Fiscal Year 2025-2026
Draft Budget
Executive Committee
Howard Chang | May 7, 2025
Introduction
2 Background & Discussion
3 • Every year in June, Ava Board of Directors (the “Board”) approves the following fiscal year’s budget • The Budget covers the overall categories of the General Operating Fund:
▪ Revenues from Operations
▪ Energy Operating Expenses
▪ Services to Facilitate Energy Operations
▪ Operational Overhead to Energy Operations
▪ Non-Operating Revenues
▪ Non-Operating Expenses, including a Capital Transfer to the Local Development Fund • The Budget typically goes through a few rounds of review prior to Board approval in June, with a full review in the May Board meeting along with reviews from subcommittees—typically the Finance, Administrative, and Procurement Subcommittee and the Executive Committee • Expenses are typically 90%+ energy related with overhead and Local Development funding accounting for 6-8% of total expenses
How Ava Works—Energy Delivery
• Ava sells energy directly to its customers by procuring energy through various market mechanisms and scheduling delivery into California Independent Service Operator (CAISO) • Ava is not responsible for transmission or delivery of the commodity; this is a service retained by PG&E • Per Ava’s risk management policy, much of the expected load is procured and hedged in advance across energy, RECs, and Resource Adequacy
• Ava schedules it's forecasted load with CAISO on a day-ahead basis and real-time basis • This is done regardless of the amount of energy hedges that Ava has procured • The CAISO is California’s regional market balancing authority whose primary purpose is to keep the energy being pulled off the grid balanced by energy being put on the grid to prevent grid damage or area shortages 4 How Ava Works—Revenues & Rates
• Ava offers two electricity products to customers:
• Renewable 100: 100% of the energy is from renewable resources • Originally set at $0.01/kWh above PG&E and has migrated down as Ava financials improved • Currently priced at $0.0025/kWh above PG&E rates
• Bright Choice: In 2025-26 this will be 81% from renewable energy and large hydro, plus ~10% nuclear • Originally set at 1.5% discount to PG&E, reduced to a 1% discount in 2021,increased to a 3% discount in 2022 • The latest adjustment was to a 5% discount to PG&E rates in 2023 • The current percent load of Bright Choice customers is ~72% for FY 2026 5 How Ava Works—Billing Cycle
• Revenues are made from sales of energy to customers based on generation rates that are indexed to PG&E cost of service rates as approved by the CPUC
• PG&E will read Ava customer meters to monitor consumption. These reads are then reported to Ava and its Billing data manager
• The consumption data is processed to generate billing amounts based on Ava’s rates and then sent back to PG&E, who then issues the bills and collects payments on Ava’s behalf • PG&E's bundled customers and unbundled (Ava) customers also pay a power charge indifference adjustment (PCIA) and minor system fees. These are collected by PG&E from customer revenues and retained prior to payment distribution to Ava.
o Additionally, all PG&E bundled and unbundled customers are charged a Transmission & Distribution cost • A billing cycle is typically about three months, meaning it takes about three months for Ava to receive payment from a customer’s consumption
• Consumption occurs in the first month
• A bill is issued in the second month
• Payment is due in the third month
6 PCIA Update
7 How Ava Works—Power Charge Indifference Adjustment (PCIA) • Ava’s generation rates to customers are indexed to PG&E’s generation rate • A portion of PG&E's generation rate is a pass-through charge to PG&E for the PCIA • The PCIA is how PG&E recovers/credits "stranded costs" for legacy generation resources • PCIA rates are based on an annual mark-to-market
• For Energy, Resource Adequacy (RA), and Renewable Portfolio Standard (RPS) resources, the mark-to-market is against "Market Price Benchmarks" (MPBs)
• Forecasts for the MPBs are presented by the Investor-Owned Utilities (IOUs) in May. This is a preliminary outlook of rates and PCIA for the next year
• MPB actuals-to-date are delivered in October and are used to establish the next year’s rates • PCIA and rates are "trued up" from forecast to actual, and any overcollection or under-collection is recovered in rates the following year.
