In 2022, 3CE’s retail sales contained 36.1% RPS eligible resources for 3Cchoice service. To date, 3CE has executed [19][confirm inclusion of Hydrostor contract] power purchase and energy storage contracts of ten years or more in duration and will continue to solicit and execute additional contracts to meet 3CE’s RPS long-term contracting requirements.
Resource Adequacy. Resource Adequacy (“RA”), a California program jointly administered by the CPUC, the California Energy Commission (“CEC”) and the California Independent System Operator (“CAISO”), directs LSEs to secure forward capacity and offer it into the CAISO’s Day-Ahead and Real-Time markets to ensure that there will be enough supply in the right locations and with sufficient ramping capability to meet load. The RA program is comprised of three products: System RA, Local RA, and Flexible RA. Local RA obligations will be assigned to a Central Procurement Entity starting in 2023. In addition, per CPUC Decision 19-11-016, LSEs are required to procure “Incremental System Capacity,” which is RA capacity that is in addition to the identified resources on the CPUC’s 2022 baseline list of resources.
Power Source Disclosure. California law requires LSEs to disclose the types of power resources used to supply retail sales. This mandate, known as the Power Source Disclosure program (“PSD”), is a consumer information program managed by the CEC on an annual basis. A key output of the PSD program is the Power Content Label (“PCL”). The PCL is an LSE-specific document that shows the breakdown of power resource types for each of the LSE’s energy products used to serve retail load, as well as a breakdown of resource types for the overall California grid. The PCL is distributed to customers each year.
Energy Demand
Long-term Load Forecast. 3CE’s long-term load forecast is a 10-year projection of the energy (reflected in MWh) that its customers will annually consume. This forecast is driven primarily by the number and types of customers that 3CE expects to serve, in conjunction with weather projections. 3CE’s long-term load forecast starts with customers’ hourly consumption data and layers in the incremental effects of 3CE programs over time. The short-term estimates (current and following year) are based on a customer’s historical consumption over the last four years, grouped by the month, day of the week and holidays, and hour of the day to predict future usage, along with customer and usage growth trends based on the most recent data available. For future years, the forecast assumes a baseline growth rate of 0.58% per year, which represents the combined net effect of changes in new customer load, customer-level usage, and energy efficiency. On top of this organic load change of 0.58%, the forecast layers in the load-building effects of additional electric vehicle deployment (consistent with State goals regarding electric vehicle penetration where applicable) and building electrification, as well as the load-reducing impacts of energy efficiency (an incremental 0.17% of base load annually).
4881-2125-6752.6
Sources of Energy
General. 3CE uses a portfolio risk-management approach in its power purchasing program, seeking low-cost supply as well as diversity among technologies, production profiles, project sizes and locations, counterparties, length of contract, and timing of market purchases. 3CE currently has over [19] renewable and storage contracts in place from diversified sources and counterparties, totaling over $2.7 billion in notional amount of energy contracts to provide energy to its customers over the next 25 years.
Energy Purchases. In 2022, 3CE procured approximately 3.9 million MWh of carbon free electricity for its customers. 3CE anticipates that roughly 41.25% of its total 2023 retail sales will be sourced from renewables and large hydroelectric energy. 3CE’s procurement strategy includes regularly procuring new projects to be 100% renewable by 2030, via contracts with terms of 10 years or more. These contracts will be in addition to the 790 MW of new California renewable projects and 410 MW of storage that 3CE has already procured. This strategy includes investments in wholesale storage capacity and stand-alone storage, as further described below.
Energy Load and Supply Risk Management. 3CE continually manages its forward load obligations and supply commitments with the objective of balancing cost stability and cost minimization, while leaving some flexibility to take advantage of market opportunities or technological improvements that may arise. 3CE closely monitors its open positions for Portfolio Content Category 1 and Portfolio Content Category 2 renewable energy, both of which are based on calendar-year targets. 3CE maintains its renewable portfolio coverage targets of up to 100% in the near-term and leaves a greater portion open in the medium- to long-term, consistent with generally accepted industry practice. 3CE monitors its positions on a regular basis with its scheduling coordinator. 3CE uses fixed-price energy contracts to hedge CAISO day-ahead market price exposure associated with its portfolio. More specifically, for the volumes and hours where 3CE does not have supply contracts that yield CAISO day-ahead revenue, 3CE uses fixed-price energy contracts where 3CE pays a fixed price per MWh to receive a floating price that clears for each hour. This helps hedge 3CE’s CAISO day-ahead market price exposure.
