial suspension period.

_____________________________________________

If you have any questions regarding this matter, please contact David Matusiak at

[email protected]

cc:

EDTariffUnit


P.O. Box 800 8631 Rush Street Rosemead, California 91770 (626) 302-4177 Fax (626) 302-6396

Russell G. Worden Managing Director, State Regulatory Operations

November 20, 2017

ADVICE 3701-E (U 338-E)

PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA ENERGY DIVISION

SUBJECT: Submission of Agreement Between Southern California Edison Company and VIAS Energies, Inc.

PURPOSE

The purpose of this advice letter is to seek California Public Utilities Commission (“Commission” or “CPUC”) approval of an agreement for the purchase of energy, capacity, and all related products between Southern California Edison Company (“SCE”) and VIAS Energies, Inc. (the “Agreement”)1 from the Victorville Energy Center. The agreement was executed as part of SCE’s fifth Combined Heat and Power (“CHP”) Request for Offers (“RFO”) (“CHP RFO 5”).

BACKGROUND

A. Combined Heat and Power Settlement

In 2008, diverse parties with divergent interests, including the three investor-owned utilities (“IOUs”),2 representatives of Qualifying Facilities (“QF”),3 and customer

1 The Agreement refers to a collective of three agreements that SCE entered into with VIAS

Energies, Inc.: a Master Power Purchase and Sale Agreement, a Master Power Purchase and Sale Agreement Confirmation Letter for Resource Adequacy Capacity, and a Master Power Purchase and Sale Agreement Confirmation Letter for Energy Only Unit Contingent Tolling.

2 The three IOUs are SCE, Pacific Gas and Electric Company (“PG&E”), and San Diego Gas & Electric Company (“SDG&E”).

3 The Public Utility Regulatory Policies Act of 1978 (“PURPA”) established a class of generating facilities known as QFs, which, in the furtherance of a variety of energy policy goals, receive special rate and regulatory treatment. QFs fall into two categories: (1) qualifying small power production facilities and (2) qualifying cogeneration facilities. For the purpose of this Advice Letter, QFs are defined as: “An electric energy generating facility that complies with the qualifying facility definition established by PURPA and any FERC rules . . . implementing PURPA and has filed with FERC (i) an application for FERC certification, . . . which FERC has granted, or (ii) a notice of self-certification . . . .” CHP

ADVICE 3701-E (U 338-E) - 2 - November 20, 2017

advocacy groups,4 engaged in settlement negotiations, which were mediated by staff of the Commission, to, among other things, resolve numerous disputes between the IOUs and QF representatives before the Commission and state court. After a year and a half of negotiations, the settling parties reached an agreement that, among other things, developed a state CHP program, which includes megawatt (“MW”) and greenhouse gas (“GHG”) emissions reduction targets, and settled all outstanding CHP/QF litigation issues.

The settling parties then filed a joint motion for Commission approval of the QF and CHP Settlement Agreement, Settlement Term Sheet and attached Exhibits (“Settlement”).5 Rule 12.1(d) of the Commission’s Rules of Practice and Procedure provides that “[t]he Commission will not approve settlements, whether contested or uncontested, unless the settlement is reasonable in light of the whole record, consistent with law, and the public interest.” To assess reasonableness, the Commission considers, among other things, whether the settlement negotiations were at arms-length and whether the parties were adequately represented.6

After considering the Settlement as a whole, its individual elements, as well as the interests at stake, the Commission approved the Settlement, finding it to be (1) reasonable; (2) the product of protracted, arms-length negotiations between sophisticated and well-represented parties with divergent interests, all of whom were required to compromise on some things, and none of whom received everything they wanted;7 and (3) in furtherance of the state policy objectives embodied in California Public Utilities Code Section 372(a), Assembly Bill 32, and the Energy Action Plan II.8

In particular, Section 4.2.1 of the Settlement Term Sheet directs the IOUs to “conduct RFOs exclusively for CHP resources” as a means of achieving the MW and GHG emissions reduction targets set forth in the Settlement.9 Section 5.1.4 of the Settlement Term Sheet requires the IOUs to conduct three RFOs during the Initial Program

Settlement Agreement, Term Sheet (“Settlement Term Sheet”), § 17, Glossary of Defined Terms, at p. 73. The QFs involved include the Energy Producers and Users Coalition, the Cogeneration Association of California, the California Cogeneration Council, and IEP.

4 Customer advocacy groups include the Office of Ratepayer Advocates and The Utility Reform Network.

5 Any capitalized term used in this Advice Letter but not defined herein have the meaning set forth in the SettlementTerm Sheet.

6 Decision (D.) 88-12-083, 30 CPUC 2d 189, 89 (approving Pacific Gas and Electric Co.’s Diablo Canyon settlement as in the public interest.)

7 D.10-12-035 at pp. 28, 35, Conclusion of Law No. 21. 8 Id. at pp. 35, 37, 38, Conclusion of Law No. 19. 9 See Settlement Term Sheet § 4.2.1.


Period10 under the Settlement.11 Pursuant to the Settlement, SCE held three RFOs during the Initial Program Period.

On June 11, 2015, the Commission approved D.15-06-028, which revised the overall GHG emissions reduction target (“GHG Target”)12 and directed SCE and SDG&E to hold up to four CHP RFOs in the Second Program Period13 to achieve their respective IOU-specific GHG Target.14 SCE’s CHP RFO 4 is the fourth RFO held during the Settlement period and the first of up to four RFOs that SCE will conduct during the Second Program Period.

