Operations Board of Directors
September 18, 2024
4:00 P.M.
Seascape Beach Resort
1 Seascape Resort Dr, Seascape Room
Aptos, CA 95003
If you have anything that you wish to be distributed to the Board, please provide 15 copies to a member of 3CE staff or the Board Clerk, who will distribute the information to the Board members and staff.
The public may comment on the consent agenda and matters not listed on the agenda but within the Board's jurisdiction at the opening of the meeting. The Board may not take action at this meeting on any item not listed on the agenda other than to refer the matter to staff or set it for a future meeting. The public may comment on a specific item listed on this agenda when the Board considers that item.
Speakers are limited to 3 minutes each.
If you choose not to attend the 3CE Operations Board of Directors meeting but wish to make a comment on a specific agenda item, you may please submit your comment as set out below. The timing of public comment shall be at the discretion of the Chair. Options for public comment are as follows:
a. To have your comments distributed to the Board prior to the meeting submit your comment via email by 5:00 p.m. on the Tuesday before the meeting. Please submit your comment to the Clerk of the Board at [email protected]. To assist the Clerk in identifying the agenda item relating to your public comment please indicate in the Subject Line, the meeting body (i.e. Operations Board of Directors Agenda) and item number (i.e. Item No. 3).
Your comment will be placed into the record at the Board meeting.
In addition, members of the public may request and receive copies without undue delay of any documents that are distributed to the Board, unless there is a specific exemption under the Public Records Act that prevents the disclosure of the record. (Cal. Gov’t Code Section 54957.5) In compliance with Government Code Section 54957.5, non-exempt writings that are distributed to a majority or all of the Board in advance of a meeting and that relate to an agenda item will be made available at 3CE’s offices located at 70 Garden Court, Suite 300, Monterey, CA 93940 during normal business hours and are also available on the 3CE website located at: https://3cenergy.org/meetings-agendas/ 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 Heather Vowell, Board Clerk, at 831-641-7216 or [email protected]. Requests should be made as soon as possible but at least 72 hours prior to the scheduled meeting.
DISCLOSURE OF CAMPAIGN CONTRIBUTIONS: Pursuant to Government Code section 84308, members of the Board are disqualified and not able to participate in any agenda item involving contracts (other than competitively bid, labor, or personal employment contracts), franchises, discretionary land use permits and other entitlements if the Board member received more than $250 in campaign contributions from the applicant or contractor, an agent of the applicant or contractor, or any financially interested participant who actively supports or opposes the decision on the agenda item since January 1, 2023.
Members of the Board who have received, and applicants, contractors or their agents who have made, campaign contributions totaling more than $250 to a Board member during the proceeding or for 12 months after a final decision is rendered in that proceeding, are required to disclose that fact for the official record of the subject proceeding. Disclosures must include the amount of the campaign contribution and identify the recipient Board member and may be made either in writing to the Clerk of the Board prior to the subject hearing or by verbal disclosure at the time of the hearing.
Welcome & Roll Call
Corrections or Additions
The Clerk will announce agenda corrections or proposed additions of emergency, urgency, or continued items, which will be acted on by the Board as provided in Section 54954.2 of the California Government Code.
Public Comment on Items on the Consent Calendar and Items Not listed on the Agenda The public may address the Board on the Consent Calendar and any matter within the jurisdiction of the Board but not on the agenda.
CONSENT CALENDAR
1. Approve minutes from the May 8, 2024, meeting of the Operations Board of Directors
2. Approve minutes from the August 14, 2024, meeting of the Operations Board of Directors
3. Adopt Resolution OB-2024-02 Setting the Regular Meeting Schedule of the Operations Board of Directors
4. Authorize the CEO to execute Amendment No. 2 to the Standard Services Agreement with Maher Accountancy Corporation, extending the term through September 30, 2025, for accounting and annual audit assistance services and adding $286,500 for a revised not
to exceed total contract amount of $843,000
5. FY 2023-24 Energy Programs Update
6. Regulatory Update
7. Financial report for the period October 1, 2023, through June 30, 2024
8. Investment Performance Report for the period of October 1, 2023 through June 30, 2024
9. CEO Report
a. Staffing Update
b. Resource Adequacy (RA) Reform
c. CEC Load Management Standards (LMS)
d. Reliable and Clean Power Procurement Program (RCPPP) e. Summary of Governance Discussion
f. Operations Board Chair and Vice Chair Nominations
10. Community Advisory Council Report
REGULAR AGENDA
11. Update on status of real property acquisitions and provide feedback regarding evaluation principles for future real property transactions
12. Consider supporting the Policy Board's adoption of the Fiscal Year 2024-25 Recommended Budget and the Calendar Year 2025 cost-based rates
13. Consider and provide direction regarding proposed 3CE Code of Conduct Board comments and reports
Adjournment
Operations Board of Directors
May 8, 2024
10:30am
Central Coast Community Energy
70 Garden Court, Suite 300
Monterey, CA 93940
County of Santa Cruz
701 Ocean Street, Third Floor Training Room
Santa Cruz, CA 95060
City of Paso Robles
City Hall
1000 Spring Street,
Second floor
Paso Robles, CA
93446
City of San Luis Obispo
City Hall
990 Palm Street,
Council Chambers San
Luis Obispo, CA 93401
City of Santa Maria
City Hall
110 East Cook Street, Council Chambers
Santa Maria, CA 93454
County of Santa Barbara
County Administration Building
105 East Anapamu Street, Suite 108
Santa Barbara, CA 93101
MINUTES
The meeting was called to order at 10:30 AM with 15 members attending in 5 locations and a quorum established.
Directors Present:
3CE Headquarters: De La Rosa, Espinosa, Hunter, Morgansen, Pia, Reynolds County of Santa Cruz: Huffaker, Palacios, Chair Goldstein City of San Luis Obispo: Campbell, Downing, Hill
City of Santa Maria: Posada, Wolfe
County of Santa Barbara: Armas
Directors Absent: Guertin, Lewis, Ramirez, Reynolds
CONSENT CALENDAR
MOTION: Moved by Director Armas, seconded by Director Wolfe to approve the Consent Calendar.
ACTION: The Motion Carried with a roll call vote: 15/0/4 AYES: Campbell, De La Rosa, Downing, Espinosa, Hill, Huffaker, Hunter, Morgansen, Palacios, Pia, Posada, Reynolds, Wolfe, Armas, Chair Goldstein
NOES: None
ABSENT: Guertin, Lewis, Mendez, Ramirez
The Chair opened the public comment period for the consent calendar and items not listed on the agenda.
No public comments received.
The Chair closed public comment period.
1. Approved Minutes from the April 10, 2024 meeting of the Operations Board of Directors
2. FY 2023-24 Energy Programs Update
3. Regulatory Update
4. Financial report for the period of October 1, 2023, through March 31, 2024
5. Approved Second Restated Legal Services Agreement with Meyers Nave, P.C., for specialized legal services, retroactive to October 1, 2023 and continuing through the end of the engagement and adding $900,000 for a revised total not-to-exceed amount of $1,109,748.00
The Chair opened public comment period.
No public comments received.
The Chair closed public comment period.
REGULAR AGENDA
6. Community Advisory Council
The Chair opened the public comment period.
No public comments received.
The Chair closed public comment period.
ACTION: Discussion Item; no action required
7. CEO Report
a. Staffing Update
b. 2024 Request for Offers for Clean Energy and Storage c. 3CE Owned and Operated EV Charging
d. CalCCA Conference highlights affordability issues and emerging technology e. Enrollment of Atascadero and the County of San Luis Obispo The Chair opened the public comment period.
No public comments received.
The Chair closed public comment period.
ACTION: Discussion Item; no action required
8. Supports 3CE's proposed behind-the-meter residential battery rebate program and recommending Policy Board's support
The Chair opened the public comment period.
The following individual(s) addressed the Board.
Seth Capron
The Chair closed public comment period.
MOTION: Moved by Director Hunter, seconded by Director Pia to approve with the direction to staff to implement a prioritization plan and return in six months to present an evaluation to the Board.
ACTION: The Motion Carried with a roll call vote: 15/0/4 AYES: Campbell, De La Rosa, Downing, Espinosa, Hill, Huffaker, Hunter, Morgansen, Palacios, Pia, Posada, Reynolds, Wolfe, Armas, Chair Goldstein
NOES: None
ABSENT: Guertin, Lewis, Mendez, Ramirez
9. Approved amendment No. 1 to the Standard Services Agreement with Optony, Inc. to add three (3) additional years for a term ending September 30, 2027 and $2,052,675.00 for a total not-to-exceed amount of $2,502,675.00 to expand Member Agency fleet electrification services
The Chair opened the public comment period.
No public comments received.
The Chair closed public comment period.
MOTION: Moved by Director Armas, seconded by Director Huffaker to approve ACTION: The Motion Carried with a roll call vote: 14/0/5 AYES: Campbell, Downing, Espinosa, Hill, Huffaker, Hunter, Morgansen, Palacios, Pia, Posada, Reynolds, Wolfe, Armas, Chair Goldstein
NOES: None
ABSENT: De La Rosa (left at 11:20am), Guertin, Lewis, Mendez, Ramirez
10. Approved an agreement with Sacramento Municipal Utility District (SMUD) in an amount not to exceed $916,041.00 with an initial delivery term of three (3) years; and (2) execute an agreement with Salesforce in an amount not-to-exceed $183,192.45 with an initial delivery term of three (3) years; and (4) and authorize the CEO to execute both agreements The Chair opened the public comment period.
No public comments received.
The Chair closed public comment period.
MOTION: Moved by Director Palacios, seconded by Director Hunter to approve ACTION: The Motion Carried with a roll call vote: 14/0/5 AYES: Campbell, Downing, Espinosa, Hill, Huffaker, Hunter, Morgansen, Palacios, Pia, Posada, Reynolds, Wolfe, Armas, Chair Goldstein
NOES: None
ABSENT: De La Rosa, Guertin, Lewis, Mendez, Ramirez
11. Report on the efforts for Setting Rates Beginning Fiscal Year 2024-25 The Chair opened the public comment period.
No public comments received.
The Chair closed public comment period.
ACTION: Discussion Item; no action required
12. FY 2023-24 Mid-Year Budget Forecast
The Chair opened the public comment period.
No public comments received.
The Chair closed public comment period.
ACTION: Discussion Item; no action required
Board member reports and comments
Adjourned at 11:52 A.M.
Operations Board of Directors
August 14, 2024
10:30AM
Central Coast Community Energy
70 Garden Court, Suite 300
Monterey, CA 93940
County of Santa Cruz
701 Ocean Street, Fifth Floor Redwood Room
Santa Cruz, CA 95060
City of Paso Robles
City Hall
1000 Spring Street, Second Floor
Paso Robles, CA 93446
City of San Luis Obispo
City Hall
990 Palm Street, Council Chambers
San Luis Obispo, CA 93401
City of Santa Maria
City Hall
110 East Cook Street, Council Chambers
Santa Maria, CA 93454
County of Santa Barbara
County Administration Building
105 East Anapamu Street, Fourth Floor
Santa Barbara, CA 93101
MINUTES
The meeting was called to order at 10:30AM with 16 members attending in 5 locations and a quorum established.
Directors Present:
3CE Headquarters: Guertin, Hunter, Pia, Mogensen, Reynolds, Ring, Vides County of Santa Cruz: Huffaker, Palacios, Chair Goldstein City of San Luis Obispo: Campbell, Downing, Hill
City of Santa Maria: Posada
County of Santa Barbara: Ramirez, Vice Chair Miyasato
Directors Absent: De La Rosa, Lewis, Wolfe
Chair opened public comment for items on the consent calendar and items not listed on the agenda.
The following individual(s) addressed the Board.
Beverly DesChaux
The Chair closed the public comment period.
CONSENT CALENDAR
Item 1 pulled by Vice Chair Miyasato. Clerk will correct the minutes from the May 8, 2024 meeting of the Operations Board of Directors and will resubmit for approval at the September 18, 2024 meeting.
MOTION: Moved by Director Pia, seconded by Director Hunter to approve consent items 2 – 9.
ACTION: The Motion Carried with a roll call vote: 16/0/3 AYES: Campbell, Downing, Ring, Guertin, Hill, Huffaker, Hunter, Mendez, Mogensen, Palacios, Posada, Ramirez, Reynolds, Vides, Vice Chair Miyasato, Chair Goldstein NOES: None
ABSENT: De La Rosa, Lewis, Wolfe
2. Approved minutes from the June 12, 2024, special meeting of the Operations Board
3. Received update on FY 2023-24 Energy Programs
4. Received Regulatory Update
5. Received a financial report for the period October 1, 2023, through May 31, 2024
6. Authorized the CEO to execute Amendment No. 4 to the Aiqueous, LLC Amended and Restated Standard Services Agreement to provide a customer relationship management platform to support Energy Programs, and to renew and extend the expiration date for an additional seven (7) months, for a revised term of January 2, 2020 through April 29, 2025, and to increase the Agreement’s amount by an additional $80,570 for a total not-to-exceed amount of $775,805
7. Authorized the CEO to execute Amendment No. 4 to the Cohen Ventures, Inc., DBA Energy Solutions Standard Services Agreement to extend the term for an additional six (6) months, for a revised term of March 11, 2022 through January 31, 2025, to administer equity rates for the Electrify Your Home program, and to increase the Agreement’s amount by an additional $565,000 for a total not-to-exceed amount of $3,825,000. Approve and authorize the CEO to execute up to two (2) amendments to revise standard terms, with no change to the total contract amount, subject to approval by the General Counsel.
8. Authorized the CEO to execute Amendment No. 3 to the Frontier Energy Inc. Standard Services Agreement to support 3CE Energy Programs, extend the expiration date for an additional twelve (12) months for a revised term of May 11, 2022, through September 30, 2026, and to increase the Agreement by an additional $251,896 for a total not to exceed amount of $641,274
9. Approved a Real Property Lease Agreement template, containing standard risk and indemnification terms, for the provision of leasing office space to tenants of 3CE properties.
Authorize updates and modifications to the template subject to General Counsel approval
REGULAR AGENDA
10. CEO Report
a. Staffing Update
b. Power Charge Indifference Adjustment
Chair opened public comment period.
No public comment received.
The Chair closed the public comment period.
11. Authorized CEO to execute CPUC approved Bioenergy Market Adjusting Tariff (BioMAT) Program, Pro-Forma Agreements, and eligible Power Purchase Agreements (PPAs) with terms of 10 to 20 years and associated forms
Chair opened public comment period.
The following individual(s) addressed the Board.
Beverly DesChaux
The Chair closed public comment period.
MOTION: Moved by Director Huffaker, seconded by Vice Chair Miyasato to approve.
ACTION: The Motion Carried with a roll call vote: 16/0/3 AYES: Campbell, Downing, Ring, Guertin, Hill, Huffaker, Hunter, Mendez, Mogensen, Palacios, Posada, Ramirez, Reynolds, Vides, Vice Chair Miyasato, Chair Goldstein NOES: None
ABSENT: De La Rosa, Lewis, Wolfe
12. Recommended that the Policy Board consider and adopt the Ad Hoc Committee’s recommendations regarding improvements to governance related matters, including board composition, engagement, and communication
Chair opened public comment period.
No public comment received.
The Chair closed the public comment period.
MOTION: Moved by Director Guertin, seconded by Director Hunter to support forwarding the Ad Hoc Committee's recommendation with the amendment to remove the right of refusal for the Cities of Salinas and Santa Maria.
SUBSTITUTE MOTION: Moved by Director Hill, seconded by Director Downing for the Operations Board to recommend to the Policy Board that they conduct a study session at the annual meeting, and out of that, if there were any direction to move forward that they could agendize the item at the next meeting, or thereafter. In that the presentation of alternatives that we saw today would be important, as well as
an additional option wherein the shared board seat rotation does not rely on the City Selection Committee process.
ACTION: The Substitute motioned failed with a roll call vote: 6/9/4 AYES: Campbell, Downing, Ring, Hill, Mogensen, Reynolds NOES: Guertin, Huffaker, Hunter, Pia, Palacios, Ramirez, Vides, Vice Chair Miyasato, Chair Goldstein ABSENT: De La Rosa, Lewis, Wolfe
MOTION: Moved by Director Guertin, seconded by Director Hunter to support forwarding the Ad Hoc Committee's recommendation to modify the Policy and Operations boards from 19 members to 11 with the following additional modifications. Removing the right of refusal for the Cities of Salinas and Santa Maria.
Additionally, cities may utilize the City Selection Committees to appoint shared seats, however, they are not required to do so.
ACTION: The Motion Carried with a roll call vote: 11/4/4 AYES: Ring, Guertin, Huffaker, Hunter, Pia, Palacios, Ramirez, Reynolds, Vides, Vice Chair Miyasato, Chair Goldstein
NOES: Campbell, Downing, Hill, Mogensen
ABSENT: De La Rosa, Lewis, Posada (left at 11:44 AM), Wolfe Adjourned at 12:44PM
Staff Report Item 3
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Heather Vowell, Board Clerk
SUBJECT: Adopt Resolution OB-2024-02 Setting the Regular Meeting Schedule of the Operations Board of Directors
DATE: September 18, 2024
RECOMMENDATION:
Adopt Resolution OB-2024-02 setting the regular meeting schedule of the Operations Board of Directors.
BACKGROUND:
Section 3.8 of the Central Coast Community Energy Joint Powers Agreement requires the Operations Board to hold up to eight meetings per year, with the option for additional or special meetings as determined by the CEO and/or Chair, and that all meetings shall be conducted in accordance with the provisions of the Ralph M. Brown Act (the “Brown Act”). The Brown Act requires that the Operations Board provide a regular time and place for its meetings by resolution, ordinance, or other formal action.
The Operations Board has previously set their regularly scheduled meetings through adoption of Resolution Nos. 2-2017, 5-2017, OB-2018-02, OB-2018-03, OB-2018-05, OB-2019-02, and OB-2020-04.
DISCUSSION/ANALYSIS:
Staff recommends the Operations Board continue to meet on the second Wednesday in the months of January, February, April, May, August, September, October, and November as set forth in the following table:
Regular Meeting Schedule
January 2
nd Wednesday
February 2
nd Wednesday
April 2
nd Wednesday
May 2
nd Wednesday
August 2
nd Wednesday
September 3
rd
Wednesday Regular and Joint Annual Meeting
October 2
nd Wednesday
November 2
nd Wednesday
This recommendation maintains the current meeting cadence, except that the Operations Board is recommended to meet in February to accommodate a March Policy Board Meeting.
FISCAL IMPACT:
No fiscal impact is anticipated.
All regular meetings shall be duly noticed to begin at 10.30 a.m. on the above days at 3CE’s offices located at 70 Garden Court, Suite 300, Monterey, CA 93940, except the September meeting which will be separately noticed to accommodate the desire for the meeting move every other year from the northern and southern portion of 3CE’s service area.
CONCLUSION:
The Operations Board’s adoption of the Draft Resolution will set the Board’s regular meeting schedule and accommodate changes to the Operations Board regular meeting calendar.
ATTACHMENT(S):
1. Draft Resolution OB-2024-02
RESOLUTION NO. OB-2024-02
A RESOLUTION OF THE OPERATIONS BOARD OF DIRECTORS OF CENTRAL COMMUNITY ENERGY ESTABLISHING A REGULAR MEETING SCHEDULE; AND SUPERCEEDING ALL PREVIOULSY ADOPTED
RESOLUTIONS TO THE EXTENT OF ANY INCONSISTENT MEETING SCHEDULE, LOCATION AND TIMES WHEREAS, Central Coast Community Energy is a Joint Powers Authority established and operated pursuant to California Government Code section 6500 et seq. to study, promote, develop, conduct, operate, and manage energy programs in the California Central Coast region of Santa Cruz, Monterey, San Benito, Santa Barbara, and San Luis Obispo Counties; and WHEREAS, pursuant to Section 3.8 of the Central Coast Community Energy Joint Powers Agreement, the Operations Board of Directors of the Authority ("Board") may fix, by resolution, the date upon which, and the hour and place at which, each regular meeting of the Board is to be held; and WHEREAS, Central Coast Community Energy desires to establish a regular meeting schedule by resolution and to supersede any prior resolutions related to the foregoing by this resolution; and NOW, THEREFORE, the Operations Board of Directors of Central Coast Community Energy does hereby resolve, determine, and order as follows:
1. The regular meetings of the Operations Board of Directors of Central Coast Community Energy shall be held at 10:30 a.m. on the following days at the following locations (unless otherwise changed by Board approval)
2. The Operations Board’s September meeting will rotate between the northern and southern portions of 3CE’s service area and will be separately noticed in conjunction with the Joint Annual Meeting.
Regular Meeting Schedule
DAY Month Location
Second (2nd) Wednesday January 70 Garden Court, Suite 300, Monterey, CA 93940
Second (2nd) Wednesday February 70 Garden Court, Suite 300, Monterey, CA 93940
Second (2nd) Wednesday April 70 Garden Court, Suite 300, Monterey, CA 93940
Second (2nd) Wednesday May 70 Garden Court, Suite 300,
Monterey, CA 93940
Second (2nd) Wednesday August 70 Garden Court, Suite 300, Monterey, CA 93940
Third (3rd) Wednesday September TBD in conjunction with Annual Joint meeting
Second (2nd) Wednesday October 70 Garden Court, Suite 300, Monterey, CA 93940
Second (2nd) Wednesday November 70 Garden Court, Suite 300, Monterey, CA 93940
3. If necessary, special Board meetings will be convened and duly noticed as per Brown Act requirements at other venues.
4. If there are no agenda items, the meeting will be cancelled.
5. This Resolution shall take effect immediately upon adoption.
PASSED AND ADOPTED by the Operations Board of Central Coast Community Energy this 18th day of September by the following vote:
AYES:
NOES:
ABSENT:
_____________________________
Chair, Jamie Goldstein
Attest:
_____________________________
Board Clerk, Heather Vowell
Staff Report Item 4
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Juan Lopez, Director of Finance
SUBJECT: Authorize the CEO to execute Amendment No. 2 to the Standard Services Agreement with Maher Accountancy Corporation, extending the term through September 30, 2025, for accounting and annual audit assistance services and adding $286,500 for a revised not to exceed total contract amount of $843,000
DATE: September 18, 2024
RECOMMENDATION:
Authorize the CEO to execute Amendment No. 2 to the Standard Services Agreement with Maher Accountancy Corporation, extending the term through September 30, 2025, for accounting and annual audit assistance services adding $286,500 for a revised not to exceed total contract amount of $843,000.
BACKGROUND:
In November 2017, Central Coast Community Energy (“3CE”) entered into an agreement with Maher Accountancy to provide accounting and audit assistance services. 3CE has successively renewed these services on an annual basis. The Operations Board authorized a Standard Services Agreement with Maher Accountancy on September 21, 2022, and Amendment No. 1 to the agreement on September 13, 2023.
DISCUSSION/ANALYSIS:
3CE has a wide range of accounting needs that include general accounting and general ledger maintenance, financial reporting, accounts payable, revenue validation and reporting, vendor and supplier disbursements, budget tracking, financial compliance, and regulatory filings.
Maher Accountancy has built a Community Choice Aggregator (“CCA”) service offering based on QuickBooks and Bill.com. It also works with investor-owned utility (“IOU”) and Independent System Operator (“ISO”) data. The Maher Accountancy offering automates tasks and includes the back-end staff necessary to effectively outsource all core accounting functions. Maher Accountancy has built significant
institutional capacity and knowledge of the CCA space and works with a significant number of CCAs throughout California.
3CE has a small accounting staff consisting of an Accountant and an experienced Senior Accountant. The finance staff focuses on contract compliance, invoice processing, payroll, select reconciliations, and tracking of cash flow/investments. At present, 3CE does not have the systems or staffing capacity to replace the Maher Accountancy functions. Amendment No. 2 to the standard services agreement extends the services for another fiscal year and includes minor adjustments to the scope of services, which include the removal of payroll services since 3CE manages payroll internally.
FISCAL IMPACT:
The proposed standard services agreement with Maher Accountancy for accounting and annual audit assistance services, with a balance not to exceed $843,000, is divided between FY 2022-23 at $259,000, FY 2023-24 at $286,500, and FY 2024-25 at $297,500. The funding for this contract is included in the FY 2024-25 Recommended Budget.
CONCLUSION:
The Operations Board’s approval and authorization for the CEO to engage Maher Accountancy for another year will ensure the continued operation of essential financial functions.
ATTACHMENT(S):
1. 3CE standard services agreement and amendment No. 1 with Maher Accountancy
2. Amendment No. 2 to the standard services agreement with Maher Accountancy
9/12/2022 1 Contract Number: ______________
CENTRAL COAST COMMUNITY ENERGY
STANDARD SERVICES AGREEMENT
This Agreement is made by and between CENTRAL COAST COMMUNITY ENERGY (“CCCE”) and Maher Accountancy_ (hereinafter “CONTRACTOR”), a California Corporation with its principal place of business located at 1101 Fifth Ave, Ste 200 San Rafael, California. CCCE and CONTRACTOR may be individually referred to herein as “Party” or collectively as “Parties.” In consideration of the mutual covenants and conditions set forth in this Agreement, the Parties agree as follows:
1. GENERAL DESCRIPTION
1.1. CCCE hereby engages CONTRACTOR to perform, and CONTRACTOR hereby agrees to perform, the services described in Exhibit A in conformity with the terms of this Agreement. The goods and/or services are generally described as: Accounting Service.
2. PAYMENT PROVISIONS
2.1. CCCE shall pay the CONTRACTOR in accordance with the payment provisions set forth in Exhibit B, subject to the limitations set forth in this Agreement. The total amount payable by CCCE to CONTRACTOR under this Agreement shall not exceed the sum of $259,000.
3. TERM OF AGREEMENT
3.1. The term of this Agreement is from the date of execution until September 30, 2023, unless sooner terminated pursuant to the terms of this Agreement. This Agreement is of no force or effect until signed by both the CONTRACTOR and CCCE, with CCCE’s execution to be last in time. CONTRACTOR may not commence work under this Agreement before CCCE signs this Agreement.
3.2. CCCE reserves the right to cancel this Agreement, or any extension of this Agreement, without cause with thirty (30) days written notice, or with cause immediately.
4. SCOPE OF SERVICES AND ADDITIONAL PROVISIONS
4.1. The following attached exhibits are incorporated herein by reference and constitute a part of this Agreement:
4.1.1.Exhibit A: Scope of Services
4.1.2.Exhibit B: Payment Terms
4.1.3.Exhibit C: Procedures for Unauthorized Release of Covered Information FIN-2022-036
DocuSign Envelope ID: 0F068908-D0A2-42EA-9B86-06535AA90F5C
9/12/2022 2 Contract Number: ______________
5. PERFORMANCE STANDARDS
5.1. CONTRACTOR warrants that CONTRACTOR and CONTRACTOR’s agents, employees and subcontractors performing services under this Agreement are specially trained, experienced, competent, and appropriately licensed to perform the work and deliver the services required under this Agreement and are not employees of CCCE or immediate family of an employee of CCCE.
5.2. CONTRACTOR and CONTRACTOR’s agents, employees and subcontractors shall perform all work in a safe and skillful manner and in compliance with all applicable laws and regulations. All work performed under this Agreement that is required by law to be performed or supervised by licensed personnel shall be performed in accordance with such licensing requirements.
5.3. CONTRACTOR shall furnish, at its own expense, all materials, equipment, and personnel necessary to carry out the terms of this Agreement, except as otherwise specified in this Agreement. CONTRACTOR shall not use CCCE premises, property (including equipment, instruments, or supplies) or personnel for any purpose other than in the performance of its obligations under this Agreement.
