Rebuttal Testimony in Support of Application for …

1 Application No.: Exhibit No.: SCE-02 Witnesses: R. Sekhon D. Snow (U 338-E) Rebuttal Testimony in Support of Application for Recovery of Aliso Canyon Utility Owned Energy Storage Costs PUBLIC VERSION Before the Public Utilities Commission of the State of California Rosemead, CaliforniaSeptember 12, 2017 SCE-02: Rebuttal Testimony in Support of Application for Recovery of Aliso Canyon Utility Owned Energy Storage Costs Table Of Contents Section Page Witness -i- I. SCE SHOULD RECOVER ITS COSTS ..1 R. Sekhon A. SCE s enhanced Gas Turbines (EGTs) Projects Adhere to Resolution E-4791 ..1 1. The Commission Issued Resolution E-4791 as an Emergency Reliability Measure.

2 1 2. The EGTs Fulfill the Resolution s Primary Objective to Provide Additional Reliability to the Grid ..2 3. SCE s EGTs Are the Most Competitive Energy Storage Resources SCE Has Ever Procured on Net Present Value (NPV) Basis ..4 B. A Competitive Solicitation for EGTs Was Not Feasible Under the Circumstances ..8 C. Denial of Cost Recovery May Deter the Future Pursuit of Innovative Strategies to Realize California s Important and Ambitious Energy and Climate Goals ..9 D. The Commission Should Approve Cost Recovery for EGT Site Development ..9 1. SCE Needed to Develop Several Sites to Satisfy the Resolution and Deploy Energy Storage in an Expedited Manner ..9 2. It Is Appropriate to Request Recovery of Costs for Site Development in this Application .

3 11 3. Does Not Explicitly Prohibit Cost Recovery for Unsuccessful Sites in a Utility Owned Storage Solicitation ..11 II. SCE S RATEMAKING PROPOSAL IS REASONABLE ..13 D. Snow A. Additional After-the-Fact Reasonableness Review of Costs is Not Appropriate or Necessary Because SCE Requests Recovery of Forecasted Costs Found Reasonable in this Application ..13 SCE-02: Rebuttal Testimony in Support of Application for Recovery of Aliso Canyon Utility Owned Energy Storage Costs Table Of Contents (Continued) Section Page Witness -ii- B. Although SCE s Proposed Advice Filing Procedure is Not Unduly Complicated, Given the Greater Certainty of SCE Costs, SCE Proposes an Alternative ..14 C.

4 The Commission Should Not Delay SCE s Cost Recovery Pending a Future Proceeding on SoCal Gas Responsibilities, if any, for Costs ..15 Public Appendix A Copies of SCE's Biannual Aliso Canyon Incremental Cost Reports Submitted to Date Appendix B Confidentiality Declarations 1 I. 1 SCE SHOULD RECOVER ITS COSTS 2 A. SCE s enhanced Gas Turbines (EGTs) Projects Adhere to Resolution E-4791 3 ORA argues the Commission should deny Southern California Edison s (SCE) cost recovery for 4 the General Electric EGTs, erroneously claiming they do not comply with the Resolution E-4791. 5 The Resolution s primary objective is to mitigate reliability concerns on an accelerated, emergency 6 basis. SCE s EGTs fulfill the letter and spirit of the Resolution, timely implementing novel technology 7 to address reliability concerns presented by the unavailability of the Aliso Canyon Storage 8 1.

5 The Commission Issued Resolution E-4791 as an Emergency Reliability Measure 9 Resolution E-4791 responds to the Governor s Emergency Proclamation directing the 10 Commission to take all actions necessary to ensure the continued reliability of natural gas and 11 electricity supplies in the coming months during the moratorium on gas injections into the Aliso Canyon 12 Storage Facility. 2 It required that all resources must interconnect in a location(s) that helps to alleviate 13 electric reliability concerns associated with the partial shutdown of the Aliso Canyon Gas Storage 14 Facility and qualify for resource adequacy credit. 3 The Resolution acknowledged the limited time to 15 undertake remedial actions or activities that will help alleviate electric reliability risk concerns 16 necessitate an accelerate[d] regulatory process so as not to delay remedial actions.

6 4 In accordance 17 with the [Proclamation], the Commission pursued activities that could be quickly implemented to 18 alleviate the electric reliability risks to the LA Basin, and selected in-front-of-the-meter (IFOM) 19 energy storage systems .. because they can be fast-responding, firm, and dispatchable. 5 20 Moreover, energy storage resources can be potentially constructed, interconnected, and deployed on a 21 1 Neither intervenor asserted any objection to cost recovery for SCE s Tesla projects. 2 January 6, 2016 Emergency Proclamation; Resolution at p. 3, Finding of Fact (FF) 1-7. 3 Resolution at p. 4 (emphasis added).

7 4 Resolution FF 10. 5 Resolution at p. 4. 2 short 6 and ".. these resources can provide benefits in addition to immediate reliability 1 needs." 2 Because time was of the essence, the Resolution required all projects to be online by 3 December 31, 2016, and directed SCE shall take all reasonable steps to expedite the 4 interconnection processes to allow a utility-owned or third-party-owned storage resource to 5 connect to the grid. 7 The Commission also found turnkey project development of build and transfer 6 projects located at SCE-owned or controlled sites .. would increase the likelihood of resources being 7 timely developed [by the end of 2016]. 8 To ensure timeliness, the Commission ordered SCE to 8 submit utility-owned storage project applications for reasonableness review within 90 days after 9 the operational start date of such projects.

8 9 It also recommended SCE undertake any other advance 10 work to quicken the procurement 11 2. The EGTs Fulfill the Resolution s Primary Objective to Provide Additional 12 Reliability to the Grid 13 Claiming they do not satisfy the Resolution, ORA contends the EGTs provide: 14 (i) insufficient Resource Adequacy (RA) and (ii) Ancillary Services (AS) are not very useful to 15 prevent outages and improve ORA s Testimony suggests that RA should have been the sole 16 focus of SCE s procurement, yet the Resolution only requires a resource to qualify for RA 17 The Resolution set no quantitative RA requirement; rather, it allowed SCE the flexibility to procure 18 energy storage resources to address the system and local liability risks associated with the moratorium 19 6 Id.

9 7 Id. at p. 11 (emphasis in original). 8 Id. 9 Id. (emphasis in original). 10 Id. 11 ORA Testimony at p. 2-3. 12 Resolution at p. 4 (All resources must qualify for resource adequacy credit); FF 15 ( It is reasonable that energy storage procurements interconnect in a location that will help alleviate electric reliability concerns and qualify for resource adequacy credit. ). 3 at Aliso The EGTs qualify for RA credit, providing MW of incremental RA 1 They are dispatchable, and can instantaneously provide up to 10 MW of battery energy to the bulk 2 power grid without gas supply. As discussed below, the EGTs also provide other benefits addressing the 3 express system reliability risks as required in the Resolution.

10 4 ORA s concentration on RA ignores the reliability benefits derived from the AS unlocked 5 by the installation of the EGTs. ORA s Testimony misunderstands the role and importance of AS15 and 6 spinning reserve in maintaining system The EGT upgrades increase system reliability by 7 adding additional spinning reserve and frequency regulation capacity to the grid. Spinning reserve is an 8 essential component for system reliability, offering an operating reserve used to meet system demand if 9 a system contingency occurs, such as a generator or transmission outage, gas curtailment, or unforeseen 10 system Spinning reserve requires a resource to be online, synced to the grid, and able to 11 immediately and automatically respond to frequency deviations.