In accordance with D.15-06-028, SCE received approval to launch CHP RFO 5 from its Finance and Risk Management (“FRM”) Working Group Committee (“WG”) on February 3, 2017 and consulted with the Cost Allocation Mechanism (“CAM”) Group on February 9, 2017. SCE launched the RFO on February 28, 2017. Interested CHP parties submitted their binding offers on April 13, 2017. SCE evaluated the offers and created a short-list of bidders using the valuation and selection methodology approved by the FRM WG with input from the CAM. The short-listed offers were approved by SCE’s FRM on May 26, 2017 and SCE consulted with the CAM Group on May 30, 2017. SCE notified short-listed bidders on June 1, 2017 and then began negotiations of contracts with those short-listed bidders. After negotiations concluded, SCE gained approval to execute the contracts from SCE’s FRM WG on September 15, 2017 and consulted with the CAM Group on September 19, 2017. SCE awarded contracts to those short-listed bidders with whom SCE was sucessful in negotiating acceptable terms, including Atlantic Midway Ventures LLC and VIAS Energies, Inc. SCE entered into the Agreement with VIAS Energies, Inc. on September 29, 2017 (“effective date”).

DESCRIPTION OF THE VICTORVILLE ENERGY CENTER FACILITY AND AGREEMENT

General Project Summary

10 The Initial Program Period is defined as the period commencing on the Settlement Effective

Date and concluding forty-eight (48) months thereafter. See Settlement Term Sheet § 2.2.1.

11 See Settlement Term Sheet § 5.1.4.1. 12 See D.15-06-028 at Ordering Paragraph (“OP”) 1 establishes the overall GHG Target as

2.72 million metric tonnes (“MMT”), PG&E’s GHG Target as 1.22 MMT, SCE’s GHG Target as 1.22 MMT, and SDG&E’s GHG Target as 0.28 MMT. Subsequent to D.15-06-028, parties to the Settlement met to “meet and confer” on the status of Existing CHP Facilities pursuant to Settlement Term Sheet § 6.4.2.1. As a result of this process and subject to verification from the Commission, SCE’s new GHG Target is 1.23 MMT, PG&E’s new GHG Target is 1.23 MMT, and SDG&E’s new GHG Target is 0.283 MMT.

13 The Second Program Period runs from November 24, 2015 to December 31, 2020. See Settlement Term Sheet § 2.3.1.

14 See D.15-06-028 at OP 7. Note that OP 3 exempts PG&E from the requirement to hold solicitations during the Second Program Period.


Under the Agreement, SCE is purchasing up to 19.0 MW of capacity, and all related products from the Victorville Energy Center. The Victorville Energy Center will be a bottoming cycle cogeneration power plant located at the Black Mountain Quarry cement plant (the “Cement Plant”) in Victorville, California. A general summary of the project is provided in Table 1 below:

Table 1: General Project Summary

Project Name Victorville Energy CenterOwner/Developer VIAS Energies, Inc.

Technology Bottoming Cycle CogenerationNameplate Capacity (MW) 19.0

Delivery Pattern (e.g. As-available, Firm, Utility Prescheduled Facility)

See chart below

Delivery/Contract Term (months) 144 Vintage (New / Existing /

Repower/Expanded/Utility Prescheduled Facility)

New

Location (city and state) Victorville, CA Source of Agreement (e.g., RFO or

Bilateral Negotiations) CHP RFO 5

Under the contract, VIAS Energies, Inc. will deliver energy as follows:

Month

Monthly Firm Contract Capacity

(kW)

As-Available Contract Capacity

(kW)

Net Contract Capacity

(kW) January N/A N/A N/A

February N/A N/A N/A March N/A N/A N/A April N/A N/A N/A May N/A N/A N/A June 11,000 2,000 13,000 July 11,000 2,000 13,000

August 11,000 2,500 13,500 September 12,000 2,500 14,500

October N/A N/A N/A November N/A N/A N/A December N/A N/A N/A

The Agreement is attached as Confidential Appendix B (B-1 and B-2). A summary of the Agreement is attached as Confidential Appendix C. A comparison of the Agreement with the Master Power Purchase and Sale Agreement is attached as Confidential Appendix D. The confidential appendices are omitted from the public version of this advice filing.


A. General Project Description

The Victorville Energy Center will be a new facility located at the Cement Plant. CEMEX Construction Materials Pacific, Inc. (“CEMEX”) owns and operates the Cement Plant which produces clinker which is mixed with other raw materials to produce cement at CEMEX’s River Plant which is 17 miles away from the Quarry Plant. The River Plant and Cement Plant are considered a “single source” under the Title V operating permit program and are collectively known as “CEMEX Victorville.” The designed cement production of the plants is 3.3 million tons annually and makes CEMEX Victorville the largest cement manufacturer in California and the second largest plant in the United States.

The Victorville Energy Center will begin delivering energy to SCE on June 1, 2020 and is expected to produce 60,967 metric tons of GHG savings. Deliveries will take place only during the months of June through September. For the remainder of the year, the energy produced at the plant will go to serve load at the Cement Plant. The new Victorville Energy Center consists of a heat recovery system which harvests heat from the Cement Plant’s kilns to operate an Organic Rankin Cycle (“ORC”) generator. The ORC generator will produce, carbon-free, electric power and will reduce GHG emissions. Specifically, waste heat from the calciner will be used as the thermal input into the ORC generator. The heat is produced by a variety of fossil fuels, for example, agricultural waste, pet coke, coal, natural gas, and other waste, to produce clinker, but a large amount goes up the chimney and is lost.

B. Safety

Pursuant to D.15-06-028,15 SCE required VIAS Energies, Inc. to provide: (a) a description of its written safety plan; (b) a report from an independent, California-licensed professional engineer certifying that VIAS Energies has a feasible written plan that obligates Seller to operate the Victorville Energy Center in accordance with existing applicable state and federal standards and in compliance with Accepted Electrical Practices; and (c) an attestation that certifies that the Victorville Energy Center will abide by its safety plan and applicable state and federal laws throughout the term of the Agreement. The Victorville Energy Center will be a newly constructed facility with