6. PAYMENT CONDITIONS
6.1. Prices shall remain firm for the initial term of the Agreement and, thereafter, may be adjusted annually as provided herein. CCCE does not guarantee any minimum or maximum amount of dollars to be spent under this Agreement.
6.2. Negotiations for rate changes shall be commenced, by CONTRACTOR, a minimum of ninety days (90) prior to the expiration of the Agreement. Rate changes are not binding unless mutually agreed upon in writing by CCCE and the CONTRACTOR.
6.3. Invoices shall be submitted monthly on a form acceptable to CCCE and provide sufficient detail, as determined by CCCE, of services rendered for the invoiced period.
6.4. CCCE shall certify the invoice for payment in either the amount requested, or in such other amount as CCCE determines is due in conformity with this Agreement. Invoices shall be certified and paid within 45 days of submission to CCCE.
7. TERMINATION
7.1. During the term of this Agreement, CCCE may terminate the Agreement for any reason by giving written notice of termination to the CONTRACTOR at least thirty (30) days prior to the effective date of termination. Such notice shall set forth the effective date of termination. In the event of such termination, the amount payable under this Agreement shall be reduced in proportion to the services provided prior to the date of termination.
7.2. CCCE may cancel and terminate this Agreement for good cause effective immediately upon written notice to CONTRACTOR. “Good cause” includes the failure of CONTRACTOR to perform FIN-2022-036
DocuSign Envelope ID: 0F068908-D0A2-42EA-9B86-06535AA90F5C
9/12/2022 3 Contract Number: ______________
the required services at the time and in the manner provided under this Agreement. If CCCE terminates this Agreement for good cause, CCCE may be relieved of the payment of any consideration to CONTRACTOR, and CCCE may proceed with the work in any manner, which CCCE deems proper. The cost to CCCE shall be deducted from any sum due the CONTRACTOR under this Agreement.
8. INDEMNIFICATION
8.1. CONTRACTOR shall fully indemnify and hold CCCE, their officers, board members, employees, and agents, harmless from any claim, expense or cost, damage or liability imposed for claim, liability, loss, injury or damage occurring by reason of the negligent acts or omissions or willful misconduct of the CONTRACTOR, its officers, employees or agents, under or in connection with or arising out of the performance or non‐performance of any work, right, or obligation of such party under this AGREEMENT.
CONTRACTOR, nor any officer, board member or agent thereof, shall be responsible for any damage or liability occurring by reason of the negligent acts or omissions or willful misconduct of CCCE, their officers, board members, employees, or agents, under or in connection with or arising out of the performance or non‐performance of any work, right, or obligation of such party under this AGREEMENT."
8.1.1.Notwithstanding any other provision of this Agreement, CCCE shall be entitled to participate fully in the defense of any claim or action.
8.1.2.The selection of counsel to satisfy the defense and hold harmless obligation as set forth in section 8.1 above, shall be subject to review and approval of CCCE.
9. INSURANCE REQUIREMENTS
9.1. Prior to commencement of this Agreement, the CONTRACTOR shall provide a “Certificate of Insurance” certifying that coverage as required herein has been obtained. Individual endorsements executed by the insurance carrier shall accompany the certificate. In addition, the CONTRACTOR upon request shall provide a certified copy of the policy or policies. This verification of coverage shall be sent to CCCE.
9.2. Without limiting CONTRACTOR’s duty to defend and indemnify, CONTRACTOR shall maintain in effect throughout the term of this Agreement a policy or policies of insurance with the following minimum limits of liability:
9.2.1.1. Commercial General Liability Insurance, including but not limited to premises and operations, including coverage for Bodily Injury and Property Damage, Personal Injury, Contractual Liability, Broad form Property Damage, Independent Contractors, Products and Completed Operations, and cross‐liability with a combined single limit for Bodily Injury and Property Damage of not less than $1,000,000 per occurrence, and $2,000,000 in the aggregate.
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9.2.1.2. Business Automobile Liability Insurance, covering all motor vehicles, including owned, leased, non‐owned, and hired vehicles, used in providing services under this Agreement, with a combined single limit for Bodily Injury and Property Damage of not less than $500,000 per occurrence.
9.2.1.3. Workers’ Compensation Insurance, if CONTRACTOR employs others in the performance of this Agreement, in accordance with California Labor Code section 3700 and with Employer’s Liability limits not less than $1,000,000 each person, $1,000,000 each accident and $1,000,000 each disease.
9.2.1.4. Professional Liability Insurance, if required for the professional services being provided, (e.g., those persons authorized by a license to engage in a business or profession regulated by the California Business and Professions Code), in the amount of not less than $1,000,000 per claim and $2,000,000 in the aggregate, to cover liability for malpractice or errors or omissions made in the course of rendering professional services. If professional liability insurance is written on a “claims‐made” basis rather than an occurrence basis, the CONTRACTOR shall, upon the expiration or earlier termination of this Agreement, obtain extended reporting coverage (“tail coverage”) with the same liability limits. Any such tail coverage shall continue for at least three years following the expiration or earlier termination of this Agreement.
9.3. Unless otherwise specified by this Agreement, all such insurance shall be written on an occurrence basis, or, if the policy is not written on an occurrence basis, such policy with the coverage required herein shall continue in effect for a period of three years following the date CONTRACTOR completes its performance of services under this Agreement.
9.4. Commercial general liability and automobile liability policies shall provide an endorsement naming CCCE, its Directors, Board members, officers, agents, and employees as Additional Insureds with respect to liability arising out of the CONTRACTOR’S work, including ongoing and completed operations, and shall further provide that such insurance is primary insurance to any insurance or self‐insurance maintained by CCCE and that the insurance of the Additional Insureds shall not be called upon to contribute to a loss covered by the CONTRACTOR’S insurance.
10. RECORD AND CONFIDENTIALITY
10.1. CONTRACTOR and its officers, employees, agents, and subcontractors shall comply with any and all federal, state, and local laws, which provide for the confidentiality of records and other information. CONTRACTOR shall not disclose any confidential records or other confidential information received from CCCE or prepared in connection with the performance of this Agreement, unless CCCE specifically permits CONTRACTOR to disclose such records or information. CONTRACTOR shall promptly transmit to CCCE any and all requests for disclosure of any such confidential records or information. CONTRACTOR shall not use any confidential information gained by CONTRACTOR in the performance of this Agreement except for the sole purpose of carrying out CONTRACTOR’s obligations under this Agreement.
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10.1.1. Confidential Information specifically includes Covered Information (as defined in Exhibit C), including Protected Personal Information(“PPI”) that identifies, relates to, describes, or is capable of being associated with, or could reasonably be linked, directly or indirectly, with a consumer, household, or customer account. All such Covered Information and PPI must fully be protected from disclosure as set forth in California Public Utility Commission Decision D.12‐08.045. In the event of an unauthorized release of Covered Information and PPI, CONTRACTOR shall comply with Exhibit C, Procedures for Unauthorized Release of Covered Information.
10.2. Upon expiration or termination of this Agreement, CONTRACTOR shall return to CCCE any CCCE records which CONTRACTOR used or received from CCCE to perform services under this Agreement.
10.3. CONTRACTOR shall prepare, maintain, and preserve all reports and records that may be required by federal, state, and local rules and regulations related to services performed under this Agreement. CONTRACTOR shall maintain such records for a period of at least three years after receipt of final payment under this Agreement. If any litigation, claim, negotiation, audit exception, or other action relating to this Agreement is pending at the end of the three‐year period, then CONTRACTOR shall retain said records until such action is resolved.
10.4. CCCE shall have the right to examine, monitor and audit all records, documents, conditions, and activities of the CONTRACTOR and its subcontractors related to services provided under this Agreement. Pursuant to Government Code section 8546.7, if this Agreement involves the expenditure of public funds in excess of $10,000, the parties to this Agreement may be subject, at the request of CCCE or as part of any audit of CCCE, to the examination and audit of the State Auditor pertaining to matters connected with the performance of this Agreement for a period of three years after final payment under the Agreement.
10.5 CCCE shall have a royalty‐free and irrevocable license to use all original programs, writings, sound recordings, pictorial reproductions, drawings, and other works of similar nature produced in the course of or under this Agreement.
11. NON‐DISCRIMINATION
11.1. During the performance of this Agreement, CONTRACTOR, and its subcontractors, shall not unlawfully discriminate against any person because of race, religious creed, color, sex, national origin, ancestry, physical disability, mental disability, medical condition, marital status, age (over 40), or sexual orientation, either in CONTRACTOR’s employment practices or in the furnishing of services to recipients. CONTRACTOR shall ensure that the evaluation and treatment of its employees and applicants for employment and all persons receiving and requesting services are free of such discrimination. CONTRACTOR and any subcontractor shall, in the performance of this Agreement, fully comply with all federal, state, and local laws and regulations which prohibit discrimination. The provision of services primarily or exclusively to FIN-2022-036
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such target population as may be designated in this Agreement shall not be deemed to be prohibited discrimination.
12. INDEPENDENT CONTRACTOR
12.1. In the performance of work, duties, and obligations under this Agreement, CONTRACTOR is at all times acting and performing as an independent contractor and not as an employee of CCCE. No offer or obligation of permanent employment with CCCE and CONTRACTOR shall not become entitled by virtue of this Agreement to receive from CCCE any form of employee benefits including but not limited to sick leave, vacation, retirement benefits, workers’ compensation coverage, insurance or disability benefits. CONTRACTOR shall be solely liable for and obligated to pay directly all applicable taxes, including federal and state income taxes and social security, arising out of CONTRACTOR’s performance of this Agreement. In connection therewith, CONTRACTOR shall defend, indemnify, and hold CCCE harmless from any and all liability which CCCE may incur because of CONTRACTOR’s failure to pay such taxes.
13. NOTICES
13.1. Notices required under this Agreement shall be delivered personally or by first‐class, postage pre‐paid mail to CCCE and CONTRACTOR’S contract administrators at the addresses listed below:
Central Coast Community Energy CONTRACTOR
Chief Financial Officer Michael Maher, Vice President, Treasurer 70 Garden Court, Suite 300 1101 Fifth Ave, Ste 200
Monterey, Ca 93940 San Rafael, CA 94901
14. MISCELLANEOUS PROVISIONS
14.1. Conflict of Interest. CONTRACTOR represents that it presently has no interest and agrees not to acquire any interest during the term of this Agreement, which would directly, or indirectly conflict in any manner or to any degree with the full and complete performance of the services required to be rendered under this Agreement.
14.2. Amendment. This Agreement may be amended or modified only by an instrument in writing signed by CCCE and the CONTRACTOR.
14.3. Waiver. Any waiver of any terms and conditions of this Agreement must be in writing and signed by CCCE and the CONTRACTOR. A waiver of any of the terms and conditions of this Agreement shall not be construed as a waiver of any other terms or conditions in this Agreement.
14.4. Contractor. The term “CONTRACTOR” as used in this Agreement includes CONTRACTOR’s officers, agents, and employees acting on CONTRACTOR’s behalf in the performance of this Agreement.
14.5. Disputes. CONTRACTOR shall continue to perform under this Agreement during any dispute.
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14.6. Assignment and Subcontracting. The CONTRACTOR shall not assign, sell, or otherwise transfer its interest or obligations in this Agreement without the prior written consent of CCCE None of the services covered by this Agreement shall be subcontracted without the prior written approval of CCCE. Notwithstanding any such subcontract, CONTRACTOR shall continue to be liable for the performance of all requirements of this Agreement.
14.7. Successors and Assigns. This Agreement and the rights, privileges, duties, and obligations of CCCE and CONTRACTOR under this Agreement, to the extent assignable or delegable, shall be binding upon and inure to the benefit of the parties and their respective successors, permitted assigns, and heirs.
14.8. Compliance with Applicable Law. The parties shall comply with all applicable federal, state, and local laws and regulations in performing this Agreement.
14.9. Headings. The headings are for convenience only and shall not be used to interpret the terms of this Agreement.
14.10. Time is of the Essence. Time is of the essence in each and all of the provisions of this Agreement.
14.11. Governing Law. This Agreement shall be governed by and interpreted under the laws of the State of California.
14.12. Non‐exclusive Agreement. This Agreement is non‐exclusive and both CCCE and CONTRACTOR expressly reserve the right to contract with other entities for the same or similar services.
14.13. Construction of Agreement. CCCE and CONTRACTOR agree that each party has fully participated in the review and revision of this Agreement and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this Agreement or any amendment to this Agreement.
14.14. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.
14.15. Authority. Any individual executing this Agreement on behalf of CCCE or the CONTRACTOR represents and warrants hereby that he or she has the requisite authority to enter into this Agreement on behalf of such party and bind the party to the terms and conditions of this Agreement.
14.16. Integration. This Agreement, including the exhibits, represent the entire Agreement between CCCE and the CONTRACTOR with respect to the subject matter of this Agreement and shall supersede all prior negotiations, representations, or agreements, either written or oral, between CCCE and the CONTRACTOR as of the effective date of this Agreement, which is the date that CCCE signs the Agreement.
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Exhibit A: Scope of Services
Exhibit A: Scope of Services
Monthly Financial Operational Assistance
1. Assist with financial covenants with energy providers and lenders.
2. Assist in the development and monitoring of internal controls over financial transactions.
3. Monitor operating budget in collaboration with management and technical consultants.
4. Maintain the general ledger by:
a. Posting aggregate customer billings, accrued revenue, cash receipts, accounts payable, cash disbursements, payroll, accrued expenses, etc. b. Prepare or maintain the following monthly analysis regarding general ledger account balances:
i. Reconciliation to statements from Authority’s financial institution for cash activity and balances;
ii. Reconcile customer data manager reports of customer activity to accounts receivable aging;
iii. Estimate user fees earned but not billed as of the end of the reporting period;
iv. Prepare and maintain schedule of depreciation of capital assets; v. Prepare schedule of aged accounts payable;
vi. Prepare and maintain schedules of details regarding all remaining balance sheet accounts.
5. Manage disbursements to vendors: CONTRACTOR utilizes a cloud‐based accounts payable and document management system to provide documentation of management review, proper segregation of duties, and access to source data. CONTRACTOR data entry and review ensures that required authorization is documented and that account coding is correct. CCCE staff then authorizes the release of payment in order to provide an additional safeguard.
6. Assist management with compliance with fiscal provisions of vendor contracts.
7. Monitor expenditure budget compliance. CONTRACTOR monitors budget available and will make timely recommendations for any necessary budget amendments.
8. Provide periodic and year‐to‐date accrual basis financial statements with comparison to projections.
9. Provide modified accrual basis financial statement with comparison to budget.
10. Prepare and file annual information returns such as form 1099/1096’s.
11. Assist the treasury function
12. Provide services to assist management with financial reports required by applicable laws and regulations.
13. File various compliance reports for state and local agencies, such as user taxes, energy surcharges, and state controller reports.
14. Provide access to professional service provider contract portal. Maintenance of data within the portal will be a shared responsibility between CCCE and Contractor.
15. Provide access to a customer budget portal that shows revenues and expenditures by CCCE division, in alignment with CCCE’s Chart of Accounts. The portal will reflect the most up to date information available to the CONTRACTOR
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Scope of Services (Continued)
16. Develop an online form for business users to request purchase approval, submitting necessary documentation (Quotes, W‐9), justification and budget coding. Implement an approval chain and related notification system which varies based threshold. Provide insight into relevant budget availability at time of approval, and generate Purchase Order form for vendor after completion of approval steps.
Payroll Assistance Services
1. CCCE will provide summarized employee master file change information.
2. CCCE will ensure timecards, as necessary, are accurately completed by employees.
3. CONTRACTOR will communicate with ADP (or successor) and other taxing authorities, as needed.
4. CONTRACTOR will not have direct contact with CCCE employees other than the CCCE Finance and Human Resources personnel designated by CCCE’s Chief Financial Officer
5. CONTRACTOR is responsible for supporting CCCE personnel in payroll processing and administration, including but not limited to data validation.
8. CONTRACTOR will communicate payroll information to retirement plan administrator, if applicable.
Annual Audit:
1. Assist with the selection of independent auditor.
2. Coordinate data flow from CCCE accounting records to independent auditor.
3. Prepare annual financial statements with note disclosures and Management Discussion and Analysis.
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Exhibit B: Payment Terms
Authority shall compensate CONTRACTOR for professional services in accordance with the terms and conditions of this Agreement based on the rates and compensation schedule set forth below.
Compensation shall be calculated based on the not to exceed amounts set forth below.
The compensation to be paid to CONTRACTOR under this Agreement for all services described in Exhibit “A” and reimbursable expenses shall not exceed a total of $259,000, as set forth below. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to Authority unless previously approved in writing by Authority.
Monthly Accounting Services $241,500 Fixed fee of $20,125 per month Annual Audit Assistance (one‐time per year) $17,500 One‐Time Total $259,000
Monthly Invoicing
CONTRACTOR shall submit monthly invoices to the Authority describing the services performed and the applicable charges. Payment will be made in accordance with Section 6 of this Agreement.
Reimbursable Expenses
Administrative, overhead,secretarial time or overtime, word processing, photocopying, in house printing, insurance and other ordinary business expenses are included within the scope of payment for services and are not reimbursable expenses. Travel expenses must be authorized in advance in writing by CCCE and shall only be reimbursed to the extent consistent with CCCE’s travel policy. Cloud based payable platform (bill.com) fees will be paid for directly by CCCE.
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Exhibit C: Procedures for Unauthorized Release of Covered Information SCOPE
CONTRACTOR hereby agrees to adhere to these Procedures for detecting and reporting the unauthorized release of Covered Information, including Protected Personal Information (“PPI”).
These Procedures apply to the following unauthorized release activities:
1. Unauthorized access
2. Unauthorized destruction
3. Unauthorized use
4. Unauthorized modification
5. Disclosure to third parties for Secondary Purposes (see below)
DEFINITIONS
Covered Entity – (1) any Community Choice Aggregator or Electrical Service Provider (when providing service to residential or small commercial customers), or any third party that provides services to a Community Choice Aggregator or Electrical Service Provider (when providing service to residential or small commercial customers) under contract, (2) any third party who accesses, collects, stores, uses or discloses covered information pursuant to an order of the Commission, unless specifically exempted, who obtains this information from an electrical corporation, a Community Choice Aggregator or an Electrical Service Provider (when providing service to residential or small commercial customers), or (3) any third party, when authorized by the customer, that accesses, collects, stores, uses, or discloses covered information relating to 11 or more customers who obtains this information from an electrical corporation, a Community Choice Aggregator or an Electrical Service Provider (when providing service to residential or small commercial customers).
Covered Information ‐‐ any usage information obtained through the use of the capabilities of Advanced Metering Infrastructure when associated with any information that can reasonably be used to identify an individual, family, household, residence, or non‐residential customer, except that covered information does not include usage information from which identifying information has been removed such that an individual, family, household or residence, or non‐residential customer cannot reasonably be identified or re‐identified. Covered information, however, does not include information provided to the California Public Utilities Commission (the “Commission”) pursuant to its oversight responsibilities.
Primary Purposes – The “primary purposes” for the collection, storage, use, or disclosure of covered information, as outlined in Rule 1(c) of Attachment B, are to:
1. Provide or bill for electrical power or gas,
2. Provide for system, grid, or operational needs,
3. Provide services as required by state or federal law or as specifically authorized by an order of the Commission, or
4. Plan, implement, or evaluate demand response, energy management, or energy efficiency programs under contract with a Community Choice Aggregator or and Electrical Service Provider (when providing service to residential or small commercial customers), under contract with the FIN-2022-036
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Commission, or as part of a Commission authorized program conducted by a governmental entity under the supervision of the Commission.
Secondary Purposes – “Secondary purpose” means any purpose that is not a primary purpose.
Non‐Covered Entity – “Non‐Covered Entity” means any entity not defined as a Covered Entity.
Responsible Parties ‐‐ CCCE, CONTRACTOR, and any staff, employees, or sub CONTRACTORs contracted by CCCE or CONTRACTOR.
PROCEDURE
Detecting and Reporting of Unauthorized Releases
1. All Responsible Parties are required to protect Covered Information from unauthorized release activities as set forth above.
2. Any request by any non‐Covered Entities, for access to Covered Information must be reviewed and approved by an CCCE manager level employee to ensure no unauthorized or inadvertent release of Covered Information.
3. All authorized releases of Covered Information to Non‐Covered Entities shall be logged and reported to CCCE on a quarterly basis.
4. Any discovery of any unauthorized release of Covered Information must be reported to CCCE within one week of detection.
Unauthorized Release Handling Procedure
1. The discovering party after detecting, or discovery of, the unauthorized release of Covered Information must contact CCCE’s Dir. of Finance and Administration (or another executive manager) immediately.
2. CONTRACTOR will quantify and validate the type and extent of unauthorized release and report that information to CCCE’s Dir. of Finance and Administration in writing with sufficient detail for CCCE to determine the extent and impact of the unauthorized release.
3. CONTRACTOR shall prepare a written annual report of all discoveries of unauthorized releases of Covered Information.
Review and Training
1. At least annually, CONTRACTOR will review these Procedures with its staff, employees, or subcontractors.
2. Any proposed changes to these Procedures shall be provided in writing to CCCE’s Dir. of Finance and Administration for their consideration.
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AMENDMENT NO. 2
TO SERVICES AGREEMENT BETWEEN MAHER ACCOUNTANCY AND CENTRAL COAST
COMMUNITY ENERGY
This Amendment No. 2 to the Services Agreement (“Agreement”), which was effective on September 27, 2022, is entered into by and between CENTRAL COAST COMMUNITY ENERGY (“3CE”) and Maher Accountancy, a California Corporation (“CONTRACTOR”); (3CE and CONTRACTOR are referred to herein as “party,” or collectively, as the “Parties”), with respect to the following:
RECITALS
WHEREAS, 3CE and CONTRACTOR entered into the Agreement on September 27, 2022, to provide goods and/or services generally described as accounting services to support 3CE Accounting Services in an amount not to exceed $259,000; and
WHEREAS, 3CE and CONTRACTOR executed Amendment No. 1 on September 18, 2023, to extend the Agreement term and add $286,500 for a total not to exceed contract sum of $545,500; and WHEREAS, 3CE now seeks to add $297,500 to the Agreement to continue accounting services in support of 3CE for a revised term of September 27, 2022 through September 30, 2025;
AGREEMENT
NOW, THEREFORE, the Parties agree to amend the Agreement as follows:
The Agreement is hereby amended on the terms and conditions as set forth in the Agreement, except as specifically set forth below.
1. Amend the first sentence of Section 3.1 to read as follows:
The term of this Agreement is from the date of execution until September 30th, 2025, unless sooner terminated pursuant to the terms of this Agreement.
2. Amend Section 2.1 to read as follows:
2.1 3CE shall pay the CONTRACTOR in accordance with the payment provisions set forth in Exhibit B, subject to the limitations set forth in this Agreement. The total amount payable to 3CE to CONTRACTOR under this Agreement shall not exceed (the “NTE”) the sum of $843,000.
3. Replace Exhibit A with Exhibit A-1, attached and incorporated herein.
4. Replace Exhibit B-1 with Exhibit B-2, attached and incorporated herein
5. Except as provided herein, all remaining terms, conditions and provisions of the Agreement are unchanged and unaffected by this Amendment No. 2 and shall continue in full force and effect.
6. A copy of this Amendment No. 2 shall be attached to the Original Agreement.
7. This Amendment No. 2 shall be effective when signed by both parties.
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Exhibit A-1: Scope of Services
Exhibit A:-1 Scope of Services
Monthly Financial Operational Assistance
1. Assist with financial covenants with energy providers and lenders.
2. Assist in the development and monitoring of internal controls over financial transactions.
3. Monitor the operating budget in collaboration with management and technical consultants.
4. Maintain the general ledger by:
a. Posting aggregate customer billings, accrued revenue, cash receipts, accounts payable, cash disbursements, payroll, accrued expenses, etc.
b. Prepare or maintain the following monthly analysis regarding general ledger account balances:
i. Reconciliation to statements from 3CE’s financial institutions for cash activity and balances; ii. Reconcile customer data manager reports of customer activity to accounts receivable aging; iii. Estimate user fees earned but not billed as of the end of the reporting period; iv. Prepare and maintain a schedule of depreciation of capital assets; v. Prepare the schedule of aged accounts payable;
vi. Prepare and maintain schedules of details regarding all remaining balance sheet accounts.
5. Manage disbursements to vendors: CONTRACTOR utilizes a cloud‐based accounts payable and document management system to provide documentation of management review, proper segregation of duties, and access to source data. CONTRACTOR data entry and review ensures that required authorization is documented and that account coding is correct. 3CE staff then authorizes the release of payment in order to provide an additional safeguard.
6. Assist management with compliance with fiscal provisions of vendor contracts.
7. Monitor expenditure budget compliance. CONTRACTOR monitors budget versus actuals and will make timely recommendations for any necessary budget amendments.
8. Provide periodic and year‐to‐date accrual basis financial statements with comparison to projections.
9. Provide a modified accrual basis financial statement with a comparison to the budget.
10. Prepare and file annual information returns such as form 1099/1096s.
11. Assist the treasury functions.
12. Provide services to assist management with financial reports required by applicable laws and regulations.
13. File various compliance reports for state and local agencies, such as user taxes, energy surcharges, and state controller reports.
14. Access to professional service provider contract portal. Maintenance of data within the portal will be a shared responsibility between 3CE and CONTRACTOR.
15. Provide a customer budget portal that shows revenues and expenditures by 3CE department, division, office, etc., in alignment with 3CE’s Chart of Accounts. The portal will reflect the most up-to-date information available to the CONTRACTOR.
16. Develop an online form for business users to request purchase approval, submit necessary documentation (Quotes, W-9), justification, and budget coding, and implement an approval chain and related notification system that varies based on threshold. Provide insight into relevant budget availability at the time of approval and generate a Purchase Order form for the vendor after completion of approval steps.
17. Other assistance as needed.
18. Provide payroll assistance as needed.
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Annual Audit:
1. Assist with the selection of an independent auditor.
2. Coordinate data flow from 3CE accounting records to an independent auditor.
3. Prepare annual financial statements with note disclosures and Management Discussion and Analysis.
Contingency:
1. Provide technical assistance outside of the monthly financial operational assistance and annual audit services.
2. The 3CE Chief Financial Officer must authorize any services provided through the Contingency.
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Exhibit B-2: Payment Terms
Authority shall compensate CONTRACTOR for professional services in accordance with the terms and conditions of this Agreement based on the rates and compensation schedule set forth below.
Compensation shall be calculated based on the not to exceed amounts set forth below.
The compensation to be paid to CONTRACTOR under this Agreement for all services described in Exhibit A: Scope of Services and reimbursable expenses shall not exceed a total of $843,000, with $297,500 not to exceed in FY 2024-25, as set forth below.
Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to 3CE unless previously approved in writing by 3CE.
FY 2024-25
Monthly Accounting Services Fixed fee of $22,000 per month Annual Audit Assistance $18,500 Once annually
Special Assistance (as necessary) 15,000 on a as needed basis Total FY 2024-25 Not to Exceed $297,500
Monthly Invoicing
CONTRACTOR shall submit monthly invoices to the Authority describing the services performed and the applicable charges. Payment will be made in accordance with Section 6 of this Agreement.
Reimbursable Expenses
Administrative, overhead, secretarial time or overtime, word processing, photocopying, in-house printing, insurance, and other ordinary business expenses are included within the scope of payment for services and are not reimbursable expenses. Travel expenses must be authorized in advance in writing by 3CE and shall only be reimbursed to the extent consistent with 3CE’s travel policy. 3CE user fees and payment issuance costs charged by cloud‐based accounts payable services will be borne by 3CE.
