Staff Report Item 15
Staff Report Item 15
To: Ava Community Energy Authority
From: Howard Chang, Chief Executive Officer
Subject: PG&E Nuclear Allocation Decision (Action Item) Date: September 18, 2024
__________________________________________________________________ Summary/Recommendation
Staff is seeking Board guidance in consideration of the nuclear greenhouse gas free (“GHG-free”) attributes being offered as a result of extended operations at Diablo Canyon Nuclear Power Plant (“DCPP”). If the Board desires to accept the nuclear attributes, staff recommends the adoption of the attached Resolution. Opting to decline the nuclear attributes requires no formal action by the Board.
Financial Impact
Fiscal impacts of this item are specific to energy procurement cost savings for the Bright Choice product and are realized beginning in 2025, when nuclear could offset large hydro procurement needs. There are no costs associated with acceptance of the allocation.
Analysis and Context
In 2020, load serving entities (“LSEs”) within PG&E service territory were offered GHG-free attributes from large hydro and nuclear power proportional to the LSE’s load. Ava, then EBCE, brought forth multiple informational and action items to the Board regarding the allocations. At the April 2020 Board meeting, the Board voted to accept the large hydro allocation and reject the nuclear allocation.
Staff Report Item 15
While Ava has received an allocation of GHG-free energy from PG&E’s portfolio of large hydro resources from 2020 through 2024, there is uncertainty around what allocation structure will be in place for future years, or whether there will be an allocation to customers with a cost responsibility. Weather variability also plays an important factor in annual availability of large hydro generation.
When the Board acted in 2020, it was anticipated that DCPP would shut down in 2024-2025. On December 14, 2023, however, the California Public Utilities Commission (“CPUC”) conducted a formal review process and adopted a final Decision1 that extended operations at DCPP until October 31, 2029 for Unit 1 and October 31, 2030 for Unit 2 due to concerns related to grid capacity and reliability. This Decision requires PG&E to continue to offer LSEs the ability to use their share of DCPP’s GHG-free attributes for their power content label using the existing process for voluntary offering as a model. This allocation process for the GHG attributes from extended operations at DCPP was formalized in an Advice Letter filed by PG&E on June 12, 20242
There is no obligation to accept an allocation of nuclear energy, and acceptance or rejection of the nuclear allocation will have no impact on the extension of DCPP, which has already been approved. All customers pay for, and will continue to pay for, PG&E nuclear generation costs through the Power Charge Indifference Adjustment (“PCIA”). Whether or not Ava accepts the nuclear allocation has no impact on PCIA charges as the PCIA is a non-by-passable charge set annually by the CPUC.
The volume of nuclear power to be offered is still being determined and will be made to all LSEs across California, not just those within PG&E territory. Staff estimates that the allocation PG&E offers to Ava may contain ~610,000 mega-watt hour (“MWh”) of nuclear power. Resource Adequacy is also included across all LSEs, as part of the allocation.
Scenarios for Board Consideration:
Scenario 0 – Do not accept nuclear. This would continue the status quo.
Scenario 1 – Ava accepts nuclear allocation up to Ava’s load share percentage and uses it to offset large hydro procurement starting in 2025.
Scenario 2 – Ava accepts nuclear allocation and uses it to offset our carbon intensity, reducing unspecified power to 9% in 2025
Scenario 3 – Ava accepts nuclear allocation and further reduces our carbon intensity with additional large hydro or nuclear purchases.
Depending on the Board’s action, the nuclear allocation could offset from 0% up to 100% of the unspecified emissions listed in the Bright Choice Power Content label in year one.
Should the Board opt to accept the nuclear allocation, the Board will need to specify which scenario Ava would follow as provided above. A Resolution is provided to formalize that action with the different scenarios provided in brackets, which would be selected as directed by the Board.
No formal action is required to decline the nuclear allocation as that is Ava’s current status quo. 1 D.23-12-036.
2 Advice Letter 7295-E
Staff Report Item 15
Committee Recommendation
This item was presented to the Community Advisory Committee (“CAC”) on May 13, 2024. The CAC recommended delaying approval and expressed opposition to accepting the nuclear allocation.
