Marketing, Regulatory and Legislative Subcommittee
Meeting
Monday, July 21, 2025
3:30 pm
In Person:
The Port Workspaces
3rd Floor, Large Conference Room
344 20th St, Oakland, CA 94612
Zoom:
https://avaenergy-org.zoom.us/j/88008124818
Or join by phone:
+Dial(for higher quality, dial a number based on your current location):
US: +1 669 444 9171 or +1 669 900 6833 or +1 346 248 7799 or +1 719 359 4580 or +1 253 205 0468 or +1 253 215 8782 or +1 309 205 3325
Webinar ID: 880 0812 4818
Meetings are accessible to people with disabilities. Individuals who need special assistance or a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting materials, should contact the Clerk of the Board at least 2 working days before the meeting at (510) 707-1764 or [email protected].
If you have anything that you wish to be distributed to the Marketing, Regulatory and Legislative Subcommittee, please email it to the clerk by 5:00 pm the day prior to the meeting.
1. Welcome & Roll Call
2. Public Comment
This item is reserved for persons wishing to address the MRL Subcommittee on any Ava-related matters that are not otherwise on this meeting agenda. Public comments on matters listed on the agenda shall be heard at the time the matter is called. As with all public comment, members of the public who wish to address the Board are customarily limited to three minutes per speaker. The MRL Chair may increase or decrease the time allotted to each speaker.
3. Approval of Minutes from May 9, 2025 (Action Item)
Ava Community Energy
Board of Directors Page | 2
4. Legislative Update (Informational Item)
Update on State legislative session.
5. Understanding the Drivers of PG&E Rate and Cost Growth (Informational Item) A presentation on the Policy team’s analysis of the drivers of increasing PG&E rates/costs.
6. PCIA Primer (Informational Item)
7. Committee Member and Staff Announcements including requests to place items on future Board Agendas
8. Adjourn
The next Marketing, Regulatory and Legislative Subcommittee meeting will be held on Friday, October 17, 2025 at 10am.
Conference Room 5
Ava Community Energy
1999 Harrison Street, Suite 2300
Oakland, CA 94612
Draft Minutes
Marketing, Regulatory and Legislative Subcommittee Special Meeting
Friday, May 9, 2025
2:00 pm
In Person:
Conference Room 5
Ava Community Energy
1999 Harrison Street, Suite 2300
Oakland, CA 94612
Or from the following locations:
• Albany Community Center, 1249 Marin Avenue, Albany, CA 94706 Zoom:
https://avaenergy-org.zoom.us/j/88008124818
Or join by phone:
+Dial(for higher quality, dial a number based on your current location):
US: +1 669 444 9171 or +1 669 900 6833 or +1 346 248 7799 or +1 719 359 4580 or +1 253 205 0468 or +1 253 215 8782 or +1 309 205 3325
Webinar ID: 880 0812 4818
Meetings are accessible to people with disabilities. Individuals who need special assistance or a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting materials, should contact the Clerk of the Board at least 2 working days before the meeting at (510) 707-1764 or [email protected].
If you have anything that you wish to be distributed to the Marketing, Regulatory and Legislative Subcommittee, please email it to the clerk by 5:00 pm the day prior to the meeting.
1. (0:59) Welcome & Roll Call
Present: Directors: Lopez (Albany), Barrientos (Livermore), Nygard (Tracy) and Chair Tregub (Berkeley).
Absent: Director Diallo (Lathrop).
2. (1:18) Public Comment
Ava Community Energy
Board of Directors Page | 2
This item is reserved for persons wishing to address the MRL Subcommittee on any Ava-related matters that are not otherwise on this meeting agenda. Public comments on matters listed on the agenda shall be heard at the time the matter is called. As with all public comment, members of the public who wish to address the Board are customarily limited to three minutes per speaker. The MRL Chair may increase or decrease the time allotted to each speaker.
There were no speakers for public comment.