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IN WITNESS WHEREOF, the parties hereto have set their hands the day and year first above written.
Maher Accountancy
By:___________________________
Michael Maher, Vice President, Treasurer
Date:_________________________
By:___________________________
John Maher, President
Date:_________________________
Central Coast Community Energy
By:___________________________
Robert M. Shaw, Chief Executive Officer
Date:_________________________
Approve as to form
By:___________________________
Marina Pantchenko, Deputy General Counsel
Date:_________________________
Approve as to Financial Terms
By:___________________________
Dewayne Woods, Chief Financial Officer
Date:_________________________
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8/28/2024
8/29/2024
8/29/2024
Staff Report Item 5
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Inaara Muhammad, Manager of Energy Programs SUBJECT: FY 2023-24 Energy Programs Update
DATE: September 18, 2024
RECOMMENDATION:
It is recommended that the Operations Board receive an update on FY 2023-24 Energy Programs.
BACKGROUND:
3CE’s Energy Programs have been administered since 2019 to incentivize customers to engage in electrification initiatives and reduce greenhouse gas emissions. The Energy Programs portfolio has undergone several iterations to improve community-wide accessibility and achieve parity for priority communities. Currently, 3CE offers 11 programs and concierge services to support residential and commercial electrification efforts in the transportation, building, and agricultural sectors. 3CE also offers programs exclusively for Member Agencies which include Plan Your Fleet, Electrify Your Fleet, and Reach Codes.
DISCUSSION/ANALYSIS:
As part of 3CE’s commitment to customers, 3CE staff continually evaluate Energy Programs’ performance by tracking several key indicators. Attached to this report are detailed status updates on 3CE’s Community Energy Programs (Attachment 1) and Member Agency Energy Programs (Attachment 2). These status updates share a variety of program performance metrics including equipment incentivized, housing units electrified, dollars spent, and performance on equity (e.g., dollars going to income qualified residents).
As part of its transition to a new Customer Relationship Management (CRM) tool and commitment to continual improvement, 3CE anticipates existing program applications will be kept open during the transition from the current to the coming fiscal year. Historically, Energy Programs applications were
paused for the month of September at the end of each fiscal year to allow for CRM updates. The Energy Programs team is currently user testing the new CRM and application integrations. The CRM is planned to launch energy program applications and management by September 30, 2024.
FISCAL IMPACT:
There is no fiscal impact associated with this report and update.
CONCLUSION:
3CE’s Energy Programs support local economies by providing the community with funding and services to accelerate regional electrification. Enhanced incentives for underserved community members reduce GHG emissions throughout the 3CE service area.
ATTACHMENT(S):
1. Update on 3CE Community Energy Programs
2. Update on 3CE Member Agency Services
FY 2023-24 3CE Community Energy Programs
This report supports the Energy Programs Staff Report for August 2024 and provides an update on participation in Central Coast Community Energy’s (3CE) Community Energy Programs for the fiscal year to date.
Electrify Your Ride Program
3CE’s Electrify Your Ride (EYR) program incentivizes residential and commercial electrification through rebates for the purchase or lease of an electric vehicle (EV), for purchase of EV Chargers, and for electrical upgrades necessary to install chargers. In 2024, the program was expanded to also include rebates for Direct-Current Fast Chargers (DCFC). In addition, EYR provides technical assistance for EV infrastructure buildout at publicly accessible commercial sites and at multifamily residential properties.
The FY 2023-24 budget for EYR totals $4 million.
Incentives are available on a first come, first served basis until funding is fully awarded. To promote greater adoption of transportation electrification in disadvantaged and low-income communities, higher incentive amounts are available for income-qualified customers and multifamily-unit buildings.
In FY 2023-24, 3CE has approved 2,017 applications and has distributed over $3.2 million in incentives to date. The following figures summarize program performance based on applications received in FY 2023- 24:
Figure 1 (above): Electrify Your Ride funds distributed by County in FY 2023-24.
Figure 2 (above): Electrify Your Ride Program Funds distributed by measure type in FY 2023-24.
Figure 3 (above): Breakdown of funds distributed to income-qualified applicants.
Tier 1 = 201 - 400% FPL; Tier 2 = <200% FPL; N/A = Non-Income Qualified applicants Electric Bus Program
3CE’s Electric Bus program provides public schools/school districts, farmworker transit organizations, and public transit agencies enrolled in 3CE service the opportunity to receive funding for the purchase of an all-electric bus. In FY 2023-24, the budget for the Electric Bus program is $2 million.
Applications are accepted until funds are fully distributed. Applicants are encouraged to apply for rebates following the purchase and delivery of an electric bus. Notices of Qualification (NOQ) may be requested to provide applicants with assurances of their eligibility status. Program recipients may elect for funds to be distributed directly from 3CE to the bus manufacturer upon receipt of the final invoice.
Applicants are encouraged to stack/leverage other incentive funds and no matching fund restrictions apply.
On July 12th, 2024, 3CE staff expanded the Electric Bus program funding guidelines to allow applicants purchasing more than one electric bus to receive a rebate of $50,000 per bus purchased in addition to the base rebate of 50% of the project cost, up to $200,000. With this change, the maximum rebate for a fleet electrification project is $400,000 applied toward the purchase of five (5) all-electric
buses. All incentives are distributed following equipment purchase and delivery, and restrictions regarding the number of fleet electrification efforts incentivized per fiscal year may apply.
To date, 3CE has distributed over $1,366,000 in post-purchase rebates to five (5) school districts and one local transit agency, incentivizing 10 electric buses and one (1) electric bus charging station. 98% of funding for school bus rebates were distributed to Title 1 Schools. New applications for two (2) electric buses in Monterey County and Santa Cruz County have been received, as well as an application for a full fleet electrification rebate for a local transit agency in Monterey County.
County Applicant
Type
Total Number of
Buses/Equipment
% funding
distributed to
Title 1 School
or Low-Income
Community
Total Funding
Monterey County School
District 2 100% $397,156.92
Santa Cruz County School
District 1 100% $157,265.37
San Benito County School
District 0 0 $0.00
SLO County School
District 0 0 $0.00
Santa Barbara
County
School
District 3 97% $409,495.87
Transit
Agency 5 100% $400,000.00
Table 1: Electric Bus projects awarded in FY 2023-24.
Electrify Your Home Program
The Electrify Your Home (EYH) program provides incentives to contractors enrolled in the TECH Clean California (TECH) program for installation of all-electric heat pump water heating and HVAC systems in existing single and multi-family buildings. EYH reduces purchase costs to 3CE customers, incentivizing making the switch to all-electric heat pump technology. The FY 2023-24 budget for EYH is $1.1 million.
Contractors enrolled in TECH are provided access to no-cost education and training on electrification design and specifications, heat pump installation, building science, and sales and marketing for electric
heat pumps. There are currently seventy-five (75) licensed contractors enrolled in the TECH program that work in 3CE’s service area.
In FY 2023-24 the EYH program has distributed $824,300 in rebates to promote the installation of 236 Heat Pump HVAC units and 71 Heat Pump Water Heater Units. The projects are primarily on single family homes but do include three multifamily developments. 3CE County Total Incentive Funds Distributed
San Luis Obispo County $258,000
Santa Cruz County $223,500
Monterey County $222,800
Santa Barbara County $120,000
Table 2: Electrify Your Home funds distributed by county New Construction Electrification Program
The New Construction Electrification Program (NCEP) provides affordable and farmworker housing developers and homeowners building Accessory Dwelling Units (ADUs) with incentives to build all-electric housing. 3CE also offers incentives to people who lost their homes because of a declared natural disaster, such as the 2022-2023 winter storms, to rebuild all-electric homes. Beginning in January 2024, NCEP expanded to include market-rate single and multifamily housing. Also, this year, to streamline the application process, 3CE began encouraging eligible applicants to submit funding requests post-project completion.
Qualifying housing projects must be built to all-electric standards for all energy utility needs, including water heating, space heating, and cooking appliances. The FY 2023-24 budget for NCEP is $1.1 million.
To date in FY 2023-24, 3CE’s New Construction Electrification Program has distributed a total of $843,250 to incentivize all-electric construction of 228 affordable housing units, 96 market-rate units, and 11 ADUs and disaster rebuilds.
3CE County Total Incentive Funds Distributed
County of Monterey $175,000
County of San Luis Obispo $349,000
County of Santa Cruz $319,250
Table 3: NCEP funds distributed by county
Agricultural Electrification Program
3CE’s Agricultural (Ag) Electrification program provides rebates to ag customers for replacing fossil fuel powered equipment with electric powered alternatives including farm tools, irrigation pumps, vehicles, and more. Enhanced incentives are available for small businesses and for businesses replacing equipment damaged or destroyed by a declared natural disaster. The program also provides technical assistance for EV infrastructure buildout at agricultural customer sites. The FY 2023-24 budget for Ag Electrification is $1.8 million.
Rebates for equipment with higher estimated GHG emissions avoidance and those benefiting small to medium sized agricultural businesses are supported with greater incentive levels. 3CE covers up to 50% of the cost for farm equipment, providing up to $15,000 USD for smaller “Tier 1” equipment and up to $75,000 USD for larger “Tier 2” equipment. Program funds are offered as a post-purchase rebate. To provide additional support for electrification in the agricultural community, 3CE has expanded eligibility to allow customers to receive two rebates per fiscal year.
Since the start of the current fiscal year, 3CE has distributed incentives for seventeen (17) projects, totaling $394,437.74 USD. Completed projects by county are described in Table 4 below.
County Tier 1
Applications
Tier 2
Applications
Small business
designation %
TOTAL
Monterey County 4 4 50% 8
Santa Cruz County 4 1 60% 5
San Benito County 1 0 0% 1
SLO County 0 0 0% 0
Santa Barbara County 0 3 33% 3
Total: 8 8 30% 17
Table 4: Agricultural Electrification projects awarded in FY 2023-24.
Residential Battery Rebate Program
With support from the Community Advisory Council, the Operations Board, and the Policy Board of Directors, 3CE staff launched the Residential Battery Rebate program on July 16, 2024, to incentivize residential use of behind-the-meter battery storage systems. Rebates are provided for eligible purchase of batteries, qualifying installation hardware, and labor directly related to the battery system's installation. 3CE estimates the program will issue four hundred (400) rebates per fiscal year, which equates to approximately 2.6 megawatts (MW) of new energy storage, and an annual expenditure of $2M.
The program offers a $300 per kilowatt hour (kWh) base rebate for customers. A $500 per kilowatt hour (kWh) rebate is for Net Energy Metering (NEM) 1.0 and NEM 2.0 tariff customers who elect to transition to Net Billing Tariff (NBT) early. Additionally, the program offers a $500 per kilowatt hour (kWh) rebate for customers who are enrolled in the Medical Baseline program and are reliant on electricity to power medical devices. To promote adoption in disadvantaged and low-income communities, the program also offers a $500 per kilowatt hour (kWh) rebate for customers enrolled in CARE or FERA payment assistance programs.
By the end of August 2024, 3CE had already received 28 applications, totaling $157,400. 3CE will continue to update the Board as staff processes applications.
FY 2023-24 3CE Member Agency Programs
This report supports the Energy Programs Staff Report for August 2024 and provides an update on FY 2023-24 Member Agency program implementation activities.
Reach Code Program
3CE’s Reach Code program for Member Agencies provides no-cost technical assistance to help local cities and counties adopt and implement reach codes, including stakeholder outreach support. Services include presenting to key stakeholders, answering technical questions, attending meetings, developing customized ordinances, reviewing staff presentations and reports, and developing implementation tools to help Member Agencies enforce reach codes. In FY 2023-24, 3CE budgeted $100,000 for the Reach Code program.
Since launching the Reach Code program on October 1, 2023, 3CE has engaged four Member Agencies:
Member Agency Reach Code Type
City of San Luis Obispo New Construction (complete) and Existing Buildings (underway) City of Santa Cruz Existing Buildings (complete)
City of Goleta Electric Vehicle Charging Infrastructure (underway) County of Monterey Electric Vehicle Charging Infrastructure (underway) Electrify Your Fleet Program
3CE’s Electrify Your Fleet (EYF) program incentivizes Member Agencies to purchase or lease electric fleet vehicles. Applications will be accepted until program funds are fully reserved or spent. A 3CE Member Agency applicant is eligible to reserve or be awarded up to $150,000 in EYF incentives in the program year. In FY 2023-24, 3CE budgeted $2.1 million for EYF.
Since launching the program on October 1, 2023, 3CE has incentivized 31 Battery Electric Vehicles totaling $480,000.
Member Agency Equipment Type Quantity Total Incentive
CITY OF SAN LUIS OBISPO Battery Electric Vehicle (BEV) 10 $50,000.00 CITY OF SANTA MARIA Battery Electric Vehicle (BEV) 12 $114,000.00 COUNTY OF SANTA CRUZ Battery Electric Vehicle (BEV) 6 $42,000.00 CITY OF CAPITOLA Battery Electric Vehicle (BEV) 1 $250,000.00 CITY OF CARMEL-BY-THE-SEA Battery Electric Vehicle (BEV) 3 $17,000.00 CITY OF GOLETA Battery Electric Vehicle (BEV) 1 $7,000.00 Total 33 $480,000.00
Charge Your Fleet Program
3CE’s Charge Your Fleet (CYF) program provides rebates for the purchase and installation of Level 2 or Level 3 (DC Fast Chargers) EV chargers. Member Agencies are eligible for up to $150,000 in CYF each year. 3CE’s 2023-24 CYF budget totals $1.2 million.
Since the launching of the program on October 1, 3CE has incentivized 24 EV chargers totaling $208,698.
Member Agency Equipment Type Quantity Total Incentive
CITY OF CARPINTERIA Level 2 10 $48,698.25
CITY OF SANTA CRUZ Level 2 4 $20,000.00
CITY OF SANTA MARIA Level 2 8 $40,000.00
CITY OF WATSONVILLE Level 3 2 $100,000.00
Total 33 $208,698.25
Plan Your Fleet Program
3CE’s Plan Your Fleet (PYF) program provides no-cost planning, design, and engineering consulting to Member Agencies to accelerate fleet electrification and EV charging infrastructure development across the Central Coast.
To best support 3CE’s Member Agency transportation electrification expansion plans, the Operations Board approved and authorized the CEO to execute an amended agreement with the Plan Your Fleet provider, Optony, Inc. on May 8th, 2024. This agreement serves to provide Member Agency fleet electrification services for a total not-to-exceed amount of $2,502,675 and a term ending on September 30, 2027, with the FY 2023-24 not-to-exceed budget augmented to $486,375. As a result of the Plan Your Fleet expansion, participation has increased from five to nine Member Agencies this FY.
This fiscal year to date, nine jurisdictions are participating in the program to receive fleet replacement plans, charging infrastructure designs, and/or additional electrification services. Jurisdictions include:
City of Carpinteria
City of Greenfield
County of Monterey
County of Santa Barbara
City of Marina
City of Santa Maria
City of San Luis Obispo
City of Soledad
City of Monterey
Staff Report Item 6
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Jerri Strickland, Manager of Energy Policy SUBJECT: Report on Regulatory Update
DATE: September 18, 2024
RECOMMENDATION:
This recommends the Operations Board receive the attached Regulatory Update.
DISCUSSION/ANALYSIS:
Please find attached 3CE’s Regulatory Update, providing the latest information on the following:
Resource Adequacy (RA)
Provider of Last Resort (POLR) and Emergency Transition Planning Integrated Resource Planning (IRP)
Bioenergy Market Adjustment Tariff (BioMAT)
Renewables Portfolio Standard (RPS)
Interconnections
Energization
Diablo Canyon Power Plant Extension
Load Management Standards (LMS) and Real-Time Pricing Energy Resources Recovery Account (ERRA) Compliance
Energy Resources Recovery Account (ERRA) Forecast
FISCAL IMPACT:
No financial impact by receiving this report.
CONCLUSION:
This is an informational item only.
ATTACHMENT(S):
Regulatory Update
Regulatory Update
September 18, 2024
2 Table of Contents
REGULATORY UPDATE .........................................................................................................................................................3 Resource Adequacy (RA) ...........................................................................................................................3 Provider of Last Resort (POLR) and Emergency Transition Planning .........................................................3 Integrated Resource Planning (IRP) ..........................................................................................................4 Bioenergy Market Adjustment Tariff (BioMAT) ........................................................................................5 Renewables Portfolio Standard ................................................................................................................5 Interconnections .......................................................................................................................................6 Energization ..............................................................................................................................................6 Diablo Canyon Power Plant Extension ......................................................................................................7 Load Management Standards (LMS) and Real-Time Pricing .....................................................................7 Energy Resources Recovery Account (ERRA) Compliance ........................................................................8 Energy Resources Recovery Account (ERRA) Forecast ..............................................................................8
3 REGULATORY UPDATE
Resource Adequacy (RA) – R.23-10-011
Issue
The Resource Adequacy (RA) program is the California Public Utilities Commission’s (CPUC) main grid reliability planning program. All load serving entities (LSEs) under the CPUC’s jurisdiction, including CCAs, must demonstrate purchase of a specified amount of eligible RA generation capacity each month and year to comply with RA program requirements. Increasing demand for and a decreasing supply of eligible RA capacity over the past five years have resulted in sharply increased prices and unprecedented difficulty procuring sufficient RA to achieve compliance. Over the past year the CPUC has also sought to tie RA compliance to other, unrelated functions such as CCA expansion into new communities.
Status
The CPUC has initiated Track 2 of the RA proceeding to consider modifications to the Central Procurement Entity (CPE) framework and the Planning Reserve Margin (PRM) requirements for 2026-2027. 3CE staff helped shape CalCCA’s proposal, submitted on June 14, that the CPUC adjust the timeline to provide LSEs with their CPE allocations at least one year prior to their year-ahead RA filings to improve procurement certainty. On July 22, the Energy Division issued its Loss of Load Expectation Study for 2026, which proposed that the Commission increase the PRM from 17% to 18.5% for the 2026 RA compliance year. 3CE submitted comments recommending that the CPUC delay adoption of a PRM for 2026 until the Slice-of-Day (SOD) framework has been fully implemented and the SOD PRM calibration methodology is refined, as several parties have identified issues with the tools and approach used to calculate the proposed PRM. In the interim, 3CE’s comments suggest the CPUC investigate policy changes that would increase reliability without costly impacts to ratepayers. The CPUC issued a Ruling indicating that because the PRM calibration tool requires corrections, a revised SOD PRM tool and translation results will be released at the end of August. 3CE also submitted informal comments to the CPUC to identify issues with the existing SOD tool.
Next Steps
3CE staff will evaluate the revised PRM calibration when available and continue to advocate that the CPUC delay adoption of an increased PRM until it has sufficient data and tools to accurately assess grid needs and that its approach strikes a balance between ensuring reliability and minimizing costs to customers. A Proposed Decision (PD) on Track 2 issues, including CalCCA’s proposal to amend the CPE timeline and the 2026 PRM level, will be issued in November.
Provider of Last Resort (POLR) and Emergency Transition Planning - R.21-03-011 Issue
The Provider of Last Resort (POLR) is the backstop entity that provides electric service to customers of a load serving entity if that LSE fails suddenly. This role has historically been held by the investor-owned utilities (IOUs, namely Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric), but this proceeding is establishing a process to allow CCAs and other non-IOU LSEs to become POLR in their service areas. 3CE does not aim to be the POLR but wants to ensure the process is fair for all LSEs and avoids competitive issues. This proceeding is also considering rules designed to prevent LSE failures that have various implications for 3CE finances and operations. This includes changes to how much money CCAs must post as insurance against their own failure (called the Financial Security Requirement or FSR).
4 Status
Pursuant to the Phase 1 Decision, 3CE jointly submitted two Advice Letters via CalCCA with guidance on financial monitoring requirements and new CCA registration guidelines to ensure that any new requirements retain flexibility within CCA contracts, preserve CCA autonomy, and align with existing regulations. On August 8, the CPUC initiated Phase 2 of the proceeding to address the requirements and process for non-IOU entities to become a POLR. CalCCA attended the prehearing conference (PHC) and issued a statement requesting that the CPUC deny PG&E’s requests to further consider the liquidity needs of the POLR and seasonal RA pricing, as these issues are outside the intended scope for Phase 2.
Next Steps
Following the PHC, the CPUC will issue a Ruling setting the formal scope and schedule for Phase 2. 3CE staff will continue to monitor and participate in the proceeding to promote beneficial changes to the current POLR framework.
Integrated Resource Planning (IRP) - R.20-05-003
Issue
Integrated Resource Planning (IRP) is the CPUC’s greenhouse gas (GHG) reduction planning program. LSEs must submit IRPs every two years demonstrating that planned future procurement will produce GHG emissions below an assigned benchmark while contributing to a resource fleet that meets sector-wide GHG targets and maintaining grid reliability. Previous IRP cycles have produced three procurement mandates, which apply to 3CE and other CCAs. On April 18, the CPUC issued an Amended Scoping Memo stating its intent to address additional issues in the IRP proceeding, including implementation of Assembly Bill (AB) 1373 which allows the Commission to request that the Department of Water Resources (DWR) serve as a central procurement entity (CPE) for certain long-lead time (LLT) resources, as well as development of a long term procurement framework entitled the Reliable and Clean Power Procurement Program (RCPPP) that would replace the CPUC’s current ad hoc mandate structure.
Status
On August 22, the CPUC approved a Decision on AB 1373 implementation, which makes an initial need determination for DWR centralized procurement of up to 10.6 gigawatts (GW) of LLT resources including offshore wind (OSW), geothermal, and long duration energy storage resources. While the PD does not adopt CalCCA’s recommendations to limit its need determination to a small amount of OSW or allow LSEs to self-provide the required resources, it does include a recommendation put forth by 3CE that DWR consider tasking a consultant with pursuing non-ratepayer sources of funding. Separately, on August 27, 3CE received notice that its updated IRP narrative for its 2022 Plan was accepted by the CPUC.
Next Steps
Within 6 months of September 1, 2024, the CPUC will request that DWR initiate its procurement process of the resources specified in the Decision. The Decision indicates that the CPUC will address allocation of costs and benefits and interactions with the RA proceeding in the future of this proceeding or its successor. 3CE continues to await a staff proposal on the RCPPP design and will evaluate it once available to assess impacts to 3CE’s procurement processes and advocate for improved coordination between the RA and IRP programs. 3CE’s next IRP filing will be due by November 1, 2025.
5 Bioenergy Market Adjustment Tariff (BioMAT) – R.22-10-010 Issue
BioMAT is a procurement program opened in 2015 to encourage the development of small bioenergy projects in California. The program is unique in that it allows load serving entities (LSEs) contracting with these projects to recover the costs from all California electricity users through the Public Purpose Programs (PPP) charge. In 2021, 3CE and other CCAs successfully lobbied legislators to reverse the exclusion of CCAs from BioMAT with the passage of AB 843. AB 843 was the first time CCAs gained access to PPP funding, setting a valuable policy precedent. The CPUC began implementation of AB 843 in October 2022 by opening of a new proceeding to work through the details of CCA participation.
Status
On August 14, the Operation Boards approved the BioMAT program, the pro-forma agreements, and granted the CEO the authority to approve eligible PPAs. Following this approval, 3CE informed the Energy Division and collaborated with Accion to finalize the BioMAT web portal. The Joint BioMAT CCAs requested and were granted an extension for the initial programmatic requirement, which is to submit an application demonstrating compliance with the CPUC’s prudent manager standards. This extension moved the deadline to September 1, as no CCA had yet executed a BioMAT PPA. Now, CCAs must submit their application by the earlier of the following two dates: six months from the execution of a Participating CCA’s first BioMAT PPA or the next annual deadline of September 1, 2025.
Next Steps
3CE will continue its outreach efforts with potential BioMAT applicants in its service territory.
Renewables Portfolio Standard - R.24-01-017
Issue
The CPUC’s Renewables Portfolio Standard (RPS) proceeding monitors compliance by retail sellers, including CCAs, within California’s RPS program which requires that 60% of all electricity retail sales be served by renewable resources by 2030 and at least 65% of the procurement a retail seller counts toward the RPS requirements be from long-term contracts. The CPUC initiated a new rulemaking to continue implementation of the RPS program, including reviewing RPS procurement plans, providing tools for RPS analysis and reporting, assessing RPS compliance, and integrating new legislative mandates into the RPS program.
Status
On July 23, 3CE submitted its Draft 2024 RPS Procurement Plan, providing information and updates on 3CE’s progress towards meeting applicable renewable energy planning and procurement targets. 3CE has also issued its annual Joint Rate Comparison (JRC) mailer, which compares 3CE and the respective IOU’s generation costs and power mix for customers to better understand their generation service options.
Next Steps
Staff will continue to monitor the new RPS proceeding to ensure 3CE’s ongoing RPS compliance and progress towards sourcing 100% clean and renewable energy by 2030, 15 years ahead of the state goal. 3CE is reviewing party comments on LSEs Draft 2024 RPS Procurement Plans to assess the need to submit reply comments, due by September 5. A PD on LSE 2024 Procurement Plans will be issued in Q4 of 2024.
6 Interconnections – IPE 2023
Issue
The California Energy Commission’s (CEC) 2023 Integrated Energy Policy Report (IEPR) identifies interconnection delays as a significant barrier to achieving California’s electrification and decarbonization goals.
Ongoing initiatives led by various entities are working to address this issue and streamline processes for connecting clean resources to the grid. One such effort is CAISO’s 2023 Interconnection Process Enhancements (IPE) initiative, focused on enhancing coordination of resource procurement, interconnection, and transmission planning to achieve state reliability and policy needs.
Status
On June 12, the CAISO board unanimously approved its Interconnection Process Enhancements proposal which introduces significant modifications to its interconnections study process, including a new scoring criteria that weights LSE interest in prospective projects. On August 1, CAISO filed its proposal with FERC, requesting approval by October 1. LSEs have received their Transmission Plan Deliverability (TPD) allocations for their Cluster 15 interest selections and must opt-in to provide scores and publicly post their scoring criteria prior to the interconnection application period.
Next Steps
3CE will continue to monitor the status of CAISO’s IPE proposal at FERC and assess its interest in and potential approach to participating in the interconnection scoring process if approved.
Energization – R.24-01-018
Issue
Demand for new service connections and upgrades to existing distribution lines have been increasing, especially as California advances policies to meet energy transition goals. In January, the CPUC opened a new Rulemaking to implement recent statutes and reduce energization delays by requiring the establishment of reasonable timelines for customers to receive new service connections and a procedure for customers to report delays.
Status
On August 12, the CPUC issued a PD establishing target energization time periods and procedures for customers to report energization delays. The PD requires IOUs to track and report energization related data and to assign a project manager to each approved application for new or upgraded electrical service to provide customers with updates on the status of their project, The PD also establishes an approach for customers to submit complaints of energization delays directly to the CPUC if the IOU exceeds the time periods.
Next Steps
3CE is working with CalCCA to shape opening comments on the Energization PD, due September 3, to support the CPUC’s establishment of statewide targets while recommending refinements to the IOUs’ reporting requirements, improvements to the customer complaint form, and the establishment of IOU energization project data portals for enhanced transparency. The CPUC will vote on the PD on September 12. Phase 2 of the energization rulemaking will continue to refine energization timelines and contemplate compliance requirements if IOUs fail to meet statewide targets.