• Higher MPBs higher IOU rates and lower PCIA = more operating headroom for Ava • Lower MPBs lower IOU rates and higher PCIA = less operating headroom for Ava 8 Portfolio
Costs
Portfolio
Value*
Stranded
Costs/credit
*Value calculated using “Market
Price Benchmarks” (MPBs)
Cal. Pub. Util. Comm'n (CPUC) Revisions to MPBs?
According to a February CPUC Staff Report:
• The current RA MPB overstates the market value of the PCIA portfolio RA products, because it:
o Reflects an insufficient number of transactions to provide a robust valuation o Includes transactions that may not purely reflect market value such as affiliate transactions, swaps, and sleeves • The PCIA methodology artificially inflates RA costs attributed to bundled customers and effectively requires bundled customers to pay unbundled customers for the use of the IOU’s resources • The CPUC has opened a new rulemaking to consider MPB changes.
Specific changes under consideration are:
• Include all transactions applicable (not just transacted) for a given delivery year • Combine different types of RA MPBs (flex, local, system) into a single MPB • Exclude affiliate, swap, and sleeve transactions
• Use monthly, or seasonal, values for MPBs
• The CPUC plans to implement any changes in time for the October update, to take effect January 1, 2026.
This rulemaking introduces considerable uncertainty into Ava's budget process! • These possible methodology changes will increase PCIA and decrease rates beginning January 2026 9 The CPUC's PCIA Process – Key Dates
• PG&E makes 2026 ERRA forecast filing - 5/15/25
• PCIA Rulemaking Phase I RA MPB proposed decision -
▪ 5/13/25 or
▪ 5/27/25
• PCIA Rulemaking Phase I RA MPB final decision -
▪ 6/12/25 or
▪ 6/26/25
• 2026 ERRA Forecast "October update filing" - 10/15/26 • 2026 ERRA Forecast final decision - 12/18/25
• New rates go into effect - 1/1/26
10 The "ERRA Forecast
proceeding" at the
CPUC results in PCIA
and PG&E generation
rates for the following
year. In this case, 2026.
Impact of Potential PCIA Reform on Revenues
• If implemented in calendar year 2026, the impact
from the PCIA Reform is estimated to reduce
revenues by approximately $187MM
▪ This reduction is based on retroactive adjustments to the 2025 RA MPBs used in the PCIA calculation
• About $79MM would be realized in the first half
(January – June 2026), which is in the proposed
budget fiscal year
• The remaining $108MM would be realized in the
second half (July – December) and would impact the
next fiscal year (FY 2026-2027)
▪ The third calendar year quarter (July – August) is
expected to have the largest effect ($58MM)
11 35,086,000
79,200,000
137,648,000
186,819,000
-
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
Q1 Q2 Q3 Q4
Comparative Revenue Performance & Impact of Reform
Upside PCIA Reform Difference Cumulative
Market Price Benchmark Trends 2023-2027
12 • In addition to changes in the PCIA calculation methodology, we are also seeing a softening of prices RA Market Price Benchmark
Brown Power Market Price Benchmark
RPS Adder
Expected Market Environment & Impact to Rates/PCIA
• Currently RA and RPS prices are softening in 2025
• Current market fundamentals are likely to set rates lower and the PCIA higher for the 2026 calendar year • Potential changes to the PCIA methodology will likely further increase PCIA and decrease rates, lowering Ava’s headroom
• For this presentation, two budgets will be considered:
▪ Upside Budget: Rates and PCIA are only affected by changes to market condition MPB’s with no PCIA reform ▪ PCIA Reform Budget: Rates and PCIA are affected by CPUC rulings and market condition MPBs 13 2026-U is the Upside Scenario
2026-R is the PCIA Reform Scenario
0 50
100
150
200
250
300
$/MWh
Month
NP15 Prices from June 2018 through June 2027
with P5-P95 Variance Band from May 2025
Forward
P95 P5 NP15 Prices Annual Avg
0 0.02
0.04 0.06
0.08 0.1
0.12 0.14
0.16 2019 2020 2021 2022 2023 2024 2025 2026-U 2026-R
$/kWh
Fiscal Year
Customer Rate Revenue Profile
Ava Average Rates PCIA Fees Operating Expense Margin
2025-26 Draft Budget
14 Draft Budget Summary
• In the face of this uncertainty, Ava continues to serve our local community and customers with cost competitive & cleaner energy while providing local jobs and equitable programs • Rates have increased and PCIA has decreased since 2021, driven by historic increases in market energy prices starting in 2021. We are seeing some stabilization in energy costs, though overall costs remain elevated.
