Common use of DISCUSSION OF MERIT FOR APPROVAL Clause in Contracts

DISCUSSION OF MERIT FOR APPROVAL. In Xxxxxx’x opinion, both the contract amendment to extend price relief under the existing contract and the new five-year agreement with Wheelabrator Shasta merit CPUC approval. • The CPUC found the project’s 2011 price relief amendment to be reasonable, including its pricing; the current amendment’s pricing is than the price of the 2011 amendment that applied in the last eleven months of its term. While Xxxxxx ranks the PPA’s contract price as high compared to recent competing proposals from projects delivering renewable energy, the more relevant peer group to which to compare this short-term amendment is other recent opportunities available to PG&E from biomass-fueled facilities that agree to deliver power in the short term from biofuel harvested from High Hazard Zones. The pricing of the new contract ranks low to moderate compared to that peer group; its value ranks moderate to high. • Similarly, the contract amendment will likely result in payments above the market price of renewable energy. This might amount to excess payments in the vicinity of by ratepayers above what they would pay for renewable energy at market prices, depending on market and performance outcomes. The $/MWh net market value of the Wheelabrator Shasta amendment deliveries will however be those of previous price extensions that PG&E granted to other QFs that are burning HHZ fuel and those of proposals received in PG&E’s BioRAM solicitation for delivering energy derived from HHZ fuel. The contract amendment is an immediate means of obtaining bioenergy from HHZ fuel at a value better than or comparable to competing alternatives. • While the price of the new five-year contract ranks high compared to competing proposals to deliver renewable energy, the more relevant peer group to which to compare this contract is other proposals from biomass-fueled facilities that offered to deliver power from biofuel harvested from High Hazard Zones. The price of the new agreement ranks low when compared to those proposals that still remained available to PG&E after the BioRAM RFO selections were completed. • The Portfolio-Adjusted Value of the new contract in levelized $/MWh ranks high compared to those of competing proposals for HHZ fuel-derived energy that were available to PG&E after the BioRAM solicitation. Xxxxxx independently ranked the new contract as moderate in net market value among those proposals. However, Xxxxxx agrees that contracting with Wheelabrator Shasta was the highest-valued alternative available to PG&E to meet its compliance obligation for HHZ fuel-based energy set by Resolution E-4805, given the limitations of the highest-valued proposal. • Because the contract amendment and the new PPA require the facility to meet a target for the content of its delivered fuel that originates in High Hazard Zones, they will contribute to meeting an urgent public policy goal stated in the Governor’s emergency proclamation on tree mortality and in regulatory and legislative directives. In Xxxxxx’x opinion, the above-market payment the amendment requires is justified by its contribution toward burning HHZ fuels in response to a state of emergency. • While taking deliveries under the contract amendment and the new PPA is not well aligned with PG&E portfolio fit or RPS compliance needs, and it is not particularly consistent with PG&E’s 2015 RPS procurement plan regarding incremental RPS contracts, the deliveries align quite well with the directives of the CPUC’s Resolutions E-4770 and E-4805 to respond to the tree mortality emergency. • The amendment and the new PPA will contribute to PG&E’s prior definition of its RPS Goals evaluation criterion, such as contributing economic benefits to a community afflicted by poverty and high unemployment, and supporting the state goal for biomass-fueled energy as a percentage of renewable energy generation. • As an operating facility that has delivered biomass-fueled energy reliably to PG&E for decades, the Wheelabrator Shasta plant ranks high for project viability. Based on these observations and judgments about the fairness of negotiations and overall impact on ratepayer benefits and costs, Xxxxxx’x opinion is that both Wheelabrator Shasta’s contract amendment and new five-year contract merit CPUC approval. Appendix E

DISCUSSION OF MERIT FOR APPROVAL. In Xxxxxx’x opinion, both the contract amendment to extend price relief under the existing contract and the new five-year agreement with Wheelabrator Shasta merit for Xxxxxx Forest Products merits CPUC approval. •  The CPUC found the projectBFP’s 2011 price relief amendment to be reasonable, including its pricing; the current amendment’s pricing is lower than the price that of the 2011 amendment that applied in the last eleven months of its termamendment. While Xxxxxx ranks the PPA’s contract price as moderate to high compared to recent competing proposals from projects delivering renewable energy, the more relevant peer group to which to compare this short-term amendment is other recent opportunities available short- to PG&E medium-term proposals from biomass-fueled facilities that agree to deliver power in the short term from biofuel harvested from High Hazard Zones. The pricing of the new contract ranks BFP amendment is low to moderate compared to that peer group; its value ranks moderate to high. •  Similarly, the contract BFP amendment will likely result in payments above the market price of renewable energy. This might amount to excess payments in the vicinity of by ratepayers above what they would pay for renewable energy at market prices, depending on market and performance outcomes. The $/MWh net market value of the Wheelabrator Shasta BFP amendment deliveries will however be below those of previous price extensions that PG&E granted to other QFs that are burning HHZ fuel and also below those of proposals received in PG&E’s BioRAM solicitation for delivering energy derived from HHZ fuel. The contract So the BFP amendment is an immediate a means of obtaining bioenergy from HHZ fuel at a better value better than or comparable to competing alternatives. • While the price of the new five-year contract ranks high compared to competing proposals to deliver renewable energy, the more relevant peer group to which to compare this contract is other proposals from biomass-fueled facilities that offered to deliver power from biofuel harvested from High Hazard Zones. The price of the new agreement ranks low when compared to those proposals that still remained available to PG&E after the BioRAM RFO selections were completed. • The Portfolio-Adjusted Value of the new contract in levelized $/MWh ranks high compared to those of competing proposals for HHZ fuel-derived energy that were available to PG&E after the BioRAM solicitation. Xxxxxx independently ranked the new contract as moderate in net market value among those proposals. However, Xxxxxx agrees that contracting with Wheelabrator Shasta was the highest-valued alternative available to PG&E to meet its compliance obligation for HHZ fuel-based energy set by Resolution E-4805, given the limitations of the highest-valued proposal. •  Because the contract BFP amendment and the new PPA require requires the facility to meet a target for the content of its delivered fuel that originates in High Hazard Zones, they it will contribute to meeting an urgent public policy goal stated in the Governor’s emergency proclamation on tree mortality and in regulatory and legislative directives. In Xxxxxx’x opinion, opinion the relatively modest above-market payment the amendment requires is justified by its contribution the progress toward burning HHZ fuels biofuels it will provide in response to a state of emergency. •  While taking deliveries under the contract BFP amendment and the new PPA is not well aligned with PG&E portfolio fit or RPS compliance needs, and it is not particularly consistent with PG&E’s 2015 RPS procurement plan regarding incremental RPS contractsplan, the deliveries align amendment aligns quite well with the directives of the CPUC’s Resolutions Resolution E-4770 and E-4805 to respond to cope with the tree mortality emergency. •  The BFP amendment and the new PPA will contribute to PG&E’s prior definition definitions of its RPS Goals goals evaluation criterion, such as contributing economic benefits to a community afflicted by poverty and high unemployment, and supporting the state goal for biomass-biomass- fueled energy as a percentage of renewable energy generation. •  As an operating facility that has delivered biomass-fueled energy reliably to PG&E for decades, the Wheelabrator Shasta plant BFP ranks high for project viability. The provision of the amendment raises concerns about fairness of negotiations. Xxxxxx’x own opinion is that PG&E’s action is,  overall, fair to BFP’s competitors, fair to the other IOUs and to their ratepayers, and fair to BFP