7 Diablo Canyon Power Plant Extension – R.23-01-007
Issue
SB 846 required the CPUC to consider the potential extension of operations at the Diablo Canyon Power Plant (DCPP) for an additional five years beyond its retirement dates to improve system reliability while additional renewable energy and zero-carbon resources come online. DCPP is owned and operated by PG&E and was licensed by the Nuclear Regulatory Commission (NRC) to operate until November 2, 2024 (Unit 1) and August 26, 2025 (Unit 2). In 2023, the CPUC opened a new proceeding related to the potential extension of DCPP.
Phase 1 of the proceeding concluded with a Decision that authorized extended operations of DCPP and allocated the costs and benefits to LSEs.
Status
Phase 2 of the proceeding will consider additional processes and mechanisms to review, recover, and approve potential extended operations costs at DCPP, including PG&E’s use of volumetric performance fees (VPF). SB 846 specifies that excess revenue generated by the extended operation of DCPP should be spent on public purpose priorities such as accelerating interconnection and promoting renewable energy. On August 20, PG&E proposed new uses for the VPFs, including expanding its existing battery program, gathering electric vehicle detection data, and streamlining energization processes.
Next Steps
3CE staff will continue to monitor the proceeding and support CalCCA’s advocacy that VPFs expenditures align with SB 846 and equally benefit all ratepayers. Opening Briefs are due October 1, 2024.
Load Management Standards (LMS) and Real-Time Pricing - 23-LMS-01 Issue
The California Energy Commission’s (CEC) updated Load Management Standard (LMS) regulations now require IOUs, municipal utilities, and CCAs with load greater than 700 GWh/year to upload time-dependent rates to the CEC’s Market Informed Demand Automation Server (MIDAS) platform, develop an LMS Compliance Plan by March 2024, and present to their governing bodies, for approval by the CEC, at least one hourly marginal cost based rate option (often referred to as a real-time rate) for their customers by 2025.
Status
3CE continues to follow its LMS Plan as adopted by the Policy Board on February 21. Accordingly, staff has been actively collaborating with stakeholders on the development and design of a statewide tool for authorized rate data access by third parties for submission to the CEC by October 1. 3CE attended a meeting with CEC staff on August 29 to discuss its LMS Plan and ongoing efforts to implement the AgFIT Pilot.
Next Steps
3CE staff is working with CalCCA to advocate for CEC or other non-ratepayer funding for LMS costs related to development of the single statewide tool and to ensure that any necessary cost recovery processes are equitable and transparent. 3CE is also developing a list of programs for the October 1 deadline and continues to assess the options outlined in its LMS Plan. In the upcoming months, the CEC will issue a review of all CCA LMS Plans.
8 Energy Resources Recovery Account (ERRA) Compliance – A.22-02-015; A.22-04-001; A.24-02- 012
Issue
Energy Resource Recovery Account (ERRA) compliance filings are made annually by the Investor-Owned Utilities (IOUs) for the approval of costs associated with Utility Owned Generation (UOG) operations and fuel procurement, Portfolio Allocation Balancing Account (PABA) entries, economic dispatch of electric resources, and contract administration. IOUs are required to demonstrate compliance with CPUC decisions and the California Public Utilities Code. All CCAs participate jointly in these proceedings through CalCCA to ensure unbundled customers are treated equitably in IOU rate-setting decisions.
PG&E Status
On July 26, the ALJ issued a short ruling (attached) re-opening discovery for CalCCA (and CalCCA alone). The ruling permits CalCCA to ask discovery on the following issues: (1) PG&E's RA sales solicitations in 2022, (2) PG&E's transfer of excess RA from PCIA to CAM, (3) PG&E's attempts to sell excess existing PCIA-eligible RA resources through the commercial process of its BPP. These issues are the same issues CalCCA has attempted to investigate throughout this proceeding. To date, PG&E's objections and the ALJ's evidentiary rulings have prevented us from doing so. Discovery on these topics was issued on August 2. The statutory deadline for this case was extended to May 28, 2025.
Next Steps
CalCCA is awaiting a response to their discovery from PG&E.
Energy Resources Recovery Account (ERRA) Forecast — A.23-05-012; A.23-06-001 Issue
ERRA forecast applications are filed annually by IOUs to look ahead at energy procurement-related revenue requirements, including the allocation of costs across Power Charge Indifference Adjustment (PCIA) vintages.
CCAs participate through CalCCA to ensure: (1) accuracy of forecast account balances, rates, and cost calculations; (2) proper attribution of PCIA vintage; (3) proposer attribution between bundled and unbundled customers; (4) appropriateness of IOU proposals within the context of an ERRA forecast proceeding.
Status
PG&E:
CalCCA filed a protest to PG&E’s 2025 ERRA Forecast Application on June 17, 2024, opposing PG&E’s proposal to freeze RA Market Price Benchmarks (MPBs) at 2024 levels if they increase from forecasted levels as this would shift costs to CCA customers through increased PCIA rates. On August 1, the CPUC ruled in favor of CalCCA’s protest that PG&E’s RA MPB proposal is inappropriate for an ERRA proceeding but may merit consideration in a statewide rulemaking proceeding.
SCE:
SCE’s 2025 ERRA Forecast Scoping Ruling set the scope and schedule of SCE’s 2025 ERRA Forecast case on August 14, 2024. SCE submitted its 2025 ERRA Forecast Supplemental Testimony on August 16, 2024, which addresses SCE’s proposal for integrating the new SOD RA methodology into its 2025 ERRA Forecast, which will end up impacting the Power Charge Indifference Amount. SCE proposes to change the current methodology for forecasting RA value from using ELCC values, which only provide one value for a month, to exceedance values for intermittent resources, which provide 24 values for each month, one for each hour. SCE then takes the average of the 24 exceedance values and determines the SOD RA Effectiveness Factor for intermittent resources. The issue SCE is attempting to address was never addressed during SOD development, however
9 more evaluation of this proposal is needed and in a venue with all three IOUs for applying consistency across territories. CalCCA will represent this position in upcoming testimony.
Next Steps
Intervenor testimony is due on September 3 for both the PG&E & SCE’s 2025 ERRA Forecast.
Staff Report Item 7
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Juan Lopez, Director of Finance
SUBJECT: Financial report for the period October 1, 2023, through June 30, 2024 DATE: September 18, 2024
RECOMMENDATION:
Receive a financial report for the period October 1, 2023, through June 30, 2024.
SUMMARY:
Over the nine months ending June 30, 2024, operating revenues amounted to $380.5 million, and operating expenses totaled $346.8 million for a net operating income of $33.7 million. Non-operating revenue of $8.8 million, driven by interest and investment returns, netted the month with a net position of $42.5 million.
Year-to-date operating revenue is $27.3 million lower than budget, primarily due to the seasonal fluctuations in revenues and expenditures and the lower-than-budgeted customer load to date.
However, operating revenue is expected to align with the budget throughout the fourth quarter as the summer months conclude. Meanwhile, investment revenue exceeded the budget with a favorable variance of $4.1 million, as staff actively manages in a favorable short-term interest rate environment.
Year-to-date operating expenditures are lower than the budget by $10.3 million. The cost of energy was $1.1 million higher than the budget. The variance is from higher-than-expected resource adequacy (RA) capacity purchases. Non-energy operating costs were $11.2 million lower than budget due to less-than-planned costs for contracted services, energy programs, and staff vacancies. The fourth quarter will see an increase in RA costs which will reduce the growth in net position.
Net position at the end of June 30, 2024, totaled $284.3 million, a $42.5 million increase from the start of the fiscal year. The increase is attributed to growth in prepaid expenses to suppliers, accrued
revenue, collateral posted with the CAISO and suppliers, and the increased long-term asset purchase (San Luis Obispo satellite office). Cash, cash equivalents, and short-term investments totaled $231.6 million, a $23.4 million decrease from the start of the fiscal year. This decrease is primarily due to the prepayment of RA purchases that occurred in April. Liquidity is expected to increase through the end of the fiscal year.
FISCAL IMPACT:
There is no financial impact associated with receiving this report.
ATTACHMENT(S):
1. June 30, 2024 Financial Report
FINANCIAL REPORT
Fiscal Year to Date
As of June 30, 2024
ACCOUNTANTS’ COMPILATION REPORT
Board of Directors
Central Coast Community Energy
Management is responsible for the accompanying financial statements of Central Coast Community Energy (a California Joint Powers Authority) which comprise the statement of net position as of June 30, 2024, and the related statement of revenues, expenses, and changes in net position, and the statement of cash flows for the period then ended in accordance with accounting principles generally accepted in the United States of America. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the accompanying statements nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, conclusion, nor provide any assurance on these financial statements.
Management has elected to omit substantially all of the note disclosures required by accounting principles generally accepted in the United States of America in these interim financial statements.
Central Coast Community Energy’s annual audited financial statements include the note disclosures omitted from these interim statements. If the omitted disclosures were included in these financial statements, they might influence the user’s conclusions about the Authority’s financial position, results of operations, and cash flows. Accordingly, these financial statements are not designed for those who are not informed about such matters.
We are not independent with respect to the Authority because we performed certain accounting services that impaired our independence.
Maher Accountancy
San Rafael, CA
July 29, 2024
1101 Fifth Avenue, Suite 200 San Rafael, CA 94901 415 459 1249 mahercpa.com
Current assets
Cash and cash equivalents - unrestricted $ 184,037,588
Accounts receivable, net of allowance 32,948,921
Accrued revenue 31,434,143
Other receivables 696,117
Loan receivable 190,718
Prepaid expenses 59,988,957
Deposits 17,706,532
Cash - restricted 294,000
Investments 47,525,436
Total current assets 374,822,412
Noncurrent assets
Deposits 23,182
Loan receivable 1,330,079
Lease asset, net of amortization 1,174,737
Land 898,658
Capital assets, net of depreciation and amortization 1,878,480 Total noncurrent assets 5,305,136
Total assets 380,127,548
Current liabilities
Accrued cost of electricity 53,973,828
Accounts payable 1,193,915
Other accrued liabilities 1,424,996
Due to broker 11,186,910
User taxes and energy surcharges due to other governments 1,828,145 Lease liability 318,925
Total current liabilities 69,926,719
Noncurrent liabilities
Security deposits - energy suppliers 24,931,424
Lease liability 925,069
Total noncurrent liabilities 25,856,493
Total liabilities 95,783,212
Net investment in capital assets 2,707,881
Restricted for security collateral 294,000
Unrestricted 281,342,455
Total net position $ 284,344,336
NET POSITION
As of June 30, 2024
STATEMENT OF NET POSITION
CENTRAL COAST COMMUNITY ENERGY
ASSETS
LIABILITIES
OPERATING REVENUES
Electricity sales, net 380,373,393$
Other income 81,179
Total operating revenues 380,454,572
OPERATING EXPENSES
Cost of electricity 325,704,952
Contract services 8,928,914
Staff compensation 5,663,529
Other operating expenses 1,240,766
Program incentives 4,805,224
Depreciation and amortization 435,707
Total operating expenses 346,779,092
Operating income (loss) 33,675,480
NONOPERATING REVENUES (EXPENSES)
Interest and investment returns 8,849,701
Interest and financing costs (52,170)
Nonoperating revenues (expenses) 8,797,531
CHANGE IN NET POSITION 42,473,011
Net position at beginning of period 241,871,325
Net position at end of period $ 284,344,336
Nine Months Ended June 30, 2024
AND CHANGES IN NET POSITION
STATEMENT OF REVENUES, EXPENSES
CENTRAL COAST COMMUNITY ENERGY
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 380,438,928$
Other operating receipts 82,460
Receipts of deposits and collateral 18,668,903
Payments to suppliers for electricity (376,563,013)
Payments of deposits and collateral (35,207,197)
Payments for other goods and services (11,023,743)
Payments for program incentives (5,492,032)
Payments of staff compensation (5,377,640)
Payments of taxes and energy surcharges to other governments (6,746,798) Net cash provided by operating activities (41,220,132)
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Interest and related expense payments (5,944)
Net cash provided by non-capital financing activities (5,944)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments of lease liability (269,604)
Payments to acquire capital assets (2,362,549)
Net cash provided (used) by capital and related financing activities (2,632,153)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment income received 8,494,487
Proceeds from investment sales 113,932,461
Principal payments received of loan receivable 187,201
Purchase of investments (90,458,201)
Net cash provided (used) by investing activities 32,155,948 Net change in cash and cash equivalents (11,702,281)
Cash and cash equivalents at beginning of year 196,033,869 Cash and cash equivalents at end of period $ 184,331,588 Reconciliation to the Statement of Net Position
Cash and cash equivalents - unrestricted $ 184,037,588
Cash - restricted 294,000
Cash and cash equivalents $ 184,331,588
Nine Months Ended June 30, 2024
STATEMENT OF CASH FLOWS
CENTRAL COAST COMMUNITY ENERGY
Operating income (loss) $ 33,675,480
Adjustments to reconcile operating income (loss) to net cash provided by operating activities
Depreciation and amortization expense 435,707
(Increase) decrease in:
Accounts receivable, net of allowance (189,646)
Accrued revenue (6,569,038)
Other receivables 3,365,441
Prepaid expenses (59,608,746)
Deposits (11,212,438)
Increase (decrease) in:
Accrued cost of electricity 5,051,352
Accounts payable (1,600,001)
Other accrued liabilities 683,195
User taxes and energy surcharges due to other governments 74,418 Security deposits - energy suppliers (5,325,856)
Net cash provided by operating activities (41,220,132)$
CENTRAL COAST COMMUNITY ENERGY
STATEMENT OF CASH FLOWS (continued)
Nine Months Ended June 30, 2024
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
ACCOUNTANTS’ COMPILATION REPORT
Board of Directors
Central Coast Community Energy
Management is responsible for the accompanying special purpose statements of Central Coast Community Energy (a California Joint Powers Authority) which comprise the budgetary comparison schedule for the periods ended June 30, 2024, and for determining that the budgetary basis of accounting is an acceptable financial reporting framework. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the accompanying statement nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor provide any assurance on this special purpose budgetary comparison statement.
The special purpose statement is prepared in accordance with the budgetary basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. This report is intended for the information of the Board of Directors of the Authority.
Management has elected to omit substantially all of the note disclosures required by accounting principles generally accepted in the United States of America in these interim financial statements.
Central Coast Community Energy’s annual audited financial statements include the note disclosures omitted from these interim statements. If the omitted disclosures were included in these financial statements, they might influence the user’s conclusions about the Authority’s financial position, results of operations, and cash flows. Accordingly, these financial statements are not designed for those who are not informed about such matters.
We are not independent with respect to the Authority because we performed certain accounting services that impaired our independence.
Maher Accountancy
San Rafael, CA
July 29, 2024
1101 Fifth Avenue, Suite 200 San Rafael, CA 94901 415 459 1249 mahercpa.com
Actual Budget $ Variance
%
Variance Actual Budget $ Variance
%
Variance
Annual
Budget
Annual Budget
Less Actual
YTD
REVENUES AND OTHER SOURCES
Electricity sales $ 49,045,350 $ 46,403,000 $ 2,642,350 6% $ 385,500,728 $ 413,280,000 $ (27,779,272) 93% $ 563,933,447 $ 178,432,719 Uncollectible accounts (652,479) (625,000) (27,479) 4% (5,127,335) (5,625,000) 497,665 91% (7,500,000) (2,372,665) Electricity sales, net 48,392,871 45,778,000 2,614,871 6% 380,373,393 407,655,000 (27,281,607) 93% 556,433,447 176,060,054 Investment and miscellaneous income 850,807 533,000 317,807 60% 8,930,880 4,800,000 4,130,880 186% 6,400,000 (2,530,880) Total revenues and other sources 49,243,678 46,311,000 2,932,678 6% 389,304,273 412,455,000 (23,150,727) 94% 562,833,447 173,529,174 EXPENDITURES AND OTHER USESCurrent Expenditures
Cost of energy 47,876,973 51,000,000 3,123,027 6% 326,388,693 325,416,000 972,693 100% 520,297,514 193,908,821 Salaries and benefits 716,896 795,000 78,104 10% 5,663,529 7,153,000 (1,489,471) 79% 9,537,076 3,873,547 Services and supplies 1,555,954 2,750,000 1,194,046 43% 15,002,421 24,750,000 (9,747,579) 61% 32,998,857 17,996,436 Total current expenditures 50,149,823 54,545,000 4,395,177 8% 347,054,643 357,319,000 (10,264,357) 97% 562,833,447 215,778,804 Surplus (deficit) $ (906,145) $ (8,234,000) $ 7,327,855 -89% 42,249,630 $ $ 55,136,000 $ (12,886,370) -23% $ (42,249,630) - $ Annual
CENTRAL COAST COMMUNITY ENERGY
BUDGETARY COMPARISON SCHEDULE
Current Month and Nine Months Ended June 30, 2024
Current Month
Variance fav. (unfav.)
Year-To-Date
Variance fav. (unfav.)
Budget Item YTD Variance Comment
Electric Sales Revenue (6.7%) Sales revenue includes revenues actually billed to customers as well as estimated customer usage during the reporting period that is not yet billed.
Cost of Energy 0.3% Variances in this category are typically due to (1) timing difference between projected and actual REC deliveries, (2) variance from actual to anticipated market prices, and (3) variance from actual to expected volume used by customers. Cost of energy includes scheduling coordinator fees for budget purposes only.
Staffing (20.8%) Staffing expenses are under budget due to the timing of new hires.
Professional Services (60.9%) This category includes accounting, IT, technical and other consultants.
Legal Costs (18.7%) This category includes outside legal costs for regulatory and energy procurement needs.
Marketing and customer enrollment (18.8%) Variance is mostly due to the lower than anticipated costs of recent customer enrollments.
Data Management Services 2.2% These fees non-discretionary and are charged on a per customer basis.
Utility Service Fees (3.6%) These are PG&E and SCE fees charged on a per customer basis.
Other General & Administrative (46.2%) This category includes occupancy costs, industry membership dues, and other general and administrative costs.
Energy and Related Programs (52.4%) Programs expenses have generally been delayed until future periods Budget Commentary for significant items
CENTRAL COAST COMMUNITY ENERGY
October 1, 2023 through June 30, 2024
1.1%
-11.4%
Act
Bud
$54.0
$82.2
$36.1
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Actual
Budget
$380.4
$407.7
$556.4
$0.0
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Actual
Budget
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Actual (T48/T8) 416 393 409 406 358 368 360 340 351
Budget 452 459 444 420 402 416 419 383 386 405 423 427
0 50
100
150
200
250
300
350
400
450
500
CUSTOMERS
SALES VOLUME
351 GWh
STD MARGIN
$0.5M (1%)
Δ in NET ASSETS
-$0.9M
Cumulative YTD Electricity Sales
Cumulative YTD Direct Margin
(Electricity Sales less Cost of Energy)
Data Definitions:
CUSTOMERS: Count of active customers from Calpine.
REPORTED / SALES VOLUME: Best available estimate of actual meter volume. Currently based on T+8 SQMD Report and T+48 when available.
REVENUE: Total Operating Revenue, net of uncollectible, (excludes Interest income).
ELECTRICITY SALES: Sales from electricity (net of uncollectible).
STD MARGIN: Electricity Sales less cost of energy (Forecasting & scheduling included in Cost of Energy to match budget) ACTUAL: Same as sales volume above
BUDGET: Volumes from FY23/24 budget
Monthly Sales Volume (GWh)
Financial Dashboard: June 2024
CUSTOMERS
457,000
ACTIVE
June revenue of $49.2M accounts for 351
GWh in net retail consumption, 35 GWh
below budget.
YTD Electricity revenue is $380M compared
to budget of $408M. YTD Direct Margin
(defined as Electricity Sales less Cost of
Energy) of $54M is below budget by $28M.
The chart to the right shows volume
comparison to budgeted volume.
The charts below display cumulative
revenue and margin $ vs budget.
30%
48%
23%
38%
47%
14%
Res
Com
Ag
YTD Month
Revenue $49.2
C.O.E. $47.9
OpEx $2.2
Net Income -$0.9
$0.5
-$5.2
Act
Bud
Margin $
10 34%
45%
22%
42%
45%
13%
Res
Com
Ag
YTD Month
REVENUE
$49.2M
Margin %
Return of Investments YTD Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep CASH AND CASH EQUIVALENTSRiver City Bank/ Chase - Money Market and other Interest Earning AccountsFunds Invested - Average Balance 132,319,400$ 114,651,102$ $ 105,356,390 $ 104,396,252 $ 103,895,294 $ 136,670,988 $ 89,128,674 $ 103,094,923 $ 99,733,192 Gains/Losses/Interest $ 3,247,111 $ 406,536 345,045.39 356,733.82 348,153.12 328,669.77 467,310.22 292,100.83 359,957.02 342,604.48 Average APY 3.69% 3.61% 4.06% 4.00% 3.80% 4.10% 3.93% 4.19% 4.12%INVESTMENTSRiver City Bank - Treasury-indexed productsFunds Invested - Average Balance $ 40,000,000 $ 50,000,000 $ 40,000,000 $ 40,000,000 $ 30,000,000 $ 30,000,000 $ 20,000,000 $ 6,700,000 $ - Gains/Losses/Interest $ 1,277,633 178,385.54 213,485.85 236,035.13 205,868.28 193,103.80 116,602.81 103,270.38 30,881.04 - Average APY 5.35% 5.12% 7.08% 6.18% 7.72% 4.66% 6.20% 5.53%RBC GAM / Principal Financal/ Schwab/FidelityFunds Invested - Average Balance $ 84,038,064 $ 89,456,032 $ 104,918,181 $ 110,378,734 $ 109,851,410 $ 85,196,666 $ 102,094,893 $ 116,668,316 $ 123,250,987 Gains/Losses/Interest $ 3,884,143 351,852.83 417,968.37 462,148.76 463,382.88 411,214.03 409,319.23 398,176.83 488,291.25 481,788.55 Average APY 5.02% 5.61% 5.29% 5.04% 4.49% 5.77% 4.68% 5.02% 4.69%
CENTRAL COAST COMMUNITY ENERGY
Investment Summary
October 1, 2023 through June 30, 2024
Current 0 - 30 Days 31 - 60 Days 61 - 90 Days > 91 Days A/R Balance $ 20,528,706 $ 9,754,550 $ 1,721,164 $ 236,656 $ 707,846 $ 32,948,922
CENTRAL COAST COMMUNITY ENERGY
Summary of Accounts Receivable, Net of Bad Debt Allowance As of June 30, 2024
Staff Report Item 8
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Juan Lopez, Director of Finance
SUBJECT: Investment Performance Report for the period of October 1, 2023 through June 30, 2024
DATE: September 18, 2024
RECOMMENDATION:
Receive the 3CE’s investment performance report for the period of October 1, 2023 through June 30, 2024.
BACKGROUND:
In early 2023, staff took guidance from the Audit and Finance Committee (“Committee”) to add operating and investment diversification to mitigate the risk of holding assets in a few concentrated financial institutions. Since the diversification was completed, staff has presented the report to the Committee quarterly in addition to including the reports in the Operations and Policy board meetings.
DISCUSSION/ANALYSIS:
The Finance Department continues its efforts to right-size 3CE’s portfolio. The strategy consists of holding three different “classes” of funds: cash to meet ongoing operating costs, liquidity reserves to meet collateral calls and unforeseen costs, and short-term investments to meet reserves, including the strategic reserve and energy rate stabilization funds. As of June 30, 2024, nine months into FY 2023-24, 3CE held $231.6 million in operating and investment accounts. The table below lists the cash and investment balances by account type.
Account Type Institution Balance Investment Mix
Operating
River City Bank $72,023,856
Cash (sweep) - $58.2M
money market - $8.8M
cash (operating) - $5.0M
Chase 25,101,271 cash (held for collaterals)
Investment
Schwab 66,805,820
Treasuries - $55.7M
cash (sweep) - $10.6M
money market - $0.5M
Fidelity 67,632,077 Treasuries - $66.0M
money market - $1.6M
Total $231,563,024
The investment strategy is passive, where fixed-income holdings such as Treasury notes and bills are held to maturity, and 3CE receives the coupon income and discount. As of June 30, 2024, 3CE served as investment manager of the $134.4 million held in the Schwab and Fidelity brokerage accounts. The average annual percentage yield for Treasuries ranged from 4.69% to 5.02% over the third quarter. All Treasuries have a maturity date of less than one calendar year. All investment holdings managed are high-grade rated investments or higher.
3CE’s investment mix aligns with the Investment Policy and California Government Code. As of June 30, 2024, 3CE held $98.9 million in cash and cash equivalents, $121.7 million in U.S. Treasuries, and $11.0 million in money market funds. Aside from money market funds, all other investment types do not have state investment limits. The State code limits money market funds to 20% of the portfolio. 3CE is well within the State limit at 5%.
Cash and Investment Holdings
Type Market Value
% of
Portfolio
Permitted by
CA Government Code
Cash $98,852,645 43% 100%
Money Market Funds 10,991,068 5% 20%
U.S. Treasuries 121,719,311 53% 100%
Total $231,563,024 100%
The FY 2023-24 Adopted Budget, with appropriations of $562.8 million, included estimated investment revenues of $6.4 million. The first three quarters of FY 2023-24 netted investment earnings of $8.8 million, $3.2 million from interest on cash and money market accounts, and $5.2 million from short-term investments, mostly from Treasuries. The FY 2023-24 Mid-Year Budget Forecast estimated investment income of $10.0 million, $3.6 million or 55% higher than budget. 3CE anticipates seeing
similar investment earnings in the remaining quarter and will likely supersede the $10.0 million estimate.
This report was presented to the Audit and Finance Committee during its August 28, 2024 special meeting.
FISCAL IMPACT:
There is no fiscal impact to receiving this report.
CONCLUSION:
3CE proactively diversified its financial institutional partners while putting cash and short-term investments to work to take advantage of a continued high-interest environment while retaining cash for ongoing operating costs and collateral calls.
ATTACHMENT(S):
None.
Staff Report Item 9
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
SUBJECT: CEO Report
DATE: September 18, 2024
STAFFING UPDATE
Ryley Kelly joined 3CE on August 19, 2024, as a Power Resources Planner. Ryley graduated from CSU Sacramento with a bachelor’s degree in economics. Ryley began his professional career in the utility industry in 2015 as a Data Management Specialist and Rate Analyst responsible for rate modeling and business intelligence reporting in the environmental utilities space. In 2019, Ryley began working as an Electric Resource Planner and Energy Trader for the City of Roseville Electric Utility, where he supported their term trading function, providing lead analytical work for Roseville’s Integrated Resource Planning, and conducting renewable resource valuations.
RESOURCE ADEQUACY (RA) REFORM
In the first week of September, 3CE met with Directors at the California Public Utilities Commission (CPUC) overseeing the new Resource Adequacy (RA) paradigm going into effect next year, known as Slice-of-Day (SOD). 3CE communicated to the CPUC our concerns with the implementation efforts to date, and the market uncertainty it is creating that has impacted all load serving entities and sellers of RA. We noted their compliance validation tool, which is on version 31, is still not working and is interfering with 3CE’s ability to make sound procurement decisions around compliance. We offered to provide insights into the market if that will facilitate improvements to the CPUC’s implementation efforts. CPUC indicated they expect to address 3CE’s primary concerns in version 32, due to be released September 19.
CEC LOAD MANAGEMENT STANDARDS (LMS)
In February 2024, 3CE’s Operations Board approved our Load Management Standards (LMS), as required by the California Energy Commission (CEC) for applicable Load Serving Entities (LSEs) such as 3CE. The CEC is seeking to use electric rates to promote shifting electricity use from peak times, which are expensive and polluting, to times when it is cheaper and cleaner. In 3CE’s Board-approved plan, we
adopted an initial plan to participate in a pilot program known as AgFIT (Agricultural Flexible Irrigation Tariff) for agricultural customers in partnership with PG&E. 3CE staff met with the CEC in early September and were informed by the CEC they expect to provide further guidance to 3CE regarding the development and implementation of load-shifting rates for all customer classes.