3. (1:48) Approval of Minutes from December 20, 2024 (Action Item) Director Nygard (Tracy) motioned to approve the minutes. Director Barrientos (Livermore) seconded the motion, which passed 4/0/0/0/1.
Yes: Lopez (Albany), Barrientos (Livermore), Nygard (Tracy) and Chair Tregub (Berkeley).
No: None.
Abstain: None.
Recuse: None.
Not Present: Diallo (Lathrop).
There were no speakers for public comment.
4. (4:05) Chair Selection (Action Item)
Director Barrientos (Livermore) motioned to elect Director Tregub as the Subcommittee Chair. Director Nygard (Tracy) seconded the motion, which passed 4/0/0/0/1.
Yes: Lopez (Albany), Barrientos (Livermore), Nygard (Tracy) and Chair Tregub (Berkeley).
No: None.
Abstain: None.
Recuse: None.
Not Present: Diallo (Lathrop).
There were no speakers for public comment.
5. (7:06) 2025 Legislative Update (Informational Item)
Review staff proposed legislative positions and program.
Sam Sale provided an update on the refined list of Assembly bills that Ava staff recommends the Board support, monitor, or oppose unless amended.
There were no speakers for public comment.
Selection of topics discussed by subcommittee members:
• The proposed shift to August/September to align with Ava’s own on-bill credits • How AB 729 fit into broader efforts to improve bill affordability and manage rate increase
• Whether the proposed summer timing for credits is sufficient or appropriate given high winter bills in some areas
Ava Community Energy
Board of Directors Page | 3
• The potential impact on Ava if the 2025 building code updates are paused, and whether there are exemptions
• Whether the new penalty provisions will affect CCAs, and whether reporting for AI data centers (AB 222) will occur earlier in the planning process
6. (40:05) Committee Member and Staff Announcements including requests to place items on future Board Agendas
There were no committee member or staff announcements.
7. Adjourned at 2:43pm.
The next Marketing, Regulatory and Legislative Subcommittee meeting will be held on Friday, June 20, 2025 at 10am.
Conference Room 5
Ava Community Energy
1999 Harrison Street, Suite 2300
Oakland, CA 94612
Minutes Written by Raïssa Ngoma.
Staff Report Item 4
To: Ava Community Energy Authority
From: Sam Sadle, Principal Legislative Manager
Subject: Updating the Board on the status of California priority legislation and the state budget
Date: July 21, 2025
__________________________________________________________________ Summary/Recommendation
This memo updates the Board on the status of priority legislation and the state budget roughly 60% of the way through of the 2025 legislative session to ensure that members have the most up-to-date information.
Financial Impact
Unclear at this time.
Analysis and Context
Since staff last updated the MRL (5/9) and the full Board (5/21) developments in Sacramento have continued apace as the results of the first round of “suspense” were released (5/23) and the deadline for bills to be approved by their chamber of origin passed (6/6).
Please see below for an update of bills on Ava’s “short list”:
Support (3 of 10 bills still moving forward in 2025):
• AB 39 Zbur (D) Municipal and County electrification plan requirement – Passed Assembly, moved to Senate.
• AB 44 Schultz (D) Load modification protocols standardization – Passed Assembly, moved to Senate.
• AB 259 Rubio (D) Brown Act teleconferencing regulations – AB 259 is no longer moving forward. However, the language was incorporated into SB 707 Durazo (D), which passed the Senate and moved to the Assembly.
• AB 729 Zbur (D) Climate credit scheduling – Passed Assembly, moved to Senate. AB 729 is no longer moving forward. However, the language was incorporated into AB 745 Irwin (D), which passed the Assembly and moved to the Senate. • SB 239 Arreguín (D) Brown Act subsidiary body teleconferencing extension – SB 239 is no longer moving forward. However, the language was incorporated into SB 707 Durazo (D), which passed the Senate and moved to the Assembly with Sen. Arreguín as principal coauthor.
