Fiscal Year 2025-2026
Draft Budget
Executive Committee
Howard Chang | June 4, 2025
Introduction & Updates
2 • The CPUC issued a Proposed Decision (PD) on Friday 5.23.25 indicating PCIA reform in line with our modeled assumptions
▪ This decision will be voted out on 6.23.25 and Ava is preparing to file comments on it • PG&E's ERRA filing was made on 5.15.25 providing a preliminary indication of rates for 2026 ▪ This filing was made prior to PD and uses outdated Market Price Benchmarks (MPBs) from end of 2024 • The material changes in this budget presentation relative to the previous presentation are:
▪ Two budget scenarios, both incorporating the PCIA reform changes - variance reflects different market prices ▪ Reduced operating expenses due to lower procurement costs from implementing compliance period procurement methodology
▪ Both scenarios now reflect the same operating expenses Proposed Recommendation for Board Approval
3 • Approve the base case budget
▪ The base case scenario is our best estimate of market prices and reflects a more conservative scenario
▪ Implement the Compliance Period Procurement methodology • Detailed procedure and policy to be brought forward for review with board in July ▪ Utilize GASB62 Rate Stabilization Fund to offset any potential fiscal year deficit • Formal recommendation to allocate a portion of the fiscal year 2024-25 surplus (forecasted at >$110MM) to the Rate Stabilization Fund to be brought forward in July/Sept timeframe
PCIA Update
4 The CPUC's PCIA Process – Key Dates
PCIA Rulemaking
• Phase I RA MPB proposed decision – issued 5/23/25
• Phase I RA MPB final decision - 6/26/25
ERRA
• 2026 ERRA Forecast filing - filed 5/15/25
• 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
5 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.
CPUC Proposed Decision (PD)
• The PD essentially proposes to adopt what Ava modeled as the "PCIA Reform" scenario • Specifically, the PD:
o Includes the prior 4 years of available transactions for a given delivery year, instead of only more recent (prior 21 months) transactions
o Uses one value for all RA MPBs that include system, local, and flexible RA, instead of separate values for each type of RA
o Excludes affiliate, swap, and sleeve transactions from RA MPB calculations • The PD, if finalized, will:
o increase calendar 2026 PCIA rates for most Ava customers (depending on vintage) and o lower calendar 2026 PG&E bundled generation rates
• Ava and CalCCA will continue to engage in this proceeding and file comments to negotiate altering this implementation
6 Impact of PCIA Reform on Revenues
• In 2026, the impact of PCIA Reform for
2025 true-up is estimated to reduce
revenues by ~$187MM
▪ This reduction is based on retroactive
adjustments to the 2025 RA MPBs used in the
PCIA calculation
▪ Separate from PCIA reform, revenues are
expected to decrease due to true-up of other
market prices that are softening in 2025
• $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
7 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
CY Q1 CY Q2 CY Q3 CY Q4
Comparative Revenue Performance & Impact of Reform for
Calendar Year 2026
No Reform PCIA Reform Difference Cumulative
Market Price Benchmark Trends 2023-2027
8 • In addition to changes in the PCIA methodology,
we forecast a softening of prices in 2025 and 2026,
though markets have seen historically high
volatility
• Note that Forecasted and Final MPBs vary
significantly, reflecting year to year market