RELIABLE AND CLEAN POWER PROCUREMENT PROGRAM (RCPPP)
The State of California is in the process of forming a new procurement program, called the Reliable and Clean Power Procurement Program (RCPPP), that will be tasked with determining the quantity, timing, and compliance parameters for reliable and clean resources throughout the state to ensure the state meets its greenhouse gas (GHG) reduction goals. The RCPPP will align various existing CPUC procurement programs, including Resource Adequacy (RA), Renewable Portfolio Standards (RPS), and Integrated Resource Planning (IRP). 3CE is monitoring this effort closely and is concerned about the impact the RCPPP may have on 3CE’s ability to meet its own goals. An initial RCPPP staff design paper, originally expected in July, has been delayed. 3CE staff will provide updates when more information is available.
SUMMARY OF GOVERNANCE DISCUSSION
The Policy Board held a special meeting on August 26 to review and consider next steps following the Operations Board’s action to forward the Ad Hoc recommendations regarding governance improvements. The Policy Board reviewed the Operations Board 11-member board recommendation along with alternatives that included a 14-member board or a reduction in Operations Board only.
Following their discussion, the Policy Board directed staff to implement general recommendations that include establishing a code of conduct, board procedures, enhanced onboarding, and other components. No JPA amendments will be considered at the annual meeting and Chair Williams appointed an advisory committee consisting of Directors Adams, Dutra, Hamon, Kosmicki, and Ortiz-Legg to discuss and review potential consensus recommendations and prepare a report to inform any further consideration of board composition.
OPERATIONS BOARD CHAIR AND VICE CHAIR NOMINATIONS
The Operations Board adopted Resolution OB-2022-04 stating its intention to rotate the Chair and Vice Chair positions between the Northern (Monterey, San Benito, and Santa Cruz counties) and Southern (San Luis Obispo and Santa Barbara counties) portions of 3CE’s territory on a two-year rotating basis. At its April 2024 meeting, the Operations Board appointed Chair Goldstein and Vice Chair Miyasato to complete the current term, which ends December 2024. Due to the scheduled rotation of seats, the Chair is requesting members provide the Clerk of the Board with an expression of interest to serve by October 31. Additionally, the Board Clerk will solicit interest from newly appointed (or returning) Operations Board members.
ATTACHMENT(S):
1. Contracts under $200k
CCCE Contracts < $200k
Vendor Total Engagement Amount From To Service Scope Remarks 1 NewGen Strategies and Solutions, LLC $422,500 11/6/2023 12/31/2026 Amendment 1 to executed contract dated 11/6/2023 increasing the NTE amount by $30,000 in FY 2023-24 2 3
4 5
Per the Purchasing and Procurement Policy:
The CEO shall have all necessary and proper authority to approve and execute: 2. Agreements up to $200,000 per vendor for a given scope of work, per fiscal year, provided that (a) the expenditures authorized by these agreements are consistent with the approved budget; (b) the agreements are approved as to form by 3CE’s General Counsel; and (c) agreements are reported at the next Operations Board meeting
Staff Report Item 10
TO: 3CE Operations Board of Directors
FROM: Gine Johnson, Community Advisory Council Chair
SUBJECT: Community Advisory Council Report
DATE: September 18, 2024
Summary of the 8/7/24 CAC meeting:
As Board members are aware, the Community Advisory Council (CAC) receives several information items from 3CE staff at each CAC meeting that are routinely presented to both the Policy and Operations Boards. At the 8/7/24 CAC meeting, the routine items included a staffing update, a description of an intern program to develop leadership and a recap of decisions made by the Policy Board at its June meeting. As these items are also presented to the Policy and Operations Boards with detailed staff reports, a summary is not included here.
In addition to receiving an update on the FY 2023-24 Energy Programs, staff presented their proposal for the FY 2024/25 Energy Programs with a launch schedule. Several CAC members commented on the increasingly high quality of the staff presentations and posed several questions before unanimously approving a recommendation to your Boards for adoption of the FY 24/25 Energy Programs Portfolio. Of note was a good discussion regarding performance metrics and the evaluation methodology to be used for continuous program improvements. Staff also gave CAC members the opportunity to learn about the community engagement plan to enroll the City of Atascadero and County of San Luis Obispo.
Proposed CAC Workplan for FY 2024-25 for your consideration At the direction of the Policy Board, Mr. Shaw, Ms. Stedman, and I worked collaboratively to develop a draft CAC workplan to be discussed at the August 7th CAC meeting. We focused on outlining a plan that aligned Board priorities and refined the CAC’s role in supporting those priorities, including 3CE energy programs, community engagement and communications, and feedback to staff and the respective Boards on topics when requested to do so.
Development of the draft workplan built on the successes, challenges and lessons learned from the implementation of the FY 23/24 workplan which focused on one topic, demand response. By centering the CAC meetings on one critical and complicated topic during FY 23/24, the CAC members bolstered their institutional and technical knowledge but also broadened their perspective on the need to improve the agency’s connection with the local communities in 3CE service area. Energy program
participation data from FY 23/24 showed a definitive need to educate customers about the benefits and programs offered by 3CE, identify ways to increase program participation and offer opportunities to receive direct feedback on customer priorities. To that end, the draft workplan for FY 24/25 proposed to focus on another critical and complicated service area, the Electrify Your Home program, and to create additional community engagement and communication opportunities throughout 3CE service area with a series of public study sessions. The clear data-driven need to increase geographic participation in the program, ensure that low- and fixed-income customers would have a simpler path to program utilization, and build relationships with local community-based organizations and stakeholders, indicated the benefit of connecting on the “ground level” with each of the local areas in 3CE service territory.
The proposed workplan was unanimously approved at the August 7th CAC meeting after a lengthy discussion with significant input from the members, especially regarding effective approaches to reaching low- and fixed-income households. CAC members indicated their enthusiasm for hosting and participating in the public study sessions and working more directly with local community based organizations and stakeholders in 3CE service area.
Please feel free to reach out if you have any questions. I can be reached at [email protected] and will be attendance at the annual meeting for additional discussion.
Staff Report Item 11
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Dewayne Woods, Chief Financial Officer
SUBJECT: Update on status of real property acquisitions and provide feedback regarding evaluation principles for future real property transactions DATE: September 18, 2024
RECOMMENDATION:
This recommends the Operations Board receive an update on status of real property acquisitions and provide feedback regarding evaluation principles for future real property transactions.
BACKGROUND
In October 2019, the Operations Board approved site selection criteria for a corporate headquarters as follows:
Location (e.g., commute time for 3CE employees, directors, and council members) Availability and cost of real property
Buildability of lot or functionality of existing space layout Ordinances or zoning considerations
Infrastructure conditions (e.g., roads and utilities) Proximity to highways and services such as restaurants Ability to recruit and retain a talented workforce
Thereafter, the Policy Board directed the CEO to conduct a search for a permanent Monterey regional headquarters. Through the application of the above criteria, staff twice identified potential facilities. In 2019, the Policy Board approved the negotiation and purchase of 3.4 acres of land in Marina, California on which a headquarters would be developed. In 2022, the Policy Board approved the negotiation and purchase of an 11,200 sq/ft building and 4.28 acres of coastal land in Pacific Grove, California. Both negotiations ultimately failed due to market conditions and inability to finalize terms favorable to 3CE.
In December 2023, the Policy Board considered additional criteria and benefits ultimately approving the negotiation and purchase of 1026 Palm Street, San Luis Obispo, a 5,019 sq/ft office building with 17 allocated private parking spaces. In addition to the above criteria, the Policy Board considered the following benefits to replacing 3CE’s existing leased space. Ability to meet current operational needs and provide opportunity for future expansion A large meeting space that could facilitate local community engagements and support the Boards by providing a central location for hybrid board meetings Create a strong local presence with a central location in the San Luis Obispo region On-site parking allowing for charging infrastructure as a showcase for visitors Potential revenue generation for rent from office spaces not occupied by 3CE Increased employee recruitment and retention with a newer office space located in a more centralized vibrant area
The Policy Board also discussed the importance of ADA access and nearby public transportation options.
In February 2024, as part of the CEO administrative review, the Executive Committee recommended and the Policy Board considered an agency goal to “Increase customer awareness while retaining 90% of customer load, successfully enrolling new communities, and establishing [regional] office locations in San Luis Obispo, Santa Cruz, and Monterey.”
3CE currently rents approximately 14,995 sq/ft at 70 Garden Court, Monterey, California. The projected annual lease is approximately $375,000 with the initial lease term set to expire January 2026.
Additionally, 3CE currently owns the 1026 Palm location where renovations are underway.1 The Operations Board feedback will be shared with the Policy Board as part of consideration and further direction to staff.
DISCUSSION/ANALYSIS:
Shared principles and criteria to guide 3CE’s acquisition and ownership of real property will enable staff to identify key acquisition opportunities that can support 3CE’s long term mission, provide greater connection to, and access for, customers while also establishing 3CE as a visible member of our communities.
Approximately 50% of our staff work on-site in the Monterey office. The current Monterey facility is proving insufficient to accommodate 3CE’s operational needs as the building lacks the flexibility required for our evolving requirements. The building has insufficient conference spaces and flexible spaces to accommodate meetings, hosting visiting staff, or to allow growth. The Monterey facility lacks proper
1 3CE is also on a continuing month to month lease for 90 Zaca Lane located in San Luis Obispo.
maintenance, often resulting in interruptions to work, and is difficult for the public to identify and access. The growing deficiencies in the Monterey facility are paired with increasingly less favorable lease terms.
With a staff projected at 56 full time equivalent employees and a geographic service area of more than 12,000 square miles, staff recommends replacing the Monterey facility while also pursuing a limited number of smaller, more flexible regional offices to better support customers, our Boards, and improve employee recruitment and retention.
Like the San Luis Obispo facility, smaller regional facilities would demonstrate 3CE's investment in our local communities and provide accessible venues for community members to learn about and participate in energy programs, meet with staff, and voice questions or ideas. The offices can function as collaboration hubs, facilitating deeper partnerships with member agency staff and hosting events or workshops related to energy demand, electrification, or other relevant topics. When critical policy changes arise, these local offices offer spaces for public forums, open houses, and listening sessions. By maintaining a consistent physical presence, 3CE will demonstrate its dedication to transparency, community involvement, and long-term investment in the areas it serves, thereby strengthening public trust and fostering a sense of shared ownership in the 3CE's mission.
Board direction and guidance regarding staff’s approach to strategic property acquisition and ownership is paramount for achieving action withing the next fiscal year. Staff recommends continuing assessing potential properties under the previously directed 2019 selection criteria and the benefits considered when assessing the San Luis Obispo facility.
Further, staff recommends that any facility identified for potential purchase first be evaluated as follows:
Needs Assessment: Staff will conduct a thorough assessment to identify the specific needs, objectives, and business functions that the property acquisition aims to address.
Long-term Vision: Staff will ensure and demonstrate how the potential property purchase aligns with the agency’s long-term strategic goals and community engagement plans.
Financial Responsibility: Staff will prepare a financial assessment of any potential purchase, including:
Budgeting: Ensure that property acquisitions are within the allocated budget and do not compromise other essential services.
Cost-Benefit Analysis: Perform a detailed cost-benefit analysis to evaluate the financial implications and potential returns on investment.
Location Assessment: Staff will evaluate proposed locations and present on the potential benefits regarding:
• Proximity to public transportation, major roads, and availability of public parking. • Impacts on existing and potential staffing, as well as the ability to facilitate coordination with member agencies, board members, and other CCA working groups. • Identify potential strategic partnerships.
• Assessment of local real estate market trends, including comparable property values and rental rates.
Legal and Regulatory Compliance
• Due Diligence: Conduct thorough due diligence to ensure compliance with all relevant laws, regulations, and zoning requirements. Including ADA accessibility. • Environmental Considerations: Assess environmental impacts and ensure that property acquisitions comply with environmental protection standards.
Risk Management
• Risk Assessment: Identify and evaluate potential risks associated with property acquisition and ownership, including financial, legal, and operational risks. • Mitigation Strategies: Develop and implement strategies to mitigate identified risks.
FISCAL IMPACT:
There is no fiscal impact from the adoption of principles for property acquisition and ownership. Any facility acquisition proposal will be supported by a full fiscal analysis and will be brought to the Policy Board for approval.
CONCLUSION:
The later adoption of guiding principles by the Policy Board will align staff’s property identification process with Board direction and provide the Policy Board valuable information to support its decision-making when potential properties are brought forward for consideration.
ATTACHMENT(S):
None.
Staff Report Item 12
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Juan Lopez, Director of Finance
SUBJECT: Consider supporting the Policy Board's adoption of the Fiscal Year 2024-25 Recommended Budget and the Calendar Year 2025 cost-based rates DATE: September 18, 2024
RECOMMENDATION:
Consider supporting the Policy Board's adoption of the Fiscal Year 2024-25 Recommended Budget and the Calendar Year 2025 cost-based rates.
BACKGROUND:
The Policy Board adopts an annual budget for the fiscal year that runs from October 1st through September 30th. Attached is the FY 2024-25 Recommended Budget that provides detailed information on the budget, including major cost drivers and corresponding cost-based rates required to maintain fund operations.
Over the past year, the Policy Board adopted staff recommendations to set the policy direction of the Recommended Budget's construction. The Financial Policies adhere to liquid reserves to support long-term business operations, build collateral power procurement, maintain the “A” credit rating, and minimize energy market volatility on customer rates. Additionally, the 2025 calendar year rate structure methodology was adopted. It utilizes a single rate structure across 3CE’s entire service area and ensures revenues are sufficient to recover costs to server customers (regardless of incumbent investor-owned utility).
Based on these policy directions and 3CE’s continued commitment to its mission, the Recommended Budget ensures the continued success of delivering clean and renewable energy while also stabilizing customer rates amidst an ever-changing regulatory environment and rising wholesale energy market.
DISCUSSION/ANALYSIS:
The Recommended Budget aligns with 3CE’s mission and goal of achieving 100% of customers’ energy demand with reliable, clean, and renewable energy while investing in its communities and ensuring fair and responsible rates. The number of customers served by 3CE will increase in FY 2024-25 with the enrollment of unincorporated San Luis Obispo County and the City of Atascadero in January 2025.
To carry out the agency’s mission and serve this increased load, the Recommended Budget totals $730.3 million in appropriations, with addition to reserves of $40.0 million funded by operating revenues of $753.0 million and the use of the Capital Infrastructure Reserve of $17.3 million for capital infrastructure. The Recommended Budget would fund a recommended 56 full-time equivalent (FTE) positions.
Summary of the Recommended Budget
The Recommended Budget represents a $167.5 million increase from the prior year’s Adopted Budget.
Cost of Energy (COE) is the primary driver of the increase, accounting for $145.0 million of the request.
The increase in COE is due to the additional load for two newly enrolled communities which will increase the agency’s load demand by 13% and higher Resource Adequacy (RA), Renewable Portfolio Standard (RFS), and energy costs. The COE accounts for 91% of all expenditures and is the main driver of 3CE’s costs, outpacing all other expenditures. All non-COE expenditures account for the remaining 9% of overall costs.
Costs for salaries and benefits are budgeted at $12.5 million, a $3.0 million increase compared to the adopted budget. The increase is driven primarily by the agency’s success in filling historically vacant roles and positions approved in the current budget year, merit increases, cost-of-living adjustments (COLA), and rise in employee benefits costs such as healthcare premiums. The Recommended Budget also includes funding for four new positions that will broaden the agency’s impact on power
procurement and energy management. The investment in these new positions will help to ensure that 3CE has the dedicated and knowledgeable staff necessary to actively manage our COE while accomplishing the transition to a clean and renewable energy grid.
Expenditures for services and supplies of $35.2 million are anticipated to increase by $2.2 million to cover additional billing data management services required to cater to the larger number of customer accounts with the expected enrollment of two member communities. It will also support continued involvement and leadership in California Community Power (CC Power) and the California Community Choice Association (CalCCA).
Funding for energy programs will remain at current levels but will be reallocated to support anticipated increases in program participation, the introduction of new programs, and the ongoing exploration of demand response offerings. Updated strategies aimed at increasing participation in energy programs will involve revising program eligibility and scope to better meet the needs of customers.
The Recommended Budget also includes $17.3 million in capital outlay. Significant work remains to determine these capital investments, including necessary engagement and approvals from the Policy Board. However, by incorporating these appropriations in the Recommended Budget, the Board is positioned to act swiftly if investment opportunities arise in FY 2024-25. This proactive approach not only facilitates timely decision-making but also demonstrates to rating agencies that 3CE is committed to thorough capital planning as an integral part of its budgeting process.
The operating revenue of $753.0 million is $190.2 million higher than the prior year’s Adopted Budget and is necessary to fund increased expenditures and additions to reserves to align towards board-approved levels over the next three years. Staff conducted a Cost-of-Service (COS) analysis to establish a revenue requirement that forecasts costs incurred in the service of our customers. The revenue requirement includes funding to work towards meeting 3CE’s minimum reserve policy levels.
To meet operating cost pressures primarily due to increased COE, including regulatory compliance, 3CE average rates by customer class are projected to change between $0.001 and $0.028 per kilowatt-hour (kWh). 3CE projects its proposed rates will remain competitive against investor-owned utilities (IOU) generation rates across all classes, on average, in 2025. These competitive rates reflect the success of 3CE’s strategic procurement while strengthening reserves for ongoing power procurement and customer rate stabilization. Maintaining fair rates is a core goal and key component of 3CE’s aim to meet customer demand with 100% reliable, clean, and renewable energy, provide local control of our energy decisions, promote local economic stimulation, and lead decarbonization through electrification.
The addition to reserves provides long-term rate stabilization and reinforces the agency’s financial health to developers and credit rating agencies. Credit rating agencies consider the agency’s ability to withstand adverse conditions, and strong liquidity enhances this ability, ensuring 3CE retains its ‘A’ credit rating.
The Audit and Finance Committee supported the Recommended Budget and proposed rates at its August 28, 2024 special meeting. The Policy Board will consider approving the FY 2024-25 Recommended Budget and 2025 proposed rates at its September 19, 2024 meeting.
FISCAL IMPACT:
The 2024-25 Recommended Budget funds $730.3 million in appropriations financed by $770.3 million in financing sources, which includes $753.0 million in operating revenues and $17.3 million in the use of the Capital Infrastructure Reserve. The end-of-year estimated reserve balance is estimated at $265.0 million.
CONCLUSION:
The FY 2024-25 Recommended Budget is a structurally balanced budget that provides the necessary financing to deliver clean and renewable energy, stabilize customer rates, and navigate evolving regulatory and energy market conditions.
ATTACHMENT(S):
1. FY 2024-25 Recommended Budget Book
FISCAL YEAR
2024-25
RECOMMENDED BUDGET
Table of Contents
4 5
Leadership,
Community,
and Staff
Introduction
6 7
8 9
10 Policy Board
Operations Board
Community Advisory Council
About the Budget Process
Organization Chart
About 3CE
Our Boards
Executive Letter
Executive Summary
Financial Policies
3CE Staff Positions Schedule
Office of the CEO
General Counsel
Administrative Services
Office of the CFO
Office of the COO
Power Supply Resources
Regulatory & Compliance
Data & Analytics
Office of the CCO
Communications & Outreach
Energy Programs
Energy Programs 2024-25 Overview
Year at-a-Glance 2023-24
Power Purchase Agreements
Glossary
FY 2024-25
Budget
Presentation
Office and
Department
Summaries
Appendices
12 14
20 28
30 32
33 34
36 38
40 41
42 44
45 46
48 50
54
About 3CE
Through its dedicated Boards and professional staff, Central Coast Community Energy (3CE) is committed to serving our customers while reducing greenhouse gas emissions by accelerating the transition to 100% clean and renewable energy and maintaining responsible rates. We believe developing a renewable and reliable grid that supports the electrification of transportation, agriculture, and buildings — and incentivizing change through innovative and impactful energy programs — is necessary to build a more sustainable future for our community
3CE is an ‘A’ rated public electric generation provider comprised of 35 local government agencies across five counties. With the County of San Luis Obispo and the City of Atascadero enrolling in 2025, 3CE will serve nearly 1.3 million people through 515,000 customer accounts, representing approximately 95% of the region’s electricity load. 3CE’s peak load is projected to be at 869 MW and is estimated to provide its customers with roughly 5.6 million MWh of power in 2025. 3CE promotes long-term electric rate stability and energy security while reducing reliance on fossil fuels, protecting the environment, and stimulating our local economies.
Our Boards
3CE is governed by a Policy Board and an Operations Board, each composed of 19 seats representing our 35 Member Agencies.
The Policy Board of Directors is composed of local elected officials, appointed by their respective agencies. The Policy Board oversees the strategic direction of 3CE, sets the budget and customer rates, and approves large capital expenses.
The Operations Board of Directors is made up of City Managers, County Administrative Officers, and other Member Agency leadership executives appointed by their respective agencies. The Operations Board approves contracts and agreements not reserved by the Policy Board, or not otherwise delegated, and oversees policy implementation to ensure the successful administration of 3CE.
Policy Board
Yvette Lopez Brooks Vice Chair
City of Capitola
Das Williams
Chair
County of Santa Barbara
John Freeman
City of San Juan Bautista
Fred Keeley
City of Santa Cruz
Jan Marx
City of San Luis Obispo
Bruce McPherson
County of Santa Cruz
Jimmy Dutra
City of Watsonville
Dawn Ortiz-Legg
County of San Luis Obispo
Mary Adams
County of Monterey
Kollin Kosmicki
County of San Benito
Scott Donaldson
City of Del Rey Oaks
Alice Patino
City of Santa Maria
David Silva
City of Buellton
Jose Rios
City of Gonzales
Kyle Richards
City of Goleta
Jesús Valenzuela
City of Salinas
Jeff Baron
City of Carmel-by-the-Sea
John Hamon
City of Paso Robles
Jim Guthrie
City of Arroyo Grande
Operations Board
Mona Miyasato
Vice Chair
County of Santa Barbara
Jamie Goldstein
Chair
City of Capitola
Sonia De La Rosa
County of Monterey
Scott Wolfe
City of Buellton
Rebecca Campbell
County of San Luis Obispo
Ty Lewis
City of Paso Robles
Rene Mendez
City of Salinas
Ray Espinosa
County of San Benito
Don Reynolds
City of San Juan Bautista
Megan Hunter
City of Soledad
Matt Huffaker
City of Santa Cruz
Matt Mogensen
City of Pacific Grove
John Guertin
City of Del Rey Oaks
Bob Hill
City of San Luis Obispo
Matthew Downing
City of Arroyo Grande
Carlos Palacios
County of Santa Cruz
Alex Posada
City of Santa Maria
Michael Ramirez
City of Carpinteria
Tamara Vides
City of Watsonville
8 Community Advisory Council
Gine Johnson
Chair
County of Santa Cruz
Norman Tuitavuki
Vice Chair
County of Monterey
The Community Advisory Council (CAC) is comprised of fifteen members serving three-year terms. The Council acts as an important connection between the agency and the diverse communities it serves.
Lew Bauman
County of Monterey
Jason Sedano
County of Monterey
Rosemary Soto
County of Monterey
Richard Stedman
County of Monterey
Wayne Norton
County of San Benito
Celina Stotler
County of San Benito
Devin Best
County of San Luis Obispo
Matthew McClish
County of San Luis Obispo
Heather Allen
County of Santa Barbara
Katie Davis
County of Santa Barbara
John Hughes
County of Santa Barbara
Kris Damhorst
County of Santa Cruz
Dennis Osmer
County of Santa Cruz
About the Budget Process
THE ANNUAL BUDGET
DEVELOPMENT PROCESS
CONSISTS OF FIVE STAGES
1. Budget Initiation
Forecast 2.
Budget Development 3.
4. Budget Adoption
Budget Management 5.
Budget development begins in March.
Departments begin their financial planning
at mid-year with the creation of a detailed
financial forecast. Following the forecast,
departments submit their requested
budgets for the next fiscal year. These
requests include two parts: baseline
spending plans and augmentation requests.
The CEO reviews and prioritizes requests
based on accuracy and reasonableness,
substantiated benefits, and alignment
with Policy Board priorities. The CEO
works to build a comprehensive, rational,
and balanced spending plan for the
coming year. The Fiscal Year 2024-25
Recommended Budget will be presented
to the Policy Board at its annual meeting
beginning on September 19, 2024.
• Departments
provide current-year estimates
and forecasts
market outlook.
• Boards and
Audit & Finance
Committee
receive forecast.
• Departments
submit baseline
and augmentation
budget requests.
• Policy Board
approves the
annual Financial
Policies.
• Audit & Finance
Committee receives
the Recommended
Budget.
• Operations Board
receives the
Recommended
Budget.
• Policy Board
considers
adoption of the
Recommended
Budget.
• Management
monitors
expenditures
and estimated
revenues.
• Boards receive
monthly and
quarterly financial
reports.
MID-YEAR
FORECAST
(MARCH-APRIL)
BUDGET
DEVELOPMENT
(MAY-AUGUST)
BUDGET
ADOPTION
(SEPTEMBER)
BUDGET
MANAGEMENT
(ONGOING)
Organization Chart
Policy Board
Chief Executive Officer
General Counsel Board Clerk
Chief Financial
Officer
Administrative Services
Director of Human Resources
& Administration
Manager of
Information Technology
Human Resources
Analyst
Sr. Admin Specialist
(2) Admin Specialists
Information
Technology Specialist
(2) Policy Advisors
Energy Risk Manager
Director of Finance
Accountant
Senior Accountant
Sr. Billing Operations & Rate Analyst
Billing Operations
& Rate Analyst
Operations Board
Chief Operating Officer
Chief Communications
Officer
Director of Communications
& Outreach
Director of Energy Programs
Manager of Energy Programs
(4) Energy Programs Analysts
Manager of Customer
Accounts & Services Manager of Communications
(2) Communications Specialists
(3) Sr. Customer
Accounts Managers
(3) Customer Accounts
Managers
Director of Regulatory
Affairs & Compliance
Power Resource
Planner
Director of Power
Supply Resources
Director of Data
Analytics
Energy Contracts &
Compliance Manager
(2) Power Settlement Analysts
Manager of Energy Trading
Power Resources &
Markets Manager
Power Supply Analyst
Data Engineer Data Analyst
Executive Letter
Honorable Chair Williams
and Members of the Board,
I am proud to present the Recommended Budget
for the Fiscal Year 2024-2025. This budget is
informed by the Board’s guidance and unwavering
commitment to 3CE’s mission to serve our
Central Coast community by providing reliable
clean electricity at fair rates, as well as innovative
electrification programs aimed at reducing
greenhouse gas emissions and strengthening
our local economies. Your leadership and our
employees’ dedication have helped navigate
turbulent energy markets, significant regulatory
uncertainty, dramatic wholesale price pressures,
and mounting delays in connecting long-term
renewable projects to California’s grid. The
Recommended Budget manages these issues
through improvements in critical operational areas
while furthering our commitment to innovative
energy programs that support local climate goals
and spur local investment.
Accomplishments of the Past Year
The City of Atascadero and unincorporated San
Luis Obispo County will be enrolled into 3CE
service in January 2025. This expansion unifies
the Central Coast with a public option for electric
generation procurement.