Attachments
A. Scenario 1: A Resolution of the Board of Directors of Ava Community Energy Authority to Accept Ava’s Allocation of GHG-Free Attributes from Extended Operations at DCPP through 2030, using the allocation to offset large hydro procurement with immediate savings starting in 2025
B. Scenario 2: A Resolution of the Board of Directors of Ava Community Energy Authority to Accept Ava’s Allocation of GHG-Free Attributes from Extended Operations at DCPP through 2030, reducing unspecified power in direct proportion to the allocation amount year one, then offsetting large hydro procurement
C. Scenario 3: A Resolution of the Board of Directors of Ava Community Energy Authority to Accept Ava’s Allocation of GHG-Free Attributes from Extended Operations at DCPP through 2030, and additional procurement of large hydro or nuclear to reduce unspecified to 0% in 2025
D. Nuclear Allocation Decision Presentation
Attachment Staff Report Item 15A
RESOLUTION NO. R-2024-xx
A RESOLUTION OF THE BOARD OF DIRECTORS
OF AVA COMMUNITY ENERGY AUTHORITY APPROVING AVA’S ACCEPTANCE
OF THEIR ALLOCATION OF GHG-FREE ATTRIBUTES FROM EXTENDED
OPERATIONS AT DIABLO CANYON NUCLEAR POWER PLANT (DCPP)
WHEREAS Ava Community Energy Authority (“Ava”) was formed as a community choice aggregation agency (“CCA”) on December 1, 2016, under the Joint Exercise of Powers Act, California Government Code sections 6500 et seq., among the County of Alameda, and the Cities of Albany, Berkeley, Dublin, Emeryville, Fremont, Hayward, Livermore, Piedmont, Oakland, San Leandro, and Union City to study, promote, develop, conduct, operate, and manage energy-related climate change programs in all of the member jurisdictions. The cities of Newark and Pleasanton, located in Alameda County, along with the City of Tracy, located in San Joaquin County, were added as members of Ava and parties to the Joint Powers Agreement (“JPA”) in March of 2020. The city of Stockton was added as a member to Ava in September of 2022. The city of Lathrop was added as a member to Ava in October of 2023. San Joaquin County was added as a member to Ava in July 2024. On October 24, 2023, Ava legally adopted the name Ava Community Energy Authority, where it had previously used the name East Bay Community Energy Authority since its inception.
WHEREAS the California Public Utilities Commission’s (“CPUC”) December 14, 2023 final decision D.23-12-036 (“Decision”) extended operations at Diablo Canyon Nuclear Power Plant (“DCPP”) until October 31, 2029 (Unit 1) and October 31, 2030 (Unit 2) due to insufficient CAISO grid capacity and reliability concerns; WHEREAS the Decision requires PG&E to offer load serving entities the ability to use their share of DCPP’s Greenhouse Gas-free (“GHG-free”) attributes for their power content label; and
WHEREAS Ava is eligible to receive their share of GHG-free attributes from extended operations at DCPP.
NOW, THEREFORE, THE BOARD OF DIRECTORS OF AVA COMMUNITY ENERGY AUTHORITY DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. The Board of Directors approves Ava’s acceptance of their allocation of GHG-free attributes from extended operations at DCPP through 2030, using the allocation to offset large hydro procurement with immediate savings starting in 2025.
ADOPTED AND APPROVED this 18th day of September, 2024.
Attachment Staff Report Item 15A
Jack Balch, Chair
ATTEST:
Adrian Bankhead, Clerk of the Board
Attachment Staff Report Item 15B
RESOLUTION NO. R-2024-xx
A RESOLUTION OF THE BOARD OF DIRECTORS
OF AVA COMMUNITY ENERGY AUTHORITY APPROVING AVA’S ACCEPTANCE
OF THEIR ALLOCATION OF GHG-FREE ATTRIBUTES FROM EXTENDED
OPERATIONS AT DIABLO CANYON NUCLEAR POWER PLANT (DCPP)
WHEREAS Ava Community Energy Authority (“Ava”) was formed as a community choice aggregation agency (“CCA”) on December 1, 2016, under the Joint Exercise of Powers Act, California Government Code sections 6500 et seq., among the County of Alameda, and the Cities of Albany, Berkeley, Dublin, Emeryville, Fremont, Hayward, Livermore, Piedmont, Oakland, San Leandro, and Union City to study, promote, develop, conduct, operate, and manage energy-related climate change programs in all of the member jurisdictions. The cities of Newark and Pleasanton, located in Alameda County, along with the City of Tracy, located in San Joaquin County, were added as members of Ava and parties to the Joint Powers Agreement (“JPA”) in March of 2020. The city of Stockton was added as a member to Ava in September of 2022. The city of Lathrop was added as a member to Ava in October of 2023. San Joaquin County was added as a member to Ava in July 2024. On October 24, 2023, Ava legally adopted the name Ava Community Energy Authority, where it had previously used the name East Bay Community Energy Authority since its inception.