15 D.15-06-028, OP 10, at p. 60, requires SCE and SDG&E to: “…require all final Combined

Heat and Power (CHP) offerers (sic) to provide a report from an independent, California-licensed professional engineer (acceptable to both investor-owned utilities (IOUs) and counterparty) (Report) certifying that counterparty has a feasible written plan for the safe construction and operation of the generating facility in accordance with existing applicable state or federal standards and in compliance with Prudent Electrical Practices (as defined in the CHP Power Purchase Agreement (PPA)) (Safety Plan); a copy of the Safety Plan; and an attestation that the counterparty will abide with the Safety Plan and applicable state and federal laws throughout the term of the PPA (Attestation). IOUs shall verify receipt of the Report, Safety Plan, and Attestation; verify that the Safety Plan covers construction (if appropriate) and operation of the facility; and submit these documents to the Commission as part of the Advice Letter for approval of the PPA.”


construction not scheduled to begin for at least a year or more. Therefore, a safety plan is not yet in place as final design and other details regarding the construction of the facility have not been completed. However, VIAS Energies. Inc. has provided a general safety plan, an attestation and certification that they will develop and operate the facility in accordance with prudent electrical practices, the requirements of the power purchase agreement and the requirements of their interconnection agreement. Copies of these documents are attached as Confidential Appendix E. In addition, the standard terms in all of SCE’s power purchase agreements (“PPAs”) attempt to secure energy, capacity and/or related products that are produced in a safe and reliable manner by requiring the generator – the entity with legal and physical control over onsite decisions – to warrant that it will conform to certain safety requirements, including, but not limited to, operating and maintaining the generating facility in accordance with Prudent Electrical Practices.16 SETTLEMENT ACCOUNTING FOR CHP PROCUREMENT AND GHG EMISSIONS REDUCTION TARGET

Set forth in Table 2 below are the Settlement’s GHG Targets and the amount procured through the Agreement that should be counted toward the GHG target.

Table 2: Settlement Accounting

Target SCE’s Portion of Statewide

Target17

Quantities Procured from –Victorville Energy Center Toward SCE’s

Settlement Target

GHG Emissions Reduction Target

1.23 MMT18 0.0610 MMT

16 See Sections 3.07(c)(i), 3.07(h), 3.14 and Exhibit A of the Power Purchase and Sale

Agreement between SCE and VIAS Energies, Inc. (attached as Confidential Appendix B-1). “Prudent Electrical Practices” are defined as: “Those practices, methods, applicable codes, and acts engaged in or approved by a significant portion of the electric power industry during the relevant time period, or any of the practices, methods, and acts which, in exercise of reasonable judgment in light of the facts known at the time a decision is made, could have been expected to accomplish a desired result at reasonable cost consistent with good business practices, reliability, safety, and expedition. Accepted Electrical Practices are not intended to be limited to the optimum practices, methods, or acts to the exclusion of others, but rather to those practices, methods, and acts generally accepted, or approved by a significant portion of the electric power industry in the relevant region, during the relevant time period, as described in the immediately preceding sentence.”

17 The MW Target must be achieved by the end of the Initial Program Period, November 23, 2015. The GHG Target must be met by the end of the Second Program Period, December 31, 2020. See Settlement Term Sheet §§ 2.2.2, 2.3.2.3, respectively.

18 MT = metric tonne. See supra note 12 and accompanying text.


C. GHG Emissions Reduction Target

D.15-06-028, OP 12, instructs the IOUs to consider bottoming-cycle CHP facilities as new facilities for greenhouse gas accounting purposes. In addition, the Victorville Energy Center has yet to be constructed and will be a new facility. As a result, section 7.3.1.1 of the CHP Program Settlement Agreement Term Sheet applies to the Agreement:

New CHP Facilities: Efficient New CHP Facilities as compared to the Double Benchmark will count as a GHG Credit toward the contracting IOU's GHG Emissions Reduction Target regardless of where the CHP Facility is located. Measurement is based on the Double Benchmark in place at the time of PPA execution compared to the anticipated operations reflected in the PPA.

Victorville Energy Center anticipates an annual electric generation value of 238,090 MWh, and no useful thermal output. Since the only GHG emissions associated with electricity from a bottoming-cycle facility are attributed to any supplementing firing used, there will be no fuel used by the Victorville Energy Center for purposes of this calculation.

EMISSIONS PERFORMANCE STANDARD

There will be zero emissions from this facility as there will be no combustion of natural gas or other fuels. CAM GROUP PARTICIPATION

The Settlement authorizes the utilities to enter into contracts for CHP resources and to recover the net costs of the resources from all bundled service customers, direct access (“DA”) customers, community choice aggregation (“CCA”) customers, and others.19

SCE’s CAM Group includes representatives from certain non-market participants, including the Commission’s Energy and Legal Divisions, the Office of Ratepayer Advocates, The Utility Reform Network, California Utility Employees, the Union of Concerned Scientists, the California Department of Water Resources, and the Sierra Club, as well as certain other non-wholesale market participant representatives of bundled service, DA, and CCA customers.

SCE consulted with its CAM Group regarding SCE’s CHP RFO 5 on three conference calls:

• On February 9, 2017, SCE presented its CHP RFO 5 Launch and Short List Selection Process.

• On May 30, 2017, SCE presented its Short-List Selection. 19 See Settlement Term Sheet § 6.3.


• On September 19, 2017, SCE presented its Approval to Execute.

During each of these teleconference calls, SCE updated CAM Group participants on the progress of SCE’s CHP RFO 5 and consulted about the valuation results and merits of the individual projects. SCE properly responded to all comments and questions, and provided additional data as requested.

INDEPENDENT EVALUATOR (“IE”) PARTICIPATION

As required by D.07-12-052 and D.10-12-035, SCE engages an IE to monitor and ensure the integrity of its competitive solicitations, including valuation, selection, and contracting for resources with a delivery term of two years or more. Section 4.2.5 of the Settlement Term Sheet states that the IOUs “shall use an Independent Evaluator” and that the independent evaluator “shall review the entire CHP RFO process.”20

SCE engaged Accion Group, Inc. (“Accion”) to act as the IE for its CHP RFO 5 and related QF/CHP Program procurement activities. Accion reviewed the design and protocols of SCE’s CHP RFO 5 prior to launch and reviewed the evaluation criteria prior to the submission of offers. The IE participated at the opening of indicative offers, received a copy of all offer materials, and performed an independent review of the evaluation of the offers. In addition, the IE monitored all communications between the parties and had access to negotiating sessions between the parties. The IE participated in SCE’s internal meetings and discussions regarding its CHP RFO 5. Finally, the IE was invited to every CAM Group meeting related to SCE’s CHP RFO 5.