itself. Xxxxxx has no information indicating that BFP participated in Edison’s or SDG&E’s BioRAM solicitations. Xxxxxx views BFP as having freedom of choice in making its decisions about the terms and conditions offered by PG&E, and has detected no reluctance to accept . Xxxxxx acknowledges that other observers of PG&E’s business dealings could view it as unfair treatment of BFP, of BFP’s competitors, or of the other IOUs and their ratepayers. Xxxxxx would expect that other biomass-fueled QFs to which PG&E did not extend price relief might very well view the concession provided to BFP as unfair. Ratepayers of the other utilities similarly might, hypothetically, object that . If this were the case, Xxxxxx would view it as the consequence of PG&E having a prior and ongoing business relationship with BFP vs. other IOUs having no business relationship. Based on these observations and judgments about the fairness of negotiations and overall impact on ratepayer benefits and costs, Xxxxxx’x qualified opinion is that both Wheelabrator Shasta’s the Xxxxxx Forest Products contract amendment and new five-year contract merit merits CPUC approval. This opinion is qualified by Xxxxxx’x inability to observe directly the negotiations in which BFP agreed to PG&E’s terms and conditions, including . Confidential Appendix ED Independent Evaluator’s Report (Confidential Version)‌‌ Xxxxxx Forest Products (“Burney”) Third Pricing Agreement Confidential in its Entirety Confidential Appendix E Confidential Summary and Analysis of the Agreement Xxxxxx Forest Products (“Xxxxxx”) Third Pricing Agreement Confidential in its Entirety PG&E Gas and Electric Advice Filing List General Order 96-B, Section IV AT&T Division of Ratepayer Advocates Office of Ratepayer Advocates Albion Power Company Xxx Xxxxxxx & Associates, Inc. OnGrid Solar Xxxxxxxx & Xxxx LLP Xxxxxxxx & Xxxxxxx Pacific Gas and Electric Company Xxxxxxxx & Xxxxx Xxxxxx & Brand Praxair Atlas ReFuel Xxxxxxx Xxxxxxxxx & Xxxxxx LLP Regulatory & Cogeneration Service, Inc. BART Evaluation + Strategy for Social Innovation SCD Energy Solutions Xxxxxxxxx & Xxx, Inc. G. A. Xxxxxx & Assoc. SCE Xxxxxx Xxxxx Associates GenOn Energy Inc. SDG&E and SoCalGas Xxxxx Xxxxxxxx XxXxxxxxxx & Xxxxx, X.X. GenOn Energy, Inc. XXXXX Xxxxx Xxxxxxxx XxXxxxxxxx, P.C. Goodin, XxxXxxxx, Xxxxxx, Xxxxxxx & Xxxxxxx San Francisco Water Power and Sewer CENERGY POWER Green Charge Networks Seattle City Light CPUC Green Power Institute Sempra Energy (Socal Gas) California Cotton Ginners & Growers Xxxx Xxxxx & Xxxxxx Sempra Utilities California Energy Commission ICF SoCalGas California Public Utilities Commission International Power Technology Southern California Edison Company California State Association of Counties Intestate Gas Services, Inc. Spark Energy Calpine Xxxxx Group Sun Light & Power Xxxxxx, Xxxxx Xxx Xxxx Consulting Sunshine Design Center for Biological Diversity Leviton Manufacturing Co., Inc. Tecogen, Inc. City of Palo Alto Linde TerraVerde Renewable Partners City of San Xxxx Los Angeles County Integrated Waste Management Task Force TerraVerde Renewable Partners, LLC Clean Power Los Angeles Dept of Water & Power Tiger Natural Gas, Inc. Clean Power Research MRW & Associates TransCanada Coast Economic Consulting Xxxxxx Xxxxxx Xxxxxxxx Xxxxxxxx Xxxxxxx LLP Commercial Energy Marin Energy Authority Utility Cost Management Cool Earth Solar, Inc. XxXxxxx Long & Xxxxxxxx LLP Utility Power Solutions County of Tehama - Department of Public Works XxXxxxxx & Associates Utility Specialists Crossborder Energy Modesto Irrigation District Verizon Crown Road Energy, LLC Xxxxxx Xxxxxxx Water and Energy Consulting Xxxxx Xxxxxx Xxxxxxxx LLP NLine Energy, Inc. Wellhead Electric Company Day Xxxxxx Xxxxxx NRG Solar Western Manufactured Housing Communities Association (WMA) Defense Energy Support Center Nexant, Inc. YEP Energy

DISCUSSION OF MERIT FOR APPROVAL. In Xxxxxx’x opinion, both the contract amendment to extend price relief under the existing contract and the new five-year agreement with Wheelabrator Shasta merit for Xxxxxx Forest Products merits CPUC approval. • The CPUC found the projectBFP’s 2011 price relief amendment to be reasonable, including its pricing; the current amendment’s pricing is lower than the price that of the 2011 amendment that applied in the last eleven months of its termamendment. While Xxxxxx ranks the PPA’s contract price as moderate to high compared to recent competing proposals from projects delivering renewable energy, the more relevant peer group to which to compare this short-term amendment is other recent opportunities available short- to PG&E medium-term proposals from biomass-fueled facilities that agree to deliver power in the short term from biofuel harvested from High Hazard Zones. The pricing of the new contract ranks BFP amendment is low to moderate compared to that peer group; its value ranks moderate to high. • Similarly, the contract BFP amendment will likely result in payments above the market price of renewable energy. This might amount to excess payments in the vicinity of by ratepayers above what they would pay for renewable energy at market prices, depending on market and performance outcomes. The $/MWh net market value of the Wheelabrator Shasta BFP amendment deliveries will however be below those of previous price extensions that PG&E granted to other QFs that are burning HHZ fuel and also below those of proposals received in PG&E’s BioRAM solicitation for delivering energy derived from HHZ fuel. The contract So the BFP amendment is an immediate a means of obtaining bioenergy from HHZ fuel at a better value better than or comparable to competing alternatives. • While the price of the new five-year contract ranks high compared to competing proposals to deliver renewable energy, the more relevant peer group to which to compare this contract is other proposals from biomass-fueled facilities that offered to deliver power from biofuel harvested from High Hazard Zones. The price of the new agreement ranks low when compared to those proposals that still remained available to PG&E after the BioRAM RFO selections were completed. • The Portfolio-Adjusted Value of the new contract in levelized $/MWh ranks high compared to those of competing proposals for HHZ fuel-derived energy that were available to PG&E after the BioRAM solicitation. Xxxxxx independently ranked the new contract as moderate in net market value among those proposals. However, Xxxxxx agrees that contracting with Wheelabrator Shasta was the highest-valued alternative available to PG&E to meet its compliance obligation for HHZ fuel-based energy set by Resolution E-4805, given the limitations of the highest-valued proposal. • Because the contract BFP amendment and the new PPA require requires the facility to meet a target for the content of its delivered fuel that originates in High Hazard Zones, they it will contribute to meeting an urgent public policy goal stated in the Governor’s emergency proclamation on tree mortality and in regulatory and legislative directives. In Xxxxxx’x opinion, opinion the relatively modest above-market payment the amendment requires is justified by its contribution the progress toward burning HHZ fuels biofuels it will provide in response to a state of emergency. • While taking deliveries under the contract BFP amendment and the new PPA is not well aligned with PG&E portfolio fit or RPS compliance needs, and it is not particularly consistent with PG&E’s 2015 RPS procurement plan regarding incremental RPS contractsplan, the deliveries align amendment aligns quite well with the directives of the CPUC’s Resolutions Resolution E-4770 and E-4805 to respond to cope with the tree mortality emergency. • The BFP amendment and the new PPA will contribute to PG&E’s prior definition definitions of its RPS Goals goals evaluation criterion, such as contributing economic benefits to a community afflicted by poverty and high unemployment, and supporting the state goal for biomass-biomass- fueled energy as a percentage of renewable energy generation. • As an operating facility that has delivered biomass-fueled energy reliably to PG&E for decades, the Wheelabrator Shasta plant BFP ranks high for project viability. The provision of the amendment raises concerns about fairness of negotiations. Xxxxxx’x own opinion is that PG&E’s action is, • overall, fair to BFP’s competitors, fair to the other IOUs and to their ratepayers, and fair to BFP itself. Xxxxxx has no information indicating that BFP participated in Edison’s or SDG&E’s BioRAM solicitations. Xxxxxx views BFP as having freedom of choice in making its decisions about the terms and conditions offered by PG&E, and has detected no reluctance to accept . Xxxxxx acknowledges that other observers of PG&E’s business dealings could view it as unfair treatment of BFP, of BFP’s competitors, or of the other IOUs and their ratepayers. Xxxxxx would expect that other biomass-fueled QFs to which PG&E did not extend