WHEREAS the California Public Utilities Commission’s (“CPUC”) December 14, 2023 final decision D.23-12-036 (“Decision”) extended operations at Diablo Canyon Nuclear Power Plant (“DCPP”) until October 31, 2029 (Unit 1) and October 31, 2030 (Unit 2) due to insufficient CAISO grid capacity and reliability concerns; WHEREAS the Decision requires PG&E to offer load serving entities the ability to use their share of DCPP’s Greenhouse Gas-free (“GHG-free”) attributes for their power content label; and
WHEREAS Ava is eligible to receive their share of GHG-free attributes from extended operations at DCPP.
NOW, THEREFORE, THE BOARD OF DIRECTORS OF AVA COMMUNITY ENERGY AUTHORITY DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. The Board of Directors approves Ava’s acceptance of their allocation of GHG-free attributes from extended operations at DCPP through 2030, reducing unspecified power in direct proportion to the allocation amount in year one, then offsetting large hydro procurement.
ADOPTED AND APPROVED this 18th day of September, 2024.
Attachment Staff Report Item 15B
Jack Balch, Chair
ATTEST:
Adrian Bankhead, Clerk of the Board
Attachment Staff Report Item 15C
RESOLUTION NO. R-2024-xx
A RESOLUTION OF THE BOARD OF DIRECTORS
OF AVA COMMUNITY ENERGY AUTHORITY APPROVING AVA’S ACCEPTANCE
OF THEIR ALLOCATION OF GHG-FREE ATTRIBUTES FROM EXTENDED
OPERATIONS AT DIABLO CANYON NUCLEAR POWER PLANT (DCPP)
WHEREAS Ava Community Energy Authority (“Ava”) was formed as a community choice aggregation agency (“CCA”) on December 1, 2016, under the Joint Exercise of Powers Act, California Government Code sections 6500 et seq., among the County of Alameda, and the Cities of Albany, Berkeley, Dublin, Emeryville, Fremont, Hayward, Livermore, Piedmont, Oakland, San Leandro, and Union City to study, promote, develop, conduct, operate, and manage energy-related climate change programs in all of the member jurisdictions. The cities of Newark and Pleasanton, located in Alameda County, along with the City of Tracy, located in San Joaquin County, were added as members of Ava and parties to the Joint Powers Agreement (“JPA”) in March of 2020. The city of Stockton was added as a member to Ava in September of 2022. The city of Lathrop was added as a member to Ava in October of 2023. San Joaquin County was added as a member to Ava in July 2024. On October 24, 2023, Ava legally adopted the name Ava Community Energy Authority, where it had previously used the name East Bay Community Energy Authority since its inception.
WHEREAS the California Public Utilities Commission’s (“CPUC”) December 14, 2023 final decision D.23-12-036 (“Decision”) extended operations at Diablo Canyon Nuclear Power Plant (“DCPP”) until October 31, 2029 (Unit 1) and October 31, 2030 (Unit 2) due to insufficient CAISO grid capacity and reliability concerns; WHEREAS the Decision requires PG&E to offer load serving entities the ability to use their share of DCPP’s Greenhouse Gas-free (“GHG-free”) attributes for their power content label; and
WHEREAS Ava is eligible to receive their share of GHG-free attributes from extended operations at DCPP.
NOW, THEREFORE, THE BOARD OF DIRECTORS OF AVA COMMUNITY ENERGY AUTHORITY DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. The Board of Directors approves Ava’s acceptance of their allocation of GHG-free attributes from extended operations at DCPP through 2030, and additional procurement of large hydro or nuclear to reduce unspecified to 0% in 2025.
ADOPTED AND APPROVED this 18th day of September, 2024.
