Central Coast Community Energy (3CE) Operations Board
October 9, 2024

Operations Board of Directors
October 9, 2024
10:30 A.M.

Central Coast Community Energy
70 Garden Court, Suite 300
Monterey, CA 93940

REMOTE LOCATION VIA TELECONFERENCE
Any interested parties or community members may attend, and participate in, the meeting at the following addresses where Board members may also join the meeting from:

County of Santa Cruz
Government Center
701 Ocean Street, 701 Community Room
Santa Cruz, CA 95060
City of San Luis Obispo
City Hall
990 Palm Street, Council Hearing Room
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
City of Salinas
City Hall
200 Lincoln Avenue
Salinas, CA 93901
Hyatt House Atlanta/Downtown
431 Marietta Steet NW
Atlanta, GA 30313
Public may participate through ZOOM. For ZOOM participation please join by computer audio at:
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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.

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/ 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 September 18, 2024 meeting of the Operations Board of Directors

2. Update on FY 2023-24 Energy Programs

3. Regulatory Update

4. Financial report for the period October 1, 2023, through July 31, 2024

REGULAR AGENDA

5. CEO Report
a. Resource Adequacy 2024-25 Compliance Year Update
b. Community Advisory Council Vacancies
c. Publication of Power Content Label Delayed

6. Update on the implementation of the Community Engagement Plan for the January 2025 Enrollment of the City of Atascadero and the County of San Luis Obispo

7. Adopt Resolution No. OB-2024-03 approving amendments to 3CE's Energy Risk Management (ERM) Policy as recommended by the Risk Management Committee (RMC)
Board member reports and comments
Adjournment
Operations Board of Directors
September 18, 2024
4:00 PM
Seascape Beach Resort
1 Seascape Resort Dr, Seascape Room
Aptos, CA 95003

MINUTES
The meeting was called to order at 4:00 PM with 12 members present and a quorum established.

Directors Present: Campbell, Downing, Huffaker, Hunter, McDonald, Pia, Palacios, Ramirez, Vides, Wolfe, Vice Chair Miyasato, Chair Goldstein
Directors Absent: De La Rosa, Espinosa, Guertin, Lewis, Mogensen, Posada, Reynolds Chair opened public comment for items on the consent calendar and items not listed on the agenda.

No public comment received.

The Chair closed the public comment period.

CONSENT CALENDAR
MOTION: Moved by Director Wolfe, seconded by Director Downing to approve the consent calendar.

ACTION: The Motion Carried with a voice vote: 12/0/7
AYES: Campbell, Downing, Huffaker, Hunter, McDonald, Pia, Palacios, Ramirez, Vides, Wolfe, Vice Chair Miyasato, Chair Goldstein
NOES: None
ABSENT: De La Rosa, Espinosa, Guertin, Lewis, Mogensen, Posada, Reynolds

1. Approved minutes from the May 8, 2024, meeting of the Operations Board of Directors

2. Approved minutes from the August 14, 2024, meeting of the Operations Board of Directors

3. Adopted Resolution OB-2024-02 Setting the Regular Meeting Schedule of the Operations Board of Directors

4. Authorized 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
Chair opened public comment period.

No public comment received.

The Chair closed the public comment period.

ACTION: Discussion Item; no action required

12. Consider supporting the Policy Board's adoption of the Fiscal Year 2024-25 Recommended Budget and the Calendar Year 2025 cost-based rates
Chair opened public comment period.

No public comments received.

The Chair closed public comment period.

MOTION: Moved by Director Pia, seconded by Director Hunter to approve.

ACTION: The Motion Carried with a voice vote: 12/0/7
AYES: Campbell, Downing, Huffaker, Hunter, McDonald, Pia, Palacios, Ramirez, Vides, Wolfe, Vice Chair Miyasato, Chair Goldstein
NOES: None
ABSENT: De La Rosa, Espinosa, Guertin, Lewis, Mogensen, Posada, Reynolds

13. Consider and provide direction regarding proposed 3CE Code of Conduct Chair tabled item for future meeting; no action taken.

Adjourned at 5:14 PM

Staff Report Item 2
TO: 3CE Operations Board
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Inaara Muhammad, Manager of Energy Programs SUBJECT: Update on FY 2023-24 Energy Programs
DATE: October 9, 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 support 3CE’s mission by serving the central coast with incentives to engage in electrification initiatives, strengthen the local economy, 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, commercial, and public agency electrification efforts in the transportation, building, and agricultural sectors.

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 Energy Programs Portfolio (Attachment 1). 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). All metrics are presented for applications approved through September 20, 2024. 3CE staff are processing applications received through the end of the fiscal year and will provide an annualized portfolio performance update in the coming months.

Below are several highlights of the Energy Programs status updates for FY 2023-24:

Transportation Electrification
 As a result of the E-Bus Program expansion in August 2024 that now allows eligible customers to receive rebates of up to $400,000, the E-Bus program has distributed an additional $1M, for a fiscal year total to date of $1.4M.  The County of Santa Barbara received $130,000 in rebates through 3CE's Charge Your Fleet program for the installation of 26 Level 2 EV chargers across the county.  The City of Santa Maria received $14,000 in rebates for 2 Ford F-150 Lightnings through 3CE’s Electrify Your Fleet program.

Building Electrification
 On September 17, 2024, City of Goleta successfully passed their Electric Vehicle Charging Infrastructure Reach Code building code. The Reach Code increases the number of EV charging spaces and/or infrastructure required in new construction and major renovations beyond what the state currently requires. The Reach Code will apply to new construction and major renovations including new multifamily buildings, hotels and motels, residential homes, and nonresidential developments such as workplaces.  3CE staff are working with 3CE’s Community Advisory Council (CAC) to review the current Electrify Your Home program design. The CAC workplan includes engaging with the community to gather input and ensure program initiatives are aligned to community needs and recommend program enhancements to increase participation and improve program resources available to underserved communities.

Agricultural Electrification
 3CE staff are continuing meetings with Polaris and PG&E to prepare for the launch of the Hourly Flex Pricing Ag Pilot next year. The pilot project will send strong dynamic price signals to participating commercial agricultural customers via their automated irrigation systems to enable significant customer savings and operational benefits.

Demand Response
 The Residential Battery Rebate Program was launched on July 16, 2024. The program has an annual budget of $2M, with anticipated participation of 400 customers per year.

As of September, the new program has received 34 applications. 3CE staff are reviewing battery tracking data to help inform the ongoing demand response pilot planning.

Strategic Initiatives
 3CE’s new Customer Relationship Management (CRM) tool will allow program applications to 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 CRM is planned to launch energy program applications and management by September 30, 2024.

 Design work has started on the level 2 EV chargers for the new San Luis Obispo Office as part of 3CE’s EV Charger Asset Pilot. 3CE staff have met with the San Luis Obispo County Air Pollution Control District (APCD) to discuss eligibility for their Alternative Fuel Infrastructure Grant Program.

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 communities reduce GHG emissions throughout the 3CE service area.

ATTACHMENT(S):

1. Update on 3CE Energy Programs Portfolio

FY 2023-24 3CE Energy Programs Portfolio
This report supports the Energy Programs Staff Report for October 2024 and provides an update on participation in Central Coast Community Energy’s (3CE) Energy Programs Portfolio for the fiscal year to date.

Transportation Electrification
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 approximately 2,000 applications and has distributed nearly $3.3 million in incentives to date, enabling over $45.6 million in electric vehicle purchases and EV charger adoption. Through the program, the 3CE community has avoided over 3,300 MT CO2 emissions, equivalent to 780 gas-powered vehicles driven for one year.

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. The FY 2023-24 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. Not yet included in this total are new applications for two (2) electric buses in Monterey County and Santa Cruz County, as well as an application for a fleet electrification rebate by a 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.

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 fiscal year.

Participating jurisdictions include:
 City of Carpinteria
 City of Greenfield
 City of Marina
 City of Monterey
 City of San Luis Obispo
 City of Santa Maria
 City of Soledad
 County of Monterey
 County of Santa Barbara
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 50 EV chargers totaling $338,698.

Member Agency Equipment Type Quantity Total Incentive
CITY OF CARPINTERIA Level 2 10 $48,698.25
COUNTY OF SANTA BARBARA Level 2 26 $130,000.00
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 50 $338,698.25
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 35 Battery Electric Vehicles totaling $494,000.

Member Agency Equipment Type Qty. Total Incentive
CITY OF SAN LUIS OBISPO Battery Electric Vehicle (BEV) 10 $50,000.00 CITY OF SANTA MARIA Battery Electric Vehicle (BEV) 14 $128,000.00 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
Building Electrification
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.

On August 14, 2024, the Operations Board approved an Amendment with 3CE’s Electrify Your Home program administrator, Energy Solutions. The contract increased the Not-to-Exceed amount by $565,000 and extended the term of the agreement by six months to allow for continued and uninterrupted services to support the Energy Programs team in implementing the Electrify Your Home program through FY 2024-25.

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 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 $858,250 to incentivize all-electric construction of 228 affordable housing units, 96 market-rate units, six ADUs, and five disaster rebuilds.

County Total Incentive Funds Distributed
Monterey County $175,000
San Luis Obispo County $349,000
Santa Cruz County $334,250
Table 3: NCEP funds distributed by county
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 (complete) City of Santa Cruz New Construction (complete) and Existing Buildings (underway) City of Goleta Electric Vehicle Charging Infrastructure (complete) County of Monterey Electric Vehicle Charging Infrastructure (underway) Agricultural Electrification
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 shown 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: 9 8 30% 17
Table 4: Agricultural Electrification projects awarded in FY 2023-24.

Demand Response
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 $2 million.

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. 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.

As of September 2024,3CE has received 34 applications, totaling $186,000. 3CE will continue to update the Board as staff processes applications.

Staff Report Item 3
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Jerri Strickland, Manager of Energy Policy Kalia Mitchell-Silbaugh, Policy Advisor
SUBJECT: Regulatory Update
DATE: October 9, 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)
 Integrated Resource Planning (IRP)
 Renewables Portfolio Standard (RPS)
 Interconnections
 Distribution Planning
 Energization
 Preventing Disconnections
 GO 156 Annual Supplier Diversity Report & Plan
 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):

1. Regulatory Update

Regulatory Update
October 19, 2024

2 Table of Contents
REGULATORY UPDATE .........................................................................................................................................................3 Resource Adequacy (RA) –.........................................................................................................................3 Integrated Resource Planning (IRP) – ........................................................................................................3 Renewables Portfolio Standard (RPS) – .....................................................................................................4 Interconnections –.....................................................................................................................................4 Distribution Planning – ..............................................................................................................................5 Energization –............................................................................................................................................5 Preventing Disconnections – .....................................................................................................................6 GO 156 Annual Supplier Diversity Report & Plan –....................................................................................6 Load Management Standards (LMS) and Real-Time Pricing – ...................................................................7 Energy Resources Recovery Account (ERRA) Compliance – ......................................................................7 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. On August 30, the Energy Division issued a revised Slice of Day (SOD) tool and proposed that the CPUC adopt a 26.5% PRM for January through May of 2026, and a 23.5% PRM for the remainder of the year, representing a significant increase to the 2025 PRM of 17% and the initial 2026 PRM recommendation of 18.5%. 3CE worked with CalCCA to submit opening and reply comments on the revised PRM analysis, reiterating that the CPUC should delay adoption of a 2026 PRM to address stakeholder concerns with the study methodology and recommended PRMs. 3CE will receive its final 2025 year-ahead RA allocations by the end of September.

Next Steps
A Proposed Decision (PD) on Track 2 issues, including the 2026 PRM level and CalCCA’s proposal to amend the CPE timeline to provide LSEs with CPE allocations at least one year prior to their year-ahead RA filings, is expected in November. 3CE will submit its annual year-ahead RA showing for 2025 by the October 31, 2024 deadline.

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 September 12, the CPUC issued a Ruling proposing resource portfolios for the 2025-2026 Transmission Planning Process. Once adopted, these resource portfolios will be used by CAISO to assess the need for upgrades or additions to the transmission system. Separately, the CPUC issued D.24-09-006 on September 17, allowing short-term alternative compliance options for LSEs to meet their procurement obligations to replace

4 the Diablo Canyon Power Plant. The Decision also finds that the CPUC should assess an LSE’s compliance with IRP-related procurement holistically, including all efforts to procure, and take into account last-minute delays from developers.

Next Steps
3CE will work with CalCCA to shape comments on the CPUC’s proposed resource portfolios, due September 30. 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.

Renewables Portfolio Standard (RPS) – 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 September 11, the CPUC issued a PD resolving three motions for waiver of RPS penalties, including a motion submitted by fellow CCA CleanPowerSF. The PD finds that the retail sellers did not comply with the CPUC’s standard terms and conditions requirements for RPS contracts, but because the sellers met their procurement quantity requirements, it significantly reduced the penalties recommended by Energy Division. CalCCA will consider filing comments on October 1 in support of the Commission’s reasonable approach to compliance, as the original penalties spanned $1-10 million despite the retail sellers’ sufficient RPS procurement.

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. A PD on LSE 2024 Procurement Plans will be issued in Q4 of 2024.

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

5 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. Pending approval of the proposal, 3CE will participate in the scoring process for Cluster 15. 3CE’s scoring criteria will be available on its website by October 1.

Distribution Planning – R.21-06-017
Issue
In anticipation of extensive increases in Distributed Energy Resources (DER) due to California’s transportation electrification (TE) and climate goals, the CPUC initiated a Rulemaking to determine how to optimize DER integration within the distribution grid. This Rulemaking seeks to improve the transparency, accuracy, and efficacy of IOU distribution planning processes to better accommodate DER growth and mitigate the need for costly grid upgrades.

Status
On September 13, the CPUC issued a PD adopting improvements to IOU distribution planning and execution processes, including refinements to their load forecasting, community engagement, and data sharing. The PD also makes a number of changes to increase the accuracy of Integration Capacity Analysis (ICA) maps, which provide information on hosting capacity, forecast data, and grid needs to help contractors and developers identify potential DER sites.

Next Steps
CalCCA will submit comments on the PD on October 3, emphasizing the importance of addressing affordability concerns in distribution planning and advocating for IOUs to consider how DERs could defer expensive grid upgrades as part of their planning process.

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 September 1, the CPUC issued a Decision establishing target energization time periods and procedures for customers to report energization delays. IOUs are required to assign a project manager to each approved application for new or upgraded service to provide updates and address customer concerns. The Decision also adopts a form for customers to report energization delays directly to the CPUC.

Next Steps
IOUs must file community engagement and communication plans by November 11 to describe how they will provide customers with information on the energization process and timing of their requests. Phase 2 of the

6 energization rulemaking will continue to refine energization timelines and contemplate compliance requirements if IOUs fail to meet statewide targets. 3CE will continue to monitor the proceeding to stay informed of changes to IOU energization processes.

Preventing Disconnections – R.18-07-005
Issue
In 2020, the CPUC established temporary residential disconnection rate caps for the IOUs, including a 3.5% cap for PG&E and a 4% cap for SCE, set to expire at the end of 2024. Further, in 2021, the CPUC directed the IOUs to allocate payments on outstanding payments on outstanding utility bills using a pro-rata method, which splits payments proportionally between utility and CCA charges, through the end of September 2024. The pro-rata method temporarily replaced the current IOU tariff “waterfall” methodology whereby past-due bills are first credited to the IOU portion and then to the CCA portion, resulting in CCAs bearing disproportionate impacts from customer payment delays. These temporary measures were implemented in the context of the COVID-19 pandemic when the IOUs were not disconnecting residential customers.

Status
On September 12, 2024, the CPUC adopted a Decision requiring the IOUs to continue indefinitely the proportional allocation of partial past-due electricity utility bill payments between IOUs and CCAs. This Decision represents a significant win for CCAs and caps a long-running dispute between the IOUs and CCAs.

Importantly, the Decision finds financially sound CCAs benefit all customers. The Decision also rules in favor of CalCCA’s argument against SCE’s “zig zag” proposal, which would result in a form of the “waterfall” and prioritize paying IOUs first, finding that this method is not proportional and would negatively impact the financial stability of CCAs.

Next Steps
On September 20, parties will submit comments on the impact of modifying disconnection rate caps on customer bills beyond 2024. 3CE will work with CalCCA to review party comments and assess the need to submit replies, due October 4.

GO 156 Annual Supplier Diversity Report & Plan – R.21-03-010 Issue
GO 156 is a California Public Utilities Commission (CPUC) program that requires California load-serving entities to report on the portion of their contracts and subcontracts that are signed with businesses that qualify as Women, Minority, Disabled, Veteran, Lesbian, Gay, Bisexual, Transgender Business Enterprises (WMDVLGBTBE).

