Staff Report Item 14
Staff Report Item 14
To: Ava Community Energy Authority
From: Howard Chang, CEO
Subject: Draft Budget Review for Fiscal Year 2025-2026
Date: 5/21/2025
__________________________________________________________________ Summary/Recommendation
Receive, review, and provide feedback on the Draft Budget for the next fiscal year.
Financial Impact
This is an informational item
Analysis and Context
Ava’s fiscal years (FY) runs from July 1st through June 30th. Staff is presenting a draft version of next fiscal year’s budget for the Board of Directors (the “Board”) to review and provide feedback.
The budget presents two possible outcomes based on potential new rule making by the California Public Utilities Commission (CPUC) on the Power Charge Indifference Adjustment (PCIA) methodology.
• The Upside outcome is a scenario based on a “status-quo” ruling by the CPUC • The Reform outcome is a scenario based on the CPUC approving the reform methodology
The attached presentation fills out the complete details on these possible outcomes and provides key discussion points.
Committee Recommendation
Staff Report Item 14
This item has been before the Executive Committee on May 7, 2025 and the Finance, Administrative, and Procurement Subcommittee on May 8, 2025. Questions regarding clarification of certain details were requested at these meetings and they have been addressed in this presentation.
Attachments
A. Draft Budget FY 2025-2026 presentation
Fiscal Year 2025-2026
Draft Budget
Board of Directors
Howard Chang | May 21, 2025
Attachment Staff Report Item 14A
Background & Discussion
2 • Every year in June, Ava Board of Directors (the “Board”) approves the following fiscal year’s budget • This draft budget has been reviewed with the Ex Comm (5/7) and FAP (5/8) • The Budget typically goes through a few rounds of review in May with formal board approval in June • 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 • Expenses are typically 90%+ energy related with overhead and Local Development funding accounting for 6-8% of total expenses
Attachment Staff Report Item 14A
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 3 Attachment Staff Report Item 14A
PCIA Update
4 Attachment Staff Report Item 14A
Power Charge Indifference Adjustment (PCIA)
• Ava’s generation rates to customers are indexed to PG&E’s generation rate • A portion of the generation cost is a pass-through charge to PG&E for the PCIA • The PCIA is how PG&E recovers "stranded costs or credits" 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 MPBs are presented by the Investor-Owned Utilities (IOUs) in May and then updated in October 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 rates and lower PCIA = more operating headroom for Ava • Lower MPBs lower rates and higher PCIA = less operating headroom for Ava 5 Portfolio
Costs
Portfolio
Value*
Stranded
Costs/credit
*Value calculated using “Market
Price Benchmarks” (MPBs)
Attachment Staff Report Item 14A
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 because:
o Insufficient number of transactions to provide a robust valuation o Includes transactions that may not reflect market value • The PCIA methodology artificially inflates RA costs attributed to bundled customers • 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 This rulemaking introduces considerable uncertainty into Ava's budget process! • CPUC plans to implement changes in time for the October update, to take effect January 1, 2026. • These possible methodology changes will increase PCIA and decrease rates 6 Attachment Staff Report Item 14A
The CPUC's PCIA Process – Key Dates
PCIA Rulemaking
• Phase I RA MPB proposed decision - 5/27/25 or later
• Phase I RA MPB final decision - 6/26/25 or later
ERRA
• 2026 ERRA Forecast filing - 5/15/25 (Updates to be
incorporated for June board meetings)
• 2026 ERRA Forecast "October update filing" - 10/15/25 • 2026 ERRA Forecast final decision - 12/18/25
• New rates go into effect - 1/1/26
7 The Energy Resource
Recovery Account (ERRA)
Forecast proceeding at the
CPUC results in PCIA and
PG&E generation rates for
the following year. In this
case, calendar year 2026.