Attachment Staff Report Item 15C
Jack Balch, Chair
ATTEST:
Adrian Bankhead, Clerk of the Board
Nuclear Allocation Decision
September 18, 2024
Attachment Staff Report Item 15D
1. Introduction
2. Background
3. Baseline Facts
4. Scenarios for Board consideration
5. Appendix
2 Attachment Staff Report Item 15D
Introduction
3 • In light of the extension of Diablo Canyon Nuclear Power Plant (DCPP) to 2029/2030 timeframe, staff is seeking direction from the board on future acceptance or rejection of the GHG-free energy attributes • CA State Legislature & Governor's office voted to extend DCPP operations in 2022 for system reliability and GHG emissions reductions purposes while requiring further development of a Clean Energy Reliability Investment Plan o CPUC subsequently formalized the extension in 2023
• PG&E will offer an allocation this fall, likely in the October/November timeframe, with delivery beginning Jan 2025 • PG&E 2023 power content is anticipated to be ~53% nuclear, 34% renewables, 13% large hydro o PG&E elects not to disclose significant natural gas emissions due to excess generation • Ava Bright Choice 2023 power content is ~55% renewables, 34% large hydro, and ~11% unspecified system power
Attachment Staff Report Item 15D
Summary
4 • Ava's decision to accept or reject the allocation of nuclear GHG-free attributes will not impact the operational extension of DCPP and will not impact CA's energy mix
o Resource adequacy benefits are shared across all load serving entities regardless of this decision • Energy resource diversification is critical to attaining Ava's and CA's clean energy goals. DCPP will continue to operate through 2030 regardless of Ava's decision and therefore is not additive to system diversification • The benefits of accepting nuclear are cost savings, GHG emissions reductions, and more transparent GHG emissions disclosures from PG&E, which should be considered along with our customer & community preferences on power mix • Accept/Reject Scenarios:
o Scenario 0: Do not accept nuclear
o Scenario 1: Accept nuclear, procure less large hydro = ~$20MM savings in 2025 relative to budget o Scenario 2: Accept nuclear, procure less system power = $0 impact in 2025 with future savings o Scenario 3: Accept nuclear, procure more GHG-free energy to eliminate system power = ~$10-16MM cost in 2025 Attachment Staff Report Item 15D
5 Background
Attachment Staff Report Item 15D
Information on Pending GHG-free Nuclear Offer
6 • The pending nuclear offer will be made to all load serving entities across California, not just those within PG&E's service area.
• PG&E filed Advice Letter 7295-E on June 12th outlining the allocation process. They will offer both nuclear and hydroelectric power which we could select together or separately • PG&E will offer the nuclear power based on load share through 2030 on an annual basis. Offers will need to be accepted annually.
▪ Historically, there has not been flexibility to accept a partial allocation – it has been acceptance or rejection only • PG&E is expected to make the allocation offer in fall 2024. Deliveries would begin in January 2025. ▪ Historically PG&E has issued a notice with a draft confirm in early November of each year followed by approximately two weeks to review the agreement, a PG&E review period, and another approximately three weeks for execution to arrive at a fully executed agreement in December. • Staff is seeking board feedback in consideration of these anticipated nuclear GHG-free attributes being offered. • Note that acceptance or rejection of these nuclear attributes will have no impact on the extension of Diablo Canyon, which has already been approved.
Attachment Staff Report Item 15D
Overview:
• SB 846 (Dodd) authorizes the extension of the DCPP beyond the previous expiration dates (2024 for Unit 1 and 2025 for Unit 2), to up to five additional years (no later than 2029 and 2030, respectively) • Signed by Governor Newsom in September of 2022
Further Details:
• Requires the CPUC to set new retirement dates for DCPP • Authorizes $1.4B loan (appropriated $600M in 2022 and $400M in 2024) to PG&E to facilitate the extension of the plant • Provides expedited permitting to facilitate relicensing of DCPP • Authorizes collections of non-bypassable charges from electric ratepayers from all LSEs (including Ava) for ongoing DCPP costs • Requires CEC to develop a Clean Energy Reliability Investment Plan to accelerate clean energy resources and reliability Voting Process:
• SB 846 passed by a wide, bipartisan margin: 69-3 in the CA Assembly and 31-1 in the CA Senate Bill Rationale:
• SB 846: extending the DCPP "may be necessary to improve statewide energy system reliability and to reduce the emissions of greenhouse gases while additional renewable energy and zero-carbon resources come online, until those new renewable energy and zero-carbon resources are adequate to meet demand." The Legislature finds "...a renewed license term is prudent, cost effective, and in the best interests of all California electricity customers." Legislative Background
7 Attachment Staff Report Item 15D
• On December 14, 2023, the CPUC adopted a final Decision that extended operations at Diablo Canyon Nuclear Power Plant (DCPP) until October 31, 2029 (Unit 1) and October 31, 2030 (Unit 2) due to insufficient CAISO grid capacity and reliability concerns.