Status
On August 27, the CPUC issued a Phase 2 PD which introduces minor modifications to the reporting requirements for LSEs’ annual GO 156 Supplier Diversity reports. The PD would require LSEs to include existing publicly available, non-confidential reports and data submitted to state and federal jurisdictions pertaining to workforce diversity, and a brief description of their board diversity data. 3CE worked with CalCCA to submit comments on the PD recommending that the CPUC exempt CCAs from the requirements to report on board diversity as CCA boards are publicly appointed or elected.

Next Steps
The CPUC will vote on the PD on September 26. If approved, the reporting modifications in the PD will apply to 3CE’s 2024 Supplier Diversity Report, which is due to the CPUC by March 1, 2025.

7 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 single statewide tool (SST) for authorized rate data access by third parties for submission to the CEC by October 1. The submission of the SST will undergo a stakeholder process with feedback from demand response stakeholders other than LSEs. 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 SST and to ensure that any necessary cost recovery processes are equitable and transparent. In the upcoming months, the CEC will issue a review of all CCA LMS Plan and issue an official determination letter on 3CE’s compliance approach. In the meantime, 3CE is developing a list of demand flexible program offerings to submit to the CEC by October 1 and continues to assess the options outlined in its LMS Plan.

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
A Ruling extended the statutory deadline of PG&E’s 2021 ERRA Compliance case from August 30, 2024, to February 28, 2025. In response to a September 3, 2024, Ruling, CalCCA submitted motions to admit new discovery responses from PG&E related to PG&E’s 2022 ERRA Compliance case, along with motions to admit evidence under seal for confidential portions of the discovery responses. This is after a previous ALJ Ruling permitting CalCCA to ask discovery regarding PG&E’s RA sales in 2022. CalCCA was able to work with PG&E to comply with the ruling and file motions for the admission of exhibits and testimonies by September 6, within three days of the filed Ruling.

SCE Status
A Decision extended the statutory deadline of SCE’s 2022 ERRA Compliance case to March 6, 2025. It also identifies a deadline of October 3, 2024, for resolving issues identified by the Scoping Ruling. Briefs were filed in April 2024. CalCCA’s issues relate to SCE double charging franchise fees to unbundled customers and attempting to recover CAISO penalty fees from ratepayers. CalCCA proposed a compromise by using a vintage-Page 23 of 117 8 specific credit for returning the double-charged franchise fees to customers and proposed that SCE shareholder incur the costs of the CAISO penalties.

Next Steps
Opening and Reply Briefs for the new discovery admitted in the PG&E 2022 ERRA Compliance case will be filed on October 4 and October 11. For SCE’s 2022 ERRA Compliance case, Intervenor Testimony is due on December

5. 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 submitted intervenor testimony on September 3, making the following recommending to the Commission regarding PG&E’s 2025 ERRA Forecast: (1) reject the proposal to change the Common Cost Allocation Method, (2) reject the proposal to create a new category of RPS-eligible energy that deviates from CPUC guidelines, (3) correct the misallocation of Sold RA and Unsold RA in the Indifference Amount calculation, and (4) correct the allocation factor related to the gain and sale of PG&E’s San Francisco General Office. These proposals and errors would unfairly shift costs onto unbundled CCA customers.

SCE:

SCE filed rebuttal testimony in its 2025 ERRA Forecast case on September 19, 2024. CalCCA determined there is no need for evidentiary hearings, but that meeting with SCE to ensure they understand CalCCA’s issues will be beneficial regarding CalCCA’s proposal for SCE to prorate allocation of forecasted sold and unsold RA. SCE agrees that it should prorate its forecasted sold RA, but not unsold RA. CalCCA’s assessment is that adopting its proposal would reduce the PCIA, however SCE argues the unsold RA should be valued at 0 and therefore segmenting unsold RA would have no effect on the PCIA. Although SCE’s proposal would not have an immediate impact on the PCIA, this issue is contentious because it could set a policymaking precedent and have negative impacts for CCAs in other IOU Service Areas.

Next Steps
3CE will be working with CalCCA to determine next steps on discovery, motions, and cross examinations for both PG&E and SCE’s 2025 ERRA Forecast cases. Proposed Decisions for both cases are anticipated to be issued in November.

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: Financial report for the period October 1, 2023, through July 31, 2024 DATE: October 9, 2024
RECOMMENDATION:

Receive a financial report for the period October 1, 2023, through July 31, 2024.

SUMMARY:

Over the ten months ending July 31, 2024, operating revenues amounted to $433.7 million, and operating expenses totaled $416.5 million for a net operating income of $17.2 million. Non-operating revenue of $9.7 million, driven by interest and investment returns, netted the month with a net position of $26.9 million.

Year-to-date operating revenue is $22.3 million lower than budget, primarily due to the seasonal fluctuations in revenues and expenditures and the lower-than-budgeted load to date. Operating revenue is anticipated to align close to the budget throughout the fourth quarter as the summer months conclude. Investment revenue exceeded the budget with a favorable variance of $4.5 million, as staff actively manages in a favorable short-term interest rate environment.

Year-to-date operating expenditures are lower than the budget by $28.6 million. The cost of energy was $20.0 million higher than the budget. The variance is from higher-than-expected resource adequacy (RA) capacity costs. Non-energy operating costs were $11.7 million lower than budget due to less-than-planned costs for contracted services, energy programs, and staff vacancies.

Net position at the end of July 31, 2024, totaled $268.7 million, a $26.9 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 $216.1 million, a $38.9 million decrease from the start of the fiscal year. This decrease is primarily due to the prepayment and incurred costs of RA purchases. 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. July 31, 2024 Financial Report

FINANCIAL REPORT
Fiscal Year to Date
As of July 31, 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 July 31, 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
September 11, 2024
1101 Fifth Avenue, Suite 200 San Rafael, CA 94901 415 459 1249 mahercpa.com

Current assets
Cash and cash equivalents - unrestricted $ 167,115,102
Accounts receivable, net of allowance 36,583,126
Accrued revenue 31,313,135
Other receivables 1,669,691
Loan receivable 190,718
Prepaid expenses 65,971,440
Deposits 12,602,344
Cash - restricted 294,000
Investments 48,940,023
Total current assets 364,679,579
Noncurrent assets
Deposits 23,182
Loan receivable 1,330,079
Capital assets, net of depreciation and amortization 3,901,804 Total noncurrent assets 5,255,065
Total assets 369,934,644
Current liabilities
Accrued cost of electricity 69,324,078
Accounts payable 2,134,769
Other accrued liabilities 1,842,494
User taxes and energy surcharges due to other governments 1,751,330 Lease liability 321,029
Security deposits - energy suppliers 14,628,299
Total current liabilities 90,001,999
Noncurrent liabilities
Security deposits - energy suppliers 10,303,125
Lease liability 897,380
Total noncurrent liabilities 11,200,505
Total liabilities 101,202,504
Net investment in capital assets 2,683,395
Restricted for security collateral 294,000
Unrestricted 265,754,745
Total net position $ 268,732,140

NET POSITION
As of July 31, 2024

STATEMENT OF NET POSITION

CENTRAL COAST COMMUNITY ENERGY
ASSETS

LIABILITIES

OPERATING REVENUES
Electricity sales, net 433,604,402$
Other income 86,858
Total operating revenues 433,691,260

OPERATING EXPENSES
Cost of electricity 392,205,473
Contract services 10,165,605
Staff compensation 6,353,036
Other operating expenses 1,416,243
Program incentives 5,910,685
Depreciation and amortization 485,778
Total operating expenses 416,536,820
Operating income (loss) 17,154,440

NONOPERATING REVENUES (EXPENSES)
Interest and investment returns 9,763,209
Interest and financing costs (56,835)
Nonoperating revenues (expenses) 9,706,374
CHANGE IN NET POSITION 26,860,814
Net position at beginning of period 241,871,325
Net position at end of period $ 268,732,139
Ten Months Ended July 31, 2024

AND CHANGES IN NET POSITION

STATEMENT OF REVENUES, EXPENSES

CENTRAL COAST COMMUNITY ENERGY

CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 431,051,438$
Other operating receipts 89,421
Receipts of deposits and collateral 39,261,062
Payments to suppliers for electricity (434,839,145)
Payments of deposits and collateral (50,695,168)
Payments for other goods and services (11,980,722)
Payments for program incentives (6,597,493)
Payments of staff compensation (6,083,966)
Payments of taxes and energy surcharges to other governments (7,718,311) Net cash provided by operating activities (47,512,884)

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Payments of financing costs (5,944)
Net cash provided by non-capital financing activities (5,944)

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES
Payments of lease liability (299,854)
Payments to acquire capital assets (2,399,529)
Net cash provided (used) by capital and related financing activities (2,699,383)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment income received 8,380,602
Proceeds from investment sales 114,932,461
Principal payments received of loan receivable 187,201
Purchase of investments (101,906,820)
Net cash provided (used) by investing activities 21,593,444 Net change in cash and cash equivalents (28,624,767)
Cash and cash equivalents at beginning of year 196,033,869 Cash and cash equivalents at end of period $ 167,409,102 Reconciliation to the Statement of Net Position
Cash and cash equivalents - unrestricted $ 167,115,102
Cash - restricted 294,000
Cash and cash equivalents $ 167,409,102
Ten Months Ended July 31, 2024

STATEMENT OF CASH FLOWS

CENTRAL COAST COMMUNITY ENERGY

Operating income (loss) $ 17,154,440
Adjustments to reconcile operating income (loss) to net cash provided by operating activities
Depreciation and amortization expense 485,778
(Increase) decrease in:

Accounts receivable, net of allowance (3,823,851)
Accrued revenue (6,448,029)
Other receivables 2,241,458
Prepaid expenses (65,591,229)
Deposits (6,108,250)
Increase (decrease) in:

Accrued cost of electricity 20,401,602
Accounts payable (622,167)
Other accrued liabilities 125,617
User taxes and energy surcharges due to other governments (2,397) Security deposits - energy suppliers (5,325,856)
Net cash provided by operating activities (47,512,884)$

CENTRAL COAST COMMUNITY ENERGY
STATEMENT OF CASH FLOWS (continued)
Ten Months Ended July 31, 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 July 31, 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
September 11, 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 $ 53,948,525 $ 48,473,000 $ 5,475,525 11% $ 439,449,253 $ 461,753,000 $ (22,303,747) 95% $ 563,933,447 $ 124,484,194 Uncollectible accounts (717,516) (625,000) (92,516) 15% (5,844,851) (6,250,000) 405,149 94% (7,500,000) (1,655,149) Electricity sales, net 53,231,009 47,848,000 5,383,009 11% 433,604,402 455,503,000 (21,898,598) 95% 556,433,447 122,829,045 Investment and miscellaneous income 919,187 533,000 386,187 72% 9,850,067 5,333,000 4,517,067 185% 6,400,000 (3,450,067) Total revenues and other sources 54,150,196 48,381,000 5,769,196 12% 443,454,469 460,836,000 (17,381,531) 96% 562,833,447 119,378,978 EXPENDITURES AND OTHER USESCurrent Expenditures
Cost of energy 66,746,089 47,719,000 (19,027,089) -40% 393,134,782 373,135,000 (19,999,782) 105% 520,297,514 127,162,732 Salaries and benefits 689,507 795,000 105,493 13% 6,353,036 7,948,000 1,594,964 80% 9,537,076 3,184,040 Services and supplies 2,352,381 2,750,000 397,619 14% 17,354,803 27,499,000 10,144,197 63% 32,998,857 15,644,054 Total current expenditures 69,787,977 51,264,000 (18,523,977) -36% 416,842,621 408,582,000 (28,549,015) 102% 562,833,447 145,990,826 Surplus (deficit) $ (15,637,781) $ (2,883,000) $ (12,754,781) 442% 26,611,848 $ $ 52,254,000 $ (25,642,152) -49% $ (26,611,848) - $ Annual

CENTRAL COAST COMMUNITY ENERGY

BUDGETARY COMPARISON SCHEDULE
Current Month and Ten Months Ended July 31, 2024
Current Month
Variance fav. (unfav.)
Year-To-Date
Variance fav. (unfav.)

CCA Program surplus/(deficit)
per budgetary comparison schedule: $ 26,611,848
Adjustments needed to reconcile to the changes in net position in the Statement of Revenues, Expenses and Changes in Net Position:

Add back GASB 87 lease amortization not in operating budget 248,966 Change in Net Position $ 26,860,814

REVENUES, EXPENSES AND CHANGES IN NET POSITION

CENTRAL COAST COMMUNITY ENERGY

BUDGET RECONCILIATION TO STATEMENT OF
Ten Months Ended July 31, 2024

Budget Item YTD Variance Comment
Electric Sales Revenue (4.8%) 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 5.4% 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 (20.1%) Staffing expenses are under budget due to the timing of new hires.

Professional Services (62.7%) This category includes accounting, IT, technical and other consultants.

Legal Costs (22.4%) This category includes outside legal costs for regulatory and energy procurement needs.

Marketing and customer enrollment 0.6% Variance is mostly due to the lower than anticipated costs of recent customer enrollments.

Data Management Services 2.7% These fees non-discretionary and are charged on a per customer basis.

Utility Service Fees (3.2%) These are PG&E and SCE fees charged on a per customer basis.

Other General & Administrative (45.2%) This category includes occupancy costs, industry membership dues, and other general and administrative costs.

Energy and Related Programs (47.5%) Programs expenses have generally been delayed until future periods Budget Commentary for significant items

CENTRAL COAST COMMUNITY ENERGY
October 1, 2023 through July 31, 2024

-25.4%

0.3%
Act
Bud
$40.5
$82.4
$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
$433.6
$455.5
$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) 422 393 409 399 358 367 360 388 389 424 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
424 GWh

STD MARGIN
-$13.5M (-25%)
Δ in NET ASSETS
-$15.6M
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: July 2024

CUSTOMERS
457,000
ACTIVE
July revenue of $54.2M accounts for 424
GWh in net retail consumption, 19 GWh
above budget.

YTD Electricity revenue is $434M compared
to budget of $456M. YTD Direct Margin
(defined as Electricity Sales less Cost of
Energy) of $40.5M is below budget by
$42M.

The chart to the right shows volume
comparison to budgeted volume.

The charts below display cumulative
revenue and margin $ vs budget.
30%
47%
23%
37%
47%
15%
Res
Com
Ag
YTD Month
Revenue $54.2
C.O.E. $66.7
OpEx $3.0
Net Income -$15.6
-$13.5
$0.1
Act
Bud
Margin $
10 32%
46%
22%
41%
45%
14%
Res
Com
Ag
YTD Month

REVENUE
$54.2M
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 $ 89,388,999 Gains/Losses/Interest $ 3,570,655 $ 406,536 345,045.39 356,733.82 348,153.12 328,669.77 467,310.22 292,100.83 359,957.02 342,604.48 323,544.31 Average APY 3.69% 3.61% 4.06% 4.00% 3.80% 4.10% 3.93% 4.19% 4.12% 4.34%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 $ 123,914,223 Gains/Losses/Interest $ 4,456,703 351,852.83 417,968.37 462,148.76 463,382.88 411,214.03 409,319.23 398,176.83 488,291.25 481,788.55 572,560.60 Average APY 5.02% 5.61% 5.29% 5.04% 4.49% 5.77% 4.68% 5.02% 4.69% 5.54%

CENTRAL COAST COMMUNITY ENERGY
Investment Summary
October 1, 2023 through July 31, 2024

Current 0 - 30 Days 31 - 60 Days 61 - 90 Days > 91 Days A/R Balance $ 23,450,894 $ 11,129,573 $ 1,150,041 $ 693,180 $ 159,437 $ 36,583,125

CENTRAL COAST COMMUNITY ENERGY
Summary of Accounts Receivable, Net of Bad Debt Allowance As of July 31, 2024

Staff Report Item 5
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
SUBJECT: CEO Report
DATE: October 9, 2024
RESOURCE ADEQUACY 2024-25 COMPLIANCE YEAR UPDATE
Year-Ahead Resource Adequacy (RA) filings for the 2025 compliance year are fast approaching, with both California Public Utilities Commission (CPUC) Slice-of-Day and California Independent System Operator (CAISO) filings due by October 31st. We are pleased to report that 3CE has already met its year-ahead obligations for these filings and is now leveraging new tools provided by the CPUC to ensure accuracy. Additionally, 3CE is actively and methodically participating in RA solicitations from Investor-Owned Utilities (IOUs) and other Load Serving Entities (LSEs) to finalize our month-ahead positions.

COMMUNITY ADVISORY COUNCIL VACANCIES
Following the recent resignations of Katie Davis, John Hughes, and Wayne Norton, 3CE’s Community Advisory Committee (CAC) currently has three vacancies. 3CE is seeking to fill these vacancies immediately. Members of the public who are interested in serving may submit a statement of interest and/or resume to the Board Clerk at ([email protected]) and inquire for additional information.