We continue to drive incremental renewable
resource development that moves us closer to
our 100% renewable goal while helping to lower
and stabilize customer costs. In the last year, we
added 205 MW of onshore wind generation,
500 MWh of energy storage, and 177 MWh
of hybrid energy storage designed to reduce
existing natural gas generation. 3CE’s operating
projects avoided approximately 410,000 metric
tons of CO2 emissions last year alone. We
improved market scheduling operations to ensure
that these and future resources are optimized to
achieve the greatest customer benefit.
3CE’s energy programs are improved and
expanded to help accelerate climate action.
Staff have launched a new management tool
to streamline and enhance customers’
experiences with energy programs. Working
with the Community Advisory Council, we have
undergone a critical review of current offerings
and evaluated the feasibility of demand-response programs. This year, we launched 3CE’s first behind-the-meter battery incentive
program that will support customers’ control
over their energy consumption.
The Path of Progress
Looking ahead, the ever-changing regulatory
environment and rising wholesale energy
market demand 3CE’s continued focus on
delivering clean and renewable energy while
meeting our regulatory reliability obligations
and stabilizing customer rates.
Accomplishing this requires attention to
strategic procurement, optimization of our
growing portfolio, and building a robust
foundation through the strengthening of our
reserves to improve credit and contractual
terms, all of which help mitigate potential
customer rate impacts.
3CE’s energy programs will continue to
innovate and bring increased focus to
providing customers with the tools to respond
to price signals and save money, while also
reducing demand during net peak hours,
reducing greenhouse gas emissions, and
contributing to a sustainable, stable, grid.
The remarkable progress 3CE has made since
its formation in 2017 is a testament to your
collective effort and strategic vision. As we
embark on the new fiscal year, I am confident
that this Recommended Budget delivers
a fiscally responsible approach to driving
innovation and community engagement that
will bring us closer to our collective goals.
Together, we will not only meet the challenges
ahead but set new benchmarks for what is
possible in the evolving world of community-owned energy we are building together.
September 2024
Robert M. Shaw, Chief Executive Officer
Central Coast Community Energy
Thank you for your continued support and dedication.
Sincerely,
Executive Summary
Fiscal Year (FY) 2024-25 is 3CE’s sixth year serving customers across the Central Coast and seventh year of operation. The Recommended Budget for FY 2024-25 aligns with 3CE’s mission and goal of meeting 100% of customers’ energy demand with reliable, clean, and renewable energy while investing in its communities and ensuring fair and responsible rates. The number of customers served by 3CE will increase in FY 2024-25 with the enrollment of unincorporated San Luis Obispo County and the City of Atascadero in January 2025. To carry out the agency’s goals and serve this increased load, the Recommended Budget totals $730.3 million, with an addition to reserves of $40.0 million funded by estimated revenues of $753.0 million and the use of the Capital Infrastructure Reserve of $17.3 million for capital infrastructure, and the authorization of 56 full-time equivalent (FTE) positions.
The Recommended Budget represents a $167.5 million increase from the prior year’s Adopted Budget.
Cost of Energy (COE) is the primary driver of the increase, accounting for $145.0 million of the request.
The increase in COE is due to the additional load for two newly enrolled communities and to higher Resource Adequacy (RA), Renewable Portfolio Standard (RPS), and energy costs. The COE includes expenses for purchased energy, RA, RPS, and grid operation services performed by the California Independent System Operator (CAISO). The COE accounts for 91.1% of all expenditures and is the main driver of 3CE’s rates, outpacing all other expenditures, which account for 8.9% of overall costs.
The Recommended Budget includes $12.6 million in salaries and benefit costs. The $3.0 million increase is driven primarily by the agency’s success in filling historically vacant roles and hiring new staff, merit increases, cost-of-living adjustments (COLA), and employee benefits. The Recommended Budget also includes funding for four new positions that will broaden the agency’s impact on power procurement and energy management. The investment in these new positions will help to ensure that 3CE has the dedicated and knowledgeable staff necessary to accomplish the transition to a clean and renewable energy grid.
FY 2024-25 Budget Summary
Prior Year
Actuals
2022-23
Adopted
Budget
2023-24
Mid-Year
Estimate
2023-24
Requested
Budget
2024-25
Recommended
Budget
2024-25
Recommended
Change from
Adopted
Electricity Sales 450,713,404 556,433,448 551,405,974 745,962,356 745,962,356 189,528,907 Interest and Investment
Returns 8,184,122 6,400,000 9,950,446 7,000,000 7,000,000 600,000 Other Income 2,356,837 - 88,732 68,400 68,400 68,400
Sub-Total Revenues 461,254,363 562,833,448 561,445,152 753,030,756 753,030,756 190,197,307 Capital Infrastructure Reserve - - - 17,318,000 17,318,000 17,318,000 Total Financing Sources 461,254,363 562,833,448 561,445,152 770,348,756 770,348,756 207,515,307 Cost of Energy 398,746,769 520,297,514 538,515,199 665,267,116 665,267,116 144,969,602 Salaries and Benefits 6,200,592 9,537,076 8,789,063 13,086,907 12,585,841 3,048,765 Services and Supplies 21,646,235 32,998,858 26,839,006 35,249,798 35,177,798 2,178,940 Capital Assets - - 210,000 17,318,000 17,318,000 17,318,000 Total Financing Uses 426,593,596 562,833,448 574,353,268 730,921,822 730,348,756 167,515,308 Total Budgeted Change
to Net Position 34,660,767 - (12,908,116) 39,426,934 40,000,000 40,000,000
Choice Association (CalCCA). Funding for energy programs will remain at current-year levels but will be redistributed to allow for the implementation of new programs and continued exploration of demand-response offerings.
The Recommended Budget also includes a capital outlay proposal totaling $17.3 million. As 3CE matures as an agency and solidifies its presence on the Central Coast, it is critical for the agency to invest in its permanent presence throughout its service area. This investment is funded by the Capital Infrastructure Reserve (CIR), which was established to fund investment in capital infrastructure, including real estate, enterprise software, and owned electric generation projects. 3CE recommends the use of the CIR to fund the purchase of offices in Monterey and Santa Cruz to continue to establish office and meeting space to conduct daily operations in a wider area. Preliminary estimates for the purchase and tenant improvements are estimated in the range of $17.0 million. While much work will be required to determine these capital investments, including Policy Board engagement and approvals, budgeting these appropriations allows the Board to move judiciously if investment opportunities arise in FY 2024-25.
Single-Territory Rate
The estimated revenues of $753.0 million are $190.2 million higher than the prior year’s Adopted Budget and are necessary to fund increased expenditures, and additions to reserves to align toward Board-approved levels over the next three years. Over the past year, 3CE staff conducted a Cost-of-Service (COS) analysis to establish a revenue requirement that forecasts costs incurred in the service of our customers. The revenue requirement includes funding to work toward meeting 3CE’s minimum reserve policy levels. To ensure rate stability, 3CE evaluated its annual revenue requirement through 2027 using 2025 as the test year.
3CE is the only Community Choice Aggregation (CCA) agency that spans two Investor-Owned Utility (IOU) territories. Following the Policy Board’s direction, the single-territory rate approach ensures that 3CE recovers accurate, appropriate revenues from each customer class based on the cost to serve them, regardless of where in 3CE’s territory they reside.
Maintaining fair rates is a core goal and key component of 3CE’s stated aim to meet customer demand with 100% reliable, clean and renewable energy, provide local control of our energy decisions, promote local economic stimulation, and lead decarbonization through electrification.
Expenditures for services and
supplies of $35.2 million are
anticipated to increase by
$2.2 million to cover additional
billing data management
services needed to serve the
larger number of customer
accounts anticipated with
the enrollment of two
member communities. The
Recommended Budget
includes additional funding for
3CE’s continued involvement
and leadership in California
Community Power (CC Power)
and California Community
Cost of Energy
Capital Assets
Services and Supplies
FY 2024-25 Forecasted Expenses
AS A PERCENT OF TOTAL
91.1%
4.8%
2.4% 1.7%
Salaries and Benefits
Executive Summary (continued)
*3CE on average rates in PG&E service area
*PG&E service area estimated surcharges (PCIA and franchise fees), based on 2017 customer vintage class *3CE on average rates in SCE service area
*SCE service area estimated surcharges (PCIA and franchise fees), based on 2021 customer vintage class Due to the increased the COE, including regulatory compliance, the projected 3CE average customer class change in rates will be between $0.001 and $0.028 per kilowatt-hour (kWh). 3CE projects its proposed rates will remain competitive against IOU generation rates across all classes, on average, in 2025. These competitive rates reflect the success of 3CE’s strategic procurement while planning to ensure liquidity for ongoing power procurement and customer rate stabilization.
Class Recommended
2025 Generation
Rates*
PG&E Vintage
2017* PCIA
Est. 2025
PG&E Generation
Rates
Difference (%)
Residential $0.146 $0.005 $0.177 -14%
Small Commercial $0.125 $0.005 $0.164 -21%
Medium Commercial $0.121 $0.005 $0.168 -25%
Large Commercial $0.121 $0.005 $0.147 -14%
Small & Medium Ag $0.143 $0.005 $0.154 -4%
Large Ag $0.130 $0.005 $0.154 -13%
Business Electric
Vehicle $0.119 $0.005 $0.179 -31%
Standby $0.102 $0.004 $0.117 -9%
Streetlights $0.117 $0.004 $0.139 -12%
Class Recommended
2025 Generation
Rates*
SCE Vintage
2021* PCIA
Est. 2025
SCE Generation
Rates
Difference (%)
Residential $0.133 $(0.039) $0.119 -22%
Small Commercial $0.118 $(0.036) $0.114 -28%
Medium Commercial $0.098 $(0.031) $0.099 -32%
Large Commercial $0.089 $(0.026) $0.083 -24%
Small & Medium Ag $0.112 $(0.030) $0.095 -13%
Large Ag $0.088 $(0.025) $0.081 -22%
Business Electric
Vehicle $0.092 $(0.031) $0.099 -38%
Streetlights $0.068 $(0.020) $0.063 -24%
Budgeted revenues also include $7.0 million generated by interest and investment returns – a reduction from current-year estimated earnings assuming the Federal Reserve will begin a rate-cutting cycle as early as September 2024.
Increasing Liquidity to Meet Reserve Targets and Maintain Credit Rating The Recommended Budget includes adding an estimated and maintained $40.0 million to cash reserves to bring 3CE’s reserves to 77% of the target by September 31, 2025. The addition to reserves aligns with targets established in the finance policies adopted by the Policy Board on June 26, 2024. The instability of market prices for energy, Renewable Energy Credits (RECs), and Resource Adequacy necessitate healthy reserves. In addition, the CPUC’s continued propensity to consider impactful regulatory changes that disrupt CCA hedging strategies and interject significant market uncertainty threatens to increase costs.
Credit rating agencies view strong liquidity as a key factor in assessing financial stability. CCAs, like other load-serving entities (LSEs), are subject to various risks, including regulatory changes, market fluctuations, and collateral calls. Strong liquidity provides a buffer that allows 3CE to navigate these challenges without compromising its financial health. Credit rating agencies consider the agency’s ability to withstand adverse conditions, and strong liquidity enhances this ability, ensuring 3CE retains its ‘A’ credit rating.
Renewable Portfolio Standard
In September 2020, 3CE’s Policy Board voted to set the goal of meeting 100% of retail sales with clean and renewable energy by 2030. Today, 3CE is on its way toward meeting this goal while maintaining responsible electricity rates, driving innovation in the energy sector, and providing impactful energy programs for the community.
3CE continues to enter into long-term Power Purchase Agreements (PPAs), which serve to stabilize rates and grow the agency’s renewable energy portfolio. 3CE is under agreements with seven renewable projects that are currently online and producing renewable energy that meets 29% of the agency’s retail sales. The agency has eight additional agreements with renewable projects that are currently under development and are anticipated to achieve commercial operation prior to 2027. The remaining projects are anticipated to come online before 2029. Assuming the on-time delivery of these projects, 3CE will be well-positioned to meet its 2030 goal.
While 3CE has demonstrated success in bringing new clean, and renewable resources online, the electricity generation sector, including 3CE, faces challenges that impact the expansion of renewable energy projects serving California. As a result, 3CE is seeing a $36.8 million year-over-year cost increase in RPS products.
Estimated Reserve Balances
at Year-End FY 2023-24 FY 2024-25
Strategic Reserve 128,722,322 151,386,285
Energy Rate Stabilization Reserve 96,247,101 113,083,138 Renewable Energy Innovation and
Initiatives Reserve - 500,000
Capital Infrastructure Reserve 17,318,000 -
Total 242,287,423 264,969,423
Executive Summary (continued)
Resource Adequacy
Resource Adequacy (RA) is a regulatory construct developed to ensure that there will be sufficient resources available to serve electric demand under all but the most extreme conditions. RA is a compliance product that commits generators to dispatch energy when needed. Regulatory changes have increased the amount of RA that Load Serving Entities (LSEs), such as 3CE, are required to purchase. At the same time, the retirement of fossil-burning resources and limitations on energy imports have decreased the available supply of RA. This imbalance between the demand for RA and its supply has spiked prices. The impact on 3CE has been dramatic, with RA estimated to be $17.4 million higher than the budget in the current year, likely resulting in an operating deficit. In the FY 2024-25 Recommended Budget, RA accounts for 27% of the total COE.
Despite the market and regulatory uncertainty, amplified by a higher COE, and the need to build on reserves, 3CE’s recommended average rates for electricity generation will remain competitive when compared to investor-owned utilities. The Recommended Budget strives to balance increased costs with the agency’s mission to provide renewable energy at responsible rates. Staff presents this budget as a step in the right direction to serve our communities while meeting the challenges associated with a highly competitive energy procurement market and a heavily regulated industry.
Capital Improvements/Acquisition
FY 2023-24 San Luis Obispo Office
With a wide-ranging service area from Santa Cruz to Santa Barbara, 3CE has made it a priority to be where our customers are and, in FY 2023-24, acquired a permanent office in San Luis Obispo. The office is centrally located in downtown San Luis Obispo adjacent to the City and County offices. The building is currently undergoing a remodel that will include a community room to hold meetings and events, with ample space for 3CE staff. Hoteling offices on the second floor will be available for traveling staff and board members who need a place to work. It is expected that most of the expense will be incurred in FY 2023-24, contingent on the construction schedule.
For FY 2024-25, the proposed capital expenditure budget is $17.3 million, including the acquisition and subsequent remodel of office buildings in Monterey County and Santa Cruz County, the purchase of two electric vehicles, and software costs. In addition, Energy Programs has budgeted $700,000 for agency-owned charger assets.
Monterey Office
The lease for the corporate office in Monterey expires at the end of 2025. Purchasing an office building will provide location and cost stability for 3CE. The corporate office in Monterey consists of approximately 30 office staff occupying two floors. A replacement property will seek to plan for future growth. Any recommendations will subsequently be brought forward to the Policy Board for consideration. The rough cost estimate is $12.0 million to acquire and remodel an existing facility.
Santa Cruz Office
A potential Santa Cruz location will be a regional office serving our northern territory, providing direct access to better serve our customers. It will be a smaller location open to staff, board members, and the community. Subsequently, any recommendations will be brought forward to the Policy Board for consideration. The rough cost estimate is $5.0 million to acquire and remodel an existing facility.
Software
3CE Finance plans to implement an Enterprise Resource Planning (ERP) system to encompass general ledger, reporting, accounts payable, purchasing/procurement, and payroll. Implementation of a full-service ERP will improve financial reporting and streamline processes. The cost is estimated at $200,000 for consulting and implementation.
Owned Charger Assets
With transportation accounting for over 50% of regional emissions, electric vehicle (EV) adoption is critical to effectively reducing harmful pollutants. One of the main barriers to EV adoption is the existing gap in EV charging infrastructure. 3CE will help address these gaps in EV charging infrastructure through the deployment of a phased EV charger asset program, starting with an EV Charger Asset Pilot. This pilot will consist of up to two sites with Level 2 and/or DC Fast Chargers that 3CE owns and manages. Additionally, the EV Charger Asset Pilot will result in refined scoping and implementation of a 3CE-owned charging station program that is financially feasible, operationally efficient, and enhances equitable access to electrification infrastructure. Currently, Energy Programs has recommended $700,000 for the first phase of this initiative.
Funding
Funding for capital projects is reserved in the Capital Infrastructure Reserve (CIR) and the Owned Charger Asset pilot is included in the Energy Programs budget. The CIR was established to cover the acquisition and replacement costs of 3CE’s capital infrastructure including enterprise software, real estate, and electric generation/storage facilities.
Financial Policies
1. Purpose and Background
Prudent and conservative stewardship of public assets is a principal responsibility given to the officials and managers of 3CE. The development and maintenance of financial policies enable 3CE officials to protect those public assets, ensure transparency, and build public trust. Financial policies define a shared understanding of how 3CE administers its financial affairs and communicates how the agency manages its resources to provide the highest value to the communities we serve.
This document centralizes 3CE’s financial policies and establishes a framework for overall fiscal planning, management, and decision-making related to public assets controlled by 3CE. These policies are reviewed, updated, and brought before the Policy Board as needed but at least annually for adoption.
This continued review and adoption promotes sound financial management and helps maintain 3CE’s stability, efficiency, and effectiveness by ensuring the Policy Board’s financial policy guidance is provided before 3CE takes any financial actions. The policies also offer guidelines for evaluating both current activities and proposals for future programs and direct 3CE’s financial resources toward meeting its objectives and strategic initiatives.
These policies provide general guidance in the management of the 3CE’s fiscal affairs and are to be used by all 3CE employees to meet their obligation to operate in a financially prudent manner. The Recommended Budget adheres to these policies.
2. General Financial Philosophy
The cornerstone and highest priority of 3CE’s financial policies is fiscal integrity. It shall be the goal of 3CE to achieve a strong financial condition with the ability to:
• Sustain adequate financial liquidity to meet normal operating and contingent obligations; • Ensure a sufficient financial base is maintained to withstand local, regional, national, and global economic impacts;
• Foster the ability to adjust efficiently to the community’s changing service requirements; • Maintain and improve infrastructure and capital assets; • Regularly review programs and operational methods to improve processes that result in higher productivity and eliminate repetitive and duplicative functions; • Encourage collaboration with other government entities, the private sector, and public-private partnerships where cost and risk are minimized in the delivery of services within 3CE’s service area; • Promote sharing of costs and benefits by service users; • Ensure the legal use of financial resources through an effective system of internal controls; • Support sound financial management by providing accurate and timely information on 3CE’s financial condition; and
• Provide a framework for the wise and prudent use of debt financing and maintain a good credit rating in the financial community.
21 Subheader 2.1 THE ANNUAL BUDGET
• The Chief Executive Officer (CEO) will recommend a balanced budget that aligns annual expenditures with market reasonable rates based on the revenue requirement established through a cost of service methodology and minimize the use of reserves and one-time financing sources for ongoing operating expenditures;
• 3CE will strive to maintain competitive rates while adhering to our renewable energy goals; • Through the CEO, the Chief Financial Officer (CFO) will consult with 3CE Officers and seek their input in developing the Recommended Budget through cooperative discussions and financial education; • CEO will keep the Policy Board apprised of the condition of the 3CE’s finances and emerging fiscal issues; and
• Through the CEO and Officers, 3CE will work with the California Community Choice Association (CalCCA), state representatives, legislative advocates in the State Capitol, and other local government organizations to ensure our community voice is heard regarding any state legislation or regulation affecting our stakeholders.
3. Roles and Functions
3.1 ROLE OF THE CHIEF EXECUTIVE OFFICER
The CEO serves as the chief policy advisor to the Policy Board, Operations Board, and the various Board committees. The CEO promotes responsible resource allocation, strives to protect 3CE’s financial position and integrity, and provides independent analysis on policy and financial issues. The CEO is the fund manager for the 3CE Enterprise Fund and any other funds that may be created.
3.2 PRINCIPAL FUNCTIONS OF THE CHIEF EXECUTIVE OFFICER
Principal functions of the CEO include:
• Promoting continuous improvement of the structures, systems, processes, and effectiveness of programs;
• Preparing the annual financial plan (Recommended Budget); • Working with departments to evaluate potential federal, state, and local budget impacts; • Developing financial forecasts;
• Monitoring revenues and expenditures for conformance with the annual budget; • Recommending effective fiscal policies to carry out the 3CE mission; • Verifying Policy Board policies are consistently applied; and • Ensuring items brought before the Policy Board are transparent, accurate, complete, fully justified, and reviewed by appropriate stakeholders.
3.3 PRINCIPAL FUNCTIONS OF THE CHIEF FINANCIAL OFFICER
• Carrying out financial operations efficiently and cost-effectively while adhering to all 3CE, state, and federal laws, regulations, and policies;
22 Subheader • Preparing budgets and financial estimates with attention to accuracy based on financial expertise, 3CE, state, and federal funding changes, and economic indicators affecting revenues, expenditures, and service levels;
• Reviewing, evaluating, and assessing federal and state budget issues that may impact the agency; • Developing and performing financial forecasts;
• Overseeing Middle Office responsibilities as identified in 3CE’s Energy Risk Management Policy; • Monitoring monthly revenue, expenditure, and cash flow performance and conformance with the Adopted Budget;
• Meeting the Policy Board’s strategic financial initiatives and policies; and • Ensuring items brought before the Policy Board are transparent, accurate, complete, fully justified, and reviewed by all appropriate stakeholders.
3.4 PRINCIPAL FUNCTIONS OF THE AUDIT AND FINANCE COMMITTEE The Audit and Finance Committee’s principal functions include receiving staff updates on financial issues affecting 3CE and providing oversight and direction to staff in developing and modifying the budget and audits.
3.5 PRINCIPAL FUNCTIONS OF THE ENERGY RISK MANAGEMENT COMMITTEE The Energy Risk Management Committee is formed by the CEO to implement and maintain the Energy Risk Management Policy, which requires 3CE to maintain sufficient financial reserves to:
• Establish long-term business sustainability;
• Build collateral for power procurement activities;
• Maintain an investment-grade credit rating;
• Develop funding sources for investment in generation and other local initiatives; and • Reduce the business and customer impact of year-to-year volatility in energy markets and procurement costs.
4. Services and Fund Structure
4.1 ENTERPRISE FUND
3CE operates as an enterprise fund. The enterprise fund accounts for revenues and expenditures for all 3CE activities. The fund’s operations are financed and operated like private business enterprises, where services provided are primarily funded through user charges (electric generation rates).
4.2 PROPRIETARY FUND
An enterprise fund is classified as a proprietary fund and is financed and operated like private business enterprises whose services are primarily funded through user charges.
23 Subheader 4.3 EXPENSES
Enterprise fund expenses and revenues will be established at sufficient levels to properly maintain the fund’s infrastructure and provide significant capital development.
4.4 RATE STRUCTURE AND NET POSITION
The enterprise fund will maintain an adequate rate structure to cover the cost of all operations, including cash flow, capital replacement and maintenance, debt service if applicable, contingency funding, reserve contributions, and depreciation. Rates may be offset from the available unreserved net position only after these requirements are met.
5. Operating Budget
5.1 THE 3CE BUDGET
The Recommended Budget is the central financial planning document for the agency’s goals, objectives, priorities, levels of service, and the associated operating revenue and expenditures. Appropriations are recommended based on the relationship between expected expenditures and revenue. If revenues are estimated to fall below expected amounts, the agency will take all actions available to reestablish a revenue and expenditure relationship that conforms to the operating requirements.
The Recommended Budget shall be presented to the Policy Board for adoption in September of each year and clearly presented to a general audience of the public. The Recommended Budget may be modified as necessary by the Policy Board during the fiscal year.
5.2 BALANCED BUDGET
A budget is balanced when the total estimated financing sources (beginning fund balance plus revenues) equal the total appropriations (expenditures). At no time shall spending in a given year exceed total current estimated revenues plus any net positive position (reserved and non-reserved).
5.3 ONGOING MAINTENANCE AND OPERATIONS NEEDS
3CE will adequately fund ongoing maintenance and operational needs with ongoing annual revenue.
Without prior direction and approval by the Policy Board, the use of one-time revenues or short-term borrowing is not allowed as a resource to finance ongoing operational needs.
5.4 CAPITAL FACILITIES AND EQUIPMENT
3CE shall establish as a primary fiscal responsibility the acquisition, preservation, maintenance, improvement, and, when applicable, orderly replacement of the 3CE’s capital facilities and equipment. 3CE shall endeavor to purchase a permanent headquarters and appropriate regional offices to provide continuity of location and operations while stabilizing and controlling facility costs into the future. 3CE will acquire and maintain high-quality equipment to maximize useful life and ensure efficient operations.
24 Subheader 5.5 APPROPRIATIONS AND TRANSFERS
The agency enterprise fund is not constrained by appropriation controls. The CEO is charged with maintaining the relationship between financing uses and financing sources and shall report to the Policy Board any deviation in excess of the adopted budget. The CEO is authorized to make appropriation transfers between departments and divisions within the enterprise fund as necessary to adequately reflect the expenditure needs of the agency.
5.6 RESPONSIBILITY FOR BUDGET MANAGEMENT AND BUDGETARY CONTROL The agency shall maintain a budgetary control system to help it adhere to the adopted budget. The CEO has budgetary control and authority over appropriations. The CFO shall administer and maintain the system utilized for budgetary control. As the administrator of the budgetary control system, the CFO shall notify the CEO when a department is reaching the departmental appropriation limit. The CFO shall seek guidance from the CEO on all issues relating to appropriations and controls. 3CE Officers in coordination with the CFO have primary responsibility for managing departmental budgets by:
• Providing accurate and timely budget estimates;
• Monitoring revenues to ensure timely receipt in the amounts anticipated; • Ensuring that expenditures comply with the law, adopted resolutions, policies, and align appropriations relative to revenues;
• Providing prompt notification to the CEO when either revenues or expenditures are not as anticipated; and
• Preparing and justifying budget revisions when necessary.
5.7 PREPARATION OF FINANCIAL REPORTS
The CEO annually prepares or causes to be prepared:
• An Annual Comprehensive Financial Report (ACFR) that reports on the 3CE’s financial position and activities adhering to Generally Accepted Accounting Principles (GAAP) or state law requirements, to provide readers with a broader understanding of the agency’s financial operations; • A mid-year estimate to provide current-year performance and forward-looking perspective to advise the Policy Board on future challenges and provide a base for building the following year’s Recommended Budget; and
• Additional reports, as appropriate, to keep the Policy Board informed on current financial performance and developments.
The CEO has oversight and contract management over the external auditors reviewing the ACFR.
External auditors shall report to the CEO or designated officer on audit findings. The CEO will take the audit findings thereafter to the Policy Board.
5.8 PUBLICATION OF BUDGET
The CEO shall publish annually a Recommended Budget document that satisfies nationally recognized standards for effective budget presentation. The Recommended Budget will be provided to the Policy
25 Subheader Board a minimum of two weeks in advance of the annual budget hearings.
5.9 3CE BUDGET DEVELOPMENT
Budget development is an annual process incorporating the Policy Board’s priorities and weighing competing requests for 3CE resources within expected fiscal constraints. The process begins with departments preparing “baseline” budgets proposing levels of service and staffing that can be carried out within expected resources (e.g., revenues). Departments may submit “augmentation requests” for additional resources to mitigate potential impacts, increase staffing/services, or invest in infrastructure.
The CEO evaluates baseline budgets and augmentation requests within the constraints of a balanced budget and builds the annual Recommended Budget. Staff considers the following criteria in formulating recommendations for the annual budget and subsequent mid-year budget modifications:
• Mandated by current law, regulation, or Policy Board policy; • Alignment with the 3CE’s strategic initiatives and priorities; • Necessary to maintain the current level of mission-critical services/operations; • Substantiation of compelling public need (e.g., health, safety, economic vitality, quality of life) that cannot be met within existing resources;
• Likelihood of success based on prior performance, degree of planning/specificity, requested resources, and assumed timeline;
• Leverages sustainable financial support from non-3CE sources; • Appropriate placement of responsibility (federal, state, or local); • Degree of urgency; and
• Critical infrastructure investment to ensure productivity and continuity of operations.