• The Decision requires PG&E to offer LSEs the ability to use their share of DCPP’s GHG-free attributes for their power content label using the existing process for voluntary offering as a model. • Ava has used estimates of the GHG free attributes in the included scenarios in this ppt as final allocation ratios will not be released until summer 2024.
• Note: Resource Adequacy is not a voluntary allocation and is included across all LSEs • While Ava has received an allocation of carbon free energy from PG&E’s portfolio of large hydro resources from 2020 through 2024, there is uncertainty around what structure will be in place for future years and whether a new market price benchmark will be incorporated, or if there will be an allocation to customers with a cost responsibility. • Note that large hydro allocations may be reduced going forward as PG&E may have discretion over allocation offerings and large hydro market purchases are increasingly scarce and variable year to year. • The current emissions accounting methodology is tracked on an annual basis and the enclosed emissions estimates in this presentation reflect the current rules. Hourly emissions accounting rules are being contemplated for the Power Source Disclosure (PSD) program beginning in 2028. This could meaningfully change Ava's emissions levels.
Regulatory Background
8 Attachment Staff Report Item 15D
Safety Committee (DCISC)
9 •Requires continuation of the Independent Safety Committee for DCPP, and requires the PUC to fund the committee
▪PUC under existing authority, has already established the Diablo Canyon Independent Safety Committee (DCISC) to make recommendations to review and enhance safety of operations at DCPP
▪DCISC holds regular public meetings, with the last meeting held February 21-22, 2024. •Presentations and fact-finding reports (on risk assessment, maintenance, seismic assessments, training etc.) are posted publicly to their website •Fact-finding reports include Nuclear Regulatory Commission inspection findings (summarized through over 5600 Inspection hours at DCPP in 2023)
•Required that an updated seismic and risk assessment be done prior to August of 2024 when the (current operating license expires)
•An updated seismic assessment was conducted from 6/2023 to 1/2024 in response to SB 846 (no updates recommended)
•Ava staff is reliant on DCISC determinations on safe operations and does not have deep expertise on nuclear operations and safety. DCISC findings and reports are provided at https://www.dcisc.org/annual-reports/
Attachment Staff Report Item 15D
10 Baseline Facts
• Current 2030 Bright Choice Procurement Schedule
• Ava and PG&E 2023 Power Content
• CCA Nuclear Allocations
Attachment Staff Report Item 15D
2030 Goal for 100% Clean Bright Choice Service
11 • The board approved the following Renewable Energy and Carbon Free Procurement schedule in April 2022 o *Indicates subsequent board approved changes to the procurement schedule Source: Board
Item from
October 18, 2023
plus subsequent
changes indicated
by *
Bright Choice CA-RPS %
Year Renewable % Carbon Free % Unspecified
%
Estimated PSDR
Emission Factor Renewable %
2018 41% 62% 38% n/a 29%
2019 60% 87% 13% n/a 31%
2020 40% 55% 45% 591 33%
2021 42% 60% 40% 564 36%
2022 49%* 72%* 28%* 496 39%
2023 54%* 76%* 24%* 503* 41%
2024 52% 81%* 19%* 403* 44%
2025 56% 81%* 19%* 371* 47%
2026 60% 81% 19% 315 49%
2027 64% 85% 15% 241 52%
2028 67% 90% 10% 163 55%
2029 71% 95% 5% 83 57%
2030 75% 100% 0% - 60%
Attachment Staff Report Item 15D
2023 Draft Power Content
(most recent reporting year)
12 PG&E claims 0 emissions in 2023
Source: https://investor.pgecorp.com/news-events/press-releases/press-release-details/2024/PGE-Customers-Electricity-100-Greenhouse-Gas-Free-in-2023/default.aspx Attachment Staff Report Item 15D
PG&E Historical Power Mix
13 2020 2021 2022 2023
Renewables 31% 48% 38% 34%
Large
Hydroelectric
10% 4% 8% 13%
Natural Gas 16% 9% 5% 0%
Nuclear 43% 39% 49% 53%
• Based on today's Power Content Regulations, if generation exceeds load a load serving has discretion for what it discloses.