Applications received from the public will be included for consideration by committees comprised of the Policy Board members for a given county.

Councilmembers Davis, Hughes, and Norton were dedicated members of the CAC, contributing significantly to CAC initiatives including the creation of an Underserved Communities Outreach & Engagement Plan, a Planning Action for Regional Transportation Electrification report, a study of Demand Response programs and annual review of 3CE’s Energy Programs performance. 3CE staff is grateful to Councilmembers Davis, Hughes, and Norton for their commitment to 3CE’s mission, their dedication and support.

PUBLICATION OF POWER CONTENT LABEL DELAYED
Software issues associated with the California Energy Commission’s (CEC) reporting tool, known as WREGIS (Western Renewable Energy Generation Information System), prompted the regulator to postpone the Power Content Label (PCL) reporting due dates, which are normally in October of each year. The revised due date is now no later than end of January 2025. 3CE will strive to publish its PCL before that time, once it is able to verify the accuracy of information reflected in WREGIS.

ATTACHMENT(S):

1. Contract List under $200k

CCCE Contracts < $200k
Vendor Total Engagement Amount From To Service Scope Remarks 1 Central Coast Security $32,886 9/14/2024 9/13/2025 Security patrol services provided at the agency's building, located at 1026 Palm St. in San Luis Obispo 2 Governmentjobs.com, Inc. (dba NeoGov) $42,185 10/1/2024 9/30/2027 3-Year subscription services for HR-related software and management solutions to assist with mandatory employee training and e-forms to streamline processes
3 The Center for Organization Effectiveness $75,410 12/1/2024 6/30/2025 The addition of $29,300 for a not to exceed amount of $75,410, for the continual facilitation and change management support to offer through partnership and leadership development to key staff members 4 5

Staff Report Item 6
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Jeff Railsback, Manager of Customer Accounts and Services SUBJECT: Update on the implementation of the Community Engagement Plan for the January 2025 Enrollment of the City of Atascadero and the County of San Luis Obispo DATE: October 9, 2024
RECOMMENDATION:

This memorandum updates the Operations Board on the implementation of the Community Engagement Plan for the January 2025 enrollment of the City of Atascadero and the County of San Luis Obispo.

BACKGROUND:

Residents and businesses within the City of Atascadero and the County of San Luis Obispo will have the choice to join 3CE as their provider of electricity generation services starting in January 2025. 3CE is working with City and County staff to implement the Community Engagement Plan designed to increase awareness about 3CE and facilitate a positive enrollment experience. Staff from 3CE met with the City and County to present and discuss the Plan's key elements in February and March 2024, and continue to work in close coordination with them to prepare for enrollment.

Enrollment Plan Overview:

The 2025 Engagement Plan outlines 3CE’s efforts to welcome the City of Atascadero and the County of San Luis Obispo to its clean and renewable energy services starting in January 2025. The plan includes community outreach, communication strategies, and partnerships to ensure a smooth enrollment process and raise awareness about the benefits of 3CE service. Key components of the plan include engaging with community partners, utilizing various communication channels such as press, social media, and webinars, and providing customers with information about the enrollment process. The goal is to enroll 90% of the eligible load and facilitate an efficient and informed process for customers.

The plan was submitted as part of the CEO’s report to the Operations Board on May 8, 2024, the Policy Board on June 26, 2024, and presented to the Community Advisory Council on August 7 and October 2, 2024.

Enrollment Process:

The two-stage formal enrollment process for Atascadero and SLO County will begin 60 days prior to the start of 3CE service (“pre-enrollment”) and end 60 days later (“post-enrollment”), as required by the California Public Utilities Commission. With 3CE service for both areas set to start in January 2025 (on customers’ regular meter-read dates), pre-enrollment will begin in November 2024, and post-enrollment will conclude at the end of March 2025.

The pre-enrollment process will begin with two notification mailers or emails (depending on customer preference) sent to all eligible customers in November and December 2024. As part of post-enrollment, two additional mailers or emails will be sent to all customers in February and March 2025. 3CE began outreach and engagement efforts in the summer of 2024. Direct community engagement, paid advertising, social media, and earned media will follow in early fall 2024. Attached is the timeline of key dates and community engagement opportunities.

DISCUSSION/ANALYSIS:

Community outreach for the 2025 enrollment process began in June 2024 with event sponsorships, participation in a local parade, and staffing and information booths at events. In October, staff will begin presenting to community groups, speaking at community events, meeting with member agency staff, and meeting with key businesses and centers of influence. These outreach efforts will continue through March 2025.

The first enrollment notification will be sent out in November based on the customer's meter read date.

It will be sent by mail or email, depending on the customer’s stated preference. November will also mark the launch of the awareness campaign, including advertising, social media, and newsletter distribution to our community partners, and solicited opinion articles in local publications.

FISCAL IMPACT
There is no fiscal impact associated with this report.

CONCLUSION:

Successful implementation of the Community Engagement Plan will ensure 3CE keeps customers informed regarding their choice related to their electric generation provider as well as the benefits of participating in 3CE service.

ATTACHMENT(S):

1. 3CE 2024-25 Enrollment Timeline & Key Dates of Community Engagement Activities

3CE 2024-25 Enrollment Timeline & Key Dates of Community Engagement Activities TIMELINE OF KEY ENROLLMENT DATES:

October 10 County of San Luis Obispo Enrollment Check-in October 14 FAQs to City and County Staff
October 21 City of Atascadero Enrollment Check-in
November Enrollment Notification 1 of 4 sent out
November Advertising/Social Media begins
November 14 County of San Luis Obispo Enrollment Check-in November 20 City of Atascadero Enrollment Check-in
December Enrollment Notification 2 of 4 sent out
December 12 County of San Luis Obispo Enrollment Check-in December 18 City of Atascadero Enrollment Check-in
January Enrollment begins
January 9 County of San Luis Obispo Enrollment Check-in January 15 City of Atascadero Enrollment Check-in
February Enrollment Notification 3 of 4 sent out
March Enrollment Notification 4 of 4 sent out
March 13 County of San Luis Obispo Enrollment Check-in
February 19 City of Atascadero Enrollment Check-in
March 19 City of Atascadero Enrollment Check-in
SCHEDULED OUTREACH EVENTS:

Summer Atascadero “Music in the Park” Concert Series Sponsor (8 events) August 2024 Atascadero “Summer Movies in the Park” Sponsor (2 events) August 31 Atascadero “Music in the Park” concert tabling September 28 Arroyo Grande Harvest Festival parade participant October Outreach to media outlets begins, editorial meetings October 1 Rotary Club of Templeton Presentation
October 2 Rise & Shine, South County” Presentation

SCHEDULED OUTREACH EVENTS, cont.:

October 3 Nipomo Business Community Meeting
October 16 Presentation at “Breakfast on the Bay”
October 17 Atascadero Octoberfest Mixer Sponsor
October 22 Electrify Your Ride Tabling Event
October 23 Rotary Club of Atascadero Rotary Presentation October 24 Presentation to “Good Morning SLO”
October 25 Paso Robles & Templeton Chamber Corporate Cup Team Building Sponsor
October 27 South County Chambers’ “Friendsgiving” mixer Presentation November 1 Rotary Club of Los Osos/Baywood Park Presentation November 13* Enrollment Webinar #1
November 14 Kiwanis of Atascadero Presentation
November 21 Atascadero Chamber Mixer Host
November 21 Women in Business Presentation
December Atascadero Holiday Lighting of Sunken Garden Sponsor December 3* Enrollment Webinar #2
December 11 Morro Bay Chamber Mixer Host
January “Flip Your Switch” Events (dates TBD)
January 8 Home Builders Association of the Central Coast Presentation January 29* Enrollment Webinar #3
February 18* Enrollment Webinar #4
*Tentative Scheduling
TO BE SCHEDULED:

Townhalls with county supervisors
Presentations to Community Service Districts
Additional Community Service Organizations
Presentation Community Advisory Committees/Commission
Presentations to Community-Based Organizations
Lunch training with City of Atascadero Staff
Trade Organizations, including contractors and agriculture Family Resource Organizations

Staff Report Item 7
TO: 3CE Operations Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Geoffrey Ihle, Energy Risk Manager
SUBJECT: Adopt Resolution No. OB-2024-03 approving amendments to 3CE’s Energy Risk Management (ERM) Policy as recommended by the Risk Management Committee (RMC) DATE: October 9, 2024
RECOMMENDATION:

This recommends the Operations Board approve amendments to 3CE’s Energy Risk Management (ERM) Policy as recommended by the Risk Management Committee (RMC).

BACKGROUND:

The Energy Risk Management (ERM) Policy establishes 3CE’s risk management functions and procedures to identify, quantify, and manage the risks associated with power procurement activities. It establishes management responsibilities, organizational structures, risk management standards, and operating controls and limits necessary to properly identify and manage 3CE’s risk to support meeting its energy procurement goals.

The Policy Board first approved the ERM Policy in March 2018. The March 2018 policy set forth that future amendments were to be considered and recommended by the RMC and approved by the Operations Board. The ERM was further revised in September 2018, November 2020. A June 2022 revision permitted the RMC amend appendixes with subsequent notice to the Operations Board to ensure timely and effective administration of the policy. The policy was last approved in August 2023.

DISCUSSION/ANALYSIS:

Regular review of the ERM Policy ensures that it evolves to address potential market, regulatory, or business changes that impact 3CE’s procurement of energy and energy related products.

In addition to housekeeping updates throughout the Policy, revisions are largely clarifications, expansions or minor adjustments. Revisions to the annual audit requirement are presented in more detail, separately.

Clarifications, Expansions or Minor Adjustments

1.2 Scope: Clarified that 3CE’s external consultants will adhere to 3CE’s ERMP.

1.4 Policy Administration: Revised so that the ERMP will be reviewed annually instead of “routinely,” to set the expected cadence.

2.2.1 Customer Opt-Out Risk: Revised and expanded to highlight competitiveness, ethical business practices and financial strength.

2.2.3 Liquidity Risk: Redefined liquidity risk to more clearly mean the risk of having insufficient short-term cash or credit.

4.7 System of Record: Expanded to note that the System of Record is a secure system, backed up to the cloud daily.

5.1 Hedging Tolerances

5.1.1 Energy Procurement: Increased the granularity of tolerance bands from annual ranges to quarterly ranges. This facilitates separate review of the more volatile (summer and winter) and less volatile (spring and fall) quarters.

5.1.2 Renewable Procurement: Slightly revised minimum and maximum tolerance levels to better match operational requirements.

5.1.3 Capacity Procurement: Adjusted language to translate to 2025’s “slice of day” regulatory framework.

5.1.4 Carbon-Free Energy Procurement: Added this section for completeness. 3CE does not currently purchase the non-RPS carbon-free energy product but may in the future.

5.1.5 Congestion Revenue Rights Procurement: Added this section for completeness. Describes how 3CE manages its free CAISO allocations and restrictions regarding CRR trading. 6: Credit Policy: Clarified that when reviewing the suitability of a counterparty, the Middle Office may rely on the ratings and analysis of a credit rating agency when such information is available. 9: Delegation of Authority: This section was moved from the appendix to the main body of the Policy to clarify that the Operations Board must approve changes to delegation of authority levels for the

RMC and CEO, per section 1.4 Policy Administration:
“The Risk Management Committee (“RMC”) and Operations Board must approve amendments to this Policy, except for the appendices, which may be amended with approval of only the RMC.”
Revisions to Audit Requirements

2.1 Policy Goals: The current language states annual audits will be conducted by an “outside third-party energy risk management expert.” Given 3CE’s growing ability to perform internal audits due to the buildup of its independent Middle Office / Risk group, staff believes that focused annual audits should be performed by the Middle Office.

Comprehensive external audits are proposed every five years at a minimum. Additionally, significant findings in an internal annual audit trigger a related external audit.

The proposed language reads as follows:
“To ensure 3CE is implementing best practices for an energy supplier of its size and scope, 3CE will perform an internal risk audit on a selected process or policy annually. Significant findings will trigger an external audit. Notwithstanding, external audits will occur every five years. Audit results will be presented to the RMC.”
Together, these Policy updates improve clarity and reportability and align with current markets and practices.

FISCAL IMPACT:

None.

CONCLUSION:

The Operations Board of Directors adoption of Resolution OB-2024-03 revisions to 3CE’s Energy Risk Management Policy as recommended by the Risk Management Committee at its September 2024 meeting ensures the ERM Policy continues to meet business needs to ensure 3CE’s effective operations while maintaining sufficient risk tolerances.

ATTACHMENT(S):

1. Energy Risk Management Policy redline

2. Energy Risk Management Policy clean

3. Draft Resolution OB-2024-03

1 Energy Risk
Management Policy
(ERMP)
Fifth Revision October 2024 – Operations Board of Directors Approved Fourth Revision July 2023- Risk Management Committee Approved Third Revision June 2022 – Operations Board of Directors Approved Second Revision November 2020 –Operations Board of Directors Approved First Revision September 2018 –Operations Board of Directors Approved Initial Version March 2018 –Policy Board of Directors Approved

2 Table of Contents
Table of Contents
SECTION 1: ERMP OVERVIEW .......................................................................................................................5

1.1 Background and Purpose ....................................................................................................................5

1.2 Scope...................................................................................................................................................5

1.3 Energy Risk Management Objective ...................................................................................................6

1.4 Policy Administration..........................................................................................................................6 SECTION 2: GOALS AND RISK EXPOSURES ....................................................................................................7

2.1 ERMP Goals.........................................................................................................................................7

2.2 Risk Catalog.........................................................................................................................................7

2.2.1 Customer Opt-Out Risk ................................................................. Error! Bookmark not defined.

2.2.2 Market Risk ..................................................................................................................................8

2.2.3 Liquidity Risk ................................................................................................................................8

2.2.4 Regulatory and Legislative Risk....................................................................................................9

2.2.5 Volumetric Risk ............................................................................................................................9

2.2.6 Model Risk....................................................................................................................................9

2.2.7 Operational Risk.........................................................................................................................10

2.2.8 Counterparty & Generalized Credit Risk....................................................................................10

2.2.9 Reputation Risk ............................................................................. Error! Bookmark not defined.

SECTION 3: ORGANIZATIONAL STRUCTURE AND RESPONSIBILITIES ..........................................................11

3.1 Risk Management Organizational Structure.....................................................................................11

3.2 Risk Management Committee (RMC) ...............................................................................................11

3.3 Segregation of Duties........................................................................................................................12

3.3.1 Front Office ................................................................................................................................12

3.3.2 Middle Office..............................................................................................................................13

3.3.3 Back Office .................................................................................................................................14 SECTION 4: BUSINESS PRACTICES ...............................................................................................................15

4.1 General Conduct ...............................................................................................................................15

4.2 Hedging & Trading Activities; Prohibition on Speculation................................................................15

3 4.3 Trading for Personal Accounts..........................................................................................................15

4.4 Conflict of Interest ............................................................................................................................15

4.5 Adherence to Statutory Requirements.............................................................................................16

4.6 Authorized Products, Markets & Terms............................................................................................16

4.7 System of Record ..............................................................................................................................17

4.8 Transaction Valuation .......................................................................................................................17

4.9 Policy Compliance .............................................................................................................................17 SECTION 5: TOLERANCES ............................................................................................................................18

5.1 Hedging Tolerances.........................................................................................................................18

5.1.1 Energy Procurement Tolerances................................................................................................18

5.1.2 Renewable Energy Procurement Tolerances.............................................................................20

5.1.3 Capacity Procurement Tolerances...........................................................................................21

5.1.4 Carbon Free Energy Tolerances.................................................................................................21

5.1.5 Congestion Revenue Rights (CRRs) ............................................................................................22

5.2 Monitoring, Reporting and Instances of Exceeding Risk Limits........................................................23 SECTION 6: CREDIT POLICY..........................................................................................................................24 SECTION 7: POSITION TRACKING AND MANAGEMENT REPORTING ..........................................................25 SECTION 8: POLICY REVISION PROCESS ......................................................................................................26

8.1 Acknowledgement of Policy..............................................................................................................26

8.2 Policy Interpretations........................................................................................................................26 SECTION 9: DELEGATION OF FINANCIAL AUTHORITY.................................................................................27 Appendix A: AUTHORIZED TRANSACTION TYPES, REGIONS, AND MARKETS .............................................28 Appendix B: NEW TRANSACTION APPROVAL FORM ..................................................................................29 Appendix C: DEFINITIONS ...........................................................................................................................30

4

5 SECTION 1: ERMP OVERVIEW

1.1 Background and Purpose
Central Coast Community Energy (3CE), formerly Monterey Bay Community Power Authority, is a public Joint Powers Authority (JPA) located within the geographic boundaries of Monterey, Santa Cruz, San Benito, San Luis Obispo and Santa Barbara Counties. Member agencies of 3CE include the Counties of Monterey, San Luis Obispo, Santa Cruz, San Benito, and Santa Barbara, as well as certain incorporated cities located within the member counties. 1 3CE members elected to implement and administer a community choice aggregation (“CCA”) program.