Attachment Staff Report Item 14A
Impact of Potential PCIA Reform on Revenues
• If implemented in 2026, the impact of PCIA
Reform is estimated to reduce revenues by
~$187MM
▪ This reduction is based on retroactive
adjustments to the 2025 RA MPBs used in the
PCIA calculation
• $79MM would be realized in January – June
2026, in this proposed budget
• The remaining $108MM would be realized
in July – December 2026, impacting fiscal
year 2026-2027
▪ The third calendar year quarter (July – August)
is expected to have the largest effect ($58MM)
8 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
Attachment Staff Report Item 14A
Market Price Benchmark Trends 2023-2027
9 • In addition to changes in the PCIA calculation methodology, we are also forecasting a softening of prices in 2025 and beyond, though markets have recently seen historically high volatility RA Market Price Benchmark
Brown Power Market Price Benchmark
RPS Adder
Attachment Staff Report Item 14A
Expected Market Environment & Impact to Rates/PCIA
• Current market fundamentals are likely to set rates lower and PCIA higher for 2026 calendar year • Potential changes to the PCIA methodology could further increase PCIA and decrease rates • 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 10 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
0.078 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
Attachment Staff Report Item 14A
2025-26 Draft Budget
11 Attachment Staff Report Item 14A
Draft Budget Summary
• Rates have increased and PCIA has decreased since 2021, driven by historic increases in market energy prices. We are seeing some stabilization and softening 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. • 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 we present 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, 20226 and has not yet been incorporated into this budget, which is anticipated ot improve this budget outlook
12 Attachment Staff Report Item 14A
Draft Budget Fiscal Year 2025-2026
13 • 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 36,437,000 51,052,000 49,078,000 TOTAL OPERATING EXPENSES 816,724,000 808,845,000 926,474,000 924,500,000 NET OPERATING POSITION 56,130,000 117,990,000 67,090,000 (9,345,000)
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 26,267,000 11,457,000 NET NON-OPERATING POSITION (13,851,000) (4,472,000) (11,500,000) 3,310,000 TOTAL NET REVENUES 42,279,000 113,518,000 55,590,000 (6,035,000) Attachment Staff Report Item 14A
Draft Budget Scenario Assumptions
• Revenues assume no changes to value proposition under both scenarios. Ava maintains 5% discount to PG&E for Bright Choice and a 0.25 cent premium for Renewable 100 • Net revenues assume Ava maintains a 1% uncollectable rate • Energy costs are derived from a blend of contracted and open positions. Open prices are non-stressed, mean-forecasted market prices. • Both scenarios assume no change to Ava’s renewable and carbon free energy targets: 81% in 2025 and 2026 calendar years plus an estimated 10% nuclear
• Both scenarios assume San Joaquin County begins service in March of 2026 (to be finalized) • No draws on credit facility, no use of reserve funds, and no recognition of GASB 62 revenue ($57.6MM)
• Non-operating revenues assume an average of 3.5% interest rate earned through the fiscal year 14 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
Attachment Staff Report Item 14A
Budget Uncertainty and Risk Mitigants
• To mitigate a potential deficit 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 (e.g. implement
procurement periods or 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
15 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 & cost assumptions for FY 25-26 are carried over for FY 26-27
Future forecasts (2027 & beyond) are highly uncertain due to market conditions and PCIA reform. There are scenarios in which Ava runs a material deficit in the 2026-27 fiscal year.
Below are indicative downside scenarios.
Attachment Staff Report Item 14A
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 16 • Difference in revenues in FY 2026 driven by potential PCIA Reform • No change to value proposition in both scenarios
• Bright Choice: 5% discount to PG&E
• Renewable 100: Premium of 0.25 cents to PG&E
• Uncollectable rates maintained at 1% of sales
• No planned recognition of GASB 62 deferred revenue balance At the current 2025 load distribution:
•1% Δ in Bright Choice discount results in
$7.2MM change in revenue
•0.25 cent Δ in R100 premium results in
$5.6MM change in revenue
Fiscal Year 1% ∆ BC 0.25 Cent ∆ R100
First Half 4,169,000 2,745,000
Second Half 3,009,000 2,873,000
Attachment Staff Report Item 14A
Carbon Free & Renewable Procurement Schedule
17 • 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
on a net annual basis
• 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
Attachment Staff Report Item 14A