• (Previously Support if Amended) SB 283 Laird (D) Utility-scale battery safety requirements – Passed Senate, moved to Assembly. Ava staff was able to secure amendments to ensure the bill will not impact battery sites currently under construction. • SB 254 Becker (D) Senate affordability package – Passed Senate, moved to Assembly. • SB 282 Wiener (D) Heat pump permitting streamlining – Did not make it out of suspense, on hold until 2026.
• SB 314 Padilla (D) Vehicle charger self-certification – Did not make it out of suspense, on hold until 2026.
• SB 698 McNerney (D) DER equipment lists – Did not make it out of suspense, on hold until 2026.
Support if Amended (2 of 2 bills still moving forward in 2025):
• AB 222 Bauer-Kahan (D) Data center energy use reporting – Passed Assembly, moved to Senate. Ava team working via a variety of channels to advance the time of notification of forthcoming data center load.
• SB 541 Becker (D) Excess distribution capacity metric development and utilization – Passed Senate, moved to Assembly. Ava staff working on amendments related to ensuring continued CCA autonomy, defining excess capacity, and confirming CCAs are eligible for any subsequent programs.
Monitor (13 of 23 bills still moving forward in 2025):
• AB 13 Ransom (D) CPUC membership and reporting – Passed Assembly, moved to Senate. Note: CPUC geographic representation amended out of the bill. • AB 34 Patterson (R) Legislative oversight for LCFS changes – Did not make it out of policy committee, on hold until 2026.
• AB 99 Ta (R) IOU rate increase restrictions – Did not make it out of policy committee, on hold until 2026.
• AB 303 Addis (D) Utility-scale battery siting regulations – Did not make it out of policy committee, unlikely to advance this session.
• AB 306 Schultz (D), Rivas (D) (co: Wicks-D) Building code update pause – Passed Assembly, moved to Senate. No longer moving forward. Language signed into law as part of HR1, the state’s 2025/26 budget.
• AB 434 DeMaio (R) Utility-scale battery construction restrictions – Did not make it out of policy committee, on hold until 2026.
• AB 740 Harabedian (D) Require IOUs to integrate load shifting into IPER – Passed Assembly, moved to Senate.
• AB 884 Essayli (R) IOU campaign contribution restrictions – Did not make it out of policy committee, not advancing this session.
• (Previously Support) AB 915 Petrie-Norris (D) Project citing and permitting support from CEC – Amended: Dam Safety – Passed the Assembly in an amended form, moved to Senate. Bill gut-and-amended and no longer relevant to Ava. • AB 942 Calderon (D) Net metering update – Amended: Climate Credit Changes – Passed Assembly, moved to Senate. Note: Changes to NEM 1 and NEM 2 rates were amended out of the bill.
• AB 1117 Schultz (D) IOU dynamic rate requirement – Passed Assembly, moved to Senate.
• AB 1167 Berman (D), Addis (D) IOU political spending restrictions – Passed Assembly, moved to Senate.
• AB 1174 Alanis (R) Public charging facilities security technology – Did not make it out of policy committee, on hold until 2026.
• AB 1260 Ward (D) Community solar – Did not make it out of suspense, on hold until 2026.
• AB 1347 Carillo (D) IOU microgrid priority areas – Did not make it out of policy committee, on hold until 2026.
• AB 1423 Irwin (D) Vehicle charging station uptime regulations – Passed Assembly, moved to Senate. Amendments adopted removing all concerning sections. • SB 24 McNerney (D) IOU advertising and political restrictions – Passed Senate, moved to Assembly.
• SB 57 Padilla (D) IOU data center requirements – Passed Senate, moved to Assembly. • SB 332 Wahab (D) IOU accountability and analysis – Passed Senate, moved to Assembly.
• (Previously Support) SB 453 Stern (D) Microgrid incentives – All SGIP language was removed from the bill in the suspense process before the bill passed the Senate and moved to the Assembly.