Accion’s IE report is found in Public Appendix F-1 (public version) and Confidential Appendix F-2 (confidential version).

CONFIDENTIALITY

In accordance with D.91-05-007, D.06-06-066, D.08-04-023, D.11-07-028 and General Order (GO) 96-B, SCE requests confidential treatment of the material in the confidential appendices as set forth below.

Confidential Appendix A: Offer Evaluation Methodology

Confidential Appendix B Agreement (B-1, B-2): Confidential Appendix C: Agreement Summary

Confidential Appendix D: Comparison of Agreement with SCE’s CHP Pro Forma PPA

Confidential Appendix E Seller-Submitted Safety Documentation (E-1, E-2, E-3):

20 See Settlement Term Sheet § 4.2.5.8.


Public Appendix F-1/ Confidential Appendix F-2: Independent Evaluator Report

Public Appendix G: Confidentiality Declaration

Public Appendix H: Proposed Non-Disclosure Agreement

The confidential material in this Advice Letter will be made available to non-market participants in accordance with and upon execution of SCE’s Proposed Non-Disclosure Agreement. Parties wishing to obtain access to the confidential material of this Advice Letter may contact Vivian Le in SCE’s Law Department at [email protected] to obtain a non-disclosure agreement.

The information in this Advice Letter for which SCE requests confidential treatment, and the length of time it should remain confidential, are provided in Public Appendix G. This information is entitled to confidentiality protection, as provided in the IOU Matrix, pursuant to D.06-06-066. The specific provisions of the IOU Matrix that apply to the confidential information in this Advice Letter are identified in Public Appendix G.

REQUEST FOR COMMISSION APPROVAL

Commission approval is a condition precedent of the Agreement. SCE therefore requests that the Commission issue a final and non-appealable resolution containing:

1. Approval of the Agreement in its entirety;

2. A finding that the Agreement, and SCE’s entry into the Agreement, is reasonable and prudent for all purposes, subject only to further review with respect to the reasonableness of SCE’s administration of the Agreement;

3. A finding that the 0.0610 MMT of GHG emissions reductions associated with the Agreement applies toward SCE’s GHG Target;

4. A finding that the Agreement is in compliance with the EPS;

5. A finding that SCE’s costs under the Agreement shall be recovered through SCE’s CAM;

6. Any other relief the Commission finds just and reasonable.

SCE asks the Commission to approve the Agreement by November 1, 2018, to meet the requirements of the contract.

TIER DESIGNATION

Pursuant to Section 4.10.2 of the Settlement Term Sheet, which provides that “IOUs will utilize a Tier 3 Advice Letter for all other PPAs (new, repowering, or existing PPAs that


contain any material modification of the PPAs approved in this Settlement),” SCE submits this Advice Letter with a Tier 3 designation.

EFFECTIVE DATE

This Advice Letter will become effective upon Commission approval.

NOTICE

Anyone wishing to protest this advice filing may do so by letter via U.S. Mail, facsimile, or electronically, any of which must be received no later than 20 days after the date of this advice filing. Protests should be submitted to:

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

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:

Russell G. Worden Managing Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, California 91770 Telephone: (626) 302-4177 Facsimile: (626) 302-6396 E-mail: [email protected] Laura Genao Managing Director, State Regulatory Affairs c/o Karyn Gansecki 601 Van Ness Avenue, Suite 2030 San Francisco, California 94102 Facsimile: (415) 929-5544 E-mail: [email protected] With a copy to:

Vivian Le Research Attorney 2244 Walnut Grove Avenue Rosemead, California 91770


Facsimile: (626) 302-1935 Email: [email protected]

There are no restrictions on who may file 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 filing to the interested parties shown on the attached GO 96-B, R.13-12-010, and A.08-11-001 et al 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 filing and keeping the advice filing at SCE’s corporate headquarters. To view other SCE advice letters filed with the Commission, log on to SCE’s web site at https://www.sce.com/wps/portal/home/regulatory/advice-letters. For questions, please contact Raffi Minasian at (626) 302-8905 or by electronic mail at [email protected].

Southern California Edison Company

/s/ Russell G. Worden Russell G. Worden

RGW:rm:cm Enclosures

CALIFORNIA PUBLIC UTILITIES COMMISSION

ADVICE LETTER FILING SUMMARY ENERGY UTILITY

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

Company name/CPUC Utility No.: Southern California Edison Company (U 338-E)

Utility type: Contact Person: Darrah Morgan

ELC GAS Phone #: (626) 302-2086

PLC HEAT WATER E-mail: [email protected]

E-mail Disposition Notice to: [email protected]

EXPLANATION OF UTILITY TYPE

ELC = Electric GAS = Gas PLC = Pipeline HEAT = Heat WATER = Water

(Date Filed/ Received Stamp by CPUC)

Advice Letter (AL) #: 3701-E Tier Designation: 3

Subject of AL: Submission of Agreement Between Southern California Edison Company and VIAS Energies, Inc.