Calendar year 2026 is forecasted at a reduction in energy market prices and rates relative to 2025. • The 2025-26 budget process has required planning for greater uncertainty due to California regulatory activity
• We modeled multiple scenarios and stress tested our operating budget. There exists a potential ruling with the CPUC that would create a material adjustment to calendar year 2026 PCIA based on retroactive recovery on 2025. In this draft budget we present two scenarios that we view as most likely, though actual results will vary based on market volatility and PCIA-related reform:
• "Upside" Budget scenario reflects status quo PCIA setting methodology with forecasted market conditions • "PCIA Reform" Budget scenario reflects impact from anticipated CPUC ruling on PCIA reform expected in June 2026 and to be implemented in 2026. In this scenario, staff has incorporated recommendations to mitigate the financial deficit and seek board feedback on other potential actions. • There is a high degree of uncertainty at this stage and we expect to have more confidence in the June timeframe on CPUC action
15 Draft Budget Fiscal Year 2025-2026
16 • Current fiscal year budget is presented along with an "Actuals" column reflecting incurred actual costs
through March 2025 and projected costs for the final
quarter
• 2026 "Upside" revenues reflect forecasted changes to
rates and PCIA given changes to market conditions
only
• 2026 "PCIA Reform" revenues reflect the changes to
market conditions and includes the impact from the
potential CPUC ruling with PCIA reform
• 2026 "PCIA Reform" budget results in a deficit of
negative $5.2MM and further actions would be taken
to ensure a neutral to positive Net Position.
Adjustments that are currently incorporated include:
▪ PCIA Reform Budget has reduced Personnel Costs in the Overhead Operating Expenses for lower incremental hiring ▪ PCIA Reform Budget has a $10MM Local Development
contribution in Non-Operating Expenses
AVA COMMUNITY ENERGY FY 2025 FY 2025 FY 2026 FY 2026
BUDGET ACTUALS UPSIDE PCIA REFORM
OPERATING ACTIVITY
TOTAL OPERATING REVENUE 872,854,000 926,835,000 993,564,000 915,155,000
EXPENSES & OTHER USES
Cost of Energy 760,248,000 760,682,000 861,043,000 861,043,000 Cost of Energy Services 11,608,000 11,726,000 14,379,000 14,379,000 Total Energy Operating Expenses 771,856,000 772,408,000 875,422,000 875,422,000 Total Overhead Operating Expenses 44,868,000 36,410,000 50,317,000 48,343,000 TOTAL OPERATING EXPENSES 816,724,000 808,818,000 925,739,000 923,765,000
NON-OPERATING ACTIVITY
TOTAL NON-OPERATING REVENUE 11,449,000 19,160,000 14,767,000 14,767,000 TOTAL NON-OPERATING EXPENSES 25,300,000 23,632,000 26,207,000 11,397,000 NET NON-OPERATING POSITION (13,851,000) (4,472,000) (11,440,000) 3,370,000 TOTAL NET REVENUES 42,279,000 113,545,000 56,385,000 (5,240,000) Budget Uncertainty and Risk Mitigants
• To mitigate a potential deficit in 2025-2026 and 2026-2027 there are a variety of options to consider:
o Adjustments to the customer value proposition (Bright Choice rate discount and R100 Premium)
o Adjustments to renewable energy and large hydro procurement targets - implement procurement periods, adjustment of
procurement floors to minimize over-procurement
o Adjustments to local development funding
o Adjustments to personnel hiring
o Allocating 2024-25 budget surplus to Rate Stabilization Fund to release in 2026-27 timeframe
• Future forecasts (2027 and beyond) are highly uncertain at this time due to market conditions and PCIA reform. There are some probably scenarios in which Ava runs a material deficit in the 2026-27 fiscal year. The scenarios are indicative downside scenarios.