• SB 500 Stern (D) IOU performance metrics – Passed Senate, moved to Assembly. • SB 540 Becker (D) Pathways – Passed Senate in an amended form, moved to Assembly.
• SB 842 Stern (D) Firm zero carbon IPER consideration – Passed Senate, moved to Assembly.
Additional legislative updates:
• AB 745 Irwin (D) Climate credit scheduling – Passed Assembly, moved to Senate.
Incorporates text from AB 729, which Ava supported.
• AB 825 Petrie-Norris (D) Assembly affordability package and public transmission financing mechanism – Passed Assembly moved to Senate. Ava team is working with CalCCA on amendments to remove a proposed Statewide Demand Side Management Program Review Task Force within the Energy Commission. • SB 237 Grayson (D) and others Gasoline makeup and standards – Passed Senate, moved to Assembly. Ava team (via CalETC) was successful in removing challenging LCFS cap.
• SB 707 Durazo (D) and Arreguin (D) Brown Act Modifications – Passed Senate, moved to Assembly. Incorporates text from SB 239 and AB 259, Ava supported.
State Budget:
• On June 27, the Governor signed a final FY2025/26 budget agreement. The budget agreement, however, did not include reauthorization of the state’s cap-and-trade program as proposed by the Governor.
• Notably, it did include $3.7 million this budget year and next as well as $2.9 million per year in ongoing spending and 12 positions to support compliance and enforcement of safety standards for battery energy storage systems.
• It also included $1.9 million and nine positions to support CEC’s opt-in clean energy and advanced manufacturing permitting program.
• Unfortunately, we were unsuccessful in incorporating language clarifying CCA customer eligibility for state SGIP funds is included in the trailer legislation. • The budget bill (HR 1) incorporated unamended language from AB 306, freezing state and local building codes for five years.
Committee Recommendation (if applicable)
N/A
Attachments (if applicable)
None
Understanding the Drivers of
PG&E Rate and Cost Growth
Claire Huang, Regulatory Analyst II
Michael Quiroz, Senior Regulatory & Data Analyst
Energy Consumption Has Remained Constant
-
20,000
40,000
60,000
80,000
100,000
120,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 GWh
Retail Sales, Self Generation, and Total Consumption in PG&E Service Territory Sales to end users Self generation Total consumption
• Self generation has grown significantly since 2012, primarily driven by rooftop solar capacity • Retail sales have decreased, leading to stability in total consumption • Rates driven by interplay of load composition, costs trends, and NEM policy Source: 2024 Baseline California Energy Demand Forecast, Form 1.1 and 1.1b. Last historical year is 2023 Rate Increases are Outpacing Inflation
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$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
$0.45
$0.50
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Volumetric Rate ($/kWh, 2024)
Inflation-Adjusted Volumetric Electric Rates by Customer Class Large industrial Residential CARE Residential non-CARE Small commercial Average Source: PG&E’s Annual Electric True-up Advice Letters, Revenue Allocation and Rate Design Tables • Rates gradually outpace inflation through 2020, then increase more rapidly 2021-2024 • Moderate year-over-year decrease in 2025 following spike in 2024 • Volumetric rate changes are generally consistent across customer classes T&D Capital Account Balances are Growing Substantially
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$35
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$45
$50
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Billions of 2024 $
Inflation-Adjusted Balance of Capital Accounts
Distribution Generation Transmission
Source: PG&E’s FERC Form 1 filings, Electric Plant in Service schedule • Balance of capital accounts is a proxy for total capital costs left to be recovered • Year-over-year change reflects additions to rate base and reductions from depreciation/amortization • Linear growth in distribution and transmission accounts; generation peaks in 2018-2020 then falls Distribution Rates Rose Sharply from 2023 to 2024
