Staff Report Item 13
Staff Report Item 13
To: Ava Community Energy Authority
From: Izzy Carson, Power Resources Manager
Subject: Presenting Ava Compliance Period Procurement Methodology Date: 7/16/2025
__________________________________________________________________ Summary/Recommendation
This Staff Report proposes that Ava implement a compliance period procurement methodology for 2024-2027, 2028-2030, and 2031-2033 periods in order to provide flexibility to balance renewable and Greenhouse Gas free (GHG-free) procurement and to reduce costs.
Financial Impact
Utilizing over procurement from 2024 will reduce procurement costs in the initial 2024-2027 compliance period.
Analysis and Context
Ava discussed the concept of a multi-year procurement period for determining compliance to our agency’s voluntary clean energy procurement targets during the 2025-2026 budget.
Intermittent resources and variations in resource availability, as well as project development timelines, growth and market price fluctuations contribute to uncertainty and challenges to procurement planning. Over time and as Ava enters into additional long-term contracts, there is greater potential for over or under-procurement.
California’s Renewable Portfolio Standard (RPS) uses multi-year compliance periods as a mechanism to effectively increase renewables while providing flexibility and stability for retail sellers to meet renewable procurement targets. Utilizing a similar compliance period approach would allow Ava to average renewable and large hydro purchases over a longer period rather Staff Report Item 13
than being strictly limited to a single year, while still meeting voluntary clean energy procurement and compliance targets.
Ava recommends implementing compliance period methodology for the 2024-2027, 2028-2030, and 2031-2033 periods in order to align with RPS compliance periods, timing for emissions accounting methodology implementation, and to create a flexible balancing mechanism to reduce costs and manage procurement.
Committee Recommendation
This item was presented at the July 9 Finance, Administrative and Procurement Subcommittee meeting. The subcommittee was in support of the staff recommendation on this item.
Attachments
A. A Resolution of the Board of Directors of Ava Community Energy Authority Authorizing the Implementation of a Compliance Period Procurement Methodology B. Compliance Period Methodology Presentation
Attachment Staff Report Item 13A
RESOLUTION NO. R-2025-xx
A RESOLUTION OF THE BOARD OF DIRECTORS
OF AVA COMMUNITY ENERGY AUTHORIZING THE IMPLEMENTATION
OF A COMPLIANCE PERIOD PROCUREMENT METHODOLOGY
WHEREAS Ava Community Energy Authority (“Ava”) was formed as a community choice aggregation agency (“CCA”) on December 1, 2016, under the Joint Exercise of Powers Act, California Government Code sections 6500 et seq., among the County of Alameda, and the Cities of Albany, Berkeley, Dublin, Emeryville, Fremont, Hayward, Livermore, Piedmont, Oakland, San Leandro, and Union City to study, promote, develop, conduct, operate, and manage energy-related climate change programs in all of the member jurisdictions. The Cities of Newark and Pleasanton, located in Alameda County, along with the City of Tracy, located in San Joaquin County, were added as members of Ava and parties to the Joint Powers Agreement (“JPA”) in March of 2020. The City of Stockton was added as a member to Ava in September of 2022. The City of Lathrop was added as a member to Ava in October of 2023. San Joaquin County was added as a member to Ava in July 2024. On October 24, 2023, Ava legally adopted the name Ava Community Energy Authority, where it had previously used the name East Bay Community Energy Authority since its inception.
WHEREAS multi-year compliance periods provide flexibility and stability for retail sellers to meet procurement targets and reduce procurement costs; and WHEREAS Ava can apply a compliance period approach for determining compliance to our agency’s voluntary clean procurement targets.
NOW, THEREFORE, THE BOARD OF DIRECTORS OF AVA COMMUNITY ENERGY AUTHORITY DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. The Board of Directors approves the implementation of a compliance period procurement methodology for the 2024-2027, 2028-2030, and 2031-2033 time periods.
ADOPTED AND APPROVED this 16th day of July, 2025.
Jack Balch, Chair
ATTEST:
Adrian Bankhead, Clerk of the Board
Ava Compliance Period
Procurement
Methodology
July 16, 2025
Attachment Staff Report Item 13B
Introduction
• Ava has discussed implementation of a multi-year
procurement period for determining compliance to our
agency's voluntary clean energy procurement targets
o The board preliminarily approved this concept in the
recent 25-26 budget
o This presentation provided implementation details to the FAP sub-committee on July 9
th
• Topics to be reviewed:
o Guaranteed Energy Production vs. Expected Energy
Overview and Challenges
o California Renewable Portfolio Standard (RPS)
Compliance Period Methodology Overview
o RPS Compliance Period 4 Comparison (PG&E and Ava)
o Benefits of a Compliance Period
o Ava Compliance Period Procurement Methodology
Scenarios
Attachment Staff Report Item 13B
Guaranteed Energy Production (GEP) vs.