The CCA program provides its members an opportunity to procure electricity supplies and implement local programs that meet the goals of the local communities. Electricity procured to serve customers will continue to be delivered over the Investor-Owned Utilities’ (PG&E & SCE) transmission and distribution systems.
3CE exists to serve its local government members, and the residences and businesses located within their respective communities. 3CE’s specific objectives are to lower greenhouse gas (GHG) emissions by reliably supplying its customers with electricity sourced from clean and renewable generation resources at competitive rates along with innovative electrification programs. 3CE also functions to stimulate the local economy and give its member agencies greater choice in the energy procured for their residents.

Providing retail electric generation service to customers enrolled in the CCA program exposes 3CE, and ultimately the customers it serves, to various significant but manageable risks. The intent of this Energy Risk Management Policy (ERMP) is to provide 3CE, and by extension its customers, with a framework to identify, monitor and manage risks associated with procuring power supplies and operating in wholesale energy markets.

This Energy Risk Management Policy, including its appendices, establishes 3CE’s Energy Risk Management Program.

1.2 Scope
Unless otherwise explicitly stated in this ERMP or other policies approved by the appropriate 3CE Board, this ERMP applies to all power procurement and related business activities that may impact the risk profile of 3CE. This ERMP documents the framework by which 3CE staff and consultants will:
 Identify, quantify and manage risk
 Develop and execute procurement strategies

1 Presently, all cities within the five County footprint are 3CE members, with the exception of King City, Lompoc, and the City of Santa Barbara. 3CE will begin serving customers in Atascadero and the unincorporated portions of San Luis Obispo County in January 2025.

6  Develop a framework of controls and oversight
 Monitor, measure, and report on the effectiveness of the ERMP To ensure its successful operation, 3CE may partner with experienced consultants to provide power supply services, when appropriate. Specific to power procurement, 3CE has partnered with two third-party Scheduling Coordinatorsthat augment 3CE’s internal Front (scheduling), Middle (monitoring) and Back (settlement) Offices related activities as discussed at Section 3.3. The Scheduling Coordinators, as well as all other consultants supporting 3CE’s power procurement activities, will adhere to and be governed by this ERMP in providing these services to 3CE. In addition, Scheduling Coordinators’ and other consultants’ activities executed on 3CE’s behalf will be governed by their own internal risk management policies and procedures, and prudent industry practices.

1.3 Energy Risk Management Objective
The objective of this ERMP is to provide a framework for conducting procurement activities that will facilitate risk management in an effort to meet 3CE’s goals as listed in Section 2.1.

Pursuant to this ERMP, 3CE will identify and measure the magnitude of the risks to which it is exposed and take the necessary steps to manage and reduce those risks to acceptable levels.

1.4 Policy Administration
This ERMP shall be reviewed and approved at least annually by the 3CE Operations Board of Directors (Board). The Risk Management Committee (RMC) and Operations Board must approve amendments to the ERMP, except for the appendices, which may be amended with approval of only the RMC. The RMC must give timely notice to the Board of any amendment it makes to an appendix or a reference policy or procedure document.

7 SECTION 2: GOALS AND RISK EXPOSURES

2.1 ERMP Goals
3CE operates in dynamic, volatile environments and markets. Prices for energy and its underlying drivers, such as natural gas, are susceptible to unpredictable and sometimes significant changes in short intervals. Regulatory and legislative actions can structurally change markets, market price levels, and procurement requirements. Low liquidity and financial dislocations may lead to counterparty distress. 3CE’s Energy Risk Management Policy (ERMP) is designed to address these challenges. Its overarching goals are the following:
 Preserving the financial health and stability of 3CE
 Providing rate stability
 Ensuring the long-term viability of 3CE
In furtherance of these goals 3CE strives to:
 Maintain a credit rating of A- or equivalent, as defined by S&P Global Ratings or an equivalent ratings agency
 Limit power supply cost variance to the annual budget to 10%, barring extraordinary circumstances
 Fund its Rate Stabilization Fund at levels that buffer customers from rate shock and maintain a competitive market position
 The ERMP is a strategic document, not a prescriptive manual. The metrics, limits, and products used to measure and manage risk must continuously evolve to reflect industry best practices and ensure relevance and alignment with 3CE’s goals. 3CE staff is responsible for designing and executing specific plans, metrics, limits, hedging plans, and processes in accordance with the ERMP. 3CE staff will report regularly to the Risk Management Committee (RMC) 3CE aims to achieve these goals by managing the key risks identified in the Risk Catalog in Section 2.2 below. The goals will be incorporated into the specific limits and metrics used to govern hedging activities and long-term procurement. It is important to note these goals are not intended to be a comprehensive list of 3CE’s goals.

To ensure 3CE is implementing best practices for an energy supplier of its size and scope, 3CE will perform an internal risk audit on a selected process or policy annually. Significant findings will trigger an external audit. Notwithstanding, external audits will occur every five years. Audit results will be presented to the RMC.

2.2 Risk Catalog
This Energy Risk Management Policy addresses the following key risks:
a) Customer Opt-Out risk
b) Market risk

8 c) Liquidity risk
d) Regulatory risk
e) Volumetric risk
f) Model risk
g) Operational risk
h) Counterparty & Generalized Credit risk

2.2.1 Customer Opt-Out Risk
Customer opt-out risk includes any condition or event that creates the potential for significant reductions in the CCA’s customer base, leading to the potential of higher retail rates, uncompetitive position, and further loss of customer base. Customer opt-out risk remains a primary risk for the CCA industry. Opt-out risk is managed through:
 Charging competitive retail generation rates, offering innovative energy programs to facilitate electrification, and reducing greenhouse gas (GHG) emissions  Engaging in ethical, transparent and honest business practices  Maintaining financial strength, including an adequate Rate Stability Reserves Fund

2.2.2 Market Risk
Market (energy price) volatility risk is the risk of losses due to the movements in power market prices, interest rates, and credit market prices. Power market price risk includes the risk of adverse price movements in energy, capacity, power basis, renewable attributes, and underlying drivers such as natural gas market prices. Interest rate and credit market price risks are considered when evaluating financing structures associated with long-term hedges or contracts. 3CE will manage market risk through the following:
 Regular measurement, including forward-looking stress tests based on multiple factors and Value-at-Risk (VaR) over multiple time horizons
 Execution of approved procurement
 Hedging and Congestion Revenue Rights strategies
Use of the Limit Structure is set forth in Section 5, below.

2.2.3 Liquidity Risk
Liquidity risk is the risk that 3CE will not be able to meet its short-term cash or financial obligations as they come due. This could occur if 3CE is unable to convert its assets into cash quickly enough to cover its immediate liabilities, or if it cannot secure financing at reasonable terms. 3CE will manage liquidity risk by maintaining sufficient cash reserves, having access to credit facilities, and implementing robust cash flow forecasting and monitoring processes to ensure it can meet its financial obligations and continue operations without disruption.

9 2.2.4 Regulatory and Legislative Risk
3CE and other CCAs are subject to an evolving legal and regulatory landscape. Additionally, CCAs are in direct competition with California’s IOUs in supplying retail electricity, and the IOUs face the risk of stranded investments in generating assets and power purchase agreements procured in the past to serve now departing CCA loads. The way such stranded costs of these legacy power supplies are allocated to departing CCA loads is subject to change based on various proceedings at the California Public Utilities Commission (CPUC). The outcome of such proceedings will directly affect the cost of power for 3CE’s customers, as well as impact the rate competitiveness of 3CE.

In addition to IOU-imposed surcharges, potential regulatory and/or legislative changes could affect the following:
 3CE’s ability to exercise local control over the manner and means of procuring power supplies to serve its customers
 Market prices
 Procurement requirements
 Cash flows
3CE will manage regulatory and legislative risks by the following activities:
 Regularly monitoring and analyzing legislative and regulatory proceedings impacting CCAs  Actively participating in, and advocating for, the interests of 3CE and its customers during regulatory and legislative proceedings

2.2.5 Volumetric Risk
Volumetric risk is the uncertainty in quantity of load served by 3CE. This leads to uncertainty in the amounts of both energy and renewable energy that 3CE must procure for its customers. Volumetric risk may be driven by factors such as attrition, weather, and behind-the-meter generation. Customer opt-out risk is explicitly modeled under this policy. Weather is the biggest short-term driver of volumetric risk. 3CE will develop load distributions that account for a wide range of weather outcomes and size positions accordingly. 3CE may set limits on open positions by tenor, as appropriate, to reduce volumetric risk.

2.2.6 Model Risk
Model risk is variance from modeled or forecasted outcomes due to fundamental deficiencies in models and/or information systems. 3CE will manage model risk by the following means:
 Validating all models on an ongoing basis for robustness, updating and/or enhancing models as needed
 Continually reviewing all model outputs
 Collaborating regularly with vendors, and exchanging information and best practices with peers bilaterally or in trainings and conferences
 Requiring all procurement transactions be recorded in a single trade capture system when that system is available

10 2.2.7 Operational Risk
Operationalrisk is variance in financial performance due to weaknesses or failures in the quality, scope, content, and/or execution of hedging, procurement, and risk management functions. Operational risk also incorporates fraudulent actions by employees or third parties, particularly due to inadequate or ineffective controls. 3CE manages operational risk through a variety of methods:
 Timely and effective reporting to the Chief Executive Officer (CEO) and the RMC  Segregation of functions
 Layered oversight
 Implementation of a compliance training program for all 3CE staff  Ongoing 3CE and consultant staff education/training and participation in industry forums  Annual internal audits to test compliance with the ERMP

2.2.8 Counterparty & Generalized Credit Risk
Counterparty risk is the risk that a counterparty will fail to perform or adequately remedy its obligations in accordance with contractual and transactional terms. Generalized credit risk is the risk of a generalized reduction in credit to a sector, a set of counterparties, or a specific counterparty that results in an increase in counterparty risk. 3CE will monitor counterparty risk based on a variety of metrics and analyses, including but not limited to an in-depth review of counterparty financials when not rated by a credit rating agency, exposure by credit rating, exposure by tenor and product type.

11 SECTION 3: ORGANIZATIONAL STRUCTURE AND RESPONSIBILITIES

3.1 Risk Management Organizational Structure
3CE risk management is organizationally structured to ensure effective segregation of duties and multiple layers of oversight using a waterfall approach. Risk approval limits are contained in Section 9, the Risk Management Delegation of Financial Authority (DOFA).

The 3CE Operations Board of Directors (Operations Board) is responsible for approving this ERMP. It reviews and approves this policy and approves risk exposures above those delegated to the Chief Executive Officer (CEO) or Risk Management Committee (RMC) in the DOFA.

The RMC is responsible for overseeing strategic compliance with this policy and approving risk exposures above those delegated to the CEO.

The Front Office is responsible for the energy short-term trading function and long-term negotiations of power supply contracts, mindful of ERMP limits.

The Middle Office is responsible for ensuring compliance with this ERMP and monthly reporting of risk exposure to the RMC. This segregates the monitoring and trading functions, ensures adherence to risk limits and provides an important check and balance.

The Back Office is responsible for processing payments, ensuring adherence to contract terms and providing appropriate reporting to regulatory agencies.

3.2 Risk Management Committee
The CEO shall establish the RMC, set the agenda, and serve as its Chair. The RMC consists of the following voting members:
 Chief Executive Officer
 Up to five (5) members of 3CE’s Policy and/or Operations Board of Directors, selected by the CEO
 Chief Financial Officer
 Chief Operating Officer
 Chief Communications Officer
The RMC is responsible for overseeing strategic compliance with this ERMP and approving major risk exposures above those delegated to the CEO. This includes ensuring procurements and hedging are consistent with 3CE’s strategic goals.

Specifically, the RMC maintains the authority and responsibility to:
 Ensure that procurements are consistent with this ERMP and hedging plans based on 3CE’s

12 financial objectives and situation
 Approve procurements and risk exposures above those delegated to the CEO and up to the limits specified in the DOFA, based on the strategic goals of this ERMP and 3CE’s financial situation
 Understand and approve the limits, metrics, and product types necessary to ensure compliance with this ERMP
 Review risk management reports as described in this ERMP  Review actual and projected risks and financial outcomes and review summaries of violations of this ERMP
 Refer to the Operations Board those exposures and risks above those delegated to the RMC in the DOFA

3.3 Segregation of Duties
3CE shall maintain a segregation of duties, also referred to as "separation of function,” to help manage and control the risks outlined in this ERMP. Individuals responsible for legally binding 3CE to a transaction will also not perform confirmation or settlement functions without supplemental, transparent, and auditable controls. 3CE will leverage the organizational structure of the Scheduling Coordinator’s Middle and Back offices to help maintain a segregation of duties. The Front, Middle and Back Office responsibilities for 3CE are described below.

3.3.1 Front Office
The Front Office is headed by the Director of Power Supply Resources. The Front Office is responsible for the procurement and hedging activities necessary to manage 3CE’s wholesale power market positions and obligations. Specific responsibilities include:
 Developing long-term procurement strategies to reliably meet 3CE’s load-serving obligation using a least-cost best-fit approach
 Developing annual, quarterly, and monthly hedge plans to prudently meet 3CE’s load-serving obligation using a mix of market transactions and 3CE’s power assets  Optimizing 3CE’s load-supply balance and asset management strategies to prudently maximize value for 3CE customers while adhering to all risk management processes and limits  Overseeing and directing scheduling of load and resources into the CAISO  Developing and using fundamental and probabilistic analysis – such as power market supply-demand balances and transmission outages – to guide optimization, procurement, and hedging decisions
 Accurately recording all transactions in the System of Record  Accurately tracking open forward positions and hedge performance across tenorsfor all power products (energy, renewable energy, carbon-free energy and resource adequacy capacity)  Maintaining forward prices for all illiquid power products (renewable energy credits, carbon-free energy and resource adequacy capacity) in the System of Record  Executing transactions and negotiating or amending contracts as needed to meet the above

13 goals in accordance with the limits set out in the DOFA. Restructuring previously approved transactions and contracts as needed in accordance with the DOFA limitations  Managing and facilitating the transaction execution process for power supply transactions through coordination of the following activities:
a. Notifying Front Office personnel of any anticipated unique physical delivery or scheduling issues
b. Working with Middle Office personnel and legal counsel to establish a contract, evaluate counterparty creditworthiness and secure additional credit from the counterparty, if necessary
c. Working with Middle Office, as needed, to perform an analysis of the potential transaction to evaluate the effects on 3CE’s portfolio risks d. Notifying Back Office of terms and conditions affecting settlement to ensure that the necessary settlement procedures are in place

3.3.2 Middle Office
The Middle Office functions are the responsibility of the Chief Financial Officer. The Middle Office is responsible for implementing, administering, and monitoring compliance with this ERMP. Specific responsibilities include:
 Developing market and transaction analytics that inform risk analyses of 3CE’s hedging and procurement activities, providing Front Office with independent views as needed  Developing metrics and risk management processes for the risks identified in the Risk Catalog in this ERMP
 Designing and setting hedging and procurement limits, including but not limited to product types, tenors, delivery points, counterparties, and markets  Monitoring risk exposures and policy compliance on an ongoing basis, with monthly reporting to the RMC
 Validating all positions, prices, and forecasts in the System of Record  Developing limits with exchanges, brokers, and trading venues  Analyzing risk of the hedging and procurement plans developed by the Front Office  Assisting consultants in developing and maintaining demand forecasts  Developing internal estimates of forward prices used in valuation, pricing and monitoring where credible liquid data is not available
 Assisting in expert valuation of all 3CE positions and contracts  Supporting settlement validation, as necessary
 Reporting limit violations to the RMC
 Validating the net forward power positions of 3CE
 Assist Back Office in calculating Counterparty Credit Exposure

14 3.3.3 Back Office
The Back Office is responsible for the administrative activities necessary to execute and settle transactions and contracts and to support the Middle Office where necessary to monitor compliance with this ERMP.

Specific responsibilities include:
 Confirming all transaction details (physical and financial) and reconciling differences with the trading counterparties
 Reviewing transaction confirmations for adherence to approved limits  Validating trade entry and flow through the System of Record  Validating and reconciling physical and financial transaction flows  Settling trades and calculating revenues and profit & loss  Providing settlement, credit, and other data as needed to the Middle Office and Finance to support monitoring of risk exposures and budget processes  Validating and promptly paying of energy related invoices payable by 3CE and resolving disputes with counterparties
 Generating and promptly collecting energy related invoices payable by counterparties

15 SECTION 4: BUSINESS PRACTICES

4.1 General Conduct
All personnel, including Members of the Operation and Policy Board of Directors, staff, and agents, (collectively referred to “3CE Representatives”) adhere to standards of integrity, ethics, conflicts of interest, compliance with statutory law and regulations and with applicable 3CE standards of personal conduct while employed by, contracted by, or affiliated with 3CE.