Source: PG&E’s Annual Electric True-up Advice Letters, Revenue Allocation and Rate Design Tables $0.00
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$0.10
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$0.25
$0.30
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Volumetric Price ($/kWh, 2024)
Bundled Residential Non-CARE Electric Rate Components
Generation Distribution Transmission Public Purpose Programs Other • Generation and transmission rate components gradually outpace inflation • Distribution component increases gradually and then spikes between 2023 and 2024 • Public purpose programs and other nonbypassable charges are relatively constant Distribution Costs Approved in GRCs are Increasing
Source: 2020 GRC Settlement Agreement, Decision on Test Year 2020 GRC, and Decision on Test Year 2023 GRC • Increase of $1.8 billion (46%) in average annual costs approved from 2020 GRC to 2023 GRC • Increased spending largely due to vegetation management and new wildfire cost categories • Inconsistent cost categorization between GRC cycles makes direct comparison difficult $-
$1
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$6
2020 2023
Billions of 2024 $
Average Annual Distribution Costs approved in 2020 and 2023 General Rate Cases Other Wildfire Risk Mitigations
Wildfire System Hardening
Other
Emergency Response and Repairs
Substation Capacity and Maintenance
Vegetation Management
Customer Interconnection and Asset Relocation
Overhead/Underground Asset Management
Breaking Down Wildfire Mitigation Costs in the 2023 GRC • Wildfire-related costs comprise 48% of PG&E’s approved distribution budget in the 2023 GRC • Vegetation management and undergrounding investments dominate over fast-trip settings Source: Decision on Test Year 2023 GRC
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Vegetation
Management
Undergrounding Overhead
hardening
Enhanced
Powerline
Safety Settings
Public Safety
Power Shutoff
IT & Forecasting Other
Billions of 2024 $
Wildfire-Related Costs Approved in PG&E's 2023 General Rate Case Key Takeaways
Rate and Cost Trends
• Generation, transmission, and distribution
costs/rates outpaced inflation from 2012-2024
• Distribution rates rose substantially from 2023-
2024, largely due to increased wildfire spending
▪ Annual approved distribution spending increased
46% from the 2020 GRC to the 2023 GRC
• Rates will likely continue to rise due to increasing
capital account balances, particularly for
distribution and transmission
Process Improvements
• Transparency and standardization: should be
easier for the public to understand and
interrogate costs/rates
▪ Many costs are “found reasonable” or approved by
CPUC but not addressed in the GRC Decision
Conclusions of Law
▪ Many costs are not directly stated in the decision
but buried in testimony and exhibits
• A significant portion of costs are uncontested by
other parties and approved as-is by CPUC
Power Charge Indifference Adjustment
(PCIA) Primer
Marketing Regulatory and Legislative Subcommittee
July 21, 2025
Contents
• What is the Power Charge Indifference Adjustment (PCIA)? • How does the PCIA work?
• How does the PCIA affect CCAs?
2 Why PCIA Matters
• PCIA/bundled rates drive Ava's gross revenue.
• As PCIA goes up, gross revenue generally goes
down
• And vice versa
3 What is the PCIA?
PCIA “Elevator Pitch”
• What is it? A $/kWh surcharge (or credit) on customer bills • Does it go by other names? Yes, people also refer to it as a departing load charge and an exit fee. It's actually neither of these things - it's a non-bypassable charge or credit.
• Who pays/receives it? Everyone (Ava customers and bundled [PG&E] customers)
• What does it cover? Costs of contracts executed and PG&E-owned powerplants from when Ava customers were still PG&E customers • How does it impact CCAs? The PCIA affects CCAs’ ability to compete against IOU generation service, for better or for worse, depending on market conditions.
5 Stranded Assets: The Basics • The PCIA is a rate mechanism for recovering "stranded costs" from all
customers.