As 3CE procures increasing portions of fixed-price renewables with storage and fixed-price large hydroelectric and ACS energy, 3CE expects to reduce its use of fixed-price unspecified CAISO energy contracts.
Procurement. 3CE procures energy and RA consistent with its Board-approved Energy Risk Management Policy. To effectively plan and manage its portfolio, 3CE differentiates contracts by their 4950
5000
5050
5100
5150
5200
5250
5300
5350
5400
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
10-Year Load Forecast (GWh)
4881-2125-6752.6
term length: short-term and long-term (longer than ten years). Based upon the expected contract tenor, 3CE may use a variety of methods, including competitive solicitations, standard contract offerings, and bilaterally negotiated agreements. Regarding short-term power purchases, 3CE may negotiate bilateral agreements directly, especially for unique or time-sensitive transactions that do not lend themselves to inclusion in a competitive solicitation. Alternatively, particularly in markets with sufficient transparency to ensure competitive outcomes, 3CE may negotiate short-term transactions via its scheduling coordinator or independent energy brokers or marketers.
Further descriptions of 3CE’s policies and procedures addressing energy procurement and risk management can be found on the 3CE website at www.3cenergy.org. The reference to this web site address is presented herein for informational purposes only, and information on such website is not incorporated by reference to this Official Statement.
Geothermal,
16%
Wind, 30%
Offshore Wind,
11%
Large Hydro, 0.2%
Solar, 43%
3CE's Projected Resource Mix
2030
4881-2125-6752.6
Energy Storage
3CE currently has approximately 410 MW of wholesale (i.e., in front of the meter) storage capacity contracted over the course of the next ten to twenty years. Of the 410 MW of already contracted storage capacity, approximately 170 MW will be paired with renewables, and 3CE is in the process of preparing and executing additional contracts including for stand-alone storage. 3CE Technology and Analytics
[to be included]
Effects of COVID-19 on 3CE Operations and Finances
Effects on Energy Load. In comparison to a similar time period in 2019 and during the COVID-19 pandemic, and controlling for the same number and type of customers, 3CE experienced a reduction in total load by approximately 1% during the months of March 2020 through January 2021. Residential load increased by an average of 8% while commercial and industrial load decreased by an average of 5% during that same period.
Uncollectables. During the pandemic, 3CE began to experience larger than normal uncollectable amounts. During fiscal years 2019-20, 2020-21, and 2021-22, 3CE experienced higher uncollectable amounts averaging at 15% of billed revenues, compared to uncollectable amounts of 5% of billed revenue in fiscal year 2018-19. [Include year-to-date for 2022-23] Financial Assistance. 3CE deferred 50% of customer generation charges in May and June of 2020 to mitigate the financial impact of the COVID-19 pandemic. For the long term, in partnership with the State and the IOUs, 3CE has been participating in delinquent payment relief in the form of the disbursement of state funds and the implementation of two pilot programs for our shared customers, Arrearage Management Plan and Percentage of Income Payment Plan. [update on current status of pilot programs, are they still in effect? ]
Financial Information
Revenues from Energy Sales and Operating Expenses. 3CE derives its operating revenues primarily from energy sales to its customers. The primary drivers for increases in revenue are the expansion of 3CE territories and increases in rates based on increased costs. Additionally, 3CE receives revenue from interest earned from 3CE accounts and dividends from investment accounts.
Financial Statements. For financial information related to 3CE, see the audited financial statements of 3CE for the fiscal years ended September 31, 2021 and 2022 attached to this Official Statement as Appendix B.
Deposit Accounts. 3CE maintains its cash in both interest-bearing and non-interest-bearing demand and term deposit accounts at River City Bank (“RCB”). 3CE’s deposits with RCB are subject to California Government Code Section 16521 which requires that at least 10% collateralize public funds in excess of the Federal Deposit Insurance Corporation limit of $250,000 by 110%. 3CE monitors its risk exposure on an ongoing basis. 3CE’s investment policy permits the investment of funds in depository accounts, certificates of deposit and the Local Agency Investment Fund program operated by the California State Treasury, United States Treasury obligations, Federal Agency Securities, commercial paper, money market funds and FDIC insured placement service deposits. In addition to RCB accounts, 3CE has Principal Investment accounts as an additional source of liquidity. 4881-2125-6752.6
[Credit Rating. On October 16, 2020, S&P Global Ratings assigned its “A” (stable) issuer credit rating to CCCE.]
[Include any other sources of liquidity or credit agreements]