volatility
RA Market Price Benchmark
Brown Power Market Price Benchmark
RPS Adder
2025-26 Draft Budget
9 Expected Market Environment & Impact to Rates/PCIA
• 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 where forecasted market prices are likely to set PCIA higher and rates lower in 2026
• The PCIA methodology changes will further increase PCIA and decrease rates in calendar year 2026 • For this presentation, two budget scenarios are considered with varying market price assumptions ▪ Upside Budget: PCIA reform incorporated and assumes higher RPS MPBs as filed in May ERRA ▪ Base case Budget: PCIA reform incorporated and assumes lower RPS MPBs based on our internal forecasts 10 2026-U is the Upside Scenario
2026-B is the Base case Scenario
0.078 0.082 0.072 0.083
0.132 0.145 0.135
0.111 0.104
0.026 0.030 0.038
0.037
0.012
0.006
0.008
0.017 0.021
-0.02
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-B
$/kWh
Fiscal Year
Customer Rate Revenue Profile
Ava Average Rates PCIA Fees Operating Expenses Margin
0.081 0.080 0.066
0.113 0.137 0.141 0.147
0.076 0.060
0.029 0.032 0.043
0.024 0.004 0.010 0.004
0.036 0.042
0.016 0.016
0.003
0.022
0.038 0.035 0.034
0.030
0.046
-0.1
-0.05
0 0.05
0.1 0.15
0.2 2019 2020 2021 2022 2023 2024 2025 2026-U 2026-B
$/kWh
Calendar Year
Customer Rate Revenue Profile
Ava Average Rates PCIA Fees Operating Expenses Margin
Draft Budget Fiscal Year 2025-2026
11 • 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 "Base case" budget results in a deficit of
negative $41.9MM and assume utilization of
the Rate Stabilization Fund to offset this
deficit
• While Ava has not previously utilized its Rate
Stabilization Fund, it serves to balance
overcollection and under collection year to
years
AVA COMMUNITY ENERGY FY 2025 FY 2025 FY 2026 FY 2026
BUDGET ACTUALS UPSIDE BASE CASE
OPERATING ACTIVITY
TOTAL OPERATING REVENUE 872,854,000 926,835,000 927,758,000 865,577,000
EXPENSES & OTHER USES
Cost of Energy 760,248,000 760,682,000 847,322,000 847,322,000 Cost of Energy Services 11,608,000 11,726,000 14,379,000 14,379,000 Total Energy Operating Expenses 771,856,000 772,408,000 861,701,000 861,701,000 Total Overhead Operating Expenses 44,868,000 36,437,000 49,054,000 49,054,000 TOTAL OPERATING EXPENSES 816,724,000 808,845,000 910,755,000 910,755,000 NET OPERATING POSITION 56,130,000 117,990,000 17,003,000 (45,178,000)
NON-OPERATING ACTIVITY
TOTAL NON-OPERATING REVENUE 11,449,000 19,160,000 14,767,000 14,767,000 TOTAL NON-OPERATING EXPENSES 25,296,000 23,628,000 11,457,000 11,457,000 NET NON-OPERATING POSITION (13,847,000) (4,468,000) 3,310,000 3,310,000 TOTAL NET REVENUES 42,283,000 113,522,000 20,313,000 (41,868,000) 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 implementation of a compliance period procurement methodology over a three-year period of 2024-2026 with an average target of 81% renewable and carbon free energy, which is unchanged from previous board approved targets • Both scenarios assume San Joaquin County begins service in March of 2026 (to be finalized) • No draws on credit facility or use of reserve funds
• We do anticipate use of Rate Stabilization Fund to offset any budget deficit • Non-operating revenues assume an average of 3.5% interest rate earned through the fiscal year • Personnel headcount as 7 incremental additional staff • Local Development allocation is $10MM
12 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
13 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.