Keywords (choose from CPUC listing): Procurement, Agreements

AL filing type: Monthly Quarterly Annual One-Time Other

If AL filed 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 No See Appendix G

If 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:

Vivian Le, Law Department, (626) 302-6093 or [email protected]

Resolution Required? Yes No

Requested effective date: Upon Commission Approval

No. of tariff sheets: -0-

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: N/A

Service affected and changes proposed1:

Pending advice letters that revise the same tariff sheets: None

1 Discuss in AL if more space is needed.

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

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

Russell G. Worden Managing Director, State Regulatory Operations Southern California Edison Company 8631 Rush Street Rosemead, California 91770 Telephone: (626) 302-4177 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] With a copy to: Vivian Le Research Attorney 2244 Walnut Grove Avenue Rosemead, California 91770 Facsimile: (626) 302-1935 Email: [email protected]

CONFIDENTIAL Appendix A

Offer Evaluation Methodology

Confidential Protected Materials – Public Disclosure Prohibited

CONFIDENTIAL Appendix B (B-1, B-2)

Agreement


CONFIDENTIAL Appendix C

Agreement Summary


CONFIDENTIAL Appendix D

Comparison of Agreement with SCE’s CHP Pro Forma PPA


CONFIDENTIAL Appendix E (E-1, E-2, E-3)

Seller-Submitted Safety Documentation


Public Appendix F-1

Independent Evaluator Report

REPORT TO THE

CALIFORNIA PUBLIC UTILITIES COMMISSION

REPORT OF THE INDEPENDENT EVALUATOR REGARDING

SOUTHERN CALIFORNIA EDISON’S 2017 COMBINED HEAT AND POWER REQUEST FOR OFFERS

("CHP RFO 5")

November 14, 2017

Submitted By:

ACCION GROUP, LLC 244 North Main Street

Concord, New Hampshire 03301 [email protected]

2 ____________________________________________________________________________________________________________________

244 North Main Street Concord, NH 03301 Phone: 603-229-1644 Fax: 603-225-4923 [email protected]

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

Accion Group, LLC (“Accion Group” or “Accion”) was selected by Southern California Edison Company (“SCE”) in conjunction with the California Public Utilities Commission (“CPUC” or “the Commission”) Energy Division (“ED”) and its respective Procurement Review Group (“PRG”), to serve as a member of SCE’s pre-qualified pool of Independent Evaluators (“IE”).

In accordance with the Qualifying Facility and Combined Heat and Power Settlement Agreement, SCE retained Accion as Independent Evaluator to:

…oversee the preparation and administration of the RFO and provide independent feedback to the Commission's Energy Division, and to participate in SCE's Cost Allocation Mechanism.

Accion was selected as IE to work with SCE throughout the development and implementation of its Combined Heat and Power (“CHP”) Request for Offers 5 (“RFO 5”) to solicit Offers (“Offers”) from owners and operators of CHP facilities and Utility Prescheduled Facilities (“UPF”) as defined in the Settlement Agreement1. SCE will use the contracts awarded through this RFO to meet its Green House Gas (“GHG”) Emissions Reduction Targets as set forth in D.15-06-028, as modified by the Meet and Confer Guide discussed with stakeholders on August 26, 2016.

Accion worked closely with SCE throughout the RFO process. Documents used in the RFO were developed with input from the IE, and all documents for this RFO were posted on SCE’s Website, providing Offerors with equal access to all information at the same time.

Offerors were instructed by SCE and the IE that they must copy the IE on all emails and other correspondence sent to SCE at [email protected].

Accion monitored the entire solicitation and negotiation processes to ensure all potential counterparties were treated in a reasonable, fair and equitable manner. The IE participated in the Web Conference, and additionally monitored SCE’s valuation methodologies and selection process to ensure reasonable, fair and equal treatment of all Offers. The IE had access to all offer data, and monitored negotiations by reviewing email exchanges between SCE personnel and Offerors as well as participating on each teleconference. Accion participated in the selection and review of CHP offers with SCE’s Finance and Risk Management committee and the Cost Allocation Mechanism (“CAM”) group. The IE reviewed all emails provided by Offerors and SCE and is unaware of any information being withheld from the IE.

1 Qualifying Facility and Combined Heat and Power (“CHP”) Program Settlement Agreement and related documents (including the CHP Program Settlement Agreement Term Sheet, or “Term Sheet”) approved by the California Public Utilities Commission (“CPUC”) on December 16, 2010 in Decision (“D.”) 10-12-035 as amended by the CPUC on June 11, 2015 in D.15-06-028 (collectively, the “Settlement Agreement”).


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The IE believes the CHP 5 RFO was conducted fairly from the initial public announcement of the RFO on February 28, 2017, through evaluation and identification of the most attractive Offers. The IE had access to SCE personnel without restriction and all of our questions were answered to our satisfaction. The IE notes that SCE personnel dedicated considerable time and numerous persons to ensuring each Offer received due consideration, even when the Offeror needed guidance beyond the clear and detailed RFO documents. The IE accepts that all email exchanges between SCE personnel and Offerors were shared with the IE. Our review of those exchanges found nothing suggesting bias towards or against any Offeror.

This Final Report on the CHP 5 RFO, reviews the actions taken by SCE in the development and conduct of the 2017 CHP 5 RFO, through Offer receipt on April 13, 2017, and the subsequent evaluation process.

2. How did the IOU conduct outreach to Offers, and was the solicitation robust; and 3. Was the outreach sufficient and materials clear such that the bids received met the needs

the solicitation was intending to fill?

The IE believes there was sufficient outreach for this RFO, and additionally, that materials relating to the solicitation were available and clear, and the resulting Offers met a portion of the needs the RFO was intending to fill.

a. Publicity

Accion Group believes SCE’s CHP RFO was well publicized. SCE generated the email shown in Figure 1, entitled “SCE Launches Its CHP RFO". This email was distributed to 2,295 parties on SCE’s email distribution list.