• PG&E has considerable natural gas generation that it elects not to disclose • Ava has sought to adjust the Power Content Label rules to require gas emissions unsuccessfully Attachment Staff Report Item 15D
CCA Background
14 • Approximately half of all CCAs statewide have accepted nuclear historically (see slide 15), while half have rejected • The majority of PG&E-territory CCAs have historically rejected nuclear (see table below) • Several CCAs are currently revisiting the decision on accepting/rejecting nuclear:
▪ MCE brought this topic to their Technical Committee and Executive Committee with unanimous approval to accept nuclear; plan to bring to their full board in September ▪ Sonoma Clean Power, Peninsula Clean Energy, and other CCAs are currently evaluating based on affordability concerns Source: https://www.energy.ca.gov/sites/default/files/2024-02/2022_Power_Content_Labels_Sortable_Table_ada.xlsx Attachment Staff Report Item 15D
2022 Power Content Labels for CCAs with nuclear content >5% 15 Retail Suppliers Retail Sales
(MWh)
GHG Intensity
(lbs. CO2e/MWh)
Eligible
Renewables
(TOTAL)
Large
Hydro
Natural
Gas
Unspecified
Power Nuclear
San José Clean Energy - GreenValue 202,231 210 40.2% 9.2% 0.0% 19.8% 30.9% Pioneer Community Energy - 2022 Pioneer Community Energy Base Service 1,633,901 343 44.1% 1.3% 0.0% 27.0% 27.6% Orange County Power Authority - 2022 OCPA Basic Choice 177,052 503 62.3% 12.4% 0.0% 0.0% 25.3% San José Clean Energy - GreenSource 3,476,520 116 59.2% 7.4% 0.0% 8.6% 24.8% Silicon Valley Clean Energy - Green Start 3,605,920 72 44.9% 30.8% 0.0% 0.0% 24.3% Energy for Palmdale’s Independent Choice - 2022 EPIC Power 52,416 458 34.3% 0.0% 0.0% 42.8% 22.9% Lancaster Choice Energy - 2022 Clear Choice 611,814 588 33.6% 0.4% 0.0% 56.4% 9.7% San Jacinto Power - 2022 SJP PrimePower Power Mix 172,810 633 30.8% 3.3% 0.0% 60.1% 5.8% Rancho Mirage Energy Authority - 2022 Base Choice 282,288 612 32.3% 3.0% 0.0% 59.0% 5.7% Pomona Choice Energy - 2022 Pomona Choice 423,784 611 32.9% 3.2% 0.0% 58.3% 5.7% Apple Valley Choice Energy - 2022 AVCE Core Choice 254,247 693 23.6% 3.2% 0.0% 67.6% 5.6% Pico Rivera Innovative Municipal Energy - 2022 Prime Power 211,547 538 40.8% 3.3% 0.0% 50.5% 5.4% Pacific Gas and Electric Company - Base Plan 30,291,314 56 38.3% 7.6% 4.8% 0.0% 49.3% Pacific Gas and Electric Company - 50% Solar Choice 31,563 46 67.2% 3.8% 4.3% 0.0% 24.6% Ava/East Bay Community Energy - Bright Choice 5,076,143 496 49.4% 21.9% 0.0% 28.4% 0.2% 2022 CA Utility Average and Total Retail Sales 243,240,118 430 35.8% 9.2% 36.4% 7.1% 9.2% Source: https://www.energy.ca.gov/sites/default/files/2024-02/2022_Power_Content_Labels_Sortable_Table_ada.xlsx Attachment Staff Report Item 15D
16 Scenarios for Board Consideration
Attachment Staff Report Item 15D
Scenarios for Board Consideration
17 • Continue towards 2030 Renewable Energy (RE) and Carbon Free (CF) targets Scenario 0 –
Do Not Accept Nuclear
• No change to 2030 RE or CF targets
• Use nuclear to offset hydro with immediate cost savings in 2025 • ~$20MM savings in 2025
Scenario 1 –
Accept Nuclear + reduce large
hydro
• No change to 2030 RE or CF targets
• Reduce unspecified to 9% year one, then offset hydro needs • $0 budget impact
Scenario 2 –
Accept Nuclear + reduce
unspecified
Scenario 3 –
Accept Nuclear + eliminate
system power
• No change to 2030 RE or CF targets
• Buy additional large hydro/nuclear to reduce unspecified to 0% • ~$10-16MM cost in 2025
Attachment Staff Report Item 15D
Details: Scenario 0 –Do Not Accept Nuclear Allocation
18 • No financial impact given this is the base case
▪ Note that based on energy market volatility
and increased demand for renewables staff is
evaluating whether an upward rate
adjustment of R100 is needed
• Power content follows plan for 2030
• * Indicates board approved procurement
changes based on annual budgeting process
Bright Choice CA-RPS %
Year Renewable % Carbon Free % Unspecified %
PSDR Emission
Factor
Estimate
Renewable %
2018 41% 62% 38% n/a 29%