Criteria in the listing are not exhaustive or in any particular order, nor are they mutually exclusive; funding recommendations may align with more than one criterion.
5.10 ESTABLISH 3CE PRIORITIES
The Policy Board has a continuous process of establishing 3CE priorities for ensuing years. The Policy Board implements these priorities in the Recommended Budget. Understanding that elected officials, appointed officials, and agency officers are charged with the actual provision of services to the community, the Policy Board shall set broad priorities to ensure flexibility for the agency to concentrate on these priorities.
5.11 AMENDMENTS TO THE ADOPTED BUDGET
Modifications to the Adopted Budget require the approval of a majority of Policy Board members.
Amendments to the Adopted Budget will be made in compliance with Policy Board policies. As an enterprise fund, the relationship between financing uses and financing sources is the overriding principle; thus, appropriation controls are not required.
5.12 BUDGETARY BASIS
3CE uses the full accrual basis of accounting following GAAP. The budgetary basis is appropriation-based, beginning October 1 and ending the last day of September of each year. 3CE is an enterprise fund that is appropriation-based budgeted; however, accounting is on a full accrual basis.
26 Subheader 5.13 CAPITAL ASSET DEFINITION
The agency defines capital assets as assets with initial, individual costs of $5,000 or more and an estimated useful life greater than one year, except infrastructure, for which the threshold is set at $100,000. Capital assets include both tangible and intangible assets categorized by asset type for reporting purposes.
5.14 APPROPRIATIONS FOR CONTINGENCIES
3CE annually adopts an appropriation for contingencies to provide sufficient working capital and a margin of safety for unplanned operational needs. The contingency appropriation is utilized only after all other budget resources have been examined. The appropriation for operational contingencies shall be equal to five percent (5%) of recommended appropriations, excluding cost of energy (COE), unless expressly modified by the Policy Board as part of the annual budget adoption.
6. Net Position and Reserve Policies
6.1 NET POSITION
Net position is a measurement of available financial resources. It is the difference between total assets and total liabilities. The Policy Board recognizes that maintaining a positive net position is essential to preserving 3CE’s financial integrity. Sufficient net position and reserve levels are a critical component of the 3CE’s overall financial management strategy. They are key factors in the ability to sustain service delivery and obtain external financing. Rating agencies analyze net position when considering 3CE’s overall financial strength and creditworthiness. Adequate reserves enable flexible financial planning in developing rate structures, future capital projects, dealing with unforeseen emergencies, and changes in general economic conditions.
6.2 USE OF UNRESERVED NET POSITION
3CE’s goal is to only use unreserved net position as a source to finance one-time investments, reserves, and/or commitments. As a one-time financing source, any end-of-year positive net position will be used for non-recurring expenditures and only after confirmation of the yearly audit.
6.3 STRATEGIC RESERVE POLICY
A strategic reserve is essential to provide an adequate financial backstop throughout the year. 3CE shall adopt a strategic reserve equal to twenty-five percent (25%) of budgeted appropriations. The strategic reserve will provide sufficient working capital (cash flow), fund settlements of legal judgments against the agency in excess of reserves specifically designated for litigation, for natural disasters as determined by the CEO or Policy Board, and for one-time-only budget overruns that could not be addressed through the annual appropriations for contingencies.
If the strategic reserve is utilized to provide temporary funding for unforeseen needs, 3CE shall take the measures necessary to prevent its use in the following fiscal year by increasing revenues and/or decreasing expenditures to regain balance. 3CE shall also restore the strategic reserve to the minimum level of twenty-five percent (25%) of budgeted appropriations within five fiscal years following the fiscal year in which the event occurred. The plan to restore the strategic reserve shall be included and highlighted in the Recommended Budget.
27 Subheader 6.4 ENERGY RATE STABILIZATION RESERVE
The agency shall maintain an energy rate stabilization reserve equal to twenty (20%) of the budgeted COE. The energy rate stabilization reserve shall be utilized for large fluctuations in the COE and/or required increased power purchasing needs including regulatory compliance. This reserve may be utilized throughout the fiscal year at the direction of the CEO with subsequent reporting to the Energy Risk Management Committee and the Boards.
6.5 RENEWABLE ENERGY INNOVATION AND INITIATIVES RESERVE The agency shall maintain a renewable energy innovation and initiatives reserve equal to five percent (5%) of the budgeted COE. This reserve shall be utilized for investments in furtherance of the Boards’ goals to accelerate the utilization of 100% clean and renewable energy through the commitment to new or emerging, but scalable, technologies that can address the challenges of an intermittent renewable grid and reduce dependency on fossil fuels for electricity generation.
6.6 CAPITAL INFRASTRUCTURE RESERVE
The agency shall establish a capital infrastructure reserve sufficient to provide for the operation, routine scheduled maintenance, reasonably anticipated unplanned repair, and ultimate replacement costs of 3CE’s capital infrastructure, including enterprise software, real estate, and electric generation and storage facilities.
6.7 MEASUREMENT OF RESERVE TARGETS
Due to the nature of the agency’s business, the mechanism to fund the four reserves shall be the use of cash, cash equivalents, and short-term investments. The reserves must be liquid and available to ensure the ability to use the reserves for their intended purpose. Market fluctuations, operational continuity, competitive advantage, and regulatory compliance are risks that are mitigated with robust reserves as the agency transitions to a clean and renewable electric grid.
7. Capital Facilities and Improvement Policies
7.1 CAPITAL INVESTMENTS
3CE is responsible for investing in the preservation, maintenance, and improvement of owned assets, including buildings, equipment, and other capital infrastructure.
Projects in excess of $100,000 that have an estimated useful life of at least five years and are non-recurring are considered capital projects and should be evaluated against other uses and priorities.
All capital expenditures should be included in the Adopted Budget or taken to the Policy Board for approval and amendment to the Adopted Budget.
8. Debt Management
Due to its length and complexity, the Debt Management Policy is reviewed by the Policy Board separately from these policies.
3CE Staff Positions Schedule
28 Office/Department Position Title
FY
2023-24
Adopted
FTE
FY 2024-25
Recommended
FTE
Recommended
Change from
Adopted
Office of the CEO Chief Executive Officer 1 1 -
General Counsel 1 1 -
Deputy General Counsel - 1 1
Clerk of the Board 1 1 -
(To Be Determined) 6 1 (5)
Subtotal 9 5 (4)
Administrative
Services
Director of Human Resources &
Administration 1 1 -
Executive Assistant 1 - (1)
Human Resources Analyst - 1 1
Sr. Administrative Specialist 1 1 -
Administrative Specialist 2 2 -
Manager of Information
Technology 1 1 -
Information Technology Specialist 1 1 -
Subtotal 7 7 -
Total Positions 16 12 (4)
Office of the CFO Chief Financial Officer 1 1 -
Finance Director of Finance 1 1 -
Senior Accountant 1 1 -
Accountant 1 1 -
Senior Billing Operations & Rates
Analyst - 1 1
Billing Operations & Rates Analyst 1 1 -
Energy Risk Manager 1 1 -
(To Be Determined) - 1 1
Total Positions 6 8 2
29 Office/Department Position Title
FY
2023-24
Adopted
FTE
FY 2024-25
Recommended
FTE
Recommended
Change from
Adopted
Office of the COO Chief Operating Officer 1 1 -
Power Supply
Resources
Director of Power Supply Resources 1 1 -
Manager of Energy Trading 1 1 -
Power Resources & Markets Manager 1 1 -
Manager of Energy Contracts & Settlements - 1 1
Energy Contracts & Compliance Manager 1 1 -
Power Supply Analyst 1 1 -
Power Settlement Analyst - 2 2
Power Resource Planner - 2 2
Subtotal (excluding COO) 5 10 5
Regulatory Affairs &
Compliance
Director of Regulatory Affairs & Compliance 1 1 -
Policy Advisor 2 2 -
Subtotal 3 3 -
Data & Analytics Director of Data & Analytics 1 1 -
Data Engineer 1 1 -
Data Analyst 1 1 -
Subtotal 3 3 -
Total Positions 12 17 5
Office of the CCO Chief Communications Officer 1 1 -
Communications &
Outreach
Director of Communications & Outreach 1 1 -
Manager of Communications 1 1 -
Communications Specialist 2 2 -
Manager of Customer Accounts & Services 1 1 -
Sr. Customer Accounts Manager 3 3 -
Customer Accounts Manager 3 3 -
Subtotal (excluding CCO) 11 11 -
Energy Programs Director of Energy Programs 1 1 -
Manager of Energy Programs 1 1 -
Energy Programs Analyst 4 4 -
(To Be Determined) - 1 1
Subtotal 6 7 1
Total Positions 18 19 1
3CE Grand Total 52 56 4
Office Summary
Administrative Services
Director of Human Resources
& Administration
Office of the CEO
General Counsel
Board Clerk
The Office of the Chief Executive Officer
provides leadership and directs the
implementation of 3CE’s business functions,
programs, and initiatives in accordance
with the Policy Board’s strategic vision and
policies. An integral part of this work involves
communication and collaboration with
customers and stakeholders, the cultivation
of strong relationships with 3CE’s Member
Agencies, and the facilitation of programs
that advance the Boards’ goals.
FY 2024-25 Budget Summary - Office of the CEO
Prior Year
Actuals
2022-23
Adopted
Budget
2023-24
Mid-Year
Estimate
2023-24
Requested
Budget
2024-25
Recommended
Budget
2024-25
Recommended
Change from
Adopted
Salaries and Employee Benefits 12,386,029 1,964,008 1,837,179 3,057,255 2,919,269 955,261 Services and Supplies 2,204,659 2,714,809 2,047,866 2,763,708 2,733,708 18,899 Total Financing Uses 14,590,688 4,678,817 3,885,045 5,820,963 5,652,977 974,160 Total Budgeted Change to
Net Position (14,590,688) (4,678,817) (3,885,045) (5,820,963) (5,652,977) (974,160)
The Chief Executive Officer works to accelerate the adoption of renewable energy resources, overseeing the negotiation of Power Purchase Agreements (PPAs) and ensuring 3CE’s plans align with its commitment to environmental stewardship. At its heart, the focus of the executive office is to lead 3CE in a way that serves its customers, empowers its staff, and respects the planet.
The Recommended Budget for the CEO totals $1,234,896, with $1,105,896 in Salaries and Benefits and $129,000 in Services and Supplies. Appropriations are $1.6 million lower than the prior year’s budget since the General Counsel was previously housed within the CEO’s departmental budget.
Office of the CEO: Chief Executive Officer
ACCOMPLISHMENTS
• Led the organization to significant financial achievements, including securing $32.9 million in savings through the first PPA Prepay deal and diversifying investments to improve financial operations. Guided the development of a single-territory rate that fairly establishes customer rates based on the cost to serve them.
• Oversaw the successful implementation of key operational improvements, such as the leadership development
program, and establishment of the Wellness Committee.
• Guided the organization through important energy
initiatives, including the implementation of the Project Selection Criteria, deploying a Resource Adequacy
procurement strategy, including deploying the hybrid
battery options, and establishing an independent energy risk management function.
• Championed the development of advanced data analytics capabilities, including deploying the Data Analytics Hub and the Energy Deals Capture Portal, enhancing decision-making across the organization. • Spearheaded the development of 3CE’s Residential Battery Rebate Program, charger asset initiative and community
engagement efforts, including the Customer Insights survey and the development of a comprehensive Outreach &
Engagement Plan for new service area enrollments.
FY 2024-25 FOCUS AREAS
• Drive the implementation of a
comprehensive Enterprise Resource
Planning system to streamline budgeting,
financials, and payroll processes across the
organization.
• Lead the establishment of a regular
cadence for soliciting long-term contracts
for clean and renewable energy projects,
positioning the organization as a “first
mover” in the industry.
• Successfully enroll and support the City
of Atascadero and unincorporated San
Luis Obispo County through effective
communication and community
engagement.
• Guide the organization in navigating
upcoming regulatory changes, particularly
in Resource Adequacy reforms and the new
Reliable Clean Power Procurement Program.
• Spearhead initiatives to increase customer
participation in energy programs, with
a focus on improving accessibility and
relevance for disadvantaged and hard-to-reach customers.
FY 2024-25 Budget Summary - Chief Executive Officer
Prior Year
Actuals
2022-23
Adopted
Budget
2023-24
Mid-Year
Estimate
2023-24
Requested
Budget
2024-25
Recommended
Budget
2024-25
Recommended
Change from
Adopted
Salaries and Benefits 6,193,176 922,506 855,535 1,105,896 1,105,896 183,390 Services and Supplies 1,653,070 1,897,521 1,300,507 129,000 129,000 (1,768,521) Total Financing Uses 7,846,246 2,820,027 2,156,042 1,234,896 1,234,896 (1,585,131) Total Budgeted Change to
Net Position (7,846,246) (2,820,027) (2,156,042) (1,234,896) (1,234,896) 1,585,131
Office Summary (continued)
Office of the CEO: General Counsel
The General Counsel Department is responsible for overseeing 3CE’s legal needs, including regulatory issues, contract negotiations, and dispute resolution. The General Counsel also oversees and coordinates contracted special counsel for specific legal engagements, such as power purchase negotiations, regulatory compliance, and litigation.
The Recommended Budget for the General Counsel totals $1,657,504, with $611,504 in Salaries and Benefits and $1,046,000 in Services and Supplies. Appropriations for the General Counsel were previously housed within the CEO’s departmental budget. The department is managed by the General Counsel and has a total of two staff.
ACCOMPLISHMENTS
• Advised and assisted in drafting new contracts
and contract amendments impacting all Offices.
• Advised the Boards on closed session and
public agenda items.
• Developed template agreements and advised
the Regulatory Affairs and Compliance team on
advocacy and comments in CPUC proceedings.
• Managed pending litigation, in coordination with
outside counsel.
FY 2024-25 FOCUS AREAS
• Support the agency’s ongoing legal needs,
deliver timely and accurate professional
services, and provide appropriate
recommendations to staff and the Boards.
• Continue to respond to legal requests to assist
staff and Boards in achieving their goals and
objectives successfully.
• Manage pending litigation, assist in the creation
of agency policies, and advise on contracts and
regulatory developments impacting the agency.
• Provide all services with competence and
integrity.
FY 2024-25 Budget Summary - General Counsel
Prior Year
Actuals
2022-23
Adopted
Budget
2023-24
Mid-Year
Estimate
2023-24
Requested
Budget
2024-25
Recommended
Budget
2024-25
Recommended
Change from
Adopted
Salaries and Benefits - - - 611,504 611,504 611,504
Services and Supplies - - - 1,046,000 1,046,000 1,046,000 Total Financing Uses - - - 1,657,504 1,657,504 1,657,504 Total Budgeted Change to
Net Position - - - (1,657,504) (1,657,504) (1,657,504)
Office of the CEO: Administrative Services
The Administrative Services Department serves 3CE’s mission and customers by developing, retaining, and enabling a diverse, productive workforce with administrative and technological expertise. It includes human resources (HR), administrative support, enterprise risk management, and information technology (IT).
The Recommended Budget for the Administrative Services Department totals $2,760,577, with $1,201,869 in Salaries and Benefits and $1,558,708 in Services and Supplies. The increase in personnel costs is due to filling previously vacant positions and funding for the Future Leadership Development Program. Increases in Services and Supplies primarily result from agencywide staff trainings, building maintenance previously budgeted under the Finance Department, and funding for a potential Climate Fellowship program. The department is managed by the Director of Human Resources & Administration and has a total of seven staff.
ACCOMPLISHMENTS
• Implemented a future leadership development
program that includes individual development
plans identifying activities to continue building
leadership competencies.
• Successfully established the Wellness
Committee that recommends year-round
wellness initiatives for 3CE staff.
• Implemented training and technological
solutions to automate and improve HR and IT
business processes.
• Completed a security assessment on 3CE’s IT
systems and network.
FY 2024-25 FOCUS AREAS
• Customize the HR cloud-based platform to
include mandatory and ongoing training to
streamline processes and ensure Federal and
State compliance.
• Implement recommended improvements to the
agency’s cybersecurity posture.
• Continued development of a robust training
program for supervisors and managers.
FY 2024-25 Budget Summary - Administrative Services
Prior Year
Actuals
2022-23
Adopted
Budget
2023-24
Mid-Year
Estimate
2023-24
Requested
Budget
2024-25
Recommended
Budget
2024-25
Recommended
Change from
Adopted
Salaries and Benefits 6,192,853 1,041,502 981,644 1,339,855 1,201,869 160,367 Services and Supplies 551,589 817,288 747,359 1,588,708 1,558,708 741,420 Total Financing Uses 6,744,442 1,858,790 1,729,003 2,928,563 2,760,577 901,787 Total Budgeted Change to
Net Position (6,744,442) (1,858,790) (1,729,003) (2,928,563) (2,760,577) (901,787)
34 Office Summary (continued)
Office of the CFO
Director of Finance
FY 2024-25 Budget Summary - Office of the CFO
Prior Year
Actuals
2022-23
Adopted
Budget
2023-24
Mid-Year
Estimate
2023-24
Requested
Budget
2024-25
Recommended
Budget
2024-25
Recommended
Change from
Adopted
Interest and Investment Returns 8,184,122 6,400,000 9,952,050 7,000,000 7,000,000 600,000 Other Income 2,200,969 - - - - -
Rental Income - - 42,996 68,400 68,400 68,400
Sub-Total Revenues 10,385,091 6,400,000 9,995,046 7,068,400 7,068,400 668,400 Capital Infrastructure Reserve - - - 17,318,000 17,318,000 17,318,000 Total Financing Sources 10,385,091 6,400,000 9,995,046 24,386,400 24,386,400 17,986,400 Salaries and Benefits 1,242 1,504,193 1,507,963 2,121,202 1,975,955 471,762 Services and Supplies 945,118 3,902,488 3,985,158 11,750,923 11,748,923 7,846,435 Capital Assets 418,568 - 332,166 17,318,000 17,318,000 17,318,000 Total Financing Uses 1,364,928 5,406,681 5,825,287 31,190,125 31,042,878 25,636,197 Total Budgeted Change to Net
Position 9,020,163 993,319 4,169,759 (6,803,725) (6,656,478) (7,649,797) The Office of the Chief Financial Officer
(CFO) performs critical Finance and
Energy Risk functions. The CFO oversees
all aspects of financial planning and
budgeting, financial reporting and
analysis, energy risk management,
treasury and revenue management,
internal controls and compliance, cost
management, financial strategy, and
decision support for the Chief Executive
Officer. The Office also staffs the Audit
and Finance Committee and is appointed
to the Energy Risk Committee. Energy
Risk Manager
The Recommended Budget for the Office of the CFO totals $31,042,878, with $1,975,955 in Salaries and Benefits, $11,748,923 in Services and Supplies, and $17,318,000 in Capital Assets. The increase in personnel costs is largely due to the addition of one new position to provide analytical support in energy risk management and the reallocation of a rates and billing position that was previously budgeted under the Office of the CEO. The increases in Services and Supplies will reflect the reallocation of outsourced customer billing data management and IOU services fees from the Data & Analytics Department. The $17.3 million in Capital Assets is comprised of capital expenditures funded by the Capital Infrastructure Reserve to purchase two office buildings in Monterey and Santa Cruz, fleet vehicle purchases, and implementation costs for agency software.
The Recommended Budget includes $7,068,400 in estimated revenue from interest income on self-managed investments and rental income from the San Luis Obispo office building.
The increase in estimated revenue is modest due to projections that interest rates may decrease throughout the fiscal year. The Office has a total of eight staff.
ACCOMPLISHMENTS
• Issued 3CE’s first Power Purchase Agreement
(PPA) Prepay deal, securng $32.9 million in
savings over seven years.
• Developed the 2025 rate structure methodology,
which utilizes a single rate structure across 3CE’s
service area (regardless of IOU) that ensures
revenues are sufficient to recover costs to serve
our customers.
• Transitioned investments to self-directed
brokerage accounts and diversified banking
institutions to improve financial operations and
management.
• Created and filled the Energy Risk Manager
position, improving agency management of
market risks.
• Implemented active counterparty collateral
monitoring and management.
FY 2024-25 FOCUS AREAS
• Present the agency’s financial position to inform
S&P’s review of 3CE’s “A” Credit Rating.
• Implement a comprehensive Enterprise
Resource Planning system for budgeting,
financials, and payroll.
• Design and implement an annual ratemaking
process to ensure operational costs and
reserves are covered by revenues.
• Develop a revised collections policy to reduce
debt write-offs.
• Create a comprehensive billing process to
support 3CE’s participation in the Hourly Flex
Pricing Pilot.
• Continue to enhance the Energy Deals
Capture Portal to manage market, credit, and
operational risks.
Director of Data
Analytics
Data Analyst
The Office of the Chief Operating
Officer leads three departments: Power
Supply Resources, Regulatory Affairs &
Compliance, and Data & Analytics. The
Office focuses on ensuring compliance
with industry regulations and
operationalizing 3CE’s adopted goal of
serving 100% of retail sales with clean
and renewable electricity.
The Chief Operating Officer is tasked
with securing affordable clean
and renewable electricity for 3CE
customers, navigating and working
to shape the regulatory environment
in which 3CE operates, ensuring
compliance with regulations, and
managing and analyzing the large
amount of data associated with serving
our customers.
Office Summary (continued)
Office of the COO
s
FY 2024-25 Budget Summary - Office of the COO
Prior Year
Actuals
2022-23
Adopted
Budget
2023-24
Mid-Year
Estimate
2023-24
Requested
Budget
2024-25
Recommended
Budget
2024-25
Recommended
Change from
Adopted
Electricity Sales 450,713,404 556,433,447 551,405,974 745,962,356 745,962,356 189,528,908 Total Financing Sources 450,713,404 556,433,447 551,405,974 745,962,356 745,962,356 189,528,908 Cost of Energy 398,746,769 520,297,514 538,515,199 665,267,116 665,267,116 144,969,602 Salaries and Benefits 3,511 2,831,689 2,472,341 4,267,691 4,049,858 1,218,169 Services and Supplies 7,772,205 9,112,507 8,708,263 3,351,114 3,327,114 (5,785,393) Total Financing Uses 406,522,485 532,241,710 549,695,803 672,885,921 672,644,088 140,402,378 Total Budgeted Change to
Net Position 44,190,919 24,191,738 1,710,171 73,076,435 73,318,268 49,126,530 Director of Regulatory
Affairs & Compliance
Director of Power
Supply Resources
Director of Data
Analytics
38 Office Summary (continued)
The Power Supply Resources Department secures competitively priced, reliable, clean and renewable electricity for 3CE customers through short-term and long-term contracting with the aim of increasing cost certainty and meeting all regulatory procurement obligations.
Power Supply Resources staff operate within a dynamic and often volatile energy market. Energy prices are prone to unpredictable and significant changes. In addition, regulatory and legislative changes can result in structural alterations to energy markets, price levels, and procurement requirements. 3CE adheres to its Energy Risk Management Policy to mitigate these risks and create rate stability while aggressively working to attain clean and renewable generation resources.
Office of the COO: Power Supply Resources
The Recommended Budget for the Power Supply Resources Department totals $670,025,246, including $665,267,116 in Cost of Energy, $2,838,121 in Salaries and Benefits, and $1,920,009 in Services and Supplies. Cost of Energy is estimated to be $144,969,602 higher than last year, primarily driven by increased requirements for Renewable Energy Certificates (RECs) and Resource Adequacy (RA) as well as energy required to meet the added load from the enrollment of our two new member communities in 2025. The $1.2 million increase in Salaries and Benefits is primarily due to the addition of five new positions in Power Supply Resources to assist with power settlement and resource planning duties. The $0.5 million increase in Services and Supplies compared to the prior year is from further involvement with California Community Power (CC Power), as 3CE works with other CCAs to procure new, cost-effective clean energy and reliability resources.
FY 2024-25 Budget Summary - Power Supply Resources
Prior Year
Actuals
2022-23
Adopted
Budget
2023-24
Mid-Year
Estimate
2023-24
Requested
Budget
2024-25
Recommended
Budget
2024-25
Recommended
Change from
Adopted
Electricity Sales 450,713,404 556,433,447 551,405,974 745,962,356 745,962,356 189,528,908 Total Financing Sources 450,713,404 556,433,447 551,405,974 745,962,356 745,962,356 189,528,908 Cost of Energy 398,746,769 520,297,514 538,515,199 665,267,116 665,267,116 144,969,602 Salaries and Benefits 3,040 1,649,598 1,512,953 3,055,954 2,838,121 1,188,523 Services and Supplies 2,187,017 1,397,478 1,140,979 1,944,009 1,920,009 522,531 Total Financing Uses 400,936,826 523,344,590 541,169,131 670,267,079 670,025,246 146,680,656 Total Budgeted Change to
Net Position 49,776,578 33,088,858 10,236,843 75,695,277 75,937,110 42,848,252
ACCOMPLISHMENTS
• Implemented the Project Selection Criteria adopted by the Policy Board in June 2023 in 3CE’s 2024 Clean and
Reliable Energy Request for Proposals (RFP), conducting qualitative assessments of projects to ensure best fit for 3CE’s project portfolio and community values.
• Amended four Power Purchase Agreements (PPAs) to
ensure the continued development of projects important to achieving agency procurement goals.
• In alignment with Board strategy, secured necessary short-term Resource Adequacy (RA) contracts for the coming year, and long-term RA contracts to provide greater cost certainty and rate stability.
• Established partnerships with new outside scheduling
coordinator and Battery Energy Storage System (BESS)
optimization vendors, bringing extensive CAISO market
experience and cost benefits to 3CE operations and
customers.
FY 2024-25 FOCUS AREAS
• Establish a regular cadence for the solicitation
of long-term contracts for clean and renewable
energy projects to gain “first mover” investment
advantage.
• Collaborate with industry partners and regulators
on upcoming reforms to RA, including the new
Slice of Day paradigm.
• Partner with contracted developers to ensure the
viability of new projects in an interconnection and
supply-chain-challenged environment.
The Recommend Budget also includes $745,962,356 in estimated revenues from the net sale of energy. The $189.5 million increase results from a recommended adjustment to generation rates across all customer classes to meet 3CE’s expenditures and continue to build reserves.
The Power Supply Resources Department is managed by the Director of Power Supply Resources and has a total of 10 staff.
39 Page 128 of 149
The Regulatory Affairs and Compliance Department engages regulatory bodies with jurisdiction over 3CE and the markets in which it operates and ensures compliance with all regulatory obligations. The department contributes to statewide planning, reliability, and renewable goals through Integrated Resource Planning, Mid-Term Reliability, Resource Adequacy, Renewable Portfolio Standards, and the Supplier Diversity Program.
Regulatory Affairs and Compliance staff actively participate in rule-making proceedings before the California Public Utilities Commission (CPUC) concerning rates, affordability, and payment assistance programs.
The Recommended Budget for Regulatory Affairs & Compliance totals $1,602,316, with $588,211 in Salaries and Benefits and $1,014,105 in Services and Supplies. The increase in appropriations is driven by growth in the number and complexity of regulatory proceedings affecting the agency. The Department is managed by the Director of Regulatory Affairs & Compliance and has a total of three staff.
Office of the COO: Regulatory Affairs & Compliance
ACCOMPLISHMENTS
• Successfully advocated for the integration of CCAs
into CPUC-approved programs, including the
Bioenergy Market Adjusting Tariff (BioMAT) program.