Figure 1 SCE is issuing its CHP RFO 5 in accordance with the Qualifying Facility and Combined Heat and Power Program Settlement Agreement and related documents (including the CHP Program Settlement Agreement Term Sheet) approved by the California Public Utilities Commission (“CPUC”) on December 16, 2010 in Decision 10-12-035 and as modified on June 11, 2015 in Decision 15-06-028 (collectively, the “Settlement Agreement”). Participants interested in participating can find all documents and instructions at the following vanity URL: on.sce.com/chprfo Questions relating to this RFO should be addressed to SCE by email at [email protected] (with copy to the Independent Evaluator at [email protected]) or by telephone to Benny Wu at (626) 302-3230 or Justin Dillon at (626) 302-3547. Questions of a general nature will be posted on this website as appropriate. CHP RFO Team Energy Contracts Southern California Edison 2244 Walnut Grove Avenue Rosemead, California 91770



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In addition to the various announcements and email notifications to interested parties, SCE updated its Company Website to include details of the CHP Program, and in particular, CHP RFO 5.

b. Adequate Outreach to Offerors

SCE and Accion collaborated to produce Announcements and RFO Documents in order to provide all registrants with up-to-date information. SCE’s RFO Instructions and documents were accessible to the public on the SCE Website, and included topics that ranged from General Information about the RFO to: Eligibility and Qualifications of Offerors; Terms and Conditions of the Agreements; Instructions for the Offer Submittal Process; a description and Overview of the Evaluation of Offers received; and, a List of Attachments that Offerors would need to include in their Submittals.

c. Offeror’s Conference

On March 16, 2017, SCE hosted an RFO Conference via WebEx to discuss the RFO process. Information on how to participate in the conference was made available on SCE’s Website. The IE participated in the webinar and contributed information to the prepared presentation. The IE reviewed the information SCE provided prior to the WebEx and noted all questions that were posed by potential Offerors.

Both the WebEx and all RFO Conference materials were posted on SCE’s Website. SCE answered all questions asked during the SCE Conference, and additionally, a recording of the entire Conference was included on the Company Website. This allowed persons who did not participate in the Offerors Conference to have access to all information delivered during the Conference, assuring that all Offerors had access to the same information.

The IE participated in the RFO Conference via WebEx. Both SCE and Accion were available to answer questions and further explain the RFO process. The IE believes the CHP 5 RFO and participation protocols were described in detail, and that making the information available on-line provided all Offerors access to the same information.

d. RFO Information was Accessible and Clear

Questions from Offerors

Offerors were instructed to address questions to SCE by email or by telephone to the designated contacts at SCE. Specifically, Offerors were instructed to address all questions regarding this RFO to [email protected], with copies to the Independent Evaluator as captured in Figure 2.

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The RFO Instructions informed Offerors that at SCE's discretion, answers to non-project specific questions would be posted on the SCE’s CHP RFO Website as appropriate. The IE accepts that copies of all emails were provided to the IE, and that SCE memorialized each telephone conversation and provided a copy of all telephonic discussions.

e. Communications

Communication with Offerors consisted of the IE, Offerors and SCE exchanging emails with copies provided to the IE. As appropriate, the IE also communicated via email. RFO Instructions included the following direction regarding communication protocol:

From past experience with SCE, the IE has confidence that all communications were shared with the IE, and that in those instances where an Offeror failed to include the IE on the email distribution list, SCE forwarded the email to Accion Group. However, using emails and email logs is not fail-safe, so the IE is unable to verify that all communications were shared. The

Figure 3 (From RFO Document)

9.02 Communications. Any exchange of material information concerning this RFO, including, without limitation, the submission of a Complete Offer Submittal Package as well as any exchange concerning the preparation or submission of Offers or other submissions to SCE related to this RFO, must be submitted to both SCE and the Independent Evaluator for the RFO in the form of an email at the following email addresses:

(a) SCE: [email protected]; and

(b) The Independent Evaluator at [email protected]

Note: The maximum size of any email submitted to SCE is limited to 8 MB.

The website address for the RFO is www.sce.com/CHPRFO.

SCE may, in its sole discretion, decline to respond to any email or other inquiry without

liability or responsibility.


9.03 Questions. Questions relating to this RFO should be addressed to SCE by email at [email protected] (with copies to the Independent Evaluator) or by telephone to Benny Wu at (626) 302-3230 or Justin Dillon at (626) 302-3547.


http://www.sce.com/CHPRFO


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IE notes that nothing in the emails provided to Accion Group indicated there were communications that had not been shared.

f. Response to the Solicitation

Notice of Intent to Participate in the 2017 CHP 5 RFO

Potential Offerors were asked to complete and submit via email, a non-binding Notice of Intent to Offer (“NOI”), by March 23, 2017 (Attachment A, RFO 2017 Combined Heat and Power Request for Offers). The following text is the preface included on the NOI Form, and explains SCE’s preferred procedure:

As noted, it was not mandatory for Offerors to complete and submit a NOI in order to participate in the Offer process by the requested date of March 23, 2017.

(Confidential information redacted and is included in Confidential Appendix A as REDACTION 1.)

Submittal Process

Offerors were required to submit their complete binding Offers to SCE and the IE by April 13, 2017, 5:00 PM PPT. As with the CHP 4 RFO, a required “Offer Structure Letter”, included as Exhibit A to the RFO Instructions, describing all submittal, projects and project options, was emailed to SCE and the IE at the respective designated email addresses. This was the only emailed material in the Offer submittal process. Two (2) electronic copies of the Offer (“Offer e-Binder”), containing all Offer information, were required to be physically mailed/delivered to SCE in the form of Physical Electronic Media.

SCE only considered submissions that constituted a Complete Offer Submittal Package, i.e., an Offer submitted in compliance with the RFO Instructions, including all documents


2017 CHP RFO

Non-Binding Notice of Intent to Offer (Attachment A)

This Non-Binding Notice of Intent to Offer (“Notice”) serves as notice to Southern California Edison Company (“SCE”) that the company listed below (“Counterparty”) is interested in participating in SCE’s Combined Heat and Power (“CHP”) Request for Offers (“RFO”) pursuant to the 2017 CHP RFO Instructions. SCE will accept receipt of the fully completed Notice on or before the deadline set forth in Section 3.01 of the CHP RFO Instructions. Please email this Notice to SCE at [email protected] and to the independent evaluator’s e-mail for RFO offers: [email protected]



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applicable to each Offer, by the Offer Due date. (Confidential information redacted and is included in Confidential Appendix A as REDACTION 2.)

g. Offer Receipt

Offer Packages were received on April 13, 2017. (Confidential information redacted, and is included in Confidential Appendix A as REDACTION 3.)