17 AVA COMMUNITY ENERGY FY 2027 FY 2027
UPSIDE PCIA REFORM
OPERATING ACTIVITY
TOTAL OPERATING REVENUE 871,419,000 757,262,000
EXPENSES & OTHER USES
Cost of Energy 904,763,000 904,763,000
Cost of Energy Services 15,754,000 15,754,000
Total Energy Operating Expenses 920,517,000 920,517,000 Total Overhead Operating Expenses 54,228,000 52,056,000 TOTAL OPERATING EXPENSES 974,745,000 972,573,000
NET OPERATING POSITION (103,326,000) (215,311,000)
NON-OPERATING ACTIVITY
TOTAL NON-OPERATING REVENUE 16,009,000 16,009,000
TOTAL NON-OPERATING EXPENSES 26,390,000 11,460,000
NET NON-OPERATING POSITION (10,381,000) 4,549,000
TOTAL NET REVENUES (113,707,000) (210,762,000)
Note: For simplicity all revenue and cost
assumptions for both scenarios for FY 25-26 are
carried over for FY 26-27
Draft Budget Scenario Assumptions
• Revenues assume no changes to value proposition under both scenarios. Ava maintains 5% discount to PG&E for its Bright Choice customers and a 0.25 cent premium for its Renewable 100 customers • Additionally, net revenues assumes Ava maintains a 1% uncollectable rate • Energy costs are derived from a blend of contracted and open positions for all attributes. Also assumes market prices behave at expected volatility throughout the year. Open prices are non-stressed, mean-forecasted market prices. • Both scenarios also assume no changes to Ava’s renewable and carbon free energy targets: 81% carbon free targets for both 2025 and 2026 calendar years • Both scenarios also assume San Joaquin County begins service in March of 2026 (to be finalized) • No draws on credit facility or reserve funds are assumed • No recognition of GASB 62 revenue ($57.6MM)
• Non-operating revenue assumes an average of 3.5% interest rate earned through the fiscal year 18 UPSIDE BUDGET
• Personnel headcount has 14 additional
needed staff for expanding operations
• Local Development allocation is $25MM
PCIA REFORM BUDGET
• Personnel headcount has 7 incremental
additional staff
• Local Development allocation is $10MM
Draft Budget: Fiscal Year Revenue Scenarios
AVA COMMUNITY ENERGY FY 2025 FY 2025 FY 2026 FY 2026
BUDGET ACTUALS UPSIDE PCIA REFORM
OPERATING ACTIVITY
REVENUE & OTHER SOURCES
Electricity Sales 881,671,000 924,006,000 1,003,600,000 924,399,000 Uncollectables (8,817,000) (9,017,000) (10,036,000) (9,244,000) Other Operating Revenue 0 11,846,000 0 0
TOTAL OPERATING REVENUE 872,854,000 926,835,000 993,564,000 915,155,000 19 • Difference in revenues between the two scenarios for FY 2026 is driven by the potential impact from PCIA Reform decision at CPUC (~$79MM for Jan 2026 – Jun 2026) • No change to value proposition under both scenarios
• Bright Choice: 5% discount to PG&E.