Expected Energy (EE)
• Reflects the band between the minimum and
maximum
• Energy from variable resources is subject to
fluctuations based on weather patterns and
time of day, making it less predictable.
• The more contingent, as delivered projects in
the portfolio, the greater the band and therefore
greater potential for over procurement.
• GEP is included in Ava’s proforma as the EE
multiplied by a specific percentage based on
technology (85% solar and 75% wind).
Attachment Staff Report Item 13B
CA 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 generation
• 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 voluntary
procurement targets with 3-4 year procurement
periods
• This methodology provides a tool in managing
finances in consideration of budget surplus and
deficit projections by creating a balancing
mechanism across the period
• Beyond 2030, LSEs have an ongoing 3-
year compliance period requirement that currently
maintains a 60% renewables target.
4 Attachment Staff Report Item 13B
RPS Compliance Period 4 Comparison
Attachment Staff Report Item 13B
Benefits of a Compliance Period
• 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
• Hourly emissions accounting, required in
2028, will impact power content and
procurement needs and costs
• Compliance periods and banking allow LSEs to adjust procurement strategies based on factors like energy availability, contract availability, and project development timelines, and provides flexibility for LSEs to help manage price fluctuations and ensure a more stable renewable energy market. • Multi year compliance periods provide additional flexibility for retail sellers to meet renewable procurement targets. This approach allows LSEs to average renewable and large hydro purchases over a longer period rather than being strictly limited to a single year.
Attachment Staff Report Item 13B
Considerations
• It is anticipated that in 2028 a new 24x7 emissions accounting methodology will be implemented. The details of this methodology are in development and uncertain at this time.
There is potential that this implementation timeframe could be delayed. • Alignment with RPS
• Historically, procurement in the last year of an RPS compliance period is more expensive due to constrained supply relative to demand;
• Staggering a compliance period with RPS could give us additional flexibility (e.g. 2024- 2027)
• Staggering could also pose additional challenges depending on timing (e.g. should Ava's first year be aligned with the last year in an RPS period?) • Large hydro and nuclear are primarily sourced through allocations from PG&E and large hydro is subject to change
• With a 100% clean target goal starting in 2030, there is not a clear mechanism to balance procurement beyond 2030
Attachment Staff Report Item 13B
Compliance Period Procurement Methodology Scenarios
8 Bright Choice 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Board Adjusted Target Procurement NA NA 68% 76% 81% 81% 81% 85% 90% 95% 100% Actuals (Renewables + Large Hydro) 55% 58% 71% 89% 96% TBD TBD TBD TBD TBD TBD Over/(Under) procurement % 1% 3% 3% 13% 15% (7.5%) (7.5%) TBD TBD TBD TBD Compliance Period Adjusted Target 73.5% 73.5%
Scenario 1: 2024-2026
Ava proposes implementing a procurement period for 2024-2026 or 2024-2027 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
• 2024-2026 compliance period 1
• 2027-2029 compliance period 2
• 2030-2032 compliance period 3
• Staggered with RPS periods
• 2028 new emissions methodology implementation in the middle of a compliance period • Scenario 1 is estimated have higher immediate savings in 2025 and 2026 Attachment Staff Report Item 13B
Compliance Period Procurement Methodology Scenarios
(Cont.)
Bright Choice 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Board Adjusted Target Procurement NA NA 68% 76% 81% 81% 81% 85% 90% 95% 100% Actuals (Renewables + Large Hydro) 55% 58% 71% 89% 96% TBD TBD TBD TBD TBD TBD Over/(Under) procurement % 1% 3% 3% 13% 15% (5%) (5%) (5%) TBD TBD TBD Compliance Period Adjusted Target 76% 76% 80%
Scenario 2: 2024-2027
• 2024-2027 compliance period 1
• 2028-2030 compliance period 2
• 2031-2033 compliance period 3
• Aligns with RPS periods
• 2028 new emissions methodology implementation at start of a new compliance period • Scenario 2 is estimated to have potentially lower near-term savings in 2025 and 2026 Attachment Staff Report Item 13B
Compliance Period Procurement Methodology Scenarios
(Cont.)
Bright Choice 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Board Adjusted Target Procurement NA NA 68% 76% 81% 81% 81% 85% 90% 95% 100% Actuals (Renewables + Large Hydro) 55% 58% 71% 89% 96% TBD TBD TBD TBD TBD TBD Scenario 3: 2025-2027
• 2025-2027 compliance period 1
• 2028-2030 compliance period 2
• 2031-2033 compliance period 3
• Aligns with RPS periods
• 2028 new emissions methodology implementation at start of a new compliance period • Scenario 3 has no immediate savings in reduced procurement costs but and aligns with RPS Actual procurement levels will be reported in Ava's annual Power Content Label and multi-period averages will be reported in the annual budget setting process.
Attachment Staff Report Item 13B
Attachment Staff Report Item 13B