price relief might very well view the concession provided to BFP as unfair. Ratepayers of the other utilities similarly might, hypothetically, object that . If this were the case, Xxxxxx would view it as the consequence of PG&E having a prior and ongoing business relationship with BFP vs. other IOUs having no business relationship. Based on these observations and judgments about the fairness of negotiations and overall impact on ratepayer benefits and costs, Xxxxxx’x qualified opinion is that both Wheelabrator Shasta’s the Xxxxxx Forest Products contract amendment and new five-year contract merit merits CPUC approval. This opinion is qualified by Xxxxxx’x inability to observe directly the negotiations in which BFP agreed to PG&E’s terms and conditions, including . Confidential Appendix ED Independent Evaluator’s Report (Confidential Version)‌‌ Xxxxxx Forest Products (“Burney”) Third Pricing Agreement Confidential in its Entirety Confidential Appendix E Confidential Summary and Analysis of the Agreement Xxxxxx Forest Products (“Burney”) Third Pricing Agreement Confidential in its Entirety PG&E Gas and Electric Advice Filing List General Order 96-B, Section IV AT&T Division of Ratepayer Advocates Office of Ratepayer Advocates Albion Power Company Xxx Xxxxxxx & Associates, Inc. OnGrid Solar Xxxxxxxx & Xxxx LLP Xxxxxxxx & Xxxxxxx Pacific Gas and Electric Company Xxxxxxxx & Poole Xxxxxx & Brand Praxair Atlas ReFuel Xxxxxxx Xxxxxxxxx & Xxxxxx LLP Regulatory & Cogeneration Service, Inc. BART Evaluation + Strategy for Social Innovation SCD Energy Solutions Xxxxxxxxx & Xxx, Inc. X. X. Xxxxxx & Xxxxx. SCE Xxxxxx Xxxxx Associates GenOn Energy Inc. SDG&E and SoCalGas Xxxxx Xxxxxxxx XxXxxxxxxx & Xxxxx, X.X. XxxXx Energy, Inc. XXXXX Xxxxx Xxxxxxxx XxXxxxxxxx, X.X. Xxxxxx, XxxXxxxx, Xxxxxx, Xxxxxxx & Xxxxxxx San Francisco Water Power and Sewer CENERGY POWER Green Charge Networks Seattle City Light CPUC Green Power Institute Sempra Energy (Socal Gas) California Cotton Ginners & Growers Xxxx Xxxxx & Xxxxxx Sempra Utilities California Energy Commission ICF SoCalGas California Public Utilities Commission International Power Technology Southern California Edison Company California State Association of Counties Intestate Gas Services, Inc. Spark Energy Calpine Xxxxx Group Sun Light & Power Xxxxxx, Xxxxx Xxx Xxxx Consulting Sunshine Design Center for Biological Diversity Leviton Manufacturing Co., Inc. Tecogen, Inc. City of Palo Alto Linde TerraVerde Renewable Partners City of San Xxxx Los Angeles County Integrated Waste Management Task Force TerraVerde Renewable Partners, LLC Clean Power Los Angeles Dept of Water & Power Tiger Natural Gas, Inc. Clean Power Research MRW & Associates TransCanada Coast Economic Consulting Xxxxxx Xxxxxx Xxxxxxxx Xxxxxxxx Xxxxxxx LLP Commercial Energy Marin Energy Authority Utility Cost Management Cool Earth Solar, Inc. XxXxxxx Long & Xxxxxxxx LLP Utility Power Solutions County of Tehama - Department of Public Works XxXxxxxx & Associates Utility Specialists Crossborder Energy Modesto Irrigation District Verizon Crown Road Energy, LLC Xxxxxx Xxxxxxx Water and Energy Consulting Xxxxx Xxxxxx Xxxxxxxx LLP NLine Energy, Inc. Wellhead Electric Company Day Xxxxxx Xxxxxx NRG Solar Western Manufactured Housing Communities Association (WMA) Defense Energy Support Center Nexant, Inc. YEP Energy

DISCUSSION OF MERIT FOR APPROVAL. In Xxxxxx’x opinion, both the amended and restated contract amendment to extend price relief under the existing contract between PG&E and the new five-year agreement with Wheelabrator Shasta merit CalRENEW-1 merits CPUC approval. : • The CPUC has already found the project’s 2011 price relief amendment original PPA to be reasonable, including its pricing; the current amendment’s pricing , which is than the price of the 2011 amendment that applied not altered in the last eleven months of its termamended contract. While Xxxxxx currently ranks the PPA’s contract price as quite high and net market value as likely low compared to recent competing proposals from projects delivering renewable energyproposals, the more relevant peer group considered by the Commission when approving the original PPA would have included competing proposals submitted to which to compare this short-term amendment is other recent opportunities available to PG&E from biomass-fueled facilities that agree to deliver power in the short term from biofuel harvested from High Hazard Zones. The pricing of the new contract ranks low to moderate compared to that peer group; its value ranks moderate to high. • Similarly, the contract amendment will likely result in payments above the market price of renewable energy. This might amount to excess payments in the vicinity of by ratepayers above what they would pay for renewable energy at market prices, depending on market and performance outcomes. The $/MWh net market value of the Wheelabrator Shasta amendment deliveries will however be those of previous price extensions that PG&E granted to other QFs that are burning HHZ fuel and those of proposals received in PG&E’s BioRAM solicitation for delivering energy derived from HHZ fuel. The contract amendment is an immediate means 2006 RPS solicitation, not perfect foresight of obtaining bioenergy from HHZ fuel at a value better than or comparable to competing alternatives. • While the price of the new five-year contract ranks high compared to competing proposals to deliver renewable energy, the more relevant peer group to which to compare this contract is other proposals from biomass-fueled facilities that offered to deliver power from biofuel harvested from High Hazard Zones. The price of the new agreement ranks low when compared to those proposals that still remained available to PG&E after the BioRAM RFO selections were completedmarket conditions in 2014. • The insertion of provisions for PG&E to exercise a buyer curtailment option provides ratepayers with a material benefit with no change in contract price. This allows PG&E to avoid taking delivery of the project’s energy when CAISO market prices turn negative during over-generation episodes, when ratepayers would otherwise pay the facility for delivering a product that is worth less than zero. The CAISO is already experiencing a modest frequency of such negative-price hours and could experience more as additional intermittent resources are built and come on line in California. Xxxxxx does not have an independent estimate of the ratepayer value for incorporating the buyer curtailment option into the CalRENEW-1 PPA. PG&E performed a valuation of the amended PPA using its current Portfolio-Adjusted Value methodology, including an estimate of the value of the new buyer curtailment option. Using the utility’s current model inputs and forward market curves from June 2014, PG&E’s methodology attributes a value option. to the SB GT&S 0670953 This calculation is quite sensitive to input assumptions. For example, this estimate is more than twice what would be estimated for a solar project with 8,760 hours per year of buyer curtailment option if the input assumptions that PG&E originally proposed in January 2014 for its 2013 RPS RFO were applied. Xxxxxx views the current set of estimates for PG&E’s valuation of buyer curtailment as too high. However, it seems credible that the benefit of flexibility provided by the curtailment option to avoid imbalance charges, CAISO curtailment orders, and volatile ancillary services prices during periods of negative market prices could be worth several dollars per MWh over the course of time for a contract that terminates in levelized $/MWh ranks high compared 2029. • In the amended contract, as with the original contract, the project will be paid a reduced price for excess energy, defined by an annual trigger the changes create some modest likelihood that total payments to CalRENEW-1 over the term of the PPA will be lower than would be case under the original contract, which if so could have the effect of a reduction in average pricing. • In contrast, by taking on the role of scheduling coordinator from the seller, PG&E’s ratepayers will be exposed to a greater likelihood of paying CAISO imbalance costs and penalties. It is not yet evident how much more costly the average costs of imbalances for CalRENEW-1 will be under the new rules implemented by the CAISO, including the elimination of netting of imbalances over a month. Xxxxxx does not have a basis for estimating the incremental average cost to ratepayers of PG&E taking on the scheduling coordinator role. Evidently it was a significant enough concern to Meridian Energy for it to initiate negotiations to shift these risks to the buyer. That being said, PG&E’s ratepayers already absorb these risks for hundreds of megawatts of solar photovoltaic projects under contract, and the number will continue to rise as new contracted projects come on line. Most of the PPAs with solar and wind projects that PG&E has entered since the CalRENEW-1 contract was first