• Renewable 100: Premium of 0.25 cents to PG&E
• Uncollectable rates are maintained at 1% of sales
• No planned recognition of GASB 62 deferred revenue balance ($57.6MM) • Other Operating revenue in FY 2025 related to damages for project delays Draft Budget: Fiscal Year Revenue Scenarios
20 At the current 2025 load distribution:
• 1% change in the Bright Choice value
proposition results in a fiscal year change
of $7.2MM
• 0.25 cent change in the Renewable 100
value proposition results in a fiscal year
change of $5.6MM
• The following table evaluates the
respective value proposition changes on
revenues for the first and second half of
the fiscal year separately
Fiscal Year 1% ∆ BC 0.25 Cent ∆ R100
First Half 4,169,000 2,745,000
Second Half 3,009,000 2,873,000
0.078 0.082 0.072 0.083
0.132 0.145 0.135
0.119 0.110
0.026 0.030 0.038
0.037
0.012
0.006
0.008
0.007 0.015
0 0.02
0.04 0.06
0.08 0.1
0.12 0.14
0.16 2019 2020 2021 2022 2023 2024 2025 2026-U 2026-R
$/kWh
Fiscal Year
Customer Rate Revenue Profile
Ava Average Rates PCIA Fees Operating Expenses Margin
Carbon Free & Renewable Procurement Schedule
21 • In April 2022, the Board approved
the “Path to Zero by 2030” for the
Bright Choice product, as shown
in the table to the left
▪ Carbon Free percentages reflect
renewable and large hydro energy
• In previous years, the Board has
approved an increase to carbon
free procurement targets
• June 2024, the Board approved an
additional 5% to calendar year
2025 targets; increasing from
76% to 81%
Year Path Target Increase Updated Target Increase Updated Target Increase Updated Target Increase Updated Target 2022 63% 5% 68% -- -- -- -- -- --
2023 66% 5% 71% 5% 76% -- -- -- --
2024 71% 0% 71% 10% 81% 0% 81% -- --
2025 76% 0% 76% 0% 76% 5% 81% 0% 81%
2026 81% 0% 81% 0% 81% 0% 81% 0% 81%
2027 85% 0% 85% 0% 85% 0% 85% 0% 85%
2022 2023 2024 2025
Optional Procurement Target Adjustments
• In order to address any deficit concerns, Ava can
consider adjustments on the procurement targets
• Implementation of multi-year Compliance Periods
to allow for variability of renewable energy and
large hydro generation year to year
o With 3-year compliance periods that match the
formal California RPS compliance periods, Ava
can reduce costs associated with over-procurement of green attributes by creating a balancing mechanism across the period
• Ava can consider adjusting procurement targets in
the absence of compliance periods as well
22 • The 2024 Power Content Label is
currently being finalized and the latest
estimate indicates Renewable and Large
Hydro energy procurement of ~93%
GASB 62: Revenue Deferred Balance
23 • The GASB 62 Revenue Deferral Fund was
established by Resolution R-2020-26
• Staff is currently evaluating a formalized
Rate Stabilization Fund Policy for review
• Contributions and Recognitions have been
tracked since inception
• Current balance is approximately $57.6MM
• ~$10.5MM is retained for long term
renewable costs to be recognized in 2027
• ~$15.0MM is retained for Net Billing Tariff
incentives from net revenues from FY 2024
• ~$32.1MM is retained for rate stabilization
purposes
FY Contribution Recognition BalancePurpose
2020 12,680,000 - 12,680,000
Stabilize Local Development balance until Fund
is established by Reso R2020-26
2021 15,814,000 12,680,000 15,814,000
Recognized LD balance with fund establishment
via Budget. Contributed to PCIA PUBA balance
through December 2023 as allocated by Audit
2022 - - 15,814,000
2023 37,200,000 - 53,014,000
~$10.5MM each for on-bill credits and PPA
premium plus $16.2MM for rate stabilization as
allocated by audit and Resolution R-2023-37
2024 - 10,504,837 42,509,163
Recognition is for on-bill credits, by Resolution
R-2023-58
2025 37,407,824 22,316,492 57,600,495
Contribution for on-bill credits and NBT from
surplus revenue as allocated by audit and
Resolution R-2024-2. Recognition is net on-bill
credits by Resolution R-2024-73.
