Renewable Renewable & &

Alternative Alternative PowerPower

Senate Energy, Utilities & Communications Committee

Stuart R. Hemphill

Director, Renewable and Alternative Power

Southern California Edison

The Hon. Christine Kehoe, Chair

February 26, 2008

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Renewable Renewable & &

Alternative Alternative PowerPower

Overview

• SCE still leads the nation in renewable deliveries• 16 percent of customers’ needs are met with renewable energy• Contracted-for renewable energy is sufficient to meet 20% target

• Based on current law, however, it is clear that load serving entities will not achieve energy deliveries of 20% by 2010

• Contracts are sufficient, but on-line timing is problematic• Transmission and a clogged interconnection queue have impeded

near term deliveries• Increasing customer demand creates a moving target

• With modest changes to existing law, 2010 deliveries may still be possible

• Expand supply options by looking out of state• Authorize the use of unbundled renewable energy credits• Expand eligibility for California Solar Initiative

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Renewable Renewable & &

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SCE’s Resource Mix

2007 (Estimated)

6%

7% 20%

16%

51%

Natural Gas

Renewables

NuclearCoal

Large Hydro

All Resources100% = 79 Billion kWh

62%

4%

5%

21%

8%

Geothermal

Biomass

Wind

Small Hydro

Renewable Resources100% = 12.5 Billion kWh

Solar

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Renewable Renewable & &

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31

4

6

11

Eligible Renewable Procurement Activity2002 To Present

• Alta Wind Power (4.9)• Calpine (2.0)• Coso (1.8)• Stirling (1.8)

35 Contracts 17 Billion kWh

Completed five solicitations to date; 2008 solicitation pending release

Contracts are primarily 10-20 year agreements

Number of Contracts

Maximum Energy Under Contract

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Renewable Renewable & &

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40 100 500 700 1,100 1,5002,200

4,200

15,000

28,300

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

The Interconnection Queue Has Become Backlogged

Until 2005, there were few renewable projects in queue

Renewable projects begin to enter queue

Massive amount of projects in queue leads to breakdown of queue process

Cumulative of Renewable Generators Only in Interconnection Queue, in MW (Summer Maximum)Source: SCE Generation Interconnection Database

Note: Full generation in queue = 41,400 MW

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Renewable Renewable & &

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Increasing Customer Demand Creates Higher Goals

62,000

64,000

66,000

68,000

70,000

72,000

74,000

76,000

78,000

80,000

2003 2004 2005 2006

Forecasted

Recorded

GWh

Source: SCE’s Demand Forecasting Group

Mar ‘03

Mar ‘03

Mar ‘03

Mar ‘03

Apr ‘04

Apr ‘04

Apr ‘04

Dec ‘04

Dec ‘04

Oct ‘05

• Much greater level of new construction

• Higher use, due to homes in inland regions

• Historically low interest rates, including mortgage rates

Primary Causes for Higher than Expected

Growth

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Renewable Renewable & &

Alternative Alternative PowerPower

9.0

1.8

1.4

Change in EnergyConsumption

Increase in SCE's RenewableGoals due to Increased Energy

Consumption

Direct Access Customers Returned, Creating Even Higher Goals

Returning Direct Access Customers

10.4 (15.2% Increase)

2002-2006 Change in Annual Energy Consumption (Billion kWh)

2.1 (15.2% Increase)

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Renewable Renewable & &

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Steps California Can Take To Increase Renewable Deliveries Before 2010

Broaden and deepen the renewables market Relax the in-state delivery requirement

Neighboring states have abundant, high quality resources Increasing supply will increase competition and reduce overall

program costs Authorize the use of Renewable Energy Credits (RECs)

Use of RECs is widespread in other states with Renewables Portfolio Standards

Increase the eligibility for the California Solar Initiative

Eliminate the “on site” requirement in the Million Solar Roofs statute to increase penetration of solar installations

Expand eligibility for CSI funds to all entities installing distribution level solar systems

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Renewable Renewable & &

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Estimates of Potential Energy Deliveries By 2010

Billions of kWh, SCE’s Portfolio

8.5

1.00.2

Authorizing Renewable EnergyCredits (Existing Customer-

Owned Solar)

Expanding Eligibility for CSIProgram (Assumes 500 MW of

New Development)

Expanding Eligibility for Out ofState Renewables and

Authorizing RECs (ViableProjects Rejected Due to Current

Delivery Requirements)

Percent of 2010 Energy Needs 0.25% 1.0% 10.0%

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Renewable Renewable & &

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Steps California Can Take To Increase Renewable Deliveries Beyond 2010

Accelerate California’s Renewable Energy Transmission Initiative

New transmission will likely take 7-10 years after new lines are identified

Encourage the federal government to extend and lengthen incentives

Production Tax Credits for wind Investment Tax Credits for solar

Support CPUC’s environmental reviews for new transmission lines

Work with federal government agencies to gain Concurrence on State renewable policy Land access to support transmission needed for renewables

With CAISO’s lead, continue to champion interconnection queue reform