STATE OF CALIFORNIA EDMUND G. BROWN JR., Governor

PUBLIC UTILITIES COMMISSION 505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

May 10, 2018

Advice Letter 5272-E

Erik Jacobson

Director, Regulatory Relations

Pacific Gas and Electric Company

77 Beale Street, Mail Code B10C

P.O. Box 770000

San Francisco, CA 94177

SUBJECT: Updates to PG&E's Bundled Procurement Plan - Customer Risk Tolerance

Level in Risk Management Policy and TeVAR Methodology.

Dear Mr. Jacobson:

Advice Letter 5272-E is effective as of April 11, 2018.

Sincerely,

Edward Randolph

Director, Energy Division

Erik Jacobson Director Regulatory Relations

Pacific Gas and Electric Company 77 Beale St., Mail Code B13U P.O. Box 770000 San Francisco, CA 94177 Fax: 415-973-3582

April 11, 2018 Advice 5272-E (Pacific Gas and Electric Company ID U 39E)

Public Utilities Commission of the State of California Subject: Updates to Pacific Gas and Electric Company’s Bundled

Procurement Plan – Customer Risk Tolerance Level in Risk Management Policy and TeVAR Methodology

Purpose Pacific Gas and Electric Company (PG&E) requests California Public Utilities Commission (Commission or CPUC) approval to update PG&E’s Bundled Procurement Plan1 (BPP), Appendix N – Risk Management Policy and To-expiration Value-at-Risk (TeVAR) Methodology, to provide PG&E’s Customer Risk Tolerance (CRT) level applicable to year 2018. Pursuant to Decision (D.) 12-01-033, this CRT calculation shall be updated every two years from the filing of the previous Long Term Procurement Plan (LTPP) via either the LTPP filing or a Tier 1 advice letter. PG&E previously updated the CRT calculation by filing a Tier 1 advice letter, which was submitted and effective on April 11, 2016. Background In accordance with D.12-01-033, all updates proposed to the BPP are to be made via an advice letter. Advice letter updates are to include redlined pages of the BPP as well as clean replacement pages.2 Below, PG&E describes the updates to its BPP, and Attachments A and B reflect the relevant changes to the BPP. Attachment A is the redlined version of the changes and Attachment B is the clean version of the changes.

1 In D.15-10-031, the Commission adopted PG&E’s proposed 2014 BPP with modifications, and

required PG&E to file a conformed copy of the BPP within ninety days of the decision. PG&E filed its conformed BPP on December 10, 2015 via Advice 4750-E, which was approved on June 15, 2016.

2 D.07-12-052, pp. 184-185.

Advice 5272-E - 2 - April 11, 2018

Request Appendix N of PG&E’s BPP describes PG&E’s Risk Management Policy and TeVAR Methodology. Consistent with the Commission’s directive on pages 23-24 of D.12-01-033, PG&E has made the following modification:

• Updated Section A.1 of Appendix N to revise the following sentence and footnote regarding CRT:

Based on PG&E’s effective March 2018 bundled system average rate of 19.545 cents per kilowatt hour (“kWh”), 2 a 10 percent risk tolerance factor yields a CRT of 1.95 cents/kWh or $ 940 million.

Attachments

Attachment A Redlined Sheet 205 of PG&E’s BPP

Attachment B Clean Sheet 205 of PG&E’s BPP

Protests Anyone wishing to protest this filing may do so by letter sent via U.S. mail, facsimile or E-mail, no later than May 1, 2018, which is 20 days after the date of this submission. Protests must be submitted to:

CPUC Energy Division ED Tariff Unit 505 Van Ness Avenue, 4th Floor San Francisco, California 94102 Facsimile: (415) 703-2200 E-mail: EDTariffUnit@cpuc.ca.gov

Copies of protests also should be mailed to the attention of the Director, Energy Division, Room 4004, at the address shown above. The protest shall also be sent to PG&E either via E-mail or U.S. mail (and by facsimile, if possible) at the address shown below on the same date it is mailed or delivered to the Commission:

Erik Jacobson Director, Regulatory Relations c/o Megan Lawson Pacific Gas and Electric Company

Advice 5272-E - 3 - April 11, 2018

77 Beale Street, Mail Code B13U P.O. Box 770000 San Francisco, California 94177 Facsimile: (415) 973-3582 E-mail: PGETariffs@pge.com

Any person (including individuals, groups, or organizations) may protest or respond to an advice letter (General Order 96-B, Section 7.4). The protest shall contain the following information: specification of the advice letter protested; grounds for the protest; supporting factual information or legal argument; name, telephone number, postal address, and (where appropriate) e-mail address of the protestant; and statement that the protest was sent to the utility no later than the day on which the protest was submitted to the reviewing Industry Division (General Order 96-B, Section 3.11). Effective Date PG&E requests that this Tier 1 Advice Letter become effective upon filing. Notice In accordance with General Order 96-B, Section IV, a copy of this advice letter is being sent electronically and via U.S. mail to parties shown on the attached list and the parties on the service list for R.16-02-007. Address changes to the General Order 96-B service list should be directed to PG&E at email address PGETariffs@pge.com. For changes to any other service list, please contact the Commission’s Process Office at (415) 703-2021 or at Process_Office@cpuc.ca.gov. Send all electronic approvals to PGETariffs@pge.com. Advice letter filings can also be accessed electronically at: http://www.pge.com/tariffs/. /S/ Erik Jacobson Director, Regulatory Relations Attachments cc: Service List R.16-02-007

CALIFORNIA PUBLIC UTILITIES COMMISSION ADVICE LETTER SUBMITTAL SUMMARY

ENERGY UTILITY

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

Company name/CPUC Utility No. Pacific Gas and Electric Company (ID U39 E)

Utility type: Contact Person: Kingsley Cheng

ELC GAS Phone #: (415) 973-5265

PLC HEAT WATER E-mail: k2c0@pge.com and PGETariffs@pge.com

EXPLANATION OF UTILITY TYPE

ELC = Electric GAS = Gas

PLC = Pipeline HEAT = Heat WATER = Water

(Date Submitted/ Received Stamp by CPUC)

Advice Letter (AL) #: 5272-E Tier: 1

Subject of AL: Updates to Pacific Gas and Electric Company’s Bundled Procurement Plan – Customer Risk Tolerance

Level in Risk Management Policy and TeVAR Methodology

Keywords (choose from CPUC listing): Compliance, Procurement

AL submittal type: Monthly Quarterly Annual One-Time Other _____________________________

If AL submitted in compliance with a Commission order, indicate relevant Decision/Resolution #: D.12-01-033

Does AL replace a withdrawn or rejected AL? If so, identify the prior AL: No

Summarize differences between the AL and the prior withdrawn or rejected AL: ____________________

Is AL requesting confidential treatment? If so, what information is the utility seeking confidential treatment for: No

Confidential information will be made available to those who have executed a nondisclosure agreement: N/A

Name(s) and contact information of the person(s) who will provide the nondisclosure agreement and access to the confidential

information: __________________________________________________________________________________________________

Resolution Required? Yes No

Requested effective date: April 11, 2018 N No. of tariff sheets: N/A

Estimated system annual revenue effect (%): N/A

Estimated system average rate effect (%): N/A

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 proposed: N/A

Pending advice letters that revise the same tariff sheets: N/A

Protests, dispositions, and all other correspondence regarding this AL are due no later than 20 days after the date of this submittal, unless

otherwise authorized by the Commission, and shall be sent to:

California Public Utilities Commission Pacific Gas and Electric Company

Energy Division

EDTariffUnit

505 Van Ness Ave., 4th Flr.

San Francisco, CA 94102

E-mail: EDTariffUnit@cpuc.ca.gov

Attn: Erik Jacobson

Director, Regulatory Relations

c/o Megan Lawson

77 Beale Street, Mail Code B13U

P.O. Box 770000

San Francisco, CA 94177

E-mail: PGETariffs@pge.com

Advice 5272-E April 11, 2018

Attachment A

Redlined Sheet 205 of PG&E’s BPP

Cal. P.U.C. Sheet No. Pacific Gas and Electric Company Pacific Gas and Electric Company San Francisco, California 2014 Bundled Procurement Plan

Decision No. 15-10-031 Issued by Date Filed December 10, 2015 Steven Malnight Effective Senior Vice President Resolution No. Regulatory Affairs

APPENDIX N

RISK MANAGEMENT POLICY

AND TEVAR METHODOLOGY

Pacific Gas and Electric Company San Francisco, California

Cal. P.U.C. Sheet No. 205Pacific Gas and Electric Company 2014 Bundled Procurement Plan

Decision No. 15-10-031 Issued by Date Filed December 10, 2015 Steven Malnight Effective

Senior Vice President Resolution No. Regulatory Affairs

investment grade. For exchanges and cleared transactions, PG&E is required to post

initial margin as well as mark to market and the portfolio does not benefit from any

unsecured credit limits.

PG&E reports its electric portfolio TeVaR to the Commission’s Energy Division

(“ED”) on a monthly basis.1 Consistent with Decision (“D.”) 07-12-052, PG&E

measures TeVaR as the potential change in portfolio costs under a low probability

(5 percent) outcome or a 95 percent confidence level. The TeVaR measure assumes that

no further forward hedging is performed, and that all existing positions are taken to

delivery. In D.12-01-033, the Customer Risk Tolerance (“CRT”) level was set by the

Commission at 10 percent of PG&E’s system average rate. The calculation of the CRT

value is derived by multiplying 10 percent of the adopted bundled system average rate by

the bundled forecasted sales for the rolling 12-month period. Based on PG&E’s effective

January 2016 March 2018 bundled system average rate of 19.54517.8 cents per

kilowatt-hour (“kWh”),2 a 10 percent risk tolerance factor yields a CRT of 1.7.81.95

cents/kWh Or $940 1,260million. Pursuant to D.12-01-033, this CRT calculation will be

updated every two years in each Long-Term Procurement Plan (“LTPP”) filing. If the

LTPP filing is delayed or not made, the CRT will be updated two years from the filing of

1 See also Appendix M (regarding TeVaR notification to the Procurement Review Group as required by D.07-12-052 and D.12-01-033). 2 PG&E Advice Letter (“AL”) 46965231-E-7 “Supplemental Filing – 2018 Annual Electric True-Up – Consolidated Changes to PG&E Electric Rate Changes Eeffective January March 1, 20186” http://www.pge.com/nots/rates/tariffs/tm2/pdf/ELEC_4696-E-A.pdf https://www.pge.com/tariffs/assets/pdf/adviceletter/ELEC_5231-E.pdf.

Advice 5272-E April 11, 2018

Attachment B

Clean Sheet 205 of PG&E’s BPP

Cal. P.U.C. Sheet No. Pacific Gas and Electric Company Pacific Gas and Electric Company San Francisco, California 2014 Bundled Procurement Plan

Decision No. 15-10-031 Issued by Date Filed December 10, 2015 Steven Malnight Effective Senior Vice President Resolution No. Regulatory Affairs

APPENDIX N

RISK MANAGEMENT POLICY

AND TEVAR METHODOLOGY

Pacific Gas and Electric Company San Francisco, California

Cal. P.U.C. Sheet No. 205Pacific Gas and Electric Company 2014 Bundled Procurement Plan

Decision No. 15-10-031 Issued by Date Filed December 10, 2015 Steven Malnight Effective

Senior Vice President Resolution No. Regulatory Affairs

investment grade. For exchanges and cleared transactions, PG&E is required to post

initial margin as well as mark to market and the portfolio does not benefit from any

unsecured credit limits.