4.2 Hedging & Trading Activities; Prohibition on Speculation 3CE contracts and trades in energy markets to hedge positions, reduce risk, and, in compliance with this ERMP, prudently optimize the value of its portfolio of assets and market positions. Speculative trading is explicitly prohibited under this ERMP. Examples of speculative trading include trading a commodity for which 3CE does not have an underlying position or risk, trading a product based solely on personal judgement about future market direction, taking positions in volumes that deviate significantly from 3CE’s underlying need, etc. Should a question arise about speculative trading activities, 3CE’s Middle Office will make an initial finding based on an analysis of the situation and present a written report to the RMC. The RMC will make a final determination based on the situation.

4.3 Trading for Personal Accounts
All 3CE staff and agents are prohibited from trading the power and environmental products traded by 3CE for personal accounts.

4.4 Conflict of Interest
3CE staff are expected to meet the highest standards for ethical conduct, beyond just the specific matters discussed in this section.
3CE staff responsible for negotiating, reviewing, and/or approving hedging activities and procurements are obligated to provide written notice to 3CE of any real or potential conflict of interest in the matter.

An example of such a conflict of interest may be negotiating with a counterparty while seeking employment for oneself or a relative with that counterparty. 3CE staff are prohibited from trading on information gained during hedging and procurement activities.

An example of such an activity would be a 3CE employee directly or indirectly purchasing stock in a developer prior to the announcement of 3CE awarding that developer a significant contract. Purchases of pooled vehicles such as broadly diversified mutual funds and ETFs are exempted from this ERMP. 3CE Front Office staff are expected to seek best execution and least-cost best-fit product attributes from counterparties and intermediaries. Steering trades and contracts to counterparties based on potential financial gain or personal relationships is prohibited.

16 Additionally, Conflicts of Interest shall be identified and defined as set forth in the 3CE Conflict of Interest Code, as amended from time to time by the Policy Board, which incorporates the Political Reform Act requirements for all employees advising 3CE.

If there is any doubt as to whether a prohibited condition exists, then it is the Representative’s responsibility to discuss the possible prohibited condition with 3CE General Counsel. Employees may seek an advisory position from the California Fair Political Practices Commission.

4.5 Adherence to Statutory Requirements
Compliance is required with rules promulgated by the state of California, California Public Utilities Commission (CPUC), California Energy Commission (CEC), Federal Energy Regulatory Commission (FERC), Commodity Futures Trading Commission (CFTC), and other regulatory agencies.

Congress, the FERC and the CFTC have enacted laws, regulations and rules that prohibit, among other things, any action or course of conduct that actually or potentially operates as a fraud or deceit upon any person in connection with the purchase or sale of electric energy or transmission services. These laws also prohibit any person or entity from making any untrue statement of fact or omitting to state a material fact where the omission would make a statement misleading. Violation of these laws can lead to both civil and criminal actions against the individual involved, as well as 3CE. This ERMP is intended to comply with these laws, regulations, and rules and to avoid improper conduct on the part of anyone employed by 3CE. These procedures may be modified from time to time due to legal requirements, auditor recommendations, RMC requests and other considerations.

In the event of an investigation or inquiry by a regulatory agency, 3CE may provide legal counsel to employees. However, 3CE, with the consent of the Operations Board, will not appoint legal counsel to an employee if 3CE determines that representation of the employee will create an actual conflict between the employee and 3CE, or that the employee was not acting in good faith within the scope of employment.

4.6 Authorized Products, Markets & Terms
Transactions are conducted bilaterally, using standard contracts such as the Edison Electric Institute’s Master Power Purchase & Sale Agreement (EEI) or Western Systems Power Pool’s Agreement (WSPP), or through exchanges such as the InterContinental Exchange (ICE). 3CE’s CEO or their designee must authorize all transactions.

New products, tenors, markets, delivery points, and transaction types can be authorized by the RMC.

When seeking such approval, a New Product Approval Form, as shown in Appendix C, should be drafted describing all significant elements of the proposed product. This should include, at a minimum:
 A description of the benefit to 3CE, such as decreasing costs, managing volatility etc.  The role of the new product in 3CE’s overall portfolio and risk management strategies  Risk analysis that identifies the specific risks mitigated by the new product and illustrates its

17 application
 Transaction process, initial risk limits and settlement process  Proposed valuation methodology (including pricing model, where appropriate)  Proposed accounting methodology
3CE’s CEO or their designee is responsible for requesting the RMC’s approval. If approved, Appendix A to the Policy will be updated to reflect the new transaction type

4.7 System of Record
3CE will maintain a secure set of records for all transactions executed in association with 3CE procurement activities. 3CE’s Technology and Data & Analytics group supports the security, integrity, and recoverability of the System of Record. For data recoverability, transaction data stored in the System of Record is replicated daily to ensure data redundancy and is backed-up via cloud-based applications.

The records will be maintained in US dollars and transactions will be separately recorded and categorized by type of transaction. This system of record shall be auditable and audited as appropriate.

4.8 Transaction Valuation
Transaction valuation and reporting of positions shall be based on objective, market-observed prices.

Whenever possible, mark-to-market valuations should be based on independent, publicly available market information and data sources. The Middle Office will be responsible for independently validating and reporting marks and valuations.

4.9 Policy Compliance
The Middle Office will provide a monthly report to the RMC monitoring compliance with the limits established by the ERMP.

18 SECTION 5: TOLERANCES

5.1 Hedging Tolerances
Hedging tolerances for energy, renewable attributes, capacity (resource adequacy) and carbon-free energy are shown below. From time to time, the Middle Office, in response to market conditions, may recommend adjustments to these ranges.

5.1.1 Energy Procurement Tolerances
Fixed Price Energy purchases provide for suppliers to deliver energy – for which 3CE will receive energy market revenues – to 3CE at a fixed price. They are used to manage the electricity commodity price risk that 3CE faces as a Load Serving Entity. Specific to 3CE ‘s customers, Fixed Price Energy hedges are used to provide cost certainty and rate stability.
3CE predominantly employs Fixed Price Block Energy contracts, which provide for suppliers to deliver a predetermined volume of energy at a constant delivery rate. As 3CE enters into long-term, fixed price contracts for renewable and/or carbon-free energy, these will likewise hedge 3CE’s market risk and, subsequently, reduce the required volume of Fixed Price Block Energy purchases.

When assessing its requirements for Fixed Price Energy, 3CE will use an econometric model to forecast hourly energy requirements and monthly peak demand by customer load class. The model will use historical data to estimate relationships between energy consumption and economic, demographic and/or weather variables. The model will be refined through time as additional load and other data is acquired.
3CE will observe the following schedule when hedging its Fixed Price Energy Requirements. The Minimum and Maximum hedge % represent the Fixed Price Energy planned or under contract divided by forecasted wholesale load.

Quarter
Minimum
Hedge %
Maximum Hedge
%
Prompt Q
(PQ) 85% 110%
PQ + 1 80% 110%
PQ + 2 74% 110%
PQ + 3 69% 110%
PQ + 4 63% 105%

19 PQ + 5 58% 99%
PQ + 6 52% 93%
PQ + 7 47% 87%
PQ + 8 41% 82%
PQ + 9 36% 76%
PQ + 10 - 39 30% 70%
Notwithstanding the maximum hedge levels shown in the above table, there shall be no maximum hedge level in quarters in which 3CE only owns long-term power purchase agreements and energy storage agreements.

Energy hedging compliance will be measured within 5 days prior to the first day of each quarter (e.g., on a date between September 26th and September 30th, 2024, 3CE will have hedged 85 to 110 percent of its projected energy requirements for Q4 2024 and 80 to 110 percent of requirements for Q1 2025).

The minimum hedge level will be achieved by implementing a time-driven programmatic strategy.

Time- driven programmatic hedges are executed at a predetermined rate pursuant to a time schedule and without regard for market conditions. The purpose of these hedging transactions is to achieve a reduction in variability in power supply costs by gradually increasing the amount of energy hedged as the actual date of consumption approaches. Time-driven strategies avoid the inherent impossibility of trying to consistently and accurately “time the market” to purchase energy at least cost when making hedging decisions. Additionally, a load serving entity the size of 3CE needs to spread its procurement efforts over time to effectively manage the potential negative price impacts of procuring a large volume of energy, over a short period of time, in an illiquid market.

Hedging decisions to reach targets between the minimum and maximum hedge levels will be based on price-driven or opportunistic strategies. The purpose of price-driven or opportunistic strategies is to capitalize on market opportunities when conditions are favorable. 3CE will base its decision to execute opportunistic hedges on the anticipated impact to projected power supply costs and the resulting reduction in risk.

Opportunistic hedges may be executed when energy price levels are favorable to lowering the cost of power relative to established program goals and financial projections; alternatively, opportunistic hedges can be executed in adverse market conditions relative to financial goals in order to reduce the potential negative impact of continued upward trending commodity prices relative to established goals.

In executing this energy risk hedging strategy, Fixed-Price Energy hedges may be modified,

20 repositioned or unwound for the purpose of maintaining hedge coverage that matches changes in forecast electric load or supply. This includes the ability of 3CE to use liquid market products to hedge average loads over a defined time period and then later modify its hedges to more precisely match load.

5.1.2 Renewable Energy Procurement Tolerances
In order to cost-effectively meet its GHG-reduction and renewable energy goals, 3CE intends to meet a growing share of its energy supply requirements with renewable energy, a large portion of which will be Product Content Category 1 (PCC1) renewable energy. PCC1 renewable energy is sourced from a renewable generator that is either directly interconnected to the California Independent System Operator (CAISO) or another California Balancing Authority or directly scheduled into CAISO without use of substitute energy. 3CE shall diversify its renewable energy portfolio further by incorporating Portfolio Content Category 2 (PCC2) renewable energy purchases. PCC2 renewable energy is sourced from renewable generators located outside the state of California, where that generation is “firmed and shaped” for delivery into California. PCC2 purchases are typically less expensive and shorter in term than PCC1, so they provide a cost-effective and flexible method of augmenting 3CE’s renewable energy purchases to meet renewable portfolio content commitments to customers. However, not all PCC2 renewable energy is emissions-free; therefore, 3CE must assess the value of PCC2s against its respective emissions intensity. In addition, RPS compliance rules set minimum requirements for PCC1 and PCC2 as a percentage of the total RPS compliance portfolio, which 3CE will abide by in its procurement of both products.

In order to manage price risk of long-term renewable energy, and to allow 3CE to prudently and methodically build a portfolio of long-term assets, 3CE intends to meet its renewable energy targets with a blend of short- and long-term contracts. 3CE intends to fully comply with long-term contracting requirements mandated by SB 350; therefore, executed and planned long-term renewable contracts will be reflected in 3CE’s renewable energy positions.
3CE shall observe the following schedule while hedging its renewable energy requirements. This hedge schedule shall be measured within 5 days prior to the first day of each quarter for the Current Calendar Year, and within 5 days prior to December 1 of each year for the following ten Calendar Years.

Time Period Minimum Hedge %
of Mandate
Maximum Hedge %
of Demand
Current Calendar Year 90 110*
Prompt Calendar Year 80 110*
PY + 1 50 105

21 PY + 2 50 100
PY + 3 50 95
PY + 4 - 9 50 95
* Maximum hedge percentages allow for a planning margin to accommodate volumetric uncertainty associated with electric consumption and generation

5.1.3 Capacity Procurement Tolerances
As a Load-Serving Entity (LSE) in California, 3CE is required to demonstrate both annually and monthly that it has secured sufficient energy capacity to provide for its share of California’s energy load; this capacity is referred to as resource adequacy (RA).

RA is typically transacted via contracts that vary in length, and it is currently bought and sold via a bilateral market. This market provides cost-effective contracting opportunities, but also proves at times to be fragmented and volatile. It is the goal of 3CE to meet all RA requirements, including local, flexible, and system requirements.
3CE will observe the following schedule when hedging its RA requirements. The hedge schedule shall be measured for the system RA product by month that 3CE is required to procure within 5 days prior to December 1 of each year for the Prompt Calendar Year and the nine subsequent calendar years.

Time Period Minimum Hedge %
(applicable to all months and
hours)
Maximum Hedge %
(applicable to peak month and
shortest hour only)2
Prompt Calendar Year 90 100
PY + 1 50 95
PY + 2 35 90
PY + 3 35 80
PY + 4 - 9 35 80

5.1.4 Carbon-Free Energy Tolerances
In pursuit of its GHG-reduction objections, 3CE shall augment its renewable energy purchases outlined above with energy purchases from carbon-free energy generating facilities, which are typically

2 Due to the variable nature of 3CE’s monthly RA requirements, non-peak months may exceed the applicable Maximum Hedge %.

22 hydroelectric resources located in California that are too large to qualify as Eligible Renewable Resources (30 MW or greater) or located outside of California. Similar to PCC2 renewable energy contracts, carbon-free energy purchases are typically short-term, most frequently one to three years in length.
3CE may have the opportunity to receive free carbon-free energy allocations from PG&E and SCE at zero cost. Hedging activity should consider these allocations and expected allocations should be included in the hedging percentages.
3CE will observe the following schedule when hedging its carbon-free renewable energy requirements.

This hedge schedule shall be measured within 5 days prior to the first day of each quarter for the Current Calendar Year, and within 5 days prior to December 1 of each year for the follg ten Calendar Years.

Time Period Minimum Hedge % Maximum Hedge %
Current Calendar Year 85 110*
Prompt Calendar Year 75 110*
PY + 1 50 110
PY + 2 25 100
PY + 3 0 75
PY + 4 - 9 0 75
* Maximum hedge percentages allow for a planning margin to accommodate volumetric uncertainty associated with electric consumption and generation In setting the above targets, it is important to note that the purchase of carbon-free energy is a voluntary requirement set by the 3CE Board to exceed states’ GHG emissions goals. In determining the total volume of carbon-free energy to be hedged, the 3CE Board may elect to increase or reduce the total quantity of carbon-free energy included in 3CE’s portfolio as it seeks to balance multiple program objectives, including financial goals such as targets for financial reserves and retail rates.

5.1.5 Congestion Revenue Rights (CRRs)
As a CAISO market participant, 3CE has congestion risk associated with serving its customer load. 3CE manages congestion risks by preferring day ahead scheduling of energy delivered at NP-15 and SP-15, and by resource assessment and selection consistent with this ERMP. Once energy is procured, 3CE manages congestion risk through the prudent management of CRRs, which are financial instruments used to hedge against transmission congestion costs encountered in the CAISO day-ahead market. The

23 RMC is responsible for overseeing the management of CRRs and CRR trading. The CRR portfolio will be managed by 3CE 's Front Office with support from 3CE’s Scheduling Coordinator. CRRs are transacted to effectively manage portfolio congestion risk, through hedging and value maximization. Trading of CRRs for speculative purposes is not permitted.

CRR position restriction: 3CE shall not use the annual or monthly CRR auctions to do any of the following:
 Increase CRR holdings on paths not related to 3CE’s generation, storage or inter-scheduler trades (ISTs)3
 Increase CRR holdings above expected generation, discharge or IST volumes on paths related to 3CE’s generation, storage or ISTs

5.2 Monitoring, Reporting and Instances of Exceeding Risk Limits The Middle Office is responsible for monitoring, and reporting compliance with, all limits within this ERMP. If a limit or control is violated, the Middle Office will notify the RMC. The RMC will discuss the cause and potential remediation of the exceedance to determine next steps for curing the exceedance.

3 Inter-scheduler trades source at NP-15. In addition to purchasing CRRs at NP-15, 3CE may additionally purchase CRRs on paths that have been found to be good proxies for NP-15.

24 SECTION 6: CREDIT POLICY
Counterparty and generalized credit risk are significant risks to 3CE’s financial operations. The Middle Office will conduct a thorough analysis of all candidate counterparties prior to approving them to transact. This analysis will include but not be limited to analyzing the proposed counterparty’s financial statements (if unrated), credit rating, liquidity, hedge levels, market sensitivity, and business operations. The Middle Office will determine whether to extend an unsecured or secured credit line to the candidate counterparty, as appropriate. The maximum unsecured credit line that can be extended to any counterparty is $50 Million.

In addition to individual counterparty limits, the Middle Office will set limits by credit rating, tenor, product, and, where appropriate, transaction type and delivery type. For example, it may set an overall limit of $50 million for counterparties rated BB+ that supersedes the BB+ counterparties’ individual credit approvals of $100 million. This will limit the concentration of credit risk.

Counterparty credit health and generalized credit conditions will be monitored on an ongoing basis.

Individual counterparty limits or aggregate credit limits by tenor/product/credit rating may be adjusted up or down to reflect current conditions. Counterparties who exceed limits must promptly post enough collateral to come into compliance or risk having their positions liquidated.

25 SECTION 7: POSITION TRACKING AND MANAGEMENT REPORTING Minimum reporting requirements are shown below. The reports outlined below will be made available to RMC members:
 Monthly Financial Model Forecast
Latest projected financial performance, marked to current market prices, and shown relative to financial goals
 Monthly Net Position Report
Latest forward net position reports of all product classes  Monthly Counterparty Credit Exposure
Credit exposures for transactions executed by 3CE
 Monthly Risk Analysis
To include a stress test of financial forecast relative to financial goals

26 SECTION 8: POLICY REVISION PROCESS
3CE’s Energy Risk Management Policy (ERMP) will evolve over time as market and business factors change. At least on an annual basis, the RMC will review the ERMP and associated procedures to determine if they should be amended, supplemented, or updated to account for changing business and/or regulatory requirements. If an amendment is warranted, the ERMP amendment will be submitted to the 3CE Operations Board for approval. Changes to appendices to this ERMP may be approved by the RMC.

8.1 Acknowledgement of Policy
Any 3CE employee participating in any activity or transaction within the scope of the ERMP shall sign on an annual basis or upon any revision, a statement approved by the RMC that such employee:
 Read 3CE’s ERMP
 Understands the terms of said ERMP
 Will comply with said ERMP
 Understands that any violation of said ERMP shall be subject to employee discipline up to and including termination of employment

8.2 Policy Interpretations
Questions about the interpretation of any matters of this ERMP should be referred to the CEO. All legal matters stemming from this ERMP will be referred to General Counsel.

27 SECTION 9: DELEGATION OF FINANCIAL AUTHORITY
The Policy and Operations Boards of Directors (Boards) explicitly delegates approval of transactions to the CEO and the RMC as outlined in the following table:

Position Maturity Limit Term Limit Value Limit ($)1
Risk Management Committee 96 Months 60 Months 110,000,000 Chief Executive Officer 96 Months 60 Months 65,000,000
1 “Value Limit” is the total notional value of the transaction, inclusive of any related procurement fees.

These delegated authorities may be further delegated and used to set hedging and procurement limits necessary to manage 3CE’s portfolio. For example, the CEO could authorize the Front Office to trade up to the CEO’s authority limits in approved products.

Additionally, to adapt to changing market conditions and to facilitate the daily operations of 3CE, the Boards have delegated authority to the CEO (or designee) to execute administrative amendments to duly approved transactions where such amendments do not exceed the CEO’s delegated authority as set forth above (for clarity, amendments exceeding Maturity, Term or Value limits shall require Operations Board approval) and further reduces 3CE’s risk in furtherance of this ERMP. Such administrative amendments must be reported during the next RMC meeting and Operations Board meeting.

These authorities will be applied to wholesale power activity executed outside of the California Independent System Operator (“CAISO”) markets. These limits provide 3CE needed authorities to manage risks as they arise. Transactions falling outside the delegations above require Board approval prior to execution. Activity with CAISO is excluded from this table due to the nature of the market, where prices for activity may not be known until after transactions are committed.

All procurement executed under the delegation above must align with the 3CE’s underlying risk exposure (locational, volume and temporal) that is being hedged consistent with the approved Procurement Strategy.

The point of delivery for all products must be at a location on the CAISO transmission grid.

28 Appendix A: AUTHORIZED TRANSACTION TYPES, REGIONS, AND MARKETS All transaction types listed below must be executed within the limits set forth in this ERMP.

Over the Counter Products
 CAISO Market Products
o Day-ahead and Real-time Energy
o Congestion Revenue Rights
o Convergence bids
o Inter Scheduling Coordinator Transactions
o Tagging into and out of CAISO
 Physical Power Products
o Power
o Physical Over-the-counter Options
o Physical Resource Adequacy Capacity
 Import Capability Rights
 Physical Transmission Products
o Physical WECC Transmission
 Physical Environmental Products
o Renewable Energy Credits
o Specified Source Power
o Carbon Allowances and Obligations
 Financial Power Products
o Power
o Financial Over-the-counter Options
 Broker Fees

29 Appendix B: NEW TRANSACTION APPROVAL FORM
New or Non-Standard Transaction Approval Form
Prepared By:

Date:

New or Non-Standard Transaction Name:

Business Rationale and Risk Assessment:
 A description of the benefit to 3CE, such as decreasing costs, managing volatility etc.  The role of the new product in 3CE’s overall portfolio and risk management strategies  Middle Office risk analysis that identifies the specific risks mitigated by the new product and illustrates its application
 Transaction process, initial risk limits and settlement process  An assessment of the legal, tax, and regulatory aspects of the product  Proposed valuation methodology (including pricing model, where appropriate)  Proposed reporting requirements, including any changes to existing procedures and system requirements necessary to support the new transaction type  Proposed accounting methodology
Reviewed by:

Chief Operating Officer Date
Chief Financial Officer Date
General Counsel Date
Chief Executive Officer Date

30 Appendix C: DEFINITIONS
Back Office: That part of a trading organization which handles transaction accounting, confirmations, management reporting, contract administration and working capital management, which reports to the Chief Operating Officer.

Bilateral Transaction: Any physical or financial transaction between two counterparties, neither of whom is an Exchange or market entity such as CAISO.

Cash Flow at Risk: A measure of the potential shortfall in cash flow from a specified level during a specified period of time at a specified confidence level.

CAISO: California Independent System Operator. CAISO operates a California bulk power transmission grid, administers the State’s wholesale electricity markets, and provides reliability planning and generation dispatch.

California Energy Commission (CEC): CEC is the primary energy policy and planning agency for California.

California Fair Political Practices Commission (FPPC): FPPC is a five-member independent, non-partisan commission that has primary responsibility for the impartial and effective administration of the Political Reform Act.

California Public Utilities Commission (CPUC): CPUC is a regulatory agency that regulates privately owned public utilities in the state of California, including electric power, telecommunications, natural gas and water companies.

Community Choice Aggregator (CCA): CCAs allow local government agencies such as cities and/or counties to purchase and/or develop generation supplies on behalf of their residents, businesses, and municipal accounts.

Commodity Futures Trading Commission (CFTC): The CFTC is a U.S. federal agency that is responsible for regulating commodity futures and swap markets. It goals include the promotion of competitive and efficient futures markets and the protection of investors against manipulation, abusive trade practices and fraud.

Clearing: Clearing is the process of reconciling purchases and sales of a commodity, as well as the direct transfer of funds from one financial institution to another. The process validates the availability of funds, records the transfer, and in the case of financial securities, ensure the delivery to the buyer.

Commodity: A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities aremost often used asinputsin the production of other goods orservices. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commoditiesmust alsomeetspecifiedminimum standards, also known as a basis grade.

Confirmation Letter: A letter agreement between two counterparties that details the specific commercial terms (e.g., price, quantity and point of delivery) of a transaction.

Congestion Revenue Right: A point-to-point financial instrument in the Day-Ahead Energy Market that entitles the holder to receive compensation for or requires the holder to pay certain congestion related transmission charges that arise when the transmission system is congested.

Counterparty Credit Risk: The risk of financial loss resulting from a counterparty to a transaction failing to fulfill its obligations.

31 Counterparty Credit Exposure: This measures the known exposures and is represented by the sum of both (a)Realized exposure and (b) Forward exposure, as those terms are defined below:

Realized exposure: payable or receivable amount owed between counterparties, is a measurement of cash flow for billed and unbilled transactions.

Forward exposure: measure of current unrealized exposure and includes the measure of a counterparty’s incentive to fulfill contractual obligations. Forward exposure measures the risk associated with having a payment default or the need to replace a transaction in the event of delivery default.

Edison Electric Institute (EEI): EEI is an association that represents all U.S. investor-owned electric companies.

Day-ahead Market: The short-term forward market for efficiently allocating transmission capacity and facilitating purchases and sales of energy and scheduled bilateral transactions; conducted by CAISO prior to the operating day.

Delivery point: the point at which a commodity will be delivered and received.

Federal Energy Regulatory Commission (FERC): FERC is a federal agency that regulates the interstate transmission of electricity, natural gas, and oil. FERC also reviews proposals to build liquefied natural gas terminals, interstate natural gas pipelines, as well as licenses hydroelectric generation projects.

Front Office: That part of a trading organization which solicits customer business, services existing customers, executes trades and ensures the physical delivery of commodities, which reports to the Chief Operating Officer.

Hedging products: Hedging products means capacity, energy, renewable energy credits or other products related to a specific transaction.

Hedging Transaction: A transaction designed to reduce the financial exposure of a specific outstanding position or portfolio; “fully hedged” equates to complete elimination of the targeted risk and “partially hedged” implies a risk reduction of less than 100%.

InterContinental Exchange (ICE): ICE s an American company formed in 2000 that operates global financial exchanges, clearing houses and provides mortgage technology, data and listing services.

Investor-Owned Utility (IOU): An IOU is a business organization providing electrical and/or natural gas services to both retail and wholesale consumers and is managed as a private enterprise. Pacific Gas & Electric Company (PG&E) and Southern California Edison (SCE) are examples of IOUs.

Middle Office: That part of a trading organization that measures and reports on market risks, develops risk management policies and monitors compliance with those policies, manages credit, and keeps management and the Board informed on risk managementissues, which reports to the Chief Financial Officer.

Speculation: Speculation is the act of trading an asset with the expectation of realizing financial gain resulting from a change in price in the asset being transacted.

Value-at-Risk (VaR): VaR is a risk tolerance metric that quantifies the extent of possible financial losses within a firm, portfolio, or position over a specific time frame.

Western Systems Power Pool (WSPP): WSPP is an organization of electrical wholesale market entities that have developed and utilize a standardized agreement (WSPP Agreement) to execute trading opportunities, allowing WSPP members to manage power delivery and price risk.

32

1 Energy Risk
Management Policy
(ERMP)
Fifth Revision October 2024 – Operations Board of Directors Approved Fourth Revision July 2023- Risk Management Committee Approved Third Revision June 2022– Operations Board of Directors Approved Second Revision November 2020 –Operations Board of Directors Approved First Revision September 2018 –Operations Board of Directors Approved Initial Version March 2018 –Policy Board of Directors Approved Style Definition: TOC 2

2 Table of Contents
Table of Contents
SECTION 1: ERMP OVERVIEW ................................................................................................................ 65

1.1 Background and Purpose ............................................................................................................. 65

1.2 Scope........................................................................................................................................... 76

1.3 Energy Risk Management Objective............................................................................................. 86

1.4 Policy Administration................................................................................................................... 87 SECTION 2: GOALS AND RISK EXPOSURES .............................................................................................. 97

2.1 ERMP Goals ................................................................................................................................. 97

2.2 Risk Catalog ............................................................................................................................... 108

2.2.1 Customer Opt-Out Risk ............................................................ Error! Bookmark not defined.8

2.2.2 Market Risk......................................................................................................................... 108

2.2.3 Liquidity Risk ....................................................................................................................... 118

2.2.4 Regulatory and Legislative Risk............................................................................................ 119

2.2.5 Volumetric Risk ................................................................................................................... 129

2.2.6 Model Risk .......................................................................................................................... 129

2.2.7 Operational Risk................................................................................................................ 1210

2.2.8 Counterparty & Generalized Credit Risk ............................................................................ 1210

2.2.9 Reputation Risk ...................................................................... Error! Bookmark not defined.10 SECTION 3: ORGANIZATIONAL STRUCTURE AND RESPONSIBILITIES.................................................... 1410

3.1 Risk Management Organizational Structure ............................................................................. 1411

3.2 Risk Management Committee (RMC) ....................................................................................... 1411

3.3 Segregation of Duties............................................................................................................... 1512

3.3.1 Front Office....................................................................................................................... 1512

3.3.2 Middle Office .................................................................................................................... 1613

3.3.3 Back Office........................................................................................................................ 1714 SECTION 4: BUSINESS PRACTICES....................................................................................................... 1815

4.1 General Conduct...................................................................................................................... 1815

4.2 Hedging & Trading Activities; Prohibition on Speculation ......................................................... 1815

3 4.3 Trading for Personal Accounts.................................................................................................. 1815

4.4 Conflict of Interest................................................................................................................... 1815

4.5 Adherence to Statutory Requirements..................................................................................... 1916

4.6 Authorized Products, Markets & Terms.................................................................................... 1916

4.7 System of Record..................................................................................................................... 2017

4.8 Transaction Valuation .............................................................................................................. 2017

4.9 Policy Compliance.................................................................................................................... 2017 SECTION 5: TOLERANCES ................................................................................................................... 2118

5.1 Hedging Tolerances................................................................................................................ 2118

5.1.1 Energy Procurement Tolerances........................................................................................ 2118

5.1.2 Renewable Energy Procurement Tolerances...................................................................... 2320

5.1.3 Capacity Procurement Tolerances ................................................................................... 2421

5.1.4 Carbon Free Energy Tolerances......................................................................................... 2521

5.1.5 Congestion Revenue Rights (CRRs) .................................................................................... 2622

5.2 Monitoring, Reporting and Instances of Exceeding Risk Limits.................................................. 2623 SECTION 6: CREDIT POLICY ................................................................................................................ 2724 SECTION 7: POSITION TRACKING AND MANAGEMENT REPORTING.................................................... 2825 SECTION 8: POLICY REVISION PROCESS.............................................................................................. 2926

8.1 Acknowledgement of Policy..................................................................................................... 2926

8.2 Policy Interpretations............................................................................................................... 2926 SECTION 9: DELEGATION OF FINANCIAL AUTHORITY.......................................................................... 3027 Appendix A: AUTHORIZED TRANSACTION TYPES, REGIONS, AND MARKETS ....................................... 3128 Appendix B: NEW TRANSACTION APPROVAL FORM........................................................................... 3229 Appendix C: DEFINITIONS .................................................................................................................. 3330 SECTION 1: POLICY OVERVIEW.................................................................................................................4

4

5 SECTION 1: POLICY ERMP OVERVIEW

1.:1 Background and Purpose
Central Coast Community Energy (“CCCE3CE”), formerly Monterey Bay Community Power Authority, is a public joint Joint powers Powers agency Authority (JPA) located within the geographic boundaries of Monterey, Santa Cruz, San Benito, San Luis Obispo, and Santa Barbara Counties. Member agencies of CCCE 3CE include the Counties of Monterey, San Luis Obispo, Santa Cruz, San Benito, and Santa Barbara, as well as certain incorporated cities located within the member counties1. and San Luis Obispo County. Presently, CCCE’s 3CE’s CCA Members include the following local government entities:

County of Santa Cruz County of
Monterey
County of San
Benito
City of San
Luis Obispo
County of Santa
Barbara
City of Santa Cruz City of Salinas City Hollister Morro Bay Santa Maria City of Watsonville City of Monterey City of San
Juan Bautista
Paso Robles Solvang
City of Capitola City of Pacific
Grove
Pismo Beach Goleta
City of Scotts Valley City of Carmel Grover Beach Carpinteria City of Seaside Arroyo Grande Guadalupe
City of Marina Buellton
Sand City
Soledad
Greenfield
Gonzales
Del Rey Oaks
Counties:

Santa Cruz Santa Barbera San Benito Monterey
Cities:

San Louis Obispo Santa Cruz Salinas Hollister
Morrow Bay Santa Maria Watsonville Monterey
San Juan Bautista Paso Robles Solvang Capitola
Pacific Grove Pismo Beach Goleta Scotts Valley

1 Presently, all cities within the five County footprint are 3CE members, with the exception of King City, Lompoc, and the City of Santa Barbara. 3CE will begin serving customers in Atascadero and the unincorporated portions of San Luis Obispo County in January 2025.

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6 Carmel Grover Beach Carpinteria Seaside
3CE exists to serve its local government members, and the residences and businesses located within their respective communities. 3CE’s specific objectives are to lower greenhouse gas (GHG) emissions by reliably supplying provide its customers with electricity sourced from clean and renewable generation resources at competitive rates along with innovative electrification programsa reliable supply of electricity, at competitive electric rates, sourced from a generation portfolio with lower greenhouse gas (GHG) emissions and higher renewable content than the incumbent utility, SCE. 3CE also has goals to be a catalyst forfunctions to stimulate the local economiceconomy development and give its member agencies greater choice in the energy procured for their residents.

Providing retail electric generation service to customers enrolled in the CCA program exposes CCCE3CE, and ultimately the customers it serves, to risks such as customer opt-out risk, market risk, regulatory risk, volumetric risk, model risk, operational risk, counterparty credit risk and reputation riskvarious significant but manageable risks. The intent of this Energy Risk Management Policy (ERMP) is to provide 3CE, and by extension its customers, with a framework to identify, monitor and manage risks associated with procuring power supplies and operating in wholesale energy markets.

This Energy Risk Management Policy (“Policy”) establishes CCCE’s Energy Risk Management Program (“Program”) including risk management functions and procedures to manage the risks associated with power procurement activities.

1.2 Scope
Unless otherwise explicitly stated in this Policythis ERMP, or other policies approved by the appropriate 3CE Board, this Policy this ERMP applies to all power procurement and related business activities that may impact the risk profile of CCCE3CE. This Policy ERMP documents the framework by which management and3CE staff and consultants will:
 Identify, and quantify and manage risk
 Develop and execute procurement strategies
 Create Develop a framework of controls and oversight
 Monitor, measure, and report on the effectiveness of the ProgramERMP 
To ensure its successful operation, 3CE hasmay partnered with experienced consultants to provide power supply services when appropriate. Specific to power procurement, 3CE has partnered with two third-party Scheduling Coordinators that augment 3CE’s internal Front (scheduling), Middle (monitoring) and Back (settlement) Officesrelated activities as discussed at Section 3.3. The Scheduling Coordinators, as well as all other consultants supporting 3CE’s power procurement activities, will adhere to and be governed by this ERMP in providing these services to 3CE. In addition, Scheduling Coordinators’ and other consultants’ activities executed on 3CE’s behalf will be governed by their own internal risk management policies and procedures, and prudent industry practices.

7 1.3 Energy Risk Management Objective
The objective of thise Energy Risk Management Policy ERMP is to provide a framework for conducting procurement activities that will manage risks to support CCCEfacilitate risk management in an effort to maximize the likelihood of 3CE meeting themeet 3CE’s goals as listed in Section 2.1.

Pursuant to this Policythis ERMP, CCCE 3CE will identify and measure the magnitude of the risks to which it is exposed and take the necessary steps to manage and reduce that riskthose risks to acceptable levels.

1.4 Policy Administration
Theisis Policy documen ERMPt shall be routinely reviewed and approved at least annually by the CCCE 3CE Operations Board of Directors (“Board”). The Risk Management Committee (“RMC”) and Operations Board must approve amendments to this Policythe ERMP, except for the appendices, which may be amended with approval of only the RMC. The RMC must give timely notice to the Board of any amendment it makes to an appendix or a reference policy or procedure document.

8 SECTION 2: STRATEGY/GOALS AND RISK EXPOSURES

2.1 Policy ERMP Goals
CCCE3CE operates in a dynamic, volatile environments and markets. Prices for energy and its underlying drivers, such as natural gas, are susceptible to unpredictable and sometimes significant changes in short intervals. Regulatory and legislative changesactions can structurally change markets, market price levels, and procurement requirements. Low liquidity and financial dislocations may lead to counterparty distress. CCCE3CE’s ’s Energy Risk Management Policy (ERMP) is designed to address these challenges. Its overarching goals are the following:
 Preserving the financial health and stability of CCCE3CE  Providing rate stability
 Ensuring the long-term viability of CCCE3CE
In furtherance of these goals CCCE 3CE strives to:
 Maintain a credit rating of A- or equivalent, as defined by S&P Global Ratings or an equivalent ratings agency
 Limit power supply cost variance to the annual budget to 10%, barring extraordinary circumstances
 Fund its Rate Stabilization Fund at levels that buffer customers from rate shock and maintain a 3-year rate trajectory and mantainmaintain a which is compecompetitive market position. with Investor-Owned Utilities (IOUs)
 The ERM PolicyERMP is a strategic document, not a prescriptive manual. The metrics, limits, used to measure and manage risk must continuously evolve to reflect industry best practices and ensure relevance and alignment with the policy’s 3CE’s goals. CCCE 3CE staff isis and executing specific plans, metrics, limits, hedging plans, and processes in accordance with the ERMP. Policy CCCE 3CE staff will report regularly to the Risk Management Committee CCCE 3CE aims to achieve these goals by managing the key risks identified in the Risk Catalog in Sat section 2.2 below. TMore specifically, the goals will be incorporated into the specific limits and metrics used to govern hedging activities and long-term procurement. It is important to note these goals are not intended to be a comprehensive list of CCCE’s 3CE’s goals.

To ensure CCCE 3CE is implementing best practices for an energy supplier of its size and scope, CCCE 3CE will engage an outside third-party energy risk management expert to conduct an annual audit and benchmark CCCE’s risk policy and internal processes. The results of audit will be presented to the RMC.perform an internal risk audit on a selected process or policy annually. Significant findings will trigger an external audit. Notwithstanding, external audits will occur every five years. Audit results will be presented to the RMC.

9 2.2 Risk Catalog
This Energy Risk Management Policy addresses the following key risks:
a) Attrition: Customer Opt-Out risk
b) Market risk
c) Liquidity Riskrisk
d) Regulatory risk
e) Volumetric risk
f) Model risk
g) Operational risk
h) Counterparty & Generalized Credit risk

2.2.1 Attrition: Customer Opt-Out Risk
Customer opt-out risk includes any condition or event that creates the potential for significant reductions in the CCA’s customer base, leading to the potential ofn higher retail rates, uncompetitive position, and further loss of customer base. Customer opt-out risk remains a primary risk for the CCA industry. Managing Opt-out risk requires the establishment of, and adherence to, certain metrics to limit optout risks, such as:Opt-out risk is managed through:
 Charging competitive retail generation rates, offering innovative energy programs to facilitate electrification, and reducing greenhouse gas (GHG) emissions  Engaging in ethical, transparent and honest business practices  Maintaining financial strength, including an adequate Rate Stability Reserves Fund  Retail rate competitiveness

2.2.2 Market Risk
Market (Energy energy Priceprice) volatility risk is the risk of losses due to the movements in power interest rates, and credit market prices. Power market price risk includes the risk of adverse price movements in energy, capacity, power basis, renewable attributes, and underlying drivers such as natural gas market prices. Interest rate and credit market price risks are considered when evaluating financing structures associated with long-term hedges or contracts. CCCE 3CE will manage market risk through the following:
 will deploy a range of metrics to measure market riskRegular measurement, such asincluding forward-looking stress tests based on multiple factors and Value-at-Risk (VaR) over multiple time periodshorizons.
 Execution of approved procurement
 Hedging and Congestion Revenue Rights strategies
LimitsUse of the Limit Structure is set forth in – such as those on position size, tenor, product type and

2.2.3 Liquidity Risk
Liquidity Risk is the risk of a lack of enough creditworthy buyers and sellers in a market to execute transactions at prices which reasonably reflect underlying fundamentals. This risk can make it

10 difficult for CCCE to execute hedging transactions, such as exits, that reduce risk and maximize they come due. This could occur if 3CE is unable to convert its assets into cash quickly enough to cover its immediate liabilities, or if it cannot secure financing at reasonable terms. 3CE will manage liquidity risk by maintaining sufficient cash reserves, having access to credit facilities, and implementing robust cash flow forecasting and monitoring processes to ensure it can meet its financial obligations and continue operations without disruption.

2.2.4 Regulatory and Legislative Risk
 Legislative and regulatory policy decisions, including technical market rule changes can have far-reaching impacts on prices, procurement requirements, asset values, and cash flows. CCCE will actively monitor and, where possible, shape legislative and regulatory policy to mitigate risk. CCCE will also quantify and forecast the financial impacts of proposed regulatory actions through scenario analysis. CCCE will mitigate potential regulatory risk by structuring procurement strategies and contracting practices to minimize potential policy change related impacts.

In addition to IOU-imposed surcharges, potential regulatory and/or legislative changes could affect the following:
 3CE’s ability to exercise local control over the manner and means of procuring power supplies to serve its customers
 Market prices
 Procurement requirements
 Cash flows
3CE will manage regulatory and legislative risks by the following activities:
 Regularly monitoring and analyzing legislative and regulatory proceedings impacting CCAs  Actively participating in, and advocating for, the interests of 3CE and its customers during regulatory and legislative proceedings

2.2.5 Volumetric Risk
Volumetric risk is the risk of variance in the expecteduncertainty in quantity of load served by CCCE3CE. amounts of both energy and renewable energy that 3CE must procure for its customers. Volumetric risk may be driven by factors such as attrition, weather, and behind-the-meter generation. Attrition opt-out risk is explicitly modeled under this policy. Weather is the biggest short-term driver of volumetric risk. CCCE 3CE will develop load distributions that account for a wide range of weather and size positions accordingly. CCCE 3CE may set limits on open positions by tenor, as appropriate, to volumetric risk.

2.2.6 Model Risk
Model risk is variance from modeled or forecasted outcomes due to fundamental deficiencies in models and/or information systems. CCCE 3CE will manage model risk by the following means:

11  validate Validating all models on an ongoing basis for robustness, update updating and/or frequentlyas needed
 Continually reviewing all model outputs
 , cCollaboratinge regularly with vendors, and exchanginge information & and best practices with peers bilaterally or in trainings and conferences
 Requiring all procurement transactions be recorded in a single trade capture system when that system is available.

2.2.7 Operational Risk
Operational risk is variance in financial performance due to weaknesses or failures in the quality, scope, content, and/or execution of hedging, procurement, and risk management functions. Operational risk also incorporates fraudulent actions by employees or third parties, particularly due to inadequate or ineffective controls. CCCE 3CE manages operational risk through a variety of methods:
 Timely and effective reporting to the Chief Executive Officer (CEO) and the RMC  Segregation of functions
 Layered oversight
 Implementation of a compliance training program for all 3CE staff  Ongoing 3CE and consultant staff education/training and participation in industry forums  Annual internal audits to test compliance with the ERMP , including regular reporting, segregation of functions, layered oversight, external audits, and staff training. Additional methods will be proposed to the RMC as appropriate.

2.2.8 Counterparty & Generalized Credit Risk
Counterparty risk is the risk that a counterparty will fail to perform or adequately remedy its obligations in accordance with contractual and transactional terms. Generalized credit risk is the risk of a generalized reduction in credit to a sector, a set of counterparties, or a specific counterparty that results in an increase in counterparty risk. The impact of counterparty failure on CCCE’s financials can be significant. CCCE 3CE will monitor counterparty risk based on a variety of metrics and analyses, including but not limited to an in-depth review of counterparty financials when not rated by a credit rating agency, exposure by credit rating, exposure by tenor and product type.

12 SECTION 3: ORGANIZATIONAL STRUCTURE AND RESPONSIBILITIESSECTION

3.1 Risk Management Organizational Structure
CCCE 3CE risk management is organizationally structured to ensure effective segregation of duties and multiple layers of oversight using a waterfall approach. Risk approval limits are contained in Exhibit DSection 9, the Risk Management Delegation of Financial Authority (DOFA).

The CCCE 3CE Operations Board of Directors (“Operations Board”) is responsible for approving the this energy risk management policyERMP. It reviews and approves this policy and approves risk exposures above those delegated to the Chief Executive Officer (CEO), or Risk Management Committee (RMC) in the DOFA.

The Risk Management Committee (RMC) is responsible for overseeing strategic compliance with this policy and approving risk exposures above those delegated to the CEO.

The Front Office is responsible for the energy short-term trading function and long-term negotiations of power supply contracts, mindful of the ERMP limits.

The Middle Office is responsible for ensuring compliance with the policy is ERMP and monthly reporting of risk exposure to the RMC. This segregates the monitoring from and trading functions, ensures adherence to risk limits and provides an important check and balance.

The Back Office is responsible for processing payments, ensuring adherence to contract terms and providinge appropriate reporting to regulatory agencies.

3.2 Risk Management Committee (RMC)
The CEO shall establish the RMC, set the agenda, and serve as its Chair. The RMC consists of the following voting members:
 Chief Executive Officer (CEO)
 Up to five (5) Members members of CCCE’s 3CE’s Policy and/or Operations Board of Directors, selected by the CEO
 Chief Financial Officer
 Chief Operating Officer
 Director of Regulatory and Legislative AffairsChief Communications Officer The RMC is responsible for overseeing strategic compliance with this policythis ERMP and approving exposures above those delegated to the CEO. This includes ensuring procurements and hedging are consistent with CCCE’s 3CE’s strategic goals.

13 Specifically, the RMC maintains the authority and responsibility to:
 Ensure that procurements are consistent with this policy ERMP and hedging plans based on financial objectives and situation.
 Approve procurements and risk exposures above those delegated to the CEO and up to the limits specified in the DOFA, based on the strategic goals of this ERM PolicyP and CCCE’s 3CE’s financial situation
 Understand and approve the limits, metrics, and product types necessary to ensure compliance with this policythis ERMP
 Review risk management reports as described in this Policy.this ERMP  Review actual and projected risks and financial outcomes and review summaries of violations of this policythis ERMP
 Refer to the Operations Board those exposures and risks above those delegated to the RMC in the DOFA

3.3 Segregation of Duties
CCCE 3CE shall maintain a segregation of duties, also referred to as "separation of function,” to help and control the risks outlined in this Policythis ERMP. Individuals responsible for legally binding 3CE to transaction will not alsoalso not perform confirmation or settlement functions without supplemental, transparent, and auditable controls. 3CE will leverage the organizational structure of the Scheduling Coordinator’s Middle and Back offices to help maintain a segregation of duties. The Front, Middle and Back Office responsibilities for 3CE are described below.

3.3.1 Front Office
The Front Office is headed by the Director of Power Supply Resources. The Front Office is responsible for the procurement and hedging activities necessary to manage CCCE’s 3CE’s wholesale power market positions and obligations. Specific responsibilities include:
 Developing long-term procurement strategies to reliably meet CCCE’s 3CE’s load-serving using a least-cost best-fit approach
 Developing annual, quarterly, and monthly hedge plans to prudently meet CCCE’s 3CE’s load-serving obligation using a mix of market transactions and CCCE 3CE’s power assets, such as dispatchable generation
 Optimize Optimizing CCCE’s 3CE’s load-supply balance and asset management strategies to prudently maximize value for CCCE 3CE customers while adhering to all risk management processes and limits
 Overseeing and directing scheduling of load and resources into the CAISO  Developing and use using fundamental and probabilistic analysis – such as power market supply-demand balances and transmission outages – to guide optimization, procurement, and hedging decisions
 Accurately recording all transactions in the system System of recordRecord

14  Accurately tracking open forward positions and hedge performance across tenorsfor all power products (energy, renewable energy, carbon-free energy and resource adequacy capacity)  Maintaining forward prices for all illiquid power products (renewable energy credits, carbon-free energy and resource adequacy capacity) in the System of Record  Execute Executing transactions and negotiate negotiating or amending contracts as needed to meet the above goals in accordance with the limits set out in the DOFA. Restructure Restructuring previously approved transactions and contracts as needed in accordance with the DOFA limitations
 Managing and facilitating the transaction execution process for power supply transactions through coordination of the following activities:
a. Notifying Front Office personnel of any anticipated unique physical delivery or scheduling issues
b. Working with Middle Office personnel and legal counsel to establish a contract, evaluate counterparty creditworthiness and secure additional credit from the counterparty, if necessary
c. Working with Middle Office, as needed, to perform an analysis of the potential transaction to evaluate the effects on 3CE’s portfolio risks d. Notifying Back Office of terms and conditions affecting settlement to ensure that the necessary settlement procedures are in place


3.3.2 Middle Office
The Middle Office functions are the responsibility of the Chief Financial Officer. The Middle Office is responsible for implementing, administering, and monitoring compliance with this policythis ERMP.

Specific responsibilities include:
 Developing market and transaction analytics that inform risk analyses of CCCE’s 3CE’s hedging procurement activities; , providing Front Office with an independent views as needed  Developing metrics and risk management processes for the risks identified in the Risk Catalog in this policythis ERMP
 Designing and setting hedging and procurement limits, including but not limited to product types, tenors, delivery points, counterparties, and markets.  Monitoring risk exposures and policy compliance on an ongoing basis, with monthly reporting to the RMC
 Validating all positions, prices, and forecasts in the System of Record  Developing limits with exchanges, brokers, and trading venues  Analyzing risk of the hedging and procurement plans developed by the Front Office.  Assisting consultants in dDeveloping and maintaining demand forecasts  Independently maintaining forward price curves for use in valuation, pricing, and monitoring.

Developing internal estimates of forward prices used in valuation, pricing and monitoring where credible liquid data is not available

15  Assisting in expert Valuingvaluation of CCCE all 3CE positions and contracts  Supporting settlement validation, as necessary Validating settlements  Reporting limit violations to the CEO and the RMC
 Calculating and maintainingValidating the net forward power positions of CCCE33CE  Assist Back Office in calculating Counterparty Credit Exposure 

3.3.3 Back Office
The Back Office is responsible for the administrative activities necessary to execute and settle transactions and contracts and to support the Middle Office where necessary to monitor compliance with this Policythis ERMP.

Specific responsibilities include:
 Confirming all transaction details (physical and financial) and reconciling differences with the trading counterparties
 Reviewing transaction confirmations for adherence to approved limits  Validating trade entry and flow through the system System of recordRecord  Validating and reconciling physical and financial transaction flows  Settling trades and calculating revenues and profit & loss  Providing settlement, credit, and other data as needed to the Middle Office and Finance to support monitoring of risk exposures and budget processes  Validating and promptly paying of energy related invoices payable by 3CE and resolving disputes with counterparties
 Generating and promptly collecting energy related invoices payable by counterparties

16 SECTION 4: BUSINESS PRACTICES

4.1 General Conduct
All personnel, including Members of the Operational and Policy Board of Directors, staff, and agents, (collectively referred to “3CE Representatives”) adhere to standards of integrity, ethics, conflicts of interest, compliance with statutory law and regulations and with applicable CCCE 3CE standards of personal conduct while employed by, contracted by, or affiliated with CCCE3CE.

4.2 Hedging & Trading Activities; Prohibition on Speculation CCCE 3CE contracts and trades in energy markets to hedge positions, reduce risk, and, in compliance with this policythis ERMP, prudently optimize the value of its portfolio of assets and market positions.

Speculative trading is explicitly prohibited under this policythis ERMP. Examples of speculative trading include trading a commodity where for which CCCE 3CE does not have an underlying position or risk, trading a product based solely on personal judgement about future market direction, taking positions in volumes that deviate significantly from CCCE’s 3CE’s underlying need, etc. Should a question arise about speculative trading activities, CCCE’s 3CE’s Middle Office will make an initial finding based on an analysis of the situation and present a written report to the CEO and the RMC. The RMC will make a final determination based on the situation.

4.3 Trading for Personal Accounts
All CCCE 3CE staff and agents are prohibited from trading the power and environmental products traded by CCCE3CE for personal accounts.

4.4 Conflict of Interest
CCCE 3CE staff are expected to meet the highest standards for ethical conduct, beyond just the specific matters discussed in this section.

CCCE 3CE staff responsible for negotiating, reviewing, and/or approving hedging activities and procurements are obligated to provide written notice to CCCE 3CE of any real or potential conflict of interest in the matter. An example of such a conflict of interest may be negotiating with a counterparty while seeking employment for oneself or a relative with that counterparty.

CCCE 3CE staff are prohibited from trading on information gained during hedging and procurement activities. An example of such an activity would be a CCCE 3CE employee directly or indirectly purchasing stock in a developer prior to the announcement of CCCE 3CE awarding that developer a significant contract. Purchases of pooled vehicles such as broadly diversified mutual funds and ETFs are exempted from this policythis ERMP.

CCCE 3CE Front Office staff are expected to seek best execution and least-cost best-fit product attributes from counterparties and intermediaries. Steering trades and contracts to counterparties

17 based on potential financial gain or personal relationships is prohibited.

Additionally, Conflicts of Interest shall be identified and defined as set forth in the CCCE 3CE Conflict of Interest Code, as amended from time to time by the Policy Board, which incorporates the Political Reform Act requirements for all employees advising CCCE3CE.

If there is any doubt as to whether a prohibited condition exists, then it is the employee’s Representative’s responsibility to discuss the possible prohibited condition with her/his manager or supervisor3CE General Counsel. Employees may seek an advisory position from the California Fair Political Practices Commission.

4.5 Adherence to Statutory Requirements
Compliance is required with rules promulgated by the state of California, California Public Utilities Commission (CPUC), California Energy Commission (CEC), Federal Energy Regulatory Commission (FERC), Commodity Futures Trading Commission (CFTC), and other regulatory agencies.

Congress, the FERC, and the CFTC have enacted laws, regulations and rules that prohibit, among other things, any action or course of conduct that actually or potentially operates as a fraud or deceit upon any person in connection with the purchase or sale of electric energy or transmission services. These laws also prohibit any person or entity from making any untrue statement of fact or omitting to state a material fact where the omission would make a statement misleading. Violation of these laws can lead to both civil and criminal actions against the individual involved, as well as CCCE3CE. This Policy ERMP is intended to comply with these laws, regulations, and rules and to avoid improper conduct on the part of anyone employed by CCCE3CE. These procedures may be modified from time to time by due to legal requirements, auditor recommendations, RMC requests and other considerations.

In the event of an investigation or inquiry by a regulatory agency, CCCE 3CE may provide legal counsel to employees. However, CCCE3CE, with the consent of the Operations Board, will not appoint legal counsel to an employee if CCCE 3CE determines that representation of the employee will create an actual conflict between the employee and CCCE3CE, or that the employee was not acting in good faith within the scope of employment.

4.6 Authorized Products, Markets & Terms
Transactions are conducted bilaterally, using standard contracts such as the Edison Electric Institute’s Master Power Purchase & Sale Agreement (EEI) or Western Systems Power Pool’s Agreement (WSPP), or through exchanges such as the InterContinental Exchange (ICE). CCCE 3CE’s CEO or their designee must authorize all transactions.

New products, tenors, markets, delivery points, and transaction types can be authorized by the RMC.

When seeking such approval, a New Product Approval Form, as shown in Appendix C, should be drafted describing all significant elements of the proposed product. This should include, at a minimum:

18  A description of the benefit to CCCE3CE, such as decreasing costs, managing volatility etcetc.  The role of the new product in 3CECCCE’s overall portfolio and risk management strategies  Risk analysis that identifies the specific risks mitigated by the new product and illustrates its application
 Transaction process, initial risk limits and settlement process  Proposed valuation methodology (including pricing model, where appropriate)  Proposed accounting methodology
CCCE’s 3CE’s CEO or their designee is responsible for requesting the RMC’s approval. If approved, Appendix A to the Policy will be updated to reflect the new transaction type.

4.7 System of Record
CCCE 3CE will maintain a secure set of records for all transactions executed in association with CCCE 3CE procurement activities. 3CE’s Technology and Data & Analytics group supports the security, integrity, and recoverability of the System of Record. For data recoverability, transaction data stored in the System of Record is replicated daily to ensure data redundancy and is backed-up via cloud-based applications.

The records will be maintained in US dollars and transactions will be separately recorded and categorized by type of transaction. This system of record shall be auditable and audited as appropriate.

4.8 Transaction Valuation
Transaction valuation and reporting of positions shall be based on objective, market-observed prices.

Whenever possible, mark-to-market valuations should be based on independent, publicly available market information and data sources. The Middle Office will be responsible for independently validating and reporting marks and, valuations, and settlements.

4.9 Policy Compliance
The Middle Office will provide a monthly report to the RMC monitoring compliance with the limits established by this Policythe ERMP.

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19 SECTION 5: TOLERANCES

5.1 Hedging Tolerances
Hedging tolerances for Energyenergy, renewable attributes, and capacity (Resource resource energy are shown below. From time to time, the middle Middle officeOffice, in response to market recommend adjustments to these ranges.

5.1.1 Energy Procurement Tolerances
Fixed Price Energy purchases provide for suppliers to deliver energy – for which 3CE will receive energy market revenues – to 3CE at a fixed price. They are used to manage the electricity commodity price risk that 3CE faces as a Load Serving Entity. Specific to 3CE ‘s customers, Fixed Price Energy hedges are used to provide cost certainty and rate stability.
3CE predominantly employs Fixed Price Block Energy contracts, which provide for suppliers to deliver a predetermined volume of energy at a constant delivery rate. As 3CE enters into long-term, fixed price contracts for renewable and/or carbon-free energy, these will likewise hedge 3CE’s market risk and, subsequently, reduce the required volume of Fixed Price Block Energy purchases.

When assessing its requirements for Fixed Price Energy, 3CE will use an econometric model to forecast hourly energy requirements and monthly peak demand by customer load class. The model will use historical data to estimate relationships between energy consumption and economic, demographic and/or weather variables. The model will be refined through time as additional load and other data is acquired.
3CE will observe the following schedule when hedging its Fixed Price Energy Requirements. The Minimum and Maximum hedge % represent the Fixed Price Energy planned or under contract divided by forecasted wholesale load.

Quarter
Minimum
Hedge %
Maximum Hedge
%
Prompt Q
(PQ) 85% 110%
PQ + 1 80% 110%
PQ + 2 74% 110%
PQ + 3 69% 110%
PQ + 4 63% 105%

20 PQ + 5 58% 99%
PQ + 6 52% 93%
PQ + 7 47% 87%
PQ + 8 41% 82%
PQ + 9 36% 76%
PQ + 10 - 39 30% 70%
Notwithstanding the maximum hedge levels shown in the above table, there shall be no maximum hedge level in quarters in which 3CE only owns long-term power purchase agreements and energy storage agreements.

Energy hedging compliance will be measured within 5 days prior to the first day of each quarter (e.g., on a date between September 26th and September 30th, 2024, 3CE will have hedged 85 to 110 percent of its projected energy requirements for Q4 2024 and 80 to 110 percent of requirements for Q1 2025).

The minimum hedge level will be achieved by implementing a time-driven programmatic strategy.

Time- driven programmatic hedges are executed at a predetermined rate pursuant to a time schedule and without regard for market conditions. The purpose of these hedging transactions is to achieve a reduction in variability in power supply costs by gradually increasing the amount of energy hedged as the actual date of consumption approaches. Time-driven strategies avoid the inherent impossibility of trying to consistently and accurately “time the market” to purchase energy at least cost when making hedging decisions. Additionally, a load serving entity the size of 3CE needs to spread its procurement efforts over time to effectively manage the potential negative price impacts of procuring a large volume of energy, over a short period of time, in an illiquid market.

Hedging decisions to reach targets between the minimum and maximum hedge levels will be based on price-driven or opportunistic strategies. The purpose of price-driven or opportunistic strategies is to capitalize on market opportunities when conditions are favorable. 3CE will base its decision to execute opportunistic hedges on the anticipated impact to projected power supply costs and the resulting reduction in risk.

Opportunistic hedges may be executed when energy price levels are favorable to lowering the cost of power relative to established program goals and financial projections; alternatively, opportunistic hedges can be executed in adverse market conditions relative to financial goals in order to reduce the potential negative impact of continued upward trending commodity prices relative to established goals.

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21 repositioned or unwound for the purpose of maintaining hedge coverage that matches changes in forecast electric load or supply. This includes the ability of 3CE to use liquid market products to hedge average loads over a defined time period and then later modify its hedges to more precisely match load.

In order to cost-effectively meet its GHG-reduction and renewable energy goals, 3CE intends to meet a growing share of its energy supply requirements with renewable energy, a large portion of which will be Product Content Category 1 (PCC1) renewable energy. PCC1 renewable energy is sourced from a renewable generator that is either directly interconnected to the California Independent System Operator (CAISO) or another California Balancing Authority or directly scheduled into CAISO without use of substitute energy. 3CE shall diversify its renewable energy portfolio further by incorporating Portfolio Content Category 2 (PCC2) renewable energy purchases. PCC2 renewable energy is sourced from renewable generators located outside the state of California, where that generation is “firmed and shaped” for delivery into California. PCC2 purchases are typically less expensive and shorter in term than PCC1, so they provide a cost-effective and flexible method of augmenting 3CE’s renewable energy purchases to meet renewable portfolio content commitments to customers. However, not all PCC2 renewable energy is emissions-free; therefore, 3CE must assess the value of PCC2s against its respective emissions intensity. In addition, RPS compliance rules set minimum requirements for PCC1 and PCC2 as a percentage of the total RPS compliance portfolio, which 3CE will abide by in its procurement of both products.

In order to manage price risk of long-term renewable energy, and to allow 3CE to prudently and methodically build a portfolio of long-term assets, 3CE intends to meet its renewable energy targets with a blend of short- and long-term contracts. 3CE intends to fully comply with long-term contracting requirements mandated by SB 350; therefore, executed and planned long-term renewable contracts will be reflected in 3CE’s renewable energy positions.
3CE shall observe the following schedule while hedging its renewable energy requirements. This hedge schedule shall be measured within 5 days prior to the first day of each quarter for the Current Calendar Year, and within 5 days prior to December 1 of each year for the following ten Calendar Years.

Time Period Minimum Hedge %
of Mandate
Maximum Hedge %
of Demand
Current Calendar Year 90 110*
Prompt Calendar Year 80 110*
PY + 1 50 105

22 PY + 2 50 100
PY + 3 50 95
PY + 4 - 9 50 95
* Maximum hedge percentages allow for a planning margin to accommodate volumetric uncertainty associated with electric consumption and generation

5.1.3 Capacity Procurement Tolerances
Period Minimum Tolerance Maximum Tolerance Target
Prompt Month 100% of required 100% of required 100% of required Prompt Quarter 90% of required 100% of required 100% of required Year 1 (Current Year) 90% of required 100% of required 100% of required Year 2 80% of required 100% of required 90% of required Year 3 50% of required 100% of required 70% of required Year 4 20% of required 70% of required 50% of required
Year 5 0% of required 50% of required 40% of required
As a Load-Serving Entity (LSE) in California, 3CE is required to demonstrate both annually and monthly that it has secured sufficient energy capacity to provide for its share of California’s energy load; this capacity is referred to as resource adequacy (RA).

RA is typically transacted via contracts that vary in length, and it is currently bought and sold via a bilateral market. This market provides cost-effective contracting opportunities, but also proves at times to be fragmented and volatile. It is the goal of 3CE to meet all RA requirements, including local, flexible, and system requirements.
3CE will observe the following schedule when hedging its RA requirements. The hedge schedule shall be measured for the system RA product by month that 3CE is required to procure within 5 days prior to December 1 of each year for the Prompt Calendar Year and the nine subsequent calendar years.

Time Period Minimum Hedge %
(applicable to all months and
hours)
Maximum Hedge %
(applicable to peak month and
shortest hour only)2
Prompt Calendar Year 90 100

2 Due to the variable nature of 3CE’s monthly RA requirements, non-peak months may exceed the applicable Maximum Hedge %.

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23 PY + 1 50 95
PY + 2 35 90
PY + 3 35 80
PY + 4 - 9 35 80

5.1.4 Carbon-Free Energy Tolerances
In pursuit of its GHG-reduction objections, 3CE shall augment its renewable energy purchases outlined above with energy purchases from carbon-free energy generating facilities, which are typically hydroelectric resources located in California that are too large to qualify as Eligible Renewable Resources (30 MW or greater) or located outside of California. Similar to PCC2 renewable energy contracts, carbon-free energy purchases are typically short-term, most frequently one to three years in length.
3CE may have the opportunity to receive free carbon-free energy allocations from PG&E and SCE at zero cost. Hedging activity should consider these allocations and expected allocations should be included in the hedging percentages.
3CE will observe the following schedule when hedging its carbon-free renewable energy requirements.

This hedge schedule shall be measured within 5 days prior to the first day of each quarter for the Current Calendar Year, and within 5 days prior to December 1 of each year for the following ten Calendar Years.

Time Period Minimum Hedge % Maximum Hedge %
Current Calendar Year 85 110*
Prompt Calendar Year 75 110*
PY + 1 50 110
PY + 2 25 100
PY + 3 0 75
PY + 4 - 9 0 75
* Maximum hedge percentages allow for a planning margin to accommodate volumetric uncertainty associated with electric consumption and generation In setting the above targets, it is important to note that the purchase of carbon-free energy is a Formatted: Font color: Accent 1
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24 voluntary requirement set by the 3CE Board to exceed states’SCE’s GHG emissions goals. In determining the total volume of carbon-free energy to be hedged, the 3CE Board may elect to increase or reduce the total quantity of carbon-free energy included in 3CE’s portfolio as it seeks to balance multiple program objectives, including financial goals such as targets for financial reserves and retail rates.

5.1.5 Congestion Revenue Rights (CRRs)
As a CAISO market participant, 3CE has congestion risk associated with serving its customer load. 3CE manages congestion risks by preferring day ahead scheduling of energy delivered at NP-15 and SP-15, and by resource assessment and selection consistent with this ERMP. Once energy is procured, 3CE manages congestion risk through the prudent management of CRRs, which are financial instruments used to hedge against transmission congestion costs encountered in the CAISO day-ahead market. The RMC is responsible for overseeing the management of CRRs and CRR trading. The CRR portfolio will be managed by 3CE 's Front Office with support from 3CE’s Scheduling Coordinator. CRRs are transacted to effectively manage portfolio congestion risk, through hedging and value maximization. Trading of CRRs for speculative purposes is not permitted.

CRR position restriction: 3CE shall not use the annual or monthly CRR auctions to do any of the following:