2026 - - 57,600,495
2027 - 10,504,837 47,095,658
Recognition is for PPA premium contribution
from 2023, by Resolutions R-2023-58 and R-2024-26
2027 - 14,963,130 32,132,528
Possible recognition of NBT incentives
contributed in FY 2025
Draft Budget: Overview of Operating Expenses
AVA COMMUNITY ENERGY FY 2025 FY 2026 FY 2026
BUDGET UPSIDE PCIA REFORM
EXPENSES & OTHER USES
Cost of Energy 760,248,000 93.1% 861,043,000 93.0% 861,043,000 93.2% Cost of Energy Services 11,608,000 1.4% 14,379,000 1.6% 14,379,000 1.6% Total Energy Operating Expenses 771,856,000 94.5% 875,422,000 94.6% 875,422,000 94.6% Overhead Operating Expenses
Personnel 26,592,000 3.3% 31,637,000 3.4% 29,663,000 3.2% Marketing & Communications 6,168,000 0.8% 4,372,000 0.5% 4,372,000 0.5% Legal, Policy, & Regulatory Affairs 4,104,000 0.5% 4,055,000 0.4% 4,055,000 0.4% Other Professional Services 2,136,000 0.3% 3,423,000 0.4% 3,423,000 0.4% General & Administrative 5,868,000 0.7% 6,830,000 0.7% 6,830,000 0.7% Total Overhead Operating Expenses 44,868,000 5.5% 50,317,000 5.4% 48,343,000 5.2% TOTAL OPERATING EXPENSES 816,724,000 100.0% 925,739,000 100.0% 923,765,000 100.0% 24 • Expenses are divided into three overall
cost center categories:
• Energy Operations which includes all
energy, energy attributes, and ancillary
related costs and required management
services such as scheduling, data
management, and customer billing
▪ This category comprises nearly 95% of Ava’s
total operating expenses
• Overhead Operations which includes all
personnel and staffing needs as well as
work function cost centers required to
manage the organization at large, and is
about 5% of total operating expenses
• Non-Operating Expenses, which are all
capital and capital transfer related costs,
includes the local development budget.
This category is presented and discussed
in a later slide
Draft Budget: Fiscal Year Energy Operations
25 Energy Costs
• Costs are derived from a blend of contracted
and open positions for all energy, attributes,
and RA
▪ Open prices are non-stressed, mean-forecasted
▪ FY 2026 overall prices are expected to be about
13% higher than FY 2025 on average
▪ Material increases in Open and RA costs
• Carbon Free targets are 5% above baseline
targets in calendar year 2025 at 81% and
maintained at baseline target in calendar year
2026 at 81%
• Note: While the last year maintained stabile
market prices, we are still in a period of
historically high brown power prices with FY
2026 prices projected at 70% above 10-year
average, and expected to increase in later
years
AVA COMMUNITY ENERGY FY 2025 FY 2025 FY 2026 FY 2026
BUDGET ACTUALS UPSIDE PCIA REFORM
EXPENSES & OTHER USES
Cost of Energy 760,248,000 760,682,000 861,043,000 861,043,000 Cost of Energy Services 11,608,000 11,726,000 14,379,000 14,379,000 Total Energy Operating Expenses 771,856,000 772,408,000 875,422,000 875,422,000 Approx. 25.3% of cost is with open positions to the market. This gives up to $70MM of potential cost increases from market risk PPAs Hedges Open Resource
Adequacy
RECs Carbon Free
FY 2026 Budget to FY 2025 Actuals by Attribute
FY 2025 FY 2026
Draft Budget: Fiscal Year Overhead Operations
26 Material Overhead Items for FY 25-26:
• Two separate Personnel cost scenarios are presented. This is discussed in more detail on the proceeding slide.