signed place the role of scheduling coordinator on the utility, so the amendment aligns this project’s imbalance risks with those of competing proposals most of PG&E’s solar PPA portfolio; the amended contract is in line with these other contracts in its allocation of risks between buyer and seller. As far as imbalance risks go, ratepayers are no worse off with the amended PPA than they would be with any other 5-MW project under PG&E’s standard contract terms in use today. PG&E’s skill set for HHZ fuelmanaging the imbalance risks of its overall portfolio has likely evolved to the point where the utility is better able to manage these specific risks than any other entity7 other than one or two of the other California IOUs. Also, one would expect that PG&E’s ability to manage a 5-derived MW solar project’s imbalance risks is enhanced by its control of other projects and by the buyer curtailment options it has secured in other PPAs. One of the elements of PG&E’s valuation of buyer SB GT&S 0670954 curtailment options is the ability to reduce exposure to CAISO imbalance energy that were available to PG&E after charges. • The existing, operating CalRENEW-1 project ranks very high in project viability. • Xxxxxx regards the BioRAM solicitation. Xxxxxx independently ranked the new contract PPA as ranking as moderate in portfolio fit given that it is already counted in PG&E’s baseline for estimating net market value among those proposals. However, Xxxxxx agrees that contracting with Wheelabrator Shasta was the highest-valued alternative available compliance needs and will deliver renewable energy both in periods currently expected to PG&E to meet its have net long and net short RPS compliance obligation for HHZ fuel-based energy set by Resolution E-4805, given the limitations of the highest-valued proposalneeds. • Because the contract amendment and the new PPA require the facility to meet a target for the content of its delivered fuel that originates in High Hazard Zones, they will contribute to meeting an urgent public policy goal stated in the Governor’s emergency proclamation on tree mortality and in regulatory and legislative directives. In Xxxxxx’x opinion, the above-market payment negotiations between Meridian Energy and PG&E to achieve an amended and restated agreement for the output of the CalRENEW-1 project were handled fairly by the utility with respect to competitors. Without being able to quantify with any accuracy the net cost to ratepayers of absorbing the risks of imbalance energy when PG&E becomes scheduling coordinator for the project, it is hard to judge whether the features of the amendment requires is justified by its contribution toward burning HHZ fuels in response to are a state net positive or negadve for ratepayers. Xxxxxx speculates that the balance between added risks of emergency. • While taking deliveries under the contract amendment imbalance costs and the new PPA is not well aligned with PG&E portfolio fit or RPS compliance needs, and it is not particularly consistent with PG&E’s 2015 RPS procurement plan regarding incremental RPS contracts, the deliveries align quite well with the directives benefits of the CPUC’s Resolutions E-4770 buyer curtailment option is probably a net positive for ratepayers and E-4805 therefore the overall changes to respond to the tree mortality emergency. • The amendment and the new PPA will contribute to PG&E’s prior definition of its RPS Goals evaluation criterion, such as contributing economic benefits to a community afflicted by poverty and high unemployment, and supporting the state goal for biomassnon-fueled energy as a percentage of renewable energy generation. • As an operating facility that has delivered biomass-fueled energy reliably to PG&E for decades, the Wheelabrator Shasta plant ranks high for project viabilityprice terms are probably fair. Based on these observations observation and judgments about the fairness of negotiations and overall impact on ratepayer benefits and costs, Xxxxxx’x opinion is that both Wheelabrator Shasta’s the amended CalRENEW-1 contract amendment and new five-year contract merit merits CPUC approval. Appendix ESB GT&S 0670955 PG&E Gas and Electric Advice Filing List General Order 96-B, Section IV AT&T Xxxxxxxx & Xxxx LLP Xxxxxxxx & Xxxxx XXXX Xxxxxxxxx & Xxx, Inc. Xxxxxx Xxxxx Associates Xxxxx Xxxxxxxx XxXxxxxxxx, P.C. CENERGY POWER California Cotton Ginners & Growers Assn California Energy Commission California Public Utilities Commission California State Association of Counties Calpine Xxxxxx, Xxxxx Center for Biological Diversity City of Palo Alto City of San Xxxx Clean Power Coast Economic Consulting Commercial Energy Cool Earth Solar, Inc. County of Tehama - Department of Public Works Crossborder Energy Xxxxx Xxxxxx Xxxxxxxx LLP Day Xxxxxx Xxxxxx Defense Energy Support Center Dept of General Services Xxxxxxxx & Xxxxxxx Xxxxxx & Brand Xxxxxxx Xxxxxxxxx & Xxxxxx LLP G. A. Xxxxxx & Assoc. GenOn Energy Inc. GenOn Energy, Inc. Goodin, XxxXxxxx, Xxxxxx, Xxxxxxx & Xxxxxxx Xxxxx Power Institute Xxxxx & Xxxxxx In House Energy International Power Technology Intestate Gas Services, Inc. K&L Gates LLP Xxxxx Group Xxxxx Los Angeles County Integrated Waste Management Task Force Los Angeles Dept of Water & Power MRW & Associates Xxxxxx Xxxxxx Xxxxxxxx Xxxxx Energy Authority XxXxxxx Long & Xxxxxxxx LLP XxXxxxxx & Associates Modesto Irrigation District Xxxxxx Xxxxxxx NLine Energy, Inc. NRG Solar Nexant, Inc. Occidental Energy Marketing, Inc. OnGrid Solar Pacific Gas and Electric Company Praxair Regulatory & Cogeneration Service, Inc. SCD Energy Solutions SCE SDG&E and SoCalGas XXXXX San Francisco Public Utilities Commission Seattle City Light Sempra Utilities SoCalGas Southern California Edison Company Spark Energy Sun Light & Power Sunshine Design Tecogen, Inc. Tiger Natural Gas, Inc. TransCanada Utility Cost Management Utility Power Solutions Utility Specialists Verizon Water and Energy Consulting Wellhead Electric Company Western Manufactured Housing Communities Association (WMA) Division of Ratepayer Advocates North America Power Partners

DISCUSSION OF MERIT FOR APPROVAL. In Xxxxxx’x opinion, both the amended and restated contract amendment to extend price relief under the existing contract between PG&E and the new five-year agreement with Wheelabrator Shasta merit Shiloh Wind Project 2 merits CPUC approval. : • The CPUC found the project’s 2011 price relief amendment original PPA to be reasonable, including its pricing; the current amendment’s pricing , which is than the price of the 2011 amendment that applied unaltered in the last eleven months of its termamended contract. While Xxxxxx currently ranks the PPA’s contract price as high and net market value as likely low compared to recent competing proposals from projects delivering renewable energyproposals, the more relevant peer group considered by the Commission when approving the original PPA would have included competing proposals submitted to which PG&E’s 2006 and 2007 RPS solicitations, not perfect foresight of market conditions in 2017. • The insertion of provisions for PG&E to compare this short-term amendment exercise a buyer curtailment option ' provides ratepayers with a material benefit with no change in contract price. This allows PG&E to avoid taking delivery of the project’s energy when CAISO market prices turn negative, when ratepayers would otherwise pay the facility for delivering a product that is other recent opportunities available to PG&E from biomass-fueled facilities that agree to deliver power in the short term from biofuel harvested from High Hazard Zonesworth less than zero. The pricing CAISO is already experiencing a modest frequency of such negative- price episodes and could experience more as additional intermittent resources are built and come on line in California. Xxxxxx does not have an independent estimate of the value for incorporating the buyer curtailment option into the Shiloh Wind Project 2 PPA. PG&E performed a valuation of the new contract ranks low buyer curtailment option based on net market value (rather than Portfolio-Adjusted Value) as the metric. Using the utility’s current model inputs, PG&E’s net market value methodology attributes a value ' to moderate compared to that peer group; its the option, as the present value ranks moderate to high. • Similarly, the contract amendment will likely result in payments above the of ratepayer benefits through avoiding purchases of energy during periods of negative market price of renewable energypricing. This might amount estimate does not count additional system benefits that the Portfolio-Adjusted Value methodology would ascribe to excess payments in the vicinity of by ratepayers above what they would pay for renewable energy at market prices, depending on market and performance outcomes. The $/MWh curtailment option beyond the net market value of energy. ' ' • By taking on the Wheelabrator Shasta role of scheduling coordinator from