• Costs can be stranded because:
o the price of historic procurement is high
relative to the current market value, and/or
o the quantity of procurement was too high
(customers left IOU service, so the IOU has
excess resources)
• Shaded areas in box to right represent
PCIA portfolio costs: o top shaded area is “too expensive” and o right shaded is “too much” 6 Stranded Costs: An Example
• Renewable prices declined between 2010 and 2019
• A significant source of PCIA stranded costs is
above-market IOU renewable PPAs—these average
about $110/MWh (red line)
• These and other PCIA resources that are “out of the
money” are earning less in the market (green line)
than they cost
7 Source for chart: Lawrence Berkeley National Laboratory Utility-Scale Solar Data Update (Oct 2020) Source for IOU PPA cost: 2021 Padilla Report
How does it work?
How does the PCIA calculate “stranded
costs?”
9 Portfolio
Costs
Portfolio
Value*
Stranded
Costs/credit
*Value calculated using “Market Price
Benchmarks” (MPB)
What are Market Price Benchmarks
(MPBs)?
• MPBs are used to value unsold portions of
the portfolio
▪ Retained for bundled customers
▪ Allocated to non-bundled customers
• PCIA Ratemaking has two phases: a
forecast and an actual.
▪ IOUs present their forecasts in May
• This is the “best guess” at what rates will be
▪ Updated in October with actuals to date
MPB
Component
Forecast Actual
RA RA-only
transactions
RA-only
transactions
(updated)
RPS PCC1 Index-Plus* PCC1 Index-Plus
(updated)
Energy Platts-ICE
Forward Curve -
Electricity forecast
for next year
Actual CAISO
Market
Revenues**
10 *Index-plus refers to contracts for the market index price of energy plus a REC bid premium **What did the PCIA resource portfolio earn in the CAISO energy market? Single largest determinant of PCIA.
Volatile: Varies widely YoY based on revenues in energy markets. Highly dependent on weather, load, and hydro conditions
What goes into Portfolio Costs and Value?
11 *Negative value – these offset the costs
Portfolio
Costs
Portfolio
Value
Who pays for what resources?
• PCIA rates are differentiated by “vintage”
• Each customer and each procurement commitment (including utility-owned storage (UOG)) is assigned a vintage
• Customer vintage
▪ For CCA or Direct Access, generally the year the customer departed the IOU generation service
▪ For bundled IOU customers, it’s the current year
▪ The vintage year runs July 1 through June 30
▪ Remain until last resource in that vintage expires
• Resource vintage
▪ Date the IOU makes the commitment to a resource (e.g., contract execution, UOG investment)
12 Example Customer Vintage:
• If a CCA launched in March of
2018, their customers would
be in the 2017 vintage.
• If a CCA launched in October
of 2018, their customers would
be in the 2018 vintage.
How does PCIA affect CCAs?
PCIA Affects “Headroom”
• Headroom is the rate derived from the most a CCA can spend on procurement and stay competitive with the incumbent IOU.
• Can change due to a variety of factors and varies by vintage 14 Bundled
PCIA Rate
Bundled
At-market
Rate
Departed
Load PCIA
Rate
Headroom
Competitive Dynamics
• IOU is guaranteed to be “in the money” every year due to the structure of the PCIA
▪ PG&E collects above market costs from all customers (varies by vintage)
• CCAs can only recover costs from current CCA customers ▪ If Ava enters into above-market contracts and it causes rates to increase, customers can opt-out to PG&E service
▪ Low market prices result in a double-whammy to headroom ▪ Low prices increase the PCIA rate, and
▪ Low prices decrease the IOU generation rates
▪ This is aggravated by the need to “true-up” the forecasted rate and PCIA values with the actuals on a year-to-year basis Bill Presentation
• How the PCIA is presented on utility bills has impact on CCAs • While all customers, bundled and unbundled, pay a PCIA rate, bundled customer bills initially did not show a separate PCIA line item • Since unbundled customer bills did show a PCIA line item, it inflated bundled gen rates and created the illusion that bundled customers do not pay a PCIA rate
• Resolution E-5131 (2021) updated D. 20-03-019 and ordered the utilities to create a PCIA line item on bundled customer bills and modified the definition of the PCIA on customer bills to make clearer all customers pay the PCIA
16