Optional Procurement Target Adjustments
• In order to address any deficit concerns, Ava can
consider adjustments on the procurement targets,
lowering 2025 or 2026 levels
• 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 similar to
California RPS compliance periods, Ava can
reduce costs associated with over-procurement
of green attributes by creating a balancing
mechanism across the period
• The 2024 Power Content Label is currently
being finalized and the latest estimate indicates
Renewable and Large Hydro energy procurement
of ~93%
18 Attachment Staff Report Item 14A
Compliance Period Procurement Methodology
• CA legislatively mandated Renewable Procurement Standards include Compliance periods of 3-4 years whereby load serving entities can bank/retire RECs in different years relative to the generating year • This allows for management of variable resources like renewable energy and large hydro to meet compliance obligations
• Without compliance periods, Ava will continue to over procure and over procurement will likely increase as our portfolio includes more contingent, as-delivered contracts, based on the new projects that Ava is building • Ava can consider implementing procurement periods for 2024-2026 to utilize over procurement from 2024 in future years, this would result in our Power Content Label being below procurement targets in some years 19 Bright Choice 2020 2021 2022 2023 2024 2025 2026
Renewables 40% 42% 49% 55% 60%
Large Hydro 15% 16% 22% 34% 33%
Unspecified 45% 40% 28% 11% 7%
Actuals (Renewables + Large Hydro) 55% 58% 71% 89% 93%
Initial Target Procurement 54% 55% 63% 66% 71% 76% 81%
Board Adjusted Target Procurement NA NA 68% 76% 81% 81% 81% Over procurement % 1% 3% 3% 13% 12%
Attachment Staff Report Item 14A
GASB 62: Revenue Deferred Balance
20 • The GASB 62 Revenue Deferral Fund was
established by Resolution R-2020-26
• Contributions and Recognitions have been
tracked since inception
• Current balance is approximately $57.6MM
o ~$10.5MM retained for long term
renewable/clean storage investment in 2027
o ~$15.0MM retained for solar & storage incentive
program from FY 2024 net revenues
o ~$32.1MM retained for rate stabilization
• Staff is currently evaluating a robust and
formal Rate Stabilization Fund Policy for
future review
• Based on the strong forecasted surplus for
2024-25, staff will consider a
recommendation in the fall to allocate a
portion to the Rate Stabilization Fund in light
of regulatory & PCIA uncertainty
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
Attachment Staff Report Item 14A
Draft Budget: Overview of Operating Expenses
21 • 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 AVA COMMUNITY ENERGY FY 2025 FY 2026 FY 2026 BUDGET %OpEx UPSIDE %OpEx PCIA REFORM %OpEx
EXPENSES & OTHER USES
Cost of Energy 760,248,000 93.1% 861,043,000 92.9% 861,043,000 93.1% 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 94.5% 875,422,000 94.5% 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% 4,260,000 0.5% 4,260,000 0.5% Other Professional Services 2,136,000 0.3% 3,523,000 0.4% 3,523,000 0.4% General & Administrative 5,868,000 0.7% 7,260,000 0.8% 7,260,000 0.8% Total Overhead Operating Expenses 44,868,000 5.5% 51,052,000 5.5% 49,078,000 5.3% TOTAL OPERATING EXPENSES 816,724,000 100.0% 926,474,000 100.0% 924,500,000 100.0% Attachment Staff Report Item 14A
Draft Budget: Fiscal Year Energy Operations
22 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
Attachment Staff Report Item 14A
Draft Budget: Fiscal Year Personnel Details
23 • 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% 24,709,000 78.1% 23,166,000 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% 519,000 1.6% 488,000 1.6% Total Personnel Costs 26,592,000 100.0% 20,139,000 100.0% 31,637,000 100.0% 29,663,000 100.0% Attachment Staff Report Item 14A
AB 2561: Ava FY 24-25 YTD
24 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.
Attachment Staff Report Item 14A
Draft Budget: General & Administrative
25 Current Year Material Items:
• Operational Expenses were slightly higher than expected due to additional banking fees associated with certain energy contracts • Rent & Utilities were slightly above expected amounts due to increased on-site needs with internet, parking, and on-site board meetings
• HR & Recruiting costs were slightly higher than expected with increased recruiting efforts
• Small Equipment is well below expected amounts due to lower than expected equipment cycling
• All other areas are actualizing lower than expected costs Next Year Material Items:
• Operational Expenses: Increased staff costs related
to insurance, service fees, supplies, membership
dues, operational services, building maintenance,
and other relevant G&A
• Membership Dues, Fees, & Operating Expenses:
Costs associated with JPAs, trade associations, and
industry associations (CalCCA, CCCFA, CCPower,
CFEE, Veloz, etc.)