the seller, PG&E’s ratepayers will be exposed to a greater likelihood of paying CAISO imbalance costs and penalties. It is not yet evident how much costlier to ratepayers the incidence of imbalances for this facility will be under the revised CAISO tariff. Xxxxxx does not have a basis for estimating the incremental average cost to ratepayers of PG&E taking on the scheduling coordinator role. That being said, PG&E’s ratepayers already absorb these risks for hundreds of megawatts of projects under contract, and the number will continue to rise as new contracted projects come on line. Most of the PPAs with solar and wind projects that PG&E has entered since the Shiloh Wind Project 2 contract was first signed place the role of scheduling coordinator upon the utility, so the amendment deliveries will however be aligns this project’s imbalance risks with those of previous price extensions most of PG&E’s renewable PPA portfolio; the amended contract is in line with these other contracts in its allocation of risks between buyer and seller. As far as imbalance risks go, ratepayers are no worse off with the amended PPA than they would be with any other wind farm project under PG&E’s standard contract terms in use today. PG&E’s skill set for managing the imbalance risks of its overall portfolio has likely evolved to the point where the utility is better able to manage these specific risks than any other entity other than one or two of the other California IOUs. Also, one would expect that PG&E granted PG&E’s ability to manage a 150-MW solar project’s imbalance risks is enhanced by its control of other QFs projects and by the buyer curtailment options it has secured in other PPAs. One of the elements of PG&E’s valuation of buyer curtailment options is the ability to reduce exposure to CAISO imbalance energy charges. • The existing, operating Shiloh Wind Project 2 facility ranks high in project viability despite its underperformance compared to contract quantity. • Xxxxxx regards the PPA as ranking as low in portfolio fit given that are burning HHZ fuel and those of proposals received it is already counted in PG&E’s BioRAM solicitation baseline for delivering estimating net compliance needs and will deliver renewable energy derived from HHZ fuel. The contract amendment is an immediate means of obtaining bioenergy from HHZ fuel at in periods which the utility expects to have a value better than or comparable to competing alternativescontinuing net long position for compliance needs. • While the price of the new five-year contract ranks high compared to competing proposals to deliver renewable energy, the more relevant peer group to which to compare this contract is other proposals from biomass-fueled facilities that offered to deliver power from biofuel harvested from High Hazard Zones. The price of the new agreement ranks low when compared to those proposals that still remained available to PG&E after the BioRAM RFO selections were completed. • The Portfolio-Adjusted Value of the new contract in levelized $/MWh ranks high compared to those of competing proposals for HHZ fuel-derived energy that were available to PG&E after the BioRAM solicitation. Xxxxxx independently ranked the new contract as moderate in net market value among those proposals. However, Xxxxxx agrees that contracting with Wheelabrator Shasta was the highest-valued alternative available to PG&E to meet its compliance obligation for HHZ fuel-based energy set by Resolution E-4805, given the limitations of the highest-valued proposal. • Because the contract amendment and the new PPA require the facility to meet a target for the content of its delivered fuel that originates in High Hazard Zones, they will contribute to meeting an urgent public policy goal stated in the Governor’s emergency proclamation on tree mortality and in regulatory and legislative directives. In Xxxxxx’x opinion, the above-market payment negotiations between EDF RE and PG&E to achieve an amended and restated agreement for the output of the Shiloh Wind Project 2 facility involved a minor concession that was less than fully fair to the project’s competitors. However, there is no evidence that any competitor was materially harmed by PG&E’s disparate treatment of Shiloh 2 in amending the existing contract. • Being unable to quantify with any accuracy the net cost to ratepayers of absorbing the risks of imbalance energy when PG&E becomes scheduling coordinator for the project, it is hard to judge whether the features of the amendment requires is justified by its contribution toward burning HHZ fuels in response to are a state net positive or negative for ratepayers. Xxxxxx speculates based on limited evidence that the balance between added risks of emergency. • While taking deliveries under the contract amendment imbalance costs and the new PPA is not well aligned with PG&E portfolio fit or RPS compliance needs, and it is not particularly consistent with PG&E’s 2015 RPS procurement plan regarding incremental RPS contracts, the deliveries align quite well with the directives benefits of the CPUC’s Resolutions E-4770 buyer curtailment option might be a net positive for ratepayers and E-4805 therefore the overall changes to respond non-price terms are probably fair to the tree mortality emergency. • The amendment and the new PPA will contribute to PG&E’s prior definition of its RPS Goals evaluation criterion, such as contributing economic benefits to a community afflicted by poverty and high unemployment, and supporting the state goal for biomass-fueled energy as a percentage of renewable energy generation. • As an operating facility that has delivered biomass-fueled energy reliably to PG&E for decades, the Wheelabrator Shasta plant ranks high for project viabilityratepayers. Based on these observations observation and judgments about the fairness of negotiations and overall impact on ratepayer benefits and costs, Xxxxxx’x opinion is that both Wheelabrator Shasta’s the amended and restated Shiloh Wind Project 2 contract amendment and new five-year contract merit merits CPUC approval. PACIFIC GAS AND ELECTRIC COMPANY Appendix EC Confidential Summary and Analysis of the Xxxxxx XX Amended and Restated Power Purchase Agreement (CONFIDENTIAL) PACIFIC GAS AND ELECTRIC COMPANY Appendix D Xxxxxx XX Amended and Restated Power Purchase Agreement (CONFIDENTIAL) PACIFIC GAS AND ELECTRIC COMPANY Appendix E Comparison of Amended and Restated PPA to Original PPA (CONFIDENTIAL) PACIFIC GAS AND ELECTRIC COMPANY Appendix F Comparison of Amended and Restated PPA to PG&E’s 2014 RPS Form PPA (CONFIDENTIAL) PACIFIC GAS AND ELECTRIC COMPANY Appendix G1 Renewable Net Short Calculations (CONFIDENTIAL) PACIFIC GAS AND ELECTRIC COMPANY Appendix G2 Renewable Net Short Calculations Table 1: Renewable Net Short Calculation as of Jan 2018 Net Short Calculation Using PG&E Bundled Retail Sales Forecast In Near Term (2018 - 2022) and LTPP Methodology (2023 - 2036) Variable Calculation Item Deficit from RPS prior to Reporting Year 2011 Actuals 2012 Actuals 2013 Actuals 2011-2013 2014 Actuals 2015 Actuals 2016 Actuals 2014-2016 2017 Actuals 2018 Forecast 2019 Forecast 2020 Forecast 2017-2020 2021 Forecast 2022 Forecast 2023 Forecast 2024 Forecast 2021 - 2024 2025 Forecast 2026 Forecast 2027 Forecast 2025 - 2027 2028 Forecast 2029 Forecast 2030 Forecast 2028 - 2030 2031 Forecast 2032 Forecast 2033 Forecast 2031 - 2033 2034 Forecast 2035 Forecast 2036 Forecast 2034- 2036 Forecast YearAnnual RPS Requirement - - - CP1 - - - CP2 - - - - CP3 - - - - - - - - - - - - - - - - - - - - - A Bundled Retail Sales Forecast (LTPP)1 74,864 76,205 75,705 226,774 74,547 72,113 68,441 215,101 61,397 47,634 31,566 30,712 33,900 33,569 129,747 33,497 33,498 33,613 100,608 33,911 34,235 34,690 102,835 35,232 35,884 36,701 107,817 37,617 38,662 39,914 116,193 B RPS Procurement Quantity Requirement (%) 20.0% 20.0% 20.0% 20.0% 21.7% 23.3% 25.0% 23.3% 27.0% 29.0% 31.0% 33.0% 30.0% 34.8% 36.5% 38.3% 40.0% 37.4% 41.7% 43.3% 45.0% 43.3% 46.7% 48.3% 50.0% 48.3% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% C A*B Gross RPS Procurement Quantity Requirement (GWh) 14,973 15,241 15,141 45,355 16,177 16,802 17,110 50,089 16,577 13,814 10,969 11,210 12,967 13,428 48,574 13,968 14,505 15,126 43,599 15,836 16,535 17,345 49,717 17,616 17,942 18,350 53,908 18,808 19,331 19,957 58,097 D Voluntary Margin of Over-procurement2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - E C+D Net RPS Procurement Need (GWh) 14,973 15,241 15,141 45,355 16,177 16,802 17,110 50,089 16,577 13,814 10,969 11,210 12,967 13,428 48,574 13,968 14,505 15,126 43,599 15,836 16,535 17,345 49,717 17,616 17,942 18,350 53,908 18,808 19,331 19,957 58,097 RPS-Eligible Procurement Fa Risk-Adjusted RECs from Online Generation3 14,699 14,513 17,212 46,424 20,207 21,285 22,548 64,039 22,320 20,509 20,885 20,623 84,336 20,174 17,713 16,964 16,689 71,540 16,521 16,008 15,756 48,285 15,700 15,131 15,058 45,890 14,286 13,749 12,513 40,549 11,235 