• Marketing costs are established to be in-line with current fiscal year actuals • Legal, Policy, & Regulatory Affairs are established in-line with current budget year as some expected litigation legal expenses were deferred
• Professional services are expected to increase as Ava continues to fill out operational needs • G&A is expected to increase also due to continued growth of operations, but continues to be less than 1% of total Operating Expenses AVA COMMUNITY ENERGY FY 2025 FY 2025 FY 2026 FY 2026 BUDGET %OpEx ACTUALS %OpEx UPSIDE %OpEx PCIA REFORM %OpEx Overhead Operating Expenses
Personnel 26,592,000 3.3% 22,326,000 2.8% 31,637,000 3.4% 29,663,000 3.2% Marketing & Communications 6,168,000 0.8% 4,420,000 0.5% 4,372,000 0.5% 4,372,000 0.5% Legal, Policy, & Regulatory Affairs 4,104,000 0.5% 2,371,000 0.3% 4,055,000 0.4% 4,055,000 0.4% Other Professional Services 2,136,000 0.3% 1,981,000 0.2% 3,423,000 0.4% 3,423,000 0.4% General & Administrative 5,868,000 0.7% 5,309,000 0.7% 6,830,000 0.7% 6,830,000 0.7% Total Overhead Operating Expenses 44,868,000 5.5% 36,407,000 4.5% 50,317,000 5.4% 48,343,000 5.2% Draft Budget: Fiscal Year Personnel Details
27 • FY 2024 Budget was set for 15 additional FTE (83 total) and FY 2025 Budget was set for 15 additional FTE (98 total) to expand on internal expertise, build more depth, and help scale operations further. • FY 2026 Budget seeks to add 7 - 14 additional FTE (105 - 112 total) to continue addressing increased workflow in key areas and meet essential business needs. ▪ Proposed additional hires have been separated to align with the two budget scenarios presented • PCIA Reform (7): 3 Power Resources, 2 Operations, 1 Local Development, 1 Marketing • Upside (14): In addition to PCIA Reform 2 Local Development, 2 Legal/Policy, 1 Marketing, 1 Operations, 1 Power Resources
• Compensation Adjustments:
▪ COLA: 3%; Promotions/Wage Adjustments: 3%; Merit-based Compensation: 13% • Note: In 2023-2024, Ava adjusted compensation structure to standardize pay scales and create merit-based compensation to reduce pay bias in salaries as a DEI initiative 2025 2025 2026 2026 PERSONNEL BUDGET %Cost ACTUALS %Cost UPSIDE %Cost PCIA REFORM %Cost Salaries & Wages 19,765,000 74.3% 16,207,000 80.5% 24,702,000 78.1% 23,159,000 78.1% Health Care/Benefits 3,961,000 14.9% 1,616,000 8.0% 3,458,000 10.9% 3,242,000 10.9% Retirement 2,450,000 9.2% 2,032,000 10.1% 2,951,000 9.3% 2,767,000 9.3% Payroll Expenses 416,000 1.6% 284,000 1.4% 499,000 1.6% 468,000 1.6% Total Personnel Costs 26,592,000 100.0% 20,139,000 100.0% 31,610,000 100.0% 29,636,000 100.0% AB 2561: Ava FY 24-25 YTD
28 FY 2024 - 2025 Budgeted Headcount
Total Active FTE Budgeted 98
New FTE Budgeted 15
New FTE Filled to date 10
Average Time to Hire 82 Days
Vacancy Rate 33%
Retention Rate 94%
Average Turnover Rate 6%
*For recruitment, only new budgeted positions are
included. This does not account for other roles, like
backfill positions.
*Reporting Period: FY 24-25; July ‘24 - April ‘25 (YTD at time of report)
*Average Time to Hire: Days from role posted to start
date.
*FTE: Full-time employee; YTD: Year-to-date
Ava has a strong retention rate of 94%, with only 5 terminations so far this year.
Challenges faced in hiring:
• Finding a great fit can take time, but it’s worth it. ▪ We are prudent in our hiring process, strategically planning the timing of hiring throughout the year, carefully considering all aspects of the role and desired impact.
• Competition for talent is high, especially in the Bay Area What helps us overcome challenges?
• A strategic and robust hiring approach
• Ava is mission-driven
• Ava is a certified Great Place to Work!
▪ Based on the most recent employee engagement survey, 92% of employees say Ava is a great place to work, compared to 57% at a typical US company.
This slide and data presented ensure compliance to AB 2561, which requires local public agencies to present the status of vacancies and recruitment and retention efforts at a public hearing before the governing board of the local agency at least once per fiscal year.