Draft Budget: Fiscal Year Revenue Scenarios
14 • Difference in revenues in FY 2026 driven by potential MPB settlements
• 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
$7.3MM change in revenue
•0.25 cent Δ in R100 premium results in
$5.6MM change in revenue
•Staff may consider a mid-year value
proposition change to bring to the board
later in 2025 as market prices actualize
AVA COMMUNITY ENERGY FY 2025 FY 2025 FY 2026 FY 2026
BUDGET ACTUALS UPSIDE BASE CASE
OPERATING ACTIVITY
REVENUE & OTHER SOURCES
Electricity Sales 881,671,000 924,006,000 937,129,000 874,320,000 Uncollectables (8,817,000) (9,017,000) (9,371,000) (8,743,000) Other Operating Revenue 0 11,846,000 0 0
TOTAL OPERATING REVENUE 872,854,000 926,835,000 927,758,000 865,577,000 Fiscal Year 1% ∆ BC 0.25 Cent ∆ R100
First Half 4,303,000 2,745,000
Second Half 3,020,000 2,873,000
Compliance Period Procurement Methodology
• CA legislatively mandated Renewable Procurement Standards (RPS) 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 hydro in meeting compliance obligations while increasing procurement of ghg-free resources over an extended timeframe • Ava can apply a similar approach for our voluntary procurement targets with 3-4 year procurement periods • This approach can help Ava address deficit concerns and reduce costs associated with over-procurement of green attributes by creating a balancing mechanism across the period 15 • The final 2024 Power Content Label is
shown to the right, reflecting total
renewables and large hydro of 96% for Ava
• PG&E procured 23% renewables utilizing
banked RECs to meet its RPS compliance
obligation for 2024
• PG&E's 2025 power content will change
significantly, likely with lower nuclear and
higher natural gas
Compliance Period Procurement Methodology (Cont.)
• Without compliance periods, Ava will continue to over procure as our portfolio includes more contingent, as-delivered contracts, based on the new projects that Ava is building • Ava proposes implementing procurement periods for 2024-2026 to utilize over procurement from 2024 in future years, this would result in our Power Content Label being above and below procurement targets in certain years allowing staff to balance procurement levels based on new projects coming online, firm vs. Contingent contracts, and optimal supply/pricing • There are different variations of this methodology and it is estimated that this can reduce procurement costs in 2025-26 by $10-16MM, which is included in the budget scenarios • Staff to bring forward more detailed procedures and policy in July for board discussion and review 16 Bright Choice 2020 2021 2022 2023 2024 2025 2026
Board Adjusted Target Procurement NA NA 68% 76% 81% 81% 81% Actuals (Renewables + Large Hydro) 55% 58% 71% 89% 96% TBD TBD Over/(Under) procurement % 1% 3% 3% 13% 15% (7.5%) (7.5%) Compliance Period Adjusted Target 73.5% 73.5%
Rate Stabilization Fund Utilization
17 • The GASB 62 Revenue Deferral Fund was
established by Resolution R-2020-26
• Current balance is approximately $57.6MM
with ~$32.1MM retained specifically for rate
stabilization
• Based on the strong forecasted surplus for
2024-25 of >$110MM, staff will propose a
recommendation to allocate all or a portion
to the Rate Stabilization Fund in July/Sept
timeframe
• If we allocate the current year's full surplus,
this would total $145MM for rate stabilization
o With a forecasted deficit of $42MM, this would
leave $103MM for future use
o The Rate Stabilization Fund is intended to be
used to balance surplus and deficit year
reflecting over and undercollection year to year
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
18 • 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 2025 FY 2026 FY 2026
BUDGET ACTUALS UPSIDE BASE CASE
EXPENSES & OTHER USES
Cost of Energy 760,248,000 760,682,000 847,322,000 847,322,000 Cost of Energy Services 11,608,000 11,726,000 14,379,000 14,379,000 Total Energy Operating Expenses 771,856,000 772,408,000 861,701,000 861,701,000 Overhead Operating Expenses
Personnel 26,592,000 22,326,000 29,639,000 29,639,000
Marketing & Communications 6,168,000 4,450,000 4,372,000 4,372,000 Legal, Policy, & Regulatory Affairs 4,104,000 2,371,000 4,260,000 4,260,000 Other Professional Services 2,136,000 1,981,000 3,523,000 3,523,000 General & Administrative 5,868,000 5,309,000 7,260,000 7,260,000 Total Overhead Operating Expenses 44,868,000 36,437,000 49,054,000 49,054,000 TOTAL OPERATING EXPENSES 816,724,000 808,845,000 910,755,000 910,755,000 Draft Budget: Fiscal Year Energy Operations