During the evaluation period the IE and SCE were in agreement if clarification was required from an Offeror in order to complete the evaluation. In those instances when clarification was needed, the Offeror was sent a request via email, and a response was received in the same manner. The clarification process did not provide an opportunity for Offerors to change any material component of an Offer.

Reports on Submitted Offers

The IE believes the established protocols maintained equity and transparency throughout the CHP RFO process. Accion found the RFO procedures to be comprehensive and clear, and they allowed all Offerors access to the same information at the same time. (Confidential information redacted and is included in Confidential Appendix A as REDACTION 4.) Participants were allowed to submit multiple pricing options from the same project which explains the higher number of Offers compared to facilities. (Confidential information redacted and is included in Confidential Appendix A as REDACTION 4.) The following Table 1 summarizes the conforming projects. (Confidential information redacted and is included in Confidential Appendix A as REDACTION 4.)

Table 1

Company Facility Name Est COD Vintage/Type CHP MW

Total MW

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

The IE worked closely with SCE prior to receiving Offers for the CHP 5 RFO to validate the quantitative and qualitative evaluation methodologies proposed and to ensure they were consistent with the RFO instructions posted on SCE'S website. The evaluation for CHP 5 was the same as CHP 4. To validate the model, a Mock Offer process where SCE evaluated seven of the previous Offers from prior RFOs was performed. These Offers consisted of CHP and UPF Offers. The evaluation of the Mock Offers provided a process to lock down the evaluation model and pricing assumptions prior to Offers being received. The IE ran the Mock Offers in parallel using its own tools and was able to duplicate SCE's results.

For the quantitative analysis, the RFO instructions were clear in that the evaluation was based on the Net Present Value C (“NPV”) of each project including capacity benefits, energy benefits, credit benefit, contract payments, debt equivalence, GHG cost, congestion cost and transmission cost. The cost minus the benefit results in a premium to customers. Similar to CHP 4, because the MW target was previously met for this program, the cost per GHG reduction was used as the ranking metric.

The RFO instructions regarding the qualitative factors were clear and provided the characteristics of the project that would be assessed in addition to the quantitative analysis. They included the following characteristics:

• Permitting and interconnection

Environmental and permitting status Electrical interconnection Fuel interconnection and source Water interconnection and source

• Pre-development milestones

Project financing status Project development experience Thermal host FERC and CA qualifying facility standards Emissions performance standards

• Development milestones

Site control Large Equipment status Reasonableness of commercial operation date

• Transmission area

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• Modifications to pro forma documents

• Fuel supply and transportation arrangements/options

• Cost effectiveness of GHG reductions

• Supplier diversity

• Congestion, negative prices, and curtailment considerations not captured in quantitative valuation

• Portfolio fit of energy, capacity and term

• Offeror concentration

• Dispatchability and curtail-ability

• Offer price in excess of public or independent data

As part of the evaluation process, SCE allowed each Offeror time to cure deficiencies or inaccuracies in the original Offer information. The IE monitored this communication which was conducted through email and met telephonically with SCE on a weekly basis to discuss updates. The IE monitored the communication via email and believes that each Offeror was treated fairly in the Offer curing process.

The IE reviewed each Offer and independently calculated the project NPV premium based on the cured Offer template for each project. Next, the GHG savings was calculated for each offer. These premiums were converted to $/GHG reduction values. Because UPF Offers are based on economic dispatch, the IE did not simulate those Offers because it did not have access to the SCE dispatch Model. However, the IE reviewed the dispatch results and confirmed the energy costs and revenues were reasonable. The IE compared its NPV premium calculations against SCE results and worked to reconcile any discrepancies with the evaluation team.

Table A in the Confidential Appendix shows the evaluation results. (Confidential information redacted and is included in Confidential Appendix A as REDACTION 5.) After the short list was approved by SCE’s FRM and the CAM group, the IE monitored the negotiation process which continued through October of 2017. (Confidential information redacted and is included in Confidential Appendix A as REDACTION 5.) SCE executed contracts with the two (2) remaining projects resulting in 90,104 MT of GHG reduction.

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

This is not applicable, as there were no affiliate Offers or ownership proposals in this CHP RFO.

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6. Based on the complete bid process, is (are) the IOU contract(s) the best overall bid(s) received by the IOU?

Based on the complete Offer process including negotiations of the short-listed Offers, the IE agrees with SCE that the contracts represent the best overall Offers from the RFO. The Offers align with the requirements of the RFO and provided GHG savings pushing SCE closer to its target. Table B in the Confidential Appendix B summarizes the Offers with which SCE executed contracts 7. If the contract does not directly reflect a product solicited and bid in an RFO, is the

contract superior to the bids received on the products solicited in the RFO? Explain.

All contracts directly reflect the products solicited in the RFO including one new CHP project and one UPF project. 8. Is the contract a reasonable way of achieving the need identified in the RFO?

The IE believes the contract is a reasonable way of achieving the GHG savings identified in the RFO. The final contract expected costs are consistent with the costs calculated in the evaluation and the premium per GHG savings are in line with projects selected in previous RFOs. (Confidential information redacted and is included in Confidential Appendix A as REDACTION 6.) 9. Based on your analysis of the RFO bids, the bid process, and the overall market, does the

contract merit Commission approval? Explain.

Based on the analysis of the RFO Offers, the Offer process, and the overall market, the IE believes the contracts merit Commission approval. (Confidential information redacted and is included in Confidential Appendix A as REDACTION 7.) SCE evaluated each conforming Offer and the evaluation process was fair for all Offerors. Information pertaining to the RFO was given to all Offerors at the same time and the evaluation was conducted fairly with no bias towards any Offeror. All Offerors were given an equal opportunity to cure deficiencies that existed in their initial Offer information. The executed contracts represents the least cost/best fit opportunity submitted in this RFO and the IE agrees with the final selection. (Confidential information redacted and is included in Confidential Appendix A as REDACTION 7.)

10. Based on the complete bid process, should some component(s) be changed to ensure future

RFOs are fairer or provide a more efficient, lower cost option?