PG&E reports its electric portfolio TeVaR to the Commission’s Energy Division

(“ED”) on a monthly basis.1 Consistent with Decision (“D.”) 07-12-052, PG&E

measures TeVaR as the potential change in portfolio costs under a low probability

(5 percent) outcome or a 95 percent confidence level. The TeVaR measure assumes that

no further forward hedging is performed, and that all existing positions are taken to

delivery. In D.12-01-033, the Customer Risk Tolerance (“CRT”) level was set by the

Commission at 10 percent of PG&E’s system average rate. The calculation of the CRT

value is derived by multiplying 10 percent of the adopted bundled system average rate by

the bundled forecasted sales for the rolling 12-month period. Based on PG&E’s effective

March 2018 bundled system average rate of 19.545 cents per kilowatt-hour (“kWh”),2 a

10 percent risk tolerance factor yields a CRT of 1.95 cents/kWh Or $940 million.

Pursuant to D.12-01-033, this CRT calculation will be updated every two years in each

Long-Term Procurement Plan (“LTPP”) filing. If the LTPP filing is delayed or not made,

the CRT will be updated two years from the filing of the previous LTPP via a Tier 1

advice letter. A description of PG&E’s TeVaR methodology is included in Section B

below.

1 See also Appendix M (regarding TeVaR notification to the Procurement Review Group as required by D.07-12-052 and D.12-01-033). 2 PG&E Advice Letter (“AL”) 5231-E “2018 Annual Electric True-Up – Consolidated Electric Rate Changes Effective March 1, 2018” https://www.pge.com/tariffs/assets/pdf/adviceletter/ELEC_5231-E.pdf.

PG&E Gas and Electric Advice Filing List General Order 96-B, Section IV

AT&T Downey & Brand Pioneer Community Energy Albion Power Company Ellison Schneider & Harris LLP Praxair Alcantar & Kahl LLP Energy Management Service Regulatory & Cogeneration Service, Inc. Anderson & Poole Evaluation + Strategy for Social

Innovation SCD Energy Solutions

Atlas ReFuel GenOn Energy, Inc. SCE BART Goodin, MacBride, Squeri, Schlotz &

Ritchie SDG&E and SoCalGas

Barkovich & Yap, Inc. Green Charge Networks SPURR Braun Blaising Smith Wynne P.C. Green Power Institute San Francisco Water Power and Sewer CalCom Solar Hanna & Morton Seattle City Light California Cotton Ginners & Growers Assn ICF Sempra Utilities California Energy Commission International Power Technology Southern California Edison Company California Public Utilities Commission Intestate Gas Services, Inc. Southern California Gas Company California State Association of Counties Kelly Group Spark Energy Calpine Ken Bohn Consulting Sun Light & Power Casner, Steve Keyes & Fox LLP Sunshine Design Cenergy Power Leviton Manufacturing Co., Inc. Tecogen, Inc. Center for Biological Diversity Linde TerraVerde Renewable Partners City of Palo Alto Los Angeles County Integrated Waste

Management Task Force Tiger Natural Gas, Inc.

City of San Jose Los Angeles Dept of Water & Power TransCanada Clean Power Research MRW & Associates Troutman Sanders LLP Coast Economic Consulting Manatt Phelps Phillips Utility Cost Management Commercial Energy Marin Energy Authority Utility Power Solutions County of Tehama - Department of Public Works

McKenzie & Associates Utility Specialists

Crossborder Energy Modesto Irrigation District Verizon Crown Road Energy, LLC Morgan Stanley Water and Energy Consulting Davis Wright Tremaine LLP NLine Energy, Inc. Wellhead Electric Company Day Carter Murphy NRG Solar Western Manufactured Housing

Communities Association (WMA) Dept of General Services Office of Ratepayer Advocates Yep Energy Don Pickett & Associates, Inc. OnGrid Solar Douglass & Liddell Pacific Gas and Electric Company