CAC Chair report to BOD – 5/21/25
Item 13. Chair Report:
• Reviewed the Draft Budget as an informational item that will be presented this evening by Ava, CAC looks forward to seeing the item for a recommendation in the June Meeting, highlighting the local development allocation from $25m in the Upside Budget to $10m with the PCIA Reform Budget (see CAC Chair Report to CAC below).
• Member Balkisson gave the Energy Affordability Ad Hoc presentation, building the story of pain for ratepayers and Member Lutz will invite Richard McCann (Energy, Water and Environmental Policy and Economics Senior Consultant), as next steps for this ad hoc and CAC discussion, Committee will also plan to meet with the appropriate Ava Staff on Energy Affordability concerns.
Item 15 - Critical Municipal Facilities Update: Member Weiner motioned to approve staff's recommendation with Member Landry seconded motion, approved unanimously.
Item 16 - 2025 State Legislative Bills:
• Member Lutz brought (with Member Balkissoon's second) a motion to approve staff's recommendation with the following exceptions: The following bills currently classed as "monitor" be moved into the Support column:
o AB1167, SB24, SB332, SB500, AB740, AB13
• Also, Member Lakshman offered a friendly amendment to Oppose AB 942 (staff recommendation listed that bill as "monitor").
• Member Lakshman's friendly amendment was accepted, and the motion was approved unanimously.
CAC Chair Report – CAC Meeting, May 19th
• CEO Chang highlighted a volunteer event at the Habitat for Humanity Sequoia Grove site in Hayward, celebrating Ava's sponsorship of an all-electric, low-income housing project • Ava also launched its Smart Home Charging Program, a residential EV managed charging initiative, targeting 10,000 vehicles with incentives for off-peak charging and already nearing 1,000 enrollments.
• CEO Chang confirmed the successful phased enrollment of 120,000 customers in Stockton and Lathrop, with opt-out rates under 5%.
• Informed the Board that the CAC voted 7-2 with one abstention to oppose supporting the SB540 letter.
• Board members requested more detailed briefings, or a possible board-wide workshop on prepaid financing before approving future transactions.
o CFO Russell Mills presented prepaid financing, a structure that allows Ava to use tax exempt debt to prepay for electricity at a discount (typically 8-12%), resulting in cumulative savings of almost $22 million through the end of 2024; exploring options to do so in 2025. • Informational item on Ava's current trajectory toward a zero-emission portfolio by 2030 and analyzed the costs and risks of moving faster.
• Board approved of multiple long-term offtake agreements, CAC Supported, with follow up clarifications by the board on Resource Adequacy, impact of battery storage on this Tracy power plant and insuring data/insights about this facility for future use/info:
o (1) Thermal RA,
o (2) Battery RA,
o (3) EEI financial settlement,
o (4) ISDA financial settlement
• SB 540 – Request by Staff to sign letter of support failed to get approval:
o Member Roche motioned to approve the SB 540 support letter. Member Gonzalez seconded the motion, which failed 5/9/1/0/2 (yes/no/abstain/recuse/not present):
o Yes: Members Hu, Roche, Gonzalez, Vice-Chair Andersen and Chair Balch o No: Members Marquez, Lopez, Keng, Del Catancio, Brown, Rickman, Blower, Nygard and Sakakihara
o Abstain: Member Tregub
o Recuse: none
o Not Present: Members Diallo and Barrientos
• Informational item on the Budget will be discussed at the upcoming Board of Directors meeting, reviewed at the Executive Committee, some high-level information for the CAC, as this is an information item for the Board.
o Rates have increased and PCIA has decreased since 2021, driven by historic increases in market energy prices. Ava is seeing some stabilization and softening in energy costs, though overall costs remain elevated.
o Calendar year 2026 is forecasted at a reduction in energy market prices and rates relative to 2025.
2025-26 budget process has required planning for greater uncertainty due to CA regulatory activity
There is a CPUC rulemaking that could create a material adjustment to calendar year 2026
PCIA/rates based on retroactive recovery on 2025. In this draft budget Ava presents two scenarios that are representative outcomes (actual results will vary based on market prices and PCIA 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 to be implemented in 2026
There is a high degree of uncertainty at this stage, and we expect to have more confidence in the June timeframe on CPUC action
Note that the ERRA filing occurred on May 15, 2025, and has not yet been incorporated into this budget, which is anticipated to improve this budget outlook