10,177 9,502 30,914 Faa Forecast Failure Rate for Online Generation (%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Fbb Forecast Failure Rate for RPS Facilities in Development (%) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Fc Pre-Approved Generic RECs - - - - - - 0 - - 4 33 214 251 598 783 944 1,084 3,409 1,190 1,199 1,198 3,587 1,200 1,195 1,194 3,589 1,193 1,195 1,190 3,578 1,189 1,188 1,190 3,566 Fd Executed REC Sales - - (142) (142) (50) - (60) (110) (2,068) - - - (2,068) - - - - - - - - - - - - - - - - - - - - - F Fa + Fb +Fc - Fd Total RPS Eligible Procurement (GWh)5 14,699 14,513 17,069 46,281 20,157 21,285 22,488 63,929 20,257 20,529 21,473 21,533 83,793 21,673 19,391 18,799 18,661 78,524 18,593 18,085 17,821 54,499 17,765 17,185 17,106 52,056 16,329 15,791 14,544 46,664 12,895 11,776 10,984 35,655 F0 Category 0 RECs 14,651 13,049 14,163 41,863 16,899 17,408 17,914 52,222 16,755 14,367 14,337 14,076 59,535 13,752 11,371 11,076 10,849 47,048 10,720 10,226 9,993 30,940 9,945 9,418 9,371 28,734 8,689 8,591 7,967 25,246 7,337 6,888 6,879 21,104 F1 Category 1 RECs 48 1,464 2,906 4,418 3,257 3,876 4,574 11,708 3,502 6,161 7,137 7,457 24,258 7,921 8,020 7,723 7,812 31,476 7,873 7,858 7,828 23,560 7,819 7,767 7,736 23,322 7,640 7,200 6,578 21,417 5,558 4,887 4,105 14,551 F2 Category 2 RECs - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - F3 Category 3 RECs - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Ga X-X Xxxxx RPS Position (Physical Net Short)Annual Gross RPS Position (GWh) (274) (728) 1,928 926 3,980 4,482 5,378 13,840 3,680 6,715 10,704 8,181 5,832 5,234 29,951 4,625 3,580 2,696 10,901 1,928 650 (238) 2,340 (1,287) (2,151) (3,806) (7,244) (5,913) (7,556) (8,973) (22,442) Gb F/A Annual Gross RPS Position (%)Application of Bank 19.6% 19.0% 22.5% 20.4% 27.0% 29.5% 32.9% 29.7% 33.0% 43.1% 68.7% 63.1% 55.5% 55.6% 60.5% 55.5% 54.0% 53.0% 54.2% 52.4% 50.2% 49.3% 50.6% 46.3% 44.0% 39.6% 43.3% 34.3% 30.5% 27.5% 30.7% Ha H - Hc (from previous year) Existing Banked RECs above the PQR6,7 - (274) (1,033) - 861 4,815 9,274 861 14,628 18,179 24,894 35,746 14,628 46,535 57,239 65,420 71,252 46,535 76,485 81,110 84,690 76,485 87,386 89,314 89,964 87,386 89,964 89,964 89,964 89,964 89,964 89,964 89,964 89,964 Hb RECs above the PQR added to Bank (274) (728) 1,928 926 3,980 4,482 5,378 13,840 3,680 6,715 10,852 10,789 32,036 10,704 8,181 5,832 5,234 29,951 4,625 3,580 2,696 10,901 1,928 650 - 2,578 - - - - - - - - Hc Non-bankable RECs above the PQR8 - 31 34 65 26 23 25 74 129 - - - 129 - - - - - - - - - - - - - - - - - - - - - H Ha+Xx Xxxxx Balance of RECs above the PQR (274) (1,002) 895 926 4,841 9,297 14,653 14,701 18,308 24,894 35,746 46,535 46,664 57,239 65,420 71,252 76,485 76,485 81,110 84,690 87,386 87,386 89,314 89,964 89,964 89,964 89,964 89,964 89,964 89,964 89,964 89,964 89,964 89,964 Ia Planned Application of RECs above the PQR towards RPS Compliance9 - - - - - - - - - J1 Category 1 RECs - - 895 895 J2 Category 2 RECs - - - - K Expiring ContractsRECs from Expiring RPS Contracts11Net RPS Position (Optimized Net Short) N/A N/A N/A N/A N/A N/A N/A - - 118 457 723 1,298 979 3,393 4,093 4,370 12,835 4,439 4,908 5,119 14,466 5,171 5,649 5,675 16,494 6,005 6,543 7,681 20,229 9,275 10,391 11,493 31,159 La Ga + Ia – Ib – Hc Annual Net RPS Position after Bank Optimization (GWh)12 (274) (759) 1,894 861 3,954 4,460 5,353 13,767 3,551 Lb (F + Ia – Ib – Hc)/A Annual Net RPS Position after Bank Optimization (%)12, 13 19.6% 19.0% 22.5% 20.4% 27.0% 29.5% 32.8% 29.7% 32.8% General Table Notes: Values are shown in GWhs. Fields in grey are protected as Confidential under CPUC Confidentiality Rules.

DISCUSSION OF MERIT FOR APPROVAL. In Xxxxxx’x opinion, both the amended and restated contract amendment to extend price relief under the existing contract between PG&E and the new five-year agreement with Wheelabrator Shasta merit CalRENEW-1 merits CPUC approval. : • The CPUC has already found the project’s 2011 price relief amendment original PPA to be reasonable, including its pricing; the current amendment’s pricing , which is than the price of the 2011 amendment that applied not altered in the last eleven months of its termamended contract. While Xxxxxx currently ranks the PPA’s contract price as quite high and net market value as likely low compared to recent competing proposals from projects delivering renewable energyproposals, the more relevant peer group considered by the Commission when approving the original PPA would have included competing proposals submitted to which to compare this short-term amendment is other recent opportunities available to PG&E from biomass-fueled facilities that agree to deliver power in the short term from biofuel harvested from High Hazard Zones. The pricing of the new contract ranks low to moderate compared to that peer group; its value ranks moderate to high. • Similarly, the contract amendment will likely result in payments above the market price of renewable energy. This might amount to excess payments in the vicinity of by ratepayers above what they would pay for renewable energy at market prices, depending on market and performance outcomes. The $/MWh net market value of the Wheelabrator Shasta amendment deliveries will however be those of previous price extensions that PG&E granted to other QFs that are burning HHZ fuel and those of proposals received in PG&E’s BioRAM solicitation for delivering energy derived from HHZ fuel. The contract amendment is an immediate means 2006 RPS solicitation, not perfect foresight of obtaining bioenergy from HHZ fuel at a value better than or comparable to competing alternatives. • While the price of the new five-year contract ranks high compared to competing proposals to deliver renewable energy, the more relevant peer group to which to compare this contract is other proposals from biomass-fueled facilities that offered to deliver power from biofuel harvested from High Hazard Zones. The price of the new agreement ranks low when compared to those proposals that still remained available to PG&E after the BioRAM RFO selections were completedmarket conditions in 2014. • The insertion of provisions for PG&E to exercise a buyer curtailment option provides ratepayers with a material benefit with no change in contract price. This allows PG&E to avoid taking delivery of the project’s energy when CAISO market prices turn negative during over-generation episodes, when ratepayers would otherwise pay the facility for delivering a product that is worth less than zero. The CAISO is already experiencing a modest frequency of such negative-price hours and could experience more as additional intermittent resources are built and come on line in California. Xxxxxx does not have an independent estimate of the ratepayer value for incorporating the buyer curtailment option into the CalRENEW-1 PPA. PG&E performed a valuation of the amended PPA using its current Portfolio-Adjusted Value methodology, including an estimate of the value of the new buyer curtailment option. Using the utility’s current model inputs and forward market curves from June 2014, PG&E’s methodology attributes a value to the option. This calculation is quite sensitive to input assumptions. For example, this estimate is more than twice what would be estimated for a solar project with 8,760 hours per year of buyer curtailment option if the input assumptions that PG&E originally proposed in January 2014 for its 2013 RPS RFO were applied. Xxxxxx views the current set of estimates for PG&E’s valuation of buyer curtailment as too high. However, it seems credible that the benefit of flexibility provided by the curtailment option to avoid imbalance charges, CAISO curtailment orders, and volatile ancillary services prices during periods of negative market prices could be worth several dollars per MWh over the course of time for a contract that terminates in levelized $/MWh ranks high compared 2029. • In the amended contract, as with the original contract, the project will be paid a reduced price for excess energy, defined by an annual trigger the changes create some modest likelihood that total payments to CalRENEW-1 over the term of the PPA will be lower than would be case under the original contract, which if so could have the effect of a reduction in average pricing. • In contrast, by taking on the role of scheduling coordinator from the seller, PG&E’s ratepayers will be exposed to a greater likelihood of paying CAISO imbalance costs and penalties. It is not yet evident how much more costly the average costs of imbalances for CalRENEW-1 will be under the new rules implemented by the CAISO, including the elimination of netting of imbalances over a month. Xxxxxx does not have a basis for estimating the incremental average cost to ratepayers of PG&E taking on the scheduling coordinator role. Evidently it was a significant enough concern to Meridian Energy for it to initiate negotiations to shift these risks to the buyer. That being