Draft Budget: Fiscal Year Non-Operating Details
AVA COMMUNITY ENERGY FY 2025 FY 2025 FY 2026 FY 2026
BUDGET ACTUALS UPSIDE PCIA REFORM
NON-OPERATING ACTIVITY
NON-OPERATING REVENUE
Interest Income 11,400,000 19,144,000 14,718,000 14,718,000 Grants 0 0 0 0
Other Non-Operating Revenue 49,000 16,000 49,000 49,000 TOTAL NON-OPERATING REVENUE 11,449,000 19,160,000 14,767,000 14,767,000
NON-OPERATING EXPENSES
Borrowing Interest 2,796,000 1,228,000 1,087,000 1,087,000 Local Development Funding 22,404,000 22,404,000 25,000,000 10,190,000 Total Capital Expenditures 100,000 0 120,000 120,000
TOTAL NON-OPERATING EXPENSES 25,300,000 23,632,000 26,207,000 11,397,000 NET NON-OPERATING POSITION (13,851,000) (4,472,000) (11,440,000) 3,370,000 29 Non-Operating Revenue
• Interest Income is based on expected returns
for the managed treasury accounts for reserve
funds and rotating working capital
▪ Rates are estimated at 3.5%
• Other Non-Operating Revenue is rent from the
AT&T tower on the 8th Street building
Non-Operating Expenses
• Borrowing Interest are costs associated with
Ava’s credit facility held with US Bank. This
facility will be up for renewal in October 2025
and current market surveys indicate marginally
more favorable rates
• Local Development Funding is presented as two
options based on budget scenarios and is
discussed in more detail on the following slides
• Capital Expenditures are costs estimated for
tenant improvements at 1999 Harrison St
offices
Draft Budget: Local Development Incremental Funding
Allocation
30 Program Area Upside
Budget
PCIA Reform
Budget
Comments
Ava Charge $5,000,000 $3,000,000 Upside allocation would support expansion to additional cities
Critical Municipal Facilities (CMF) $6,000,000 $0 Upside allocation would support a second future portfolio
Heat Pump Water Heater support $5,000,000 $0 Program funding to support Air District gas water heater phase out
Future Roadmap Funding $5,000,000 $4,000,000 Upside allocation to support 2027 programmatic effort.
PCIA reform allocation could be used for CMF,
expansion of Ava Charge, heat pump support, or future
road map
Consultants for Roadmap $500,000 $500,000 Allocation for external consultants to help inform future roadmap for 2027 forward
Legal expenses $1,500,000 $1,050,000 Expenses associated primarily with Ava Charge and CMF Marketing expenses $2,000,000 $1,640,000 Expenses to support operational programs, such as Ava Charge, Ava Bike Electric, Ava SmartHome Charging, and
the upcoming solar and storage program
Total $25,000,000 $10,190,000
Ava is currently in the execution phase of previously budgeted programs (more details on following slide) and additional strategic planning for future phase implementations is underway Local Development –
FY26 anticipated spend of existing funding
31 Program Area Previously Funded Comments
Ava Charge $1,500,000 Development, Operations and Marketing Critical Municipal Facilities $15,000,000 Capital expenditure and risk mitigation Grants $950,000 Payments for contracted grants
Solar + storage upfront incentives $2,000,000
Incentives and expenses for ongoing programs
Solar + storage ongoing incentives $500,000
Health-e Communities pilot $1,000,000
Building Efficiency Accelerator $1,000,000
Ava Bike Electric incentives $5,000,000
Ava SmartHome Charging incentives $900,000
Total $27,850,000
Next Steps
• Upcoming rate filings and anticipated regulatory proceedings will inform our further development of budget scenarios and recommendations • Review of Draft Budget with the ExComm (5/7), FAP (5/8), and Board (5/21) • Additional review in June with approval at Full board on Wednesday June 18, 2025 • Considerations to evaluate going into the June meetings o Contingent budget approval on both scenarios depending on what CPUC action materials. CPUC actions are anticipated to be resolved before end of calendar 2025, but could delay.
o Bring for a mid-year budget update in December for action depending on CPUC changes
o When reviewing audited results for fiscal year 2024/25 in the fall 2025, consider adjustments to the budget surplus allocation to a rate stabilization fund 32