2019 60% 87% 13% n/a 31%
2020 40% 55% 45% 591 33%
2021 42% 60% 40% 564 36%
2022 49%* 72%* 28% 496 39%
2023 54%* 76%* 24%* 503* 41%
2024 52% 81%* 19%* 403* 44%
2025 56% 81%* 19%* 371* 47%
2026 60% 81% 19% 315 49%
2027 64% 85% 15% 241 52%
2028 67% 90% 10% 163 55%
2029 71% 95% 5% 83 57%
2030 75% 100% 0% - 60%
Attachment Staff Report Item 15D
Details: Scenario 1 –Accept Nuclear Allocation
19 General
• No change to Renewable Energy (RE) or Carbon-Free (CF) targets • Procure less large hydro resulting in cost savings year one Financial
Power Content
2025 2026 2027 2028 2029 2030
Potential savings on hydro $ 19,560,851 $20,661,212 $21,706103 $ 21,438,734 $21,976,609 $20,484,860 Bright Choice Power Content (estimated) 2025 2026 2027 2028 2029 2030 Renewable Energy 56% 60% 64% 67% 71% 75%
Large Hydro 15% 10% 10% 12% 14% 15%
Nuclear 10% 11% 11% 11% 10% 10%
Unspecified 19% 19% 15% 10% 5% 0%
GHG Emissions 371 371 284 191 97 0
Reference: Current Plan Unspecified 19% 19% 15% 10% 5% 0% Attachment Staff Report Item 15D
Details: Scenario 2 –Accept Nuclear Allocation + Reduce Unspecified to 9% 20 General
• No change to RE or CF targets; Reduce unspecified to 9% year one, then offsets hydro needs • Reduced emissions starting in 2025 and savings starting in 2027 Financial
Power Content
2025 2026 2027 2028 2029 2030
Potential savings on hydro - - $5,751,975 $15,399,916 $10,920,175 $20,484,860 Bright Choice Power Content (estimated) 2025 2026 2027 2028 2029 2030 Renewable Energy 56% 60% 64% 67% 71% 75%
Large Hydro 25% 21% 18% 15% 19% 15%
Nuclear 10% 11% 11% 11% 10% 10%
Unspecified 9% 8% 7% 7% 0% 0%
GHG Emissions 273 262 207 162 97 0
Reference: Current Plan Unspecified 19% 19% 15% 10% 5% 0% Attachment Staff Report Item 15D
Details: Scenario 3 –Accept Nuclear Allocation + Additional large hydro or nuclear 21 General
• No change to RE or CF targets; Reduce unspecified and buy additional large hydro or nuclear to eliminate unspecified in 2025 (emissions would be from PCC2s only)
• Then offsets hydro needs starting in 2028
Financial
Power Content
2025 2026 2027 2028 2029 2030
Potential savings on hydro - - - $1,309,341 $10,920,175 $20,484,860 Cost for add’l nuclear ($20) $9,647,593 $8,162,906 $2,083,163 Cost of add’l large hydro ($34) $16,400,908 13,876,940 $6,249,488 Bright Choice Power Content (estimated) 2025 2026 2027 2028 2029 2030 Renewable Energy 56% 60% 64% 67% 71% 75%
Large Hydro 25% 21% 21% 22% 19% 15%
Nuclear 10% 11% 11% 11% 10% 10%
Add’l Hydro or Nuclear 9% 8% 4% 0% 0% 0%
Unspecified 0% 0% 0% 0% 0% 0%
GHG Emissions 191 190 141 96 50 0
Reference: Current Plan Unspecified 19% 19% 15% 10% 5% 0% Attachment Staff Report Item 15D
22 2025 Bright Choice Power Content
(estimated) Scenario 0* Scenario 1 Scenario 2 Scenario 3 Renewable Energy 56% 56% 56% 56%
Large Hydro 25% 15% 25% 25%
Nuclear 0% 10% 10% 10%
Additional Hydro or Nuclear 0% 0% 0% 9%
Unspecified 19% 19% 9% 0%
GHG Emissions 371 371 230 191
Estimated (Savings)/Cost $0 ($20MM) $0 $10-16MM
2025Bright Choice Estimated Power Content by Scenario
*Based on board adopted 2030 Carbon-Free Goal plus subsequent budget approvals Attachment Staff Report Item 15D
Conclusion
23 • Staff is seeking board direction at this time in preparation for the pending nuclear allocation from PG&E in Fall 2024 • Ava's decision to accept or reject the allocation of nuclear GHG-free attributes will not impact the operational extension of DCPP and will not impact CA's energy mix
• The benefits of accepting nuclear are cost savings, GHG emissions reductions, and more transparent GHG emissions disclosures from PG&E, which must be considered along with our customer & community preferences on power mix • Accept/Reject Scenarios:
o Scenario 0: Do not accept nuclear
o Scenario 1: Accept nuclear, procure less large hydro = ~$20MM savings in 2025 relative to budget o Scenario 2: Accept nuclear, procure less system power = $0 impact in 2025 with future savings o Scenario 3: Accept nuclear, procure more GHG-free energy to eliminate system power = ~$10-16MM cost in 2025 • Recommendation to the board to consider a phased voting:
o Phase A: Vote on Reject or Accept Nuclear GHG Free attributes from Diablo Canyon through 2030 o Phase B: If accepted, then vote on Scenarios 1, 2, or 3 Attachment Staff Report Item 15D
24 Appendix
Attachment Staff Report Item 15D
• Ava brought forth multiple informational and action items to the Board regarding Nuclear allocations in 2019 and 2020.
• In the April 2020 Board meeting, a decision was passed to accept the large hydro allocation and reject the nuclear allocation.
• Decision passed with a vote of 10 yes and 5 no; No's were in favor of accepting the nuclear allocation • No votes: Hayward, Newark, Pleasanton, Piedmont, Livermore • 80+ public comments in opposition to accepting Nuclear • In the December 2020 Board meeting, a decision was passed to accept the nuclear allocation to resell the attributes at equal to or >$0.
• This decision was in part passed because PG&E is able to disclose a lower GHG emissions level due to high nuclear content. It is able to elect not to disclose its natural gas procurement in favor of carbon-free nuclear. • Decision passed with 10 yes and 2 No; No's were in favor of accepting and retaining the nuclear • No votes: Hayward, Albany
• 10+ public comments in opposition to this structure
• Following the formal extension of Diablo Canyon, the 2024 allocation decision was brought forward as an informational item to the Ava board for consideration in April 2024 Ava Background
25 Attachment Staff Report Item 15D
• Energy Market Pricing Dynamics
• Historically PCC1 Renewable Energy Credits (RECs) have generally priced in the $10 to $15/MWh range and are currently pricing in the $80 to $90/MWh range.
• Historically Large Hydro GHG-free attributes have generally priced in the $3 to $6/MWh range and are currently pricing in the $25 to $35/MWh range.
• Historically nuclear GHG-free attributes have not been transacted and CCAs have shown varying interest with low interest in procuring it outside of accepting the PG&E allocation. There appears to be increasing interest from CCAs to accept and potentially procure additional nuclear currently. • The sharp increase in pricing is driven by several factors, including limited generating capacity in CAISO, significant increased clean energy demand in California by CCAs and Corporates accelerating beyond SB100, increased clean energy demand outside of California impacting imports, and increased weather variability impacting supply. This weather variability has a particularly pronounced effect on large hydro resources inside and outside of CAISO. • There continues to be upward pressure on pricing on the horizon and there are indications that there will likely be market demand for nuclear by other load serving entities. • Pricing implications on the following slides are based on current market conditions and subject to increased volatility.
Energy Market Background
26 Attachment Staff Report Item 15D
Large Hydro Production in California
27 Source: California Energy Commission “Total_System_Electric_Generation_2009-2022_with_totals_ada.xlsx” -
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Gigawatt-hours
Year
Attachment Staff Report Item 15D
Nuclear Power Production
28 • Nuclear plants operate at a steady state with small variations for maintenance • Nuclear power covers about 2,000 MW of baseline load
• Nuclear power production represented by the grey strip in the charts below. 6/01/23 1/01/24 3/01/24
Source: California Independent System Operator (CAISO) Supply Trend Data Attachment Staff Report Item 15D
29 Questions?
Additional Resources:
1. https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M521/K496/521496276.PDF
2. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220SB846
3. https://www.pge.com/assets/pge/docs/about/pge-systems/seismic-assessment.pdf
4. https://www.dcisc.org/
5. https://www.dcisc.org/annual-reports/
Attachment Staff Report Item 15D