said, PG&E’s ratepayers already absorb these risks for hundreds of megawatts of solar photovoltaic projects under contract, and the number will continue to rise as new contracted projects come on line. Most of the PPAs with solar and wind projects that PG&E has entered since the CalRENEW-1 contract was first signed place the role of scheduling coordinator on the utility, so the amendment aligns this project’s imbalance risks with those of competing proposals most of PG&E’s solar PPA portfolio; the amended contract is in line with these other contracts in its allocation of risks between buyer and seller. As far as imbalance risks go, ratepayers are no worse off with the amended PPA than they would be with any other 5-MW project under PG&E’s standard contract terms in use today. PG&E’s skill set for HHZ fuelmanaging the imbalance risks of its overall portfolio has likely evolved to the point where the utility is better able to manage these specific risks than any other entity other than one or two of the other California IOUs. Also, one would expect that PG&E’s ability to manage a 5-derived MW solar project’s imbalance risks is enhanced by its control of other projects and by the buyer curtailment options it has secured in other PPAs. One of the elements of PG&E’s valuation of buyer curtailment options is the ability to reduce exposure to CAISO imbalance energy that were available to PG&E after charges. • The existing, operating CalRENEW-1 project ranks very high in project viability. • Xxxxxx regards the BioRAM solicitation. Xxxxxx independently ranked the new contract PPA as ranking as moderate in portfolio fit given that it is already counted in PG&E’s baseline for estimating net market value among those proposals. However, Xxxxxx agrees that contracting with Wheelabrator Shasta was the highest-valued alternative available compliance needs and will deliver renewable energy both in periods currently expected to PG&E to meet its have net long and net short RPS compliance obligation for HHZ fuel-based energy set by Resolution E-4805, given the limitations of the highest-valued proposalneeds. • Because the contract amendment and the new PPA require the facility to meet a target for the content of its delivered fuel that originates in High Hazard Zones, they will contribute to meeting an urgent public policy goal stated in the Governor’s emergency proclamation on tree mortality and in regulatory and legislative directives. In Xxxxxx’x opinion, the above-market payment negotiations between Meridian Energy and PG&E to achieve an amended and restated agreement for the output of the CalRENEW-1 project were handled fairly by the utility with respect to competitors. Without being able to quantify with any accuracy the net cost to ratepayers of absorbing the risks of imbalance energy when PG&E becomes scheduling coordinator for the project, it is hard to judge whether the features of the amendment requires is justified by its contribution toward burning HHZ fuels in response to are a state net positive or negative for ratepayers. Xxxxxx speculates that the balance between added risks of emergency. • While taking deliveries under the contract amendment imbalance costs and the new PPA is not well aligned with PG&E portfolio fit or RPS compliance needs, and it is not particularly consistent with PG&E’s 2015 RPS procurement plan regarding incremental RPS contracts, the deliveries align quite well with the directives benefits of the CPUC’s Resolutions E-4770 buyer curtailment option is probably a net positive for ratepayers and E-4805 therefore the overall changes to respond to the tree mortality emergency. • The amendment and the new PPA will contribute to PG&E’s prior definition of its RPS Goals evaluation criterion, such as contributing economic benefits to a community afflicted by poverty and high unemployment, and supporting the state goal for biomassnon-fueled energy as a percentage of renewable energy generation. • As an operating facility that has delivered biomass-fueled energy reliably to PG&E for decades, the Wheelabrator Shasta plant ranks high for project viabilityprice terms are probably fair. Based on these observations observation and judgments about the fairness of negotiations and overall impact on ratepayer benefits and costs, Xxxxxx’x opinion is that both Wheelabrator Shasta’s the amended CalRENEW-1 contract amendment and new five-year contract merit merits CPUC approval. Appendix EPG&E Gas and Electric Advice Filing List General Order 96-B, Section IV AT&T Xxxxxxxx & Xxxxxxx Occidental Energy Marketing, Inc. Xxxxxxxx & Xxxx LLP Xxxxxx & Brand OnGrid Solar Xxxxxxxx & Xxxxx Xxxxxxx Xxxxxxxxx & Xxxxxx LLP Pacific Gas and Electric Company BART G. A. Xxxxxx & Assoc. Praxair Xxxxxxxxx & Xxx, Inc. GenOn Energy Inc. Regulatory & Cogeneration Service, Inc. Xxxxxx Xxxxx Associates GenOn Energy, Inc. SCD Energy Solutions Xxxxx Xxxxxxxx XxXxxxxxxx, P.C. Goodin, MacBride, Xxxxxx, Xxxxxxx & Xxxxxxx SCE CENERGY POWER Green Power Institute SDG&E and SoCalGas California Cotton Ginners & Growers Xxxx Xxxxx & Xxxxxx XXXXX California Energy Commission In House Energy San Francisco Public Utilities Commission California Public Utilities Commission International Power Technology Seattle City Light California State Association of Counties Intestate Gas Services, Inc. Sempra Utilities Calpine K&L Gates LLP SoCalGas Xxxxxx, Xxxxx Xxxxx Group Southern California Edison Company Center for Biological Diversity Linde Spark Energy City of Palo Alto Los Angeles County Integrated Waste Management Task Force Sun Light & Power City of San Xxxx Los Angeles Dept of Water & Power Sunshine Design Clean Power MRW & Associates Tecogen, Inc. Coast Economic Consulting Xxxxxx Xxxxxx Xxxxxxxx Xxxxx Natural Gas, Inc. Commercial Energy Marin Energy Authority TransCanada Cool Earth Solar, Inc. XxXxxxx Long & Xxxxxxxx LLP Utility Cost Management County of Tehama - Department of Public Works XxXxxxxx & Associates Utility Power Solutions Crossborder Energy Modesto Irrigation District Utility Specialists Xxxxx Xxxxxx Xxxxxxxx LLP Xxxxxx Xxxxxxx Verizon Day Xxxxxx Xxxxxx NLine Energy, Inc. Water and Energy Consulting Defense Energy Support Center NRG Solar Wellhead Electric Company Dept of General Services Nexant, Inc. Western Manufactured Housing Communities Association (WMA)

DISCUSSION OF MERIT FOR APPROVAL. In Xxxxxx’x opinion, both the amended and restated contract amendment to extend price relief under the existing contract between PG&E and the new five-year agreement with Wheelabrator Shasta merit CalRENEW-1 merits CPUC approval. : • The CPUC has already found the project’s 2011 price relief amendment original PPA to be reasonable, including its pricing; the current amendment’s pricing , which is than the price of the 2011 amendment that applied not altered in the last eleven months of its termamended contract. While Xxxxxx currently ranks the PPA’s contract price as quite high and net market value as likely low compared to recent competing proposals from projects delivering renewable energyproposals, the more relevant peer group considered by the Commission when approving the original PPA would have included competing proposals submitted to which to compare this short-term amendment is other recent opportunities available to PG&E from biomass-fueled facilities that agree to deliver power in the short term from biofuel harvested from High Hazard Zones. The pricing of the new contract ranks low to moderate compared to that peer group; its value ranks moderate to high. • Similarly, the contract amendment will likely result in payments above the market price of renewable energy. This might amount to excess payments in the vicinity of by ratepayers above what they would pay for renewable energy at market prices, depending on market and performance outcomes. The $/MWh net market value of the Wheelabrator Shasta amendment deliveries will however be those of previous price extensions that PG&E granted to other QFs that are burning HHZ fuel and those of proposals received in PG&E’s BioRAM solicitation for delivering energy derived from HHZ fuel. The contract amendment is an immediate means 2006 RPS solicitation, not perfect foresight of obtaining bioenergy from HHZ fuel at a value better than or comparable to competing alternatives. • While the price of the new five-year contract ranks high compared to competing proposals to deliver renewable energy, the more relevant peer group to which to compare this contract is other proposals from biomass-fueled facilities that offered to deliver power from biofuel harvested from High Hazard Zones. The price of the new agreement ranks low when compared to those proposals that still remained available to PG&E after the BioRAM RFO selections were completedmarket conditions in 2014. • The insertion of provisions for PG&E to exercise a buyer curtailment option provides ratepayers with a material benefit with no change in contract price. This allows PG&E to avoid