As stated in CHP 4, it is the IE's opinion that having a central location for Offers to be submitted and cured, along with all communications with Offerors, would provide significant efficiency to the process and eliminate any question about what was communicated to individual

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Offerors. There would be benefit in hosting and organizing the data on a central site in the event regulatory review of exchanges is conducted.

It is the opinion of the IE that SCE personnel are doing everything possible to successfully complete this program. (Confidential information redacted and is included in Confidential Appendix A as REDACTION 8).

CONFIDENTIAL Appendix F-2

Independent Evaluator Report


Public Appendix G

Confidentiality Declaration

Public Appendix H

Proposed Non-Disclosure Agreement

1

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Submission of Agreement Between Southern California Edison Company and VIAS Energies, Inc.

) ) Advice 3701-E

[MODEL] NONDISLOSURE AGREEMENT REGARDING MARKET PROTECTED MATERIALS

1. Scope. This Nondisclosure Agreement Regarding Protected Materials

(“Nondisclosure Agreement”) shall govern access to and the use of Protected Materials, produced

by, or on behalf of, a 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 Nondisclosure

Agreement, the following terms are defined for the purposes of this Nondisclosure Agreement:

A. For purposes of this Nondisclosure Agreement, 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, 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 Nondisclosure Agreement 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,

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

(including information in electronic form) that copies, discloses, incorporates, includes or

2

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

Nondisclosure Agreement or any other nondisclosure agreement or protective order.

B. The term “redacted” refers to situations in which Protected Materials in a

document, whether the document is in paper or electronic form, have been covered, blocked out,

or removed.

C. The “Disclosing Party” is Southern California Edison Company (SCE).

D. The “Requesting Party” is _________________ [Insert entity name].

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 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

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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.

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 Nondisclosure Agreement.

H. “Reviewing Representatives” are limited to person(s) designated in

accordance with Paragraph 5 who meet the following criteria:

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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 Nondisclosure Agreement and are bound by the terms of this Nondisclosure Agreement.

I. The term “Authorized Reviewers” refers to: (1) a Requesting Party that is a

Non-Market Participant that has executed a Nondisclosure Agreement; or (2) a Reviewing

Representative of a Requesting Party if the Requesting Party has executed a Nondisclosure

Agreement and the Reviewing Representative has executed a Nondisclosure Certificate. 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.

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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 NONDISCLOSURE AGREEMENT,” or with words of similar import as long as one or more

of the terms, “Protected Materials” or “Nondisclosure Agreement” 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 13 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 Nondisclosure Agreement or any other nondisclosure agreement or protective

order.

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 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 Nondisclosure

Agreement. 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

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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 receives Protected 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

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an identified person or entity is an appropriate Reviewing Representative shall be resolved

through the dispute resolution procedures in Paragraph 10 of this Nondisclosure Agreement. If a

Disclosing Party objects to a specific Reviewing Representative within five (5) business days

after the Reviewing Representative is identified, the Requesting Party 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 10. 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 10.

Reviewing Representative(s) have a duty to disclose to the Disclosing Party any potential

conflict 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

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 Nondisclosure Agreement, Authorized Reviewers shall be entitled to access any Protected

Materials and may make copies of Protected Materials, but such copies become Protected

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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 Nondisclosure

Agreement.

8. Maintaining Confidentiality of Protected Materials. Each Authorized Reviewer

shall treat Protected Materials as confidential in accordance with this Nondisclosure Agreement

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 Nondisclosure Agreement 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 Nondisclosure Agreement, and shall treat such Protected Materials in the same

manner as they treat their own most highly confidential information.

Reviewing Representatives shall be liable for any unauthorized disclosure or use by

themselves and/or their employees, paralegal, or administrative staff. In the event any Requesting

Party and/or its Reviewing Representative 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 Requesting Party shall

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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

Requesting Party and its Reviewing Representative 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 a Requesting Party and/or Reviewing

Representative has been ordered to produce certain specific Protected Materials, the Requesting

Party and/or Reviewing Representative 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 an Authorized Reviewer 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

Reviewer 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

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, such Protected Materials shall remain subject to this Nondisclosure Agreement.

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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 a declaration 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 Nondisclosure Agreement and the Nondisclosure Certificate.

10. Dispute Resolution. All disputes that arise under this Nondisclosure Agreement,

including but not limited to alleged violations of this Nondisclosure Agreement 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.

11. Other Objections to Use or Disclosure. Nothing in this Nondisclosure Agreement

shall be construed as limiting the right of a Party to object to the use or disclosure of Protected

Materials on any legal ground, including relevance or privilege.

12. Remedies. Any violation of this Nondisclosure Agreement shall constitute a

violation of an order of the Commission. Notwithstanding the foregoing, the Parties 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.

13. 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

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

Materials for specific documents or material.

14. Modification. This Nondisclosure Agreement shall remain in effect unless and

until it is modified or terminated by written agreement of the parties or by order of the

Commission or Assigned ALJ. The Parties agree that modifications to this Nondisclosure

Agreement may become necessary, and they further agree to work cooperatively to devise and

implement such modifications in as timely a manner as possible. Each Party governed by this

Nondisclosure Agreement has the right to seek modifications in it as appropriate from the

Assigned ALJ or the Commission.

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

the scope of this Nondisclosure Agreement. REQUESTING PARTY

By: _____________________________

Title: __________________________ _

Representing: _____________________

Date: __________________________ _

DISCLOSING PARTY

By: _____________________________

Title: __________________________ _

Representing: _____________________

Date: __________________________ _

APPENDIX A TO MODEL NONDISCLOSURE AGREEMENT

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Submission of Agreement Between Southern California Edison Company and VIAS Energies, Inc.

) ) Advice 3701-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 Nondisclosure Agreement between [REQUESTING PARTY] and SCE in this proceeding, that I have been given a copy of and have read the Nondisclosure Agreement, 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 Nondisclosure Agreement. I acknowledge that a violation of this certificate constitutes a violation of an order of California Public Utilities Commission.

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