• Software & Subscriptions: Increase covers
additional software needs for Power Resources, HR,
and EAS, as well as essential subscriptions for
ongoing operations with expanded staff
• Rent & Utilities: Increases with lease transition and improvements
• Board & Director Fees: Draft Budget reflects
potential maximum cost
DRAFT BUDGET BUDGET ACTUALS
2026 2025 2025
GENERAL OPERATIONS
Operational Expenses 1,200,000 832,000 844,000
Memberships & Sponsorships 1,165,000 600,000 678,000
Software & Subscriptions 3,052,000 2,669,000 2,132,000
Small Equipment 310,000 510,000 79,000
Rent & Utilities 1,021,000 770,000 965,000
Conferences & Prof. Development 231,000 249,000 146,900 HR & Recruiting 190,000 156,000 251,000
Board & Director Fees 91,000 78,000 37,100
Total 7,260,000 5,864,000 5,133,000
Attachment Staff Report Item 14A
Draft Budget: Marketing & Communications
26 Current Year Material Items:
• Advertising & Promotions: Advertising costs and
promotional items were sourced at lower-than-expected costs, also certain special event fundings did not materialize
DRAFT BUDGET BUDGET ACTUALS
2026 2025 2025
MARKETING
Advertising & Promotions 1,450,000 1,515,000 541,000
Required Mailings 635,000 1,052,000 813,000
Communications 1,450,000 2,755,000 2,397,000
Sponsorships & Memberships 661,000 780,000 624,000
Software & Subscriptions 176,000 66,000 75,000
Total 4,372,000 6,168,000 4,450,000
Next Year Material Items:
• Advertising & Promotions: Event and Local
sponsorships, education and awareness
campaigns, other printing costs
• Required Mailings: Enrollment notifications
for San Joaquin County, Fremont R100
notifications, Joint Rate Mailer, Power Content
Label Mailer
• Communications Consultants: Consultants
for graphic design, public relations, other
creative services
• Software & Subscriptions: With efficiencies
in other areas, software and subscriptions are
expected to increase to compensate
Attachment Staff Report Item 14A
Draft Budget: Legal, Policy, & Regulatory Affairs
27 Current Year Material Items:
• Legal Consultants: Certain expected litigations costs did not wholly materialize in the fiscal year, also
efficiencies in procedure developed by counsel and
staffing has reduced outside counsel demand
• Software & Subscriptions: Software expectations
were not implemented in current FY, but are planned
for next year
Next Year Material Items:
• Policy & Legislative Consultants: Expected
increase due to increase in CPUC docket
DRAFT BUDGET BUDGET ACTUALS
2026 2025 2025
LEGAL, POLICY, & REGULATORY AFFAIRS
Legal Consultants 3,143,000 3,238,000 1,694,000
Policy & Legislative Consultants 740,000 560,000 571,000 Software & Subscriptions 298,000 256,000 56,000
Memberships & Sponsorships 79,000 50,000 50,000
Total 4,260,000 4,104,000 2,371,000
Attachment Staff Report Item 14A
Draft Budget: Other Professional Services
28 No significant current year
material items to report.
Consultant projects are well
managed.
DRAFT BUDGET BUDGET ACTUALS
2026 2025 2025
OPERATIONS CONSULTANTS
Operations 475,000 335,000 311,000
Finance Consultants 650,000 333,000 309,000
Power Resources Consultants 741,000 715,000 664,000
Human Resources Consultants 747,000 364,000 338,000
Technology Consultants 460,000 25,000 24,000
Information Technology Consultants 450,000 360,000 335,000 Total 3,523,000 2,132,000 1,981,000
Next Year Material Items:
• Operations: Increase due to tenant improvement contractors and project management consultants
• Finance Consultants: Increase is from new Treasury Manager costs and some expected increases in rates from current consultants • Human Resources: With headcount growth and continued staff collaboration on key initiatives, increased need for training & development plus increased scope with 3rd-party staffing agencies. • Technology Consultants: Expanding operations requires additional data engineering and CRM structure and design
Attachment Staff Report Item 14A
Draft Budget: Fiscal Year Non-Operating Details
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
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 0 180,000 180,000
TOTAL NON-OPERATING EXPENSES 25,300,000 23,632,000 26,267,000 11,457,000 NET NON-OPERATING POSITION (13,851,000) (4,472,000) (11,500,000) 3,310,000 Attachment Staff Report Item 14A
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
FY25-26 Total Additional LD Funding $25,000,000 $10,190,000 Est EOY LD Fund Balance $92,000,000
Potential updated Fund Balance $117,000,000 $102,190,000 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 Attachment Staff Report Item 14A
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 $8,000,000 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 $20,850,000
Attachment Staff Report Item 14A
Next Steps
• Upcoming rate filings and anticipated regulatory proceedings will inform further development of budget scenarios and recommendations for June o PCIA related Proposed Decision could occur in May but could also come later in the year • Further review of Draft Budget with ExComm (6/4)
• Approval at Full board on Wednesday June 18, 2025
32 Attachment Staff Report Item 14A
Feedback
Note: These budget scenarios are indicative and will change based on energy market conditions and CPUC action
Staff is seeking feedback on:
1. Any matters that the board would like to see updated in June when seeking formal approval on the budget
2. The incorporated adjustments between Upside and PCIA Reform budget cases
3. Implementing a Compliance Period methodology for power procurement to address the variable nature of generation resources
4. The other potential financial risk mitigant tools on slide 16
5. Other considerations to evaluate if a CPUC decision is delayed beyond June:
o Contingent budget approval on both scenarios depending on what CPUC action materializes. 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
33 Attachment Staff Report Item 14A
Appendix
34 Attachment Staff Report Item 14A
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 35 Attachment Staff Report Item 14A
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
36 Attachment Staff Report Item 14A