taking delivery of the project’s energy when CAISO market prices turn negative during over-generation episodes, when ratepayers would otherwise pay the facility for delivering a product that is worth less than zero. The CAISO is already experiencing a modest frequency of such negative-price hours and could experience more as additional intermittent resources are built and come on line in California. Xxxxxx does not have an independent estimate of the ratepayer value for incorporating the buyer curtailment option into the CalRENEW-1 PPA. PG&E performed a valuation of the amended PPA using its current Portfolio-Adjusted Value methodology, including an estimate of the value of the new buyer curtailment option. Using the utility’s current model inputs and forward market curves from June 2014, PG&E’s methodology attributes a value to the option. This calculation is quite sensitive to input assumptions. For example, this estimate is more than twice what would be estimated for a solar project with 8,760 hours per year of buyer curtailment option if the input assumptions that PG&E originally proposed in January 2014 for its 2013 RPS RFO were applied. Xxxxxx views the current set of estimates for PG&E’s valuation of buyer curtailment as too high. However, it seems credible that the benefit of flexibility provided by the curtailment option to avoid imbalance charges, CAISO curtailment orders, and volatile ancillary services prices during periods of negative market prices could be worth several dollars per MWh over the course of time for a contract that terminates in levelized $/MWh ranks high compared 2029. • In the amended contract, as with the original contract, the project will be paid a reduced price for excess energy, defined by an annual trigger the changes create some modest likelihood that total payments to CalRENEW-1 over the term of the PPA will be lower than would be case under the original contract, which if so could have the effect of a reduction in average pricing. • In contrast, by taking on the role of scheduling coordinator from the seller, PG&E’s ratepayers will be exposed to a greater likelihood of paying CAISO imbalance costs and penalties. It is not yet evident how much more costly the average costs of imbalances for CalRENEW-1 will be under the new rules implemented by the CAISO, including the elimination of netting of imbalances over a month. Xxxxxx does not have a basis for estimating the incremental average cost to ratepayers of PG&E taking on the scheduling coordinator role. Evidently it was a significant enough concern to Meridian Energy for it to initiate negotiations to shift these risks to the buyer. That being said, PG&E’s ratepayers already absorb these risks for hundreds of megawatts of solar photovoltaic projects under contract, and the number will continue to rise as new contracted projects come on line. Most of the PPAs with solar and wind projects that PG&E has entered since the CalRENEW-1 contract was first signed place the role of scheduling coordinator on the utility, so the amendment aligns this project’s imbalance risks with those of competing proposals most of PG&E’s solar PPA portfolio; the amended contract is in line with these other contracts in its allocation of risks between buyer and seller. As far as imbalance risks go, ratepayers are no worse off with the amended PPA than they would be with any other 5-MW project under PG&E’s standard contract terms in use today. PG&E’s skill set for HHZ fuelmanaging the imbalance risks of its overall portfolio has likely evolved to the point where the utility is better able to manage these specific risks than any other entity other than one or two of the other California IOUs. Also, one would expect that PG&E’s ability to manage a 5-derived MW solar project’s imbalance risks is enhanced by its control of other projects and by the buyer curtailment options it has secured in other PPAs. One of the elements of PG&E’s valuation of buyer curtailment options is the ability to reduce exposure to CAISO imbalance energy that were available to PG&E after charges. • The existing, operating CalRENEW-1 project ranks very high in project viability. • Xxxxxx regards the BioRAM solicitation. Xxxxxx independently ranked the new contract PPA as ranking as moderate in portfolio fit given that it is already counted in PG&E’s baseline for estimating net market value among those proposals. However, Xxxxxx agrees that contracting with Wheelabrator Shasta was the highest-valued alternative available compliance needs and will deliver renewable energy both in periods currently expected to PG&E to meet its have net long and net short RPS compliance obligation for HHZ fuel-based energy set by Resolution E-4805, given the limitations of the highest-valued proposalneeds. • Because the contract amendment and the new PPA require the facility to meet a target for the content of its delivered fuel that originates in High Hazard Zones, they will contribute to meeting an urgent public policy goal stated in the Governor’s emergency proclamation on tree mortality and in regulatory and legislative directives. In Xxxxxx’x opinion, the above-market payment negotiations between Meridian Energy and PG&E to achieve an amended and restated agreement for the output of the CalRENEW-1 project were handled fairly by the utility with respect to competitors. Without being able to quantify with any accuracy the net cost to ratepayers of absorbing the risks of imbalance energy when PG&E becomes scheduling coordinator for the project, it is hard to judge whether the features of the amendment requires is justified by its contribution toward burning HHZ fuels in response to are a state net positive or negative for ratepayers. Xxxxxx speculates that the balance between added risks of emergency. • While taking deliveries under the contract amendment imbalance costs and the new PPA is not well aligned with PG&E portfolio fit or RPS compliance needs, and it is not particularly consistent with PG&E’s 2015 RPS procurement plan regarding incremental RPS contracts, the deliveries align quite well with the directives benefits of the CPUC’s Resolutions E-4770 buyer curtailment option is probably a net positive for ratepayers and E-4805 therefore the overall changes to respond to the tree mortality emergency. • The amendment and the new PPA will contribute to PG&E’s prior definition of its RPS Goals evaluation criterion, such as contributing economic benefits to a community afflicted by poverty and high unemployment, and supporting the state goal for biomassnon-fueled energy as a percentage of renewable energy generation. • As an operating facility that has delivered biomass-fueled energy reliably to PG&E for decades, the Wheelabrator Shasta plant ranks high for project viabilityprice terms are probably fair. Based on these observations observation and judgments about the fairness of negotiations and overall impact on ratepayer benefits and costs, Xxxxxx’x opinion is that both Wheelabrator Shasta’s the amended CalRENEW-1 contract amendment and new five-year contract merit merits CPUC approval. Appendix EPG&E Gas and Electric Advice Filing List General Order 96-B, Section IV AT&T Xxxxxxxx & Xxxxxxx Occidental Energy Marketing, Inc. Xxxxxxxx & Xxxx LLP Xxxxxx & Brand OnGrid Solar Xxxxxxxx & Xxxxx Xxxxxxx Xxxxxxxxx & Xxxxxx LLP Pacific Gas and Electric Company XXXX G. A. Xxxxxx & Xxxxx. Praxair Xxxxxxxxx & Xxx, Inc. GenOn Energy Inc. Regulatory & Cogeneration Service, Inc. Xxxxxx Xxxxx Associates GenOn Energy, Inc. SCD Energy Solutions Xxxxx Xxxxxxxx XxXxxxxxxx, X.X. Xxxxxx, XxxXxxxx, Xxxxxx, Xxxxxxx & Xxxxxxx SCE CENERGY POWER Green Power Institute SDG&E and SoCalGas California Cotton Ginners & Growers Xxxx Xxxxx & Xxxxxx XXXXX California Energy Commission In House Energy San Francisco Public Utilities Commission California Public Utilities Commission International Power Technology Seattle City Light California State Association of Counties Intestate Gas Services, Inc. Sempra Utilities Calpine K&L Gates LLP SoCalGas Xxxxxx, Xxxxx Xxxxx Group Southern California Edison Company Center for Biological Diversity Linde Spark Energy City of Palo Alto Los Angeles County Integrated Waste Management Task Force Sun Light & Power City of San Xxxx Los Angeles Dept of Water & Power Sunshine Design Clean Power MRW & Associates Tecogen, Inc. Coast Economic Consulting Xxxxxx Xxxxxx Xxxxxxxx Xxxxx Natural Gas, Inc. Commercial Energy Marin Energy Authority TransCanada Cool Earth Solar, Inc. XxXxxxx Long & Xxxxxxxx LLP Utility Cost Management County of Tehama - Department of Public Works XxXxxxxx & Associates Utility Power Solutions Crossborder Energy Modesto Irrigation District Utility Specialists Xxxxx Xxxxxx Xxxxxxxx LLP Xxxxxx Xxxxxxx Verizon Day Xxxxxx Xxxxxx NLine Energy, Inc. Water and Energy Consulting Defense Energy Support Center NRG Solar Wellhead Electric Company Dept of General Services Nexant, Inc. Western Manufactured Housing Communities Association (WMA)