19 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 11%
higher than FY 2025 on average
▪ Material increases in Open and RA costs
• RECs are lower to reflect compliance period
savings
• Approx. 25.3% of cost is with open positions to
the market. This gives up to $70MM of potential
cost increases from market risk
• 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 BASE CASE
EXPENSES & OTHER USES
Cost of Energy 760,248,000 760,682,000 847,322,000 847,322,000 Energy Services
Data Management/CRM 8,057,000 8,170,000 10,326,000 10,326,000 Billing & Metering 2,820,000 2,826,000 3,286,000 3,286,000 Scheduling 731,000 730,000 767,000 767,000
Cost of Energy Services 11,608,000 11,726,000 14,379,000 14,379,000 Total Energy Operating Expenses 771,856,000 772,408,000 861,701,000 861,701,000 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 Non-Operating Details
20 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
• 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 MPB FLEX
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 22,400,000 22,400,000 10,190,000 10,190,000 Capital Expenditures
Investments 0 0 0 0
Other CapEx 100,000 0 180,000 180,000
Total Capital Expenditures 100,000 0 180,000 180,000
TOTAL NON-OPERATING EXPENSES 25,296,000 23,628,000 11,457,000 11,457,000 NET NON-OPERATING POSITION (13,847,000) (4,468,000) 3,310,000 3,310,000 Draft Budget: Local Development Incremental Funding Allocation 21 Program Area Previous
Upside
Budget
Current
Proposed
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 Local Development –
FY26 anticipated spend of existing funding
22 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
Next Steps
• Staff will continue to refine modeling and market assumptions, but does not anticipate material updates to this budget
• Preliminary Draft budget was presented in May to Ex Comm, FAP, and Full board • Staff will seek approval at Full board on June 18, 2025 and is seeking feedback from Ex Comm on the recommendation
• Staff recommendation is to approve the base case budget ▪ The base case scenario is our best estimate of market prices and reflects a more conservative scenario ▪ Implement the Compliance Period Procurement methodology – detailed procedure and policy to be brought forward for review with board in July
▪ Utilize GASB-62 Rate Stabilization Fund to offset any potential fiscal year deficit – formal recommendation to allocate a portion of the fiscal year 2024-25 surplus (forecasted at >$110MM) to the Rate Stabilization Fund to be brought forward in July/Sept timeframe
• Staff will consider a value proposition adjustment as part of a mid-year budget update based on how market prices actualize
23 Appendix
24 Background & Discussion
25 • 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
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 26 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 27 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
28 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 29 Portfolio
Costs
Portfolio
Value*
Stranded
Costs/credit
*Value calculated using “Market
Price Benchmarks” (MPBs)
Carbon Free & Renewable Procurement Schedule
30 • 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
Draft Budget: Fiscal Year Personnel Details
31 • 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 additional FTE (105 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 (7): 3 Power Resources, 2 Operations, 1 Local Development, 1 Marketing • 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 BASE CASE %Cost Salaries & Wages 19,765,000 74.3% 16,207,000 80.5% 23,171,000 78.2% 23,171,000 78.2% Health Care/Benefits 3,961,000 14.9% 1,616,000 8.0% 3,242,000 10.9% 3,242,000 10.9% Retirement 2,450,000 9.2% 2,032,000 10.1% 2,745,000 9.3% 2,745,000 9.3% Payroll Expenses 416,000 1.6% 284,000 1.4% 481,000 1.6% 481,000 1.6% Total Personnel Costs 26,592,000 100.0% 20,139,000 100.0% 29,639,000 100.0% 29,639,000 100.0% Draft Budget: General & Administrative
32 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
Draft Budget: Marketing & Communications
33 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
Draft Budget: Legal, Policy, & Regulatory Affairs
34 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
Draft Budget: Other Professional Services
35 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