• Submitted over 60 filings to key regulatory bodies,
receiving commendation from the CPUC staff for the
Annual Supplier Diversity Report, which highlights
3CE’s investments in small, local, and disadvantaged
businesses.
FY 2024-25 FOCUS AREAS
• Continue to engage in regulatory policy discussions
to expedite the integration of new resources and
optimize load-shifting strategies in alignment with
3CE’s goal of supplying 100% clean and renewable
energy to meet retail sales.
• Complete and submit the 2025 Integrated Resource
Plan and narrative.
• Monitor and implement the CPUC’s new Reliable
Clean Power Procurement Program.
Office Summary (continued)
FY 2024-25 Budget Summary - Regulatory Affairs & Compliance Prior Year
Actuals
2022-23
Adopted
Budget
2023-24
Mid-Year
Estimate
2023-24
Requested
Budget
2024-25
Recommended
Budget
2024-25
Recommended
Change from
Adopted
Salaries and Benefits 136 571,161 424,656 588,211 588,211 17,050 Services and Supplies 594,570 786,805 667,442 1,014,105 1,014,105 227,300 Total Financing Uses 594,706 1,357,966 1,092,098 1,602,316 1,602,316 244,350 Total Budgeted Change to
Net Position (594,706) (1,357,966) (1,092,098) (1,602,316) (1,602,316) (244,350)
The Data & Analytics Department oversees 3CE’s extensive customer usage and transaction data for more than 515,000 projected accounts, providing strategic analysis to inform business decisions. The department’s primary objective is to empower the organization with information and insights, and to create a consolidated data environment affording increased visibility into agency operations.
The Recommended Budget for the Data & Analytics Department totals $1,016,526, with $623,526 in Salaries and Benefits and $393,000 in Services and Supplies. This represents a budget decrease compared to the prior year due to the reallocation of customer billing data management and IOU services fees to the Finance Department. The Data & Analytics Department is managed by the Director of Data & Analytics and has a total of three staff.
Office of the COO: Data & Analytics
ACCOMPLISHMENTS
• Deployed the Data Analytics Hub, which is built
from 3CE’s internal Data Warehouse and includes
dashboards and reporting tools supporting multiple
agency departments.
• Completed the Energy Deals Capture Portal to
improve the visibility of Power Purchase Agreements
and their energy contributions.
• Integrated diverse data sources, including energy
price forward data and Salesforce customer
relationship management data to further enrich
analytics.
• Launched Customer Insights and Power Supply
dashboards to enhance customer relationships and
provide a clear view of energy use patterns.
FY 2024-25 FOCUS AREAS
• Automate the population of PPA data into
the Energy Deals Capture Portal.
• Develop a robust system of record to ensure
consistency in Key Performance Indicator
(KPI) and metrics tracking.
• Incorporate Customer Relationship
Management (CRM) data into the 3CE
Data Warehouse to enhance insights
across departments and support increased
participation in 3CE programs.
FY 2024-25 Budget Summary - Data & Analytics
Prior Year
Actuals
2022-23
Adopted
Budget
2023-24
Mid-Year
Estimate
2023-24
Requested
Budget
2024-25
Recommended
Budget
2024-25
Recommended
Change from
Adopted
Salaries and Benefits 335 610,930 534,732 623,526 623,526 12,596 Services and Supplies 4,990,618 6,928,224 6,899,842 393,000 393,000 (6,535,224) Total Financing Uses 4,990,953 7,539,154 7,434,574 1,016,526 1,016,526 (6,522,628) Total Budgeted Change to
Net Position (4,990,953) (7,539,154) (7,434,574) (1,016,526) (1,016,526) 6,522,628
42 Office Summary (continued)
The Office of the Chief Communications
Officer (CCO) is responsible for establishing
and maintaining meaningful relationships
between 3CE and its member communities.
The departments of Communications &
Outreach and Energy Programs fall within
this office, which is responsible for customer
communications, community relations,
legislative affairs, and the development
and implementation of energy programs
to result in impactful investment into 3CE’s
communities.
The Communications & Outreach and Energy
Programs departments collaborate to
promote a wide range of energy programs
tailored to the needs of residents, businesses,
and local governments. The Office of the
Chief Communications Officer aims to foster
trust and understanding by demonstrating
the value of 3CE programs in promoting
affordability, environmental stewardship, and
public participation.
Office of the CCO
FY 2024-25 Budget Summary - Office of the CCO
Prior Year
Actuals
2022-23
Adopted
Budget
2023-24
Mid-Year
Estimate
2023-24
Requested
Budget
2024-25
Recommended
Budget
2024-25
Recommended
Change from
Adopted
Miscellaneous Income 155,868 - 44,132 - - -
Total Financing Sources 155,868 - 44,132 - - -
Salaries and Benefits 2,663 3,237,186 2,971,580 3,640,759 3,640,759 403,573 Services and Supplies 10,803,776 17,269,054 11,975,553 17,384,054 17,368,054 99,000 Total Financing Uses 10,806,439 20,506,240 14,947,133 21,024,813 21,008,813 502,573 Total Budgeted Change
to Net Position (10,650,571) (20,506,240) (14,903,001) (21,024,813) (21,008,813) (502,573) Director of Energy Programs
s
Director of
Communications
& Outreach
44 ACCOMPLISHMENTS
• Led a robust community engagement effort to
inform the next phase of outreach to underserved
communities and developed an improved,
prioritized workplan.
• Conducted a Customer Insights survey
throughout 3CE’s service area to gain a better
understanding of the values and priorities of
customers.
• Developed a comprehensive Outreach &
Engagement Plan for the enrollment of the
City of Atascadero and the County of San Luis
Obispo.
• Gathered community input and facilitated its
integration into the development of 3CE’s Net
Billing Tariff, Battery Incentive Program, and
annual ratemaking process.
FY 2024-25 FOCUS AREAS
• Facilitate the successful enrollment of customers in the City of Atascadero and the unincorporated regions of San Luis Obispo County through best-in-class communications and community engagement.
• Further the full implementation of the Underserved
Communities Outreach and Engagement Plan by
completing all items contained in the supplemental FY
2024-25 Action Plan approved by the Policy Board in
June 2024.
• Innovate and develop compelling and simplified
messaging that speaks plainly to customers in all
communications collateral. Strive for communications that are culturally and linguistically appropriate.
• Develop partnerships with Community Based
Organizations (CBOs) to amplify the reach and improve
the efficacy of outreach and communications efforts.
Office of the CCO: Communications & Outreach
Office Summary (continued)
The Communications & Outreach Department acts as a customer advocate by building relationships and engaging in community outreach to help inform the public’s energy-related decisions and reduce regional emissions. Through print, broadcast, and digital media, participation in events, and partnerships with community-based organizations (CBOs), the department works to promote access and awareness among all customers and to encourage choices that contribute to regional sustainability.
Over the past year, the Communications & Outreach Department extended its reach across the diverse communities served by 3CE. This reflects the agency’s commitment to fostering understanding of the benefits of clean energy and to engaging with communities by providing excellent service and communicating 3CE’s mission, progress, and value.
The Recommended Budget for the Communication & Outreach Department totals $4,140,897, with $2,363,206 in Salaries and Benefits and $1,777,691 in Services and Supplies. Appropriations increased compared to the prior year due to filling personnel vacancies. The Recommended Budget also includes additional funding for enrollment outreach efforts and more engagement with local and state associations. The Department is managed by the Director of Communications & Outreach and has a total of 11 staff.
FY 2024-25 Budget Summary - Communications & Outreach
Prior Year
Actuals
2022-23
Adopted
Budget
2023-24
Mid-Year
Estimate
2023-24
Requested
Budget
2024-25
Recommended
Budget
2024-25
Recommended
Change from
Adopted
Salaries and Benefits 2,017 2,017,719 2,035,013 2,363,206 2,363,206 345,487 Services and Supplies 1,296,390 1,678,691 1,523,258 1,793,691 1,777,691 99,000 Total Financing Uses 1,298,407 3,696,410 3,558,271 4,156,897 4,140,897 444,487 Total Budgeted Change to Net
Position (1,298,407) (3,696,410) (3,558,271) (4,156,897) (4,140,897) (444,487)
Office of the CCO: Energy Programs
ACCOMPLISHMENTS
• Increased customer participation in 3CE energy
programs.
• Launched behind-the-meter Residential Battery
Rebate Program
• Initiated the planning phase for the Vehicle
Charger Asset Ownership pilot program.
• Launched a new customer relationship
management system, avoiding a program
shutdown during the transition to a new fiscal
year.
FY 2024-25 FOCUS AREAS
• Further customer participation and emission
reduction impacts of existing energy programs.
• Complete the construction phase of the 3CE Electric
Vehicle Charger Asset Pilot.
• Explore non-residential Demand-Response Pilot with
battery storage and grid support capabilities.
• Examine program barriers and relevancy for
disadvantaged and hard-to-reach customers. Identify
and implement program design improvements to
further promote adoption in these areas.
The Energy Programs Department promotes regional climate action through effective and broadly accessible energy programs, which focus on electrifying transportation, buildings, agriculture, and on demand-side management. 3CE’s energy programs provide incentives and technical assistance to customers to empower them to take action to reduce greenhouse gas emissions by switching from-fossil-fuel burning vehicles, equipment, and appliances to clean, all-electric versions.
The Recommended Budget for the Energy Programs Department totals $16,867,916, with $1,277,553 in Salaries and Benefits and $15,590,363 in Services and Supplies, including incentive budgets and program implementation and administration support services. The department is managed by the Director of Energy Programs and has a total of seven staff.
FY 2024-25 Budget Summary - Energy Programs
Prior Year
Actuals
2022-23
Adopted
Budget
2023-24
Mid-Year
Estimate
2023-24
Requested
Budget
2024-25
Recommended
Budget
2024-25
Recommended
Change from
Adopted
Miscellaneous Income 155,868 - 44,132 - - -
Total Financing Sources 155,868 - 44,132 - - -
Salaries and Benefits 646 1,219,467 936,567 1,277,553 1,277,553 58,086 Services and Supplies 9,507,386 15,590,363 10,452,295 15,590,363 15,590,363 - Total Financing Uses 9,508,032 16,809,830 11,432,994 16,867,916 16,867,916 58,086 Total Budgeted Change to Net
Position (9,352,164) (16,809,830) (11,388,862) (16,867,916) (16,867,916) (58,086)
Energy Programs 2024-25 Overview
TRANSPORTATION ELECTRIFICATION
The Electrify Your Ride Program provides
residential and commercial customers with a
“one-stop-shop” for transportation electrification
rebates to purchase Electric Vehicles (EVs) and
install EV infrastructure, and offers technical
support to multifamily and commercial property
owners in planning and building EV infrastructure
at their project sites.
2024-25 INCENTIVE BUDGET: $4.1 MILLION –
over 2,000 distinct applications
The Electric Bus Program provides customers with
incentives for the purchase or lease of all-electric
school buses, agricultural worker transport, and
public transit buses.
2024-25 INCENTIVE BUDGET: $1.4 MILLION –
over 10 e-buses
The Plan Your Fleet Program provides 3CE
Member Agencies technical assistance to
accelerate fleet electrification through support
services including fleet replacement planning,
project design and engineering, EV charging
recommendations, and funding plans.
2024-25 BUDGET: $650,000 – 10 Member Agencies
The Electrify Your Fleet Program provides 3CE
Member Agencies with incentives for the purchase
or lease of light, medium, and heavy-duty Electric
Vehicles.
2024-25 INCENTIVE BUDGET: $1.1 MILLION
The Charge Your Fleet Program provides 3CE
Member Agencies with incentives for the purchase
and installation of Level 3 DC Fast Chargers.
2024-25 INCENTIVE BUDGET: $1 MILLION
The Grant Programs provided Member Agencies
and both residential and commercial customers
with grants for planning, implementation, and
innovation projects in electrification and energy.
Grant funding included the California Electric
Vehicle Infrastructure Project (CALeVIP), which was
implemented by the Center for Sustainable Energy
to incentivize the purchase and installation of EV
charging equipment for 3CE customers in the
South Central Coast and Central Coast cycles of
CALeVIP. The grant programs were discontinued,
and the budget is allocated to fund prior-year
recipients with ongoing projects.
2024-25 INCENTIVE BUDGET: $735,000
3CE is dedicated to investing in communities served through a portfolio of energy programs.
The incentives offered through these programs support all 3CE customers to transition their homes, workplaces, and transportation from fossil-fuel power to clean-energy solutions. $16.8MM
Invested in our Communities
Transportation
Electrification
$9MM
Building
Electrification
$1.9MM
Agricultural
Electrification
$800K
Demand-Side
Management
$2MM
3CE
Pilots
$1MM
BUILDING ELECTRIFICATION
The Electrify Your Home Program, in
partnership with TECH Clean California,
provides incentives to local contractors for the
replacement of gas appliances with electric
heat-pump appliances for residential and
multifamily 3CE customers.
2024-25 INCENTIVE BUDGET: $720,000 –
Over 400 distinct applications
The New Construction Electrification
Program provides residential, multifamily,
and agricultural housing developers with
incentives to build all-electric housing.
2024-25 INCENTIVE BUDGET: $1 MILLION
The Reach Code Program provides technical
assistance and stakeholder engagement
support to help cities and counties adopt
and implement building and transportation
electrification codes more advanced than
those required by the state.
2024-25 BUDGET: $150,000
AGRICULTURE ELECTRIFICATION
The Ag Electrification Program provides
rebates for the purchase of all-electric
equipment to commercial businesses that that
are in, or that directly support, the agricultural
industry in 3CE territory. The program also
provides technical assistance for customers
interested in building EV infrastructure at their
agricultural sites.
2024-25 INCENTIVE BUDGET: $800,000 –
over 20 applications
3CE PILOTS
The EV Charger Asset Pilot will deploy a phased
ownership program that enables 3CE-owned
Level 2 and DC Fast Charger operations across
3CE community resilience hubs, corridor charging,
and Member Agency sites. The scope and goals
will be refined as 3CE further develops the pilot.
2024-25 BUDGET: $700,000
The Hourly Flex Pricing Pilot will, in partnership
with Polaris, incentivize pumping automation
and transactive pricing system services to 3CE’s
customers in the agricultural sector. The scope
and goals will be refined as 3CE further develops
the pilot.
2024-25 BUDGET: $100,000
The Demand Response Pilot will reduce energy
usage during periods of high grid stress and
improve grid stability by rewarding 3CE customers
for modifying their energy consumption. The
pilot will include incentivizing battery storage
at a commercial scale with a distributed Energy
Resource Management System (DERMS) for
optimized operation.
2024-25 BUDGET: $200,000
DEMAND SIDE MANAGEMENT
Launched in July 2024, the Residential Battery
Rebate Program provides incentives to 3CE
customers for the purchase and installation of
residential, behind-the-meter battery systems.
2024-25 INCENTIVE BUDGET: $2 MILLION – over
400 distinct applications
Scan the QR Code to learn more! 3Cenergy.org/rebates-incentives Interested in exploring the incentives available to 3CE customers? NEW FOR FY 2024-25
Year-at-a-Glance 2023-24
REGULATORY
& LEGISLATIVE
ENERGY PROGRAMS TEAM
FINANCE
Two major regulatory filings
The Annual Supplier
Diversity Report
receives top marks.
Per the CPUC, “If
we did rankings
on community
outreach, 3CE
would be number
one”
The Load Management Standards Compliance
Plan identifies pathways to meeting the California
Energy Commission’s Load Management
Standards, developed to support demand
flexibility and contribute to the state’s climate
policy goals
30+ Active proceedings
Regulatory staff monitored and participated in
more than 30 active proceedings spanning three
regulatory bodies, including proceedings related
to utility ratemaking, resource adequacy, and
greenhouse gas reduction planning
First Battery Rebate Program
The Residential Battery Rebate Program provides
incentives for the purchase and installation of
home batteries, helping customers manage energy
consumption and lower costs
More all-electric, affordable housing
projects for healthier living
Tabasa Gardens, a 53-unit affordable housing
development in Watsonville, will utilize all-electric
appliances for healthier indoor air, thanks to 3CE’s
rebates and partnership with Eden Housing
In Buellton, 50 clean-air affordable housing
units with all-electric appliances will house low-income senior citizens, senior veterans, thanks in part to 3CE rebates and the Cabrillo Economic
Development Corporation
$10MM in returns
after bringing investment management in-house
$33MM in savings
over seven years by issuing first PPA Prepay deal
OD
SUPPLIER
DIVERSITY
REPORT
2023 Annual Report | 2024 Annual Plan
COMMUNICATIONS
OUTREACH
OPERATIONS
EMISSIONS
POWER SUPPLY
RESOURCES
Earned media, storytelling build trust,
bolster advertising campaigns
The Residential Battery Rebate Program launch
reached its maximum potential by combining
media coverage with paid advertising.
Video collaborations with customers and
stakeholders produce documentary-style
advertisements that build trust, raise awareness,
and promote energy programs
16 Farmworker outreach events
Working with local, Spanish-language radio
stations and farm managers enables staff to meet
an important community of customers where they
are
Expanding our reach and footprint
Purchased office space in San Luis Obispo
Moved from 36% vacancy rate to fully
staffed
410,000 metric tons of CO2 emission
reduction from PPAs
Equivalent to greenhouse gas emissions
from 97,581 gasoline-powered vehicles
driven for a year
Powerful progress
California’s grid was powered by renewablesfor
at least several minutes a day for 100 days –
affirming that agencies like 3CE are making our
grid cleaner and more reliable
Energy Market Outlook and Power Purchase Agreements
A Power Purchase Agreement (PPA) is a contract between two parties, typically a renewable energy developer (such as a solar or wind farm) and an electricity consumer (such as a load-serving entity like 3CE). In a PPA, the developer agrees to generate and deliver a certain amount of renewable energy to 3CE over a specified period, while the agency commits to purchasing that energy at an agreed-upon price. 3CE enters PPAs for several reasons, including commitment to renewable energy goals, risk mitigation, hedging against energy price volatility, promotion of renewable energy market growth, regulatory compliance, and promoting local economic development. 3CE continues to work collaboratively with developers to bring new clean-energy resources onto the CAISO grid to serve our customers. Challenges with long interconnection completion times and supply-chain delays continue to plague the California grid and delay our ability to bring these projects online. 3CE continues to work with its contracted developers as well as with CAISO staff, regulators, and lawmakers to ensure these challenges are addressed in a timely manner to ensure meaningful progress toward California’s clean energy goals.
The graph at left depicts, as a percentage
of total retail sales (MWh), how much of
3CE’s load is served by long-term renewable
contracts with fixed prices. As new resources
are brought onto the grid on 3CE’s behalf,
a larger percentage of our load is served by
these renewable sources.
Fixed-price contracts as a percentage of total
cost exhibit how much of 3CE’s cost of energy
is made up of fixed-price contracted costs.
As more of 3CE’s load is served by long-term
renewable contracts, its cost of energy will
be less exposed to variable costs and market
volatility. This creates price certainty for
3CE’s customers and allows for the continued
provision of clean and renewable energy to
these customers for the foreseeable future.
Fixed-Price Contracts vs. Retail Sales (MWh)
Fixed-Price Contracts vs. Variable Costs (as a % of $)
PPA Technology Renewable
MW
Storage
MW
MWh % of
Load
Online Date
(Actual or
Expected)
Term in
Years
Coso Geothermal Geothermal 66.3 570,000 10% 1/1/2022 15 Slate PV + BESS 67.5 33.8 187,000 3% 3/3/2022 17
Mammoth Casa Diablo IV Geothermal 7.0 57,000 1% 7/14/2022 10 Mountain View Wind Wind 33.3 128,500 2% 7/26/2022 20
Rabbitbrush Solar + Storage 60.0 12 178,000 3% 10/18/2022 15 Yellow Pine Solar + Storage 75.0 39 240,000 4% 7/26/2023 20 Victory Pass Solar + Storage 100.0 25 301,000 5% 3/29/2024 15 RPCA Storage 1 Standalone Storage 10 N/A N/A 3/31/2025 20 Aratina Solar + Storage 120.0 75 394,000 7% 6/1/2025 20 San Luis West Solar + Storage 62.5 15.6 157,300 3% 12/31/2025 20 Atlas Solar Only 150.0 457,000 8% 12/31/2025 10
Ormat Portfolio (CC Power) Geothermal 22.4 187,000 3% 3/1/2026 20 OME Fish Lake (CC Power) Geothermal 2.4 20,000 0% 3/1/2026 20 SunZia Wind 205 647,000 12% 9/30/2026 15
Angela Solar + Storage 20 10 56,000 1% 11/1/2026 15
Jasmine Solar + Storage 70 64.4 206,000 4% 11/11/2026 10 Bodega Energy Storage Standalone Storage 10 N/A N/A 6/1/2027 20 Gabriel Storage Standalone Storage 125 N/A N/A 6/1/2027 15 Green Valley Energy Storage Standalone Storage 16 N/A N/A 6/1/2027 20 Rava Mesa Energy Storage Standalone Storage 6 N/A N/A 6/1/2027 20 Willow Rock Standalone Storage 200 N/A N/A 6/1/2027 25
TOTAL 1,061 642 3,785,800 67%
As a % of 2025 forecasted load (including San Luis Obispo County & City of Atascadero) Pathway to 100% Clean and Renewable
3CE Central Coast Community Energy
ACFR Annual Comprehensive Financial Report
AMP Arrearage Management Plan
BioMAT Bioenergy Market Adjusting Tariff
CCA Community Choice Aggregator
CAISO California Independent System Operator
CalCCA California Community Choice Association
CCO Chief Communications Officer
CEC California Energy Commission
CEO Chief Executive Officer
CFO Chief Financial Officer
COE Cost of Energy
COO Chief Operations Officer
COS Cost of Service
CPUC California Public Utilities Commission
DSM Demand-Side Management
FTE Full-Time Equivalent
FY Fiscal Year
GAAP Generally Accepted Accounting Principles
IOU Investor-Owned Utility
kWh Kilowatt-hour
LSE Load Serving Entity
MT CO2e Metric Tons of Carbon Dioxide Emissions
MW Megawatt
MWh Megawatt-hour
PG&E Pacific Gas & Electric
PPA Power Purchase Agreement
RA Resource Adequacy
RMC Risk Management Committee
ROI Return on Investment
SCE Southern California Edison
US EIA US Energy Information Administration
WREGIS Western Renewable Energy Generation
Information System
Glossary
55 Page 144 of 149
POWER FOR GOOD POWER FOR GOOD POWER FOR GOOD
Staff Report Item 13
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, CEO
SUBJECT: Consider and provide direction regarding proposed 3CE Code of Conduct DATE: September 18, 2024
RECOMMENDATION:
It is recommended that the Operations Board consider and provide direction regarding proposed 3CE Code of Conduct.
BACKGROUND:
On August 26, 2024, the Policy Board held a Special Meeting to discuss improvements to governance structure, including certain “General Recommendations” which directed staff to prepare and implement a code of conduct, prepare board procedures, and enhanced onboarding for new directors.
DISCUSSION/ANALYSIS:
Consistent with the identified goals of the Operations and Policy Boards, as well as the Ad Hoc Committee to improve operations and communications, a Code of Conduct will establish clear standards, obligations, and expectations of both the Boards’ and staffs’ commitment to each other, the agency, and non-seated member agency jurisdictions.
One of the main components of the proposed Code of Conduct includes a seated board member’s obligation, in collaboration with staff where appropriate, to keep non-seated jurisdictions informed on matters involving the agency and to solicit input on important developments.
As proposed, the Code of Conduct builds on the Boards’, and staffs’, ethical and legal obligations but does not seek to duplicate conflict of interest state law provisions, adherence to the Ralph M. Brown Act as codified in Government Code §§54950–54963, or to identify procedures raising or resolving issues – which are proposed to be addressed, if necessary, in a Board procedural manual. If adopted, the Code of Conduct would further ensure that all Board members, while exercising their office, conduct
themselves in a manner that will promote public confidence, trust, and fair operation of 3CE for the benefit of its customers.
The Operations Board’s feedback will be shared with the Policy Board and incorporated into a final draft for the Policy Board’s final consideration.
CONCLUSION:
The Boards’ feedback and direction will assist staff’s preparation of a 3CE Code of Conduct intended to better engage with non-seated jurisdictions, improve communication, and facilitate more streamlined operations.
ATTACHMENT(S):
1. Draft 3CE Code of Conduct
Central Coast Community Energy
Policy and Operations Boards of Directors
CODE OF CONDUCT
Central Coast Community Energy (3CE) through its Policy and Operations Board of Directors (Boards) commits itself and its members to respectful, ethical, and lawful conduct. Directors are committed to public service, upholding public trust and representing the best interests of 3CE customers, across the service territory.
I. General Principles:
1. Directors and staff work for the common benefit of 3CE and its customers.
2. Directors and staff shall act with integrity and honesty in all dealings.
3. Directors and staff shall treat all individuals with respect, courtesy and dignity.
4. Directors and staff will conduct themselves ethically and in compliance with state and local rules.
II. Conflict of Interest and Ethical Duties:
1. Directors and staff must avoid conflicts of interest with respect to their responsibility in accordance with applicable laws, including 3CE’s Conflict of Interest Policy and are obligated to discharge their responsibilities with integrity and fidelity and are prohibited from placing themselves in a position where their private, personal interests may conflict with the official duties to the Agency.
III. Obligations of Agency Staff:
1. Staff shall provide timely onboarding and orientation for new and recently appointed Directors. Such onboarding and orientation will include, at a minimum, information regarding 3CE’s structure, meetings cadence, operations, financial position, energy risk, and regulatory outlook.
2. Staff shall timely and routinely advise the Boards about 3CE’s work in local communities, including anticipated projects, energy programs participation, and attendance at events.
3. Staff shall coordinate periodic opportunities for Member Agency jurisdiction subject matter experts to provide input and feedback on 3CE energy programs, ensuring relevancy, and benefits to local communities.
4. Staff shall provide Boards with complete and accurate information to evaluate and consider Agency matters.
IV. Board Member Obligations, Conduct with One Another and Coordination with Non-Seated Agency Jurisdictions:
1. Directors shall make every effort to attend Board meetings and meetings of committees to which they are appointed. When unable to attend, Directors shall provide staff and Alternates sufficient notice to allow Alternate Directors to meaningfully attend Board and committee meetings in their place.
2. Directors shall review agenda materials in advance, be prepared and exercise care in discussing the issues and business on the agenda.
3. Director votes should reflect their independent judgment regarding 3CE’s best interests, informed, among other things, by their understanding of customer needs and viewpoints within the service territory that their seat represents.
4. Directors commit to keep Alternate Directors appraised of 3CE matters and coordinate with their alternative members to assist them in preparing for meetings that they attend in their primary capacity.
5. Directors from shared seats commit to coordinating with staff to keep shared seat counterpart jurisdictions’ governing bodies apprised of 3CE business and key developments. Such coordination may include:
a. When feasible, inviting or joining 3CE staff at regional meetings, open houses, or open forums to share perspectives, updates and solicit feedback.
VII. External Communications:
1. 3CE welcomes and invites the public’s participation in 3CE public meetings.
2. When Community Advisory Council vacancies occur, Policy Board Directors shall solicit nominations to facilitate diverse representation of public stakeholders.
3. Directors and staff shall not disclose to third parties confidential financial, personnel, proprietary, or trade secret information or other matters protected by law to third parties.
4. Directors and staff shall not violate the confidentiality of closed session discussions.
5. When serving on external committees, councils or Boards, Directors strive to faithfully articulate 3CE’s official position on an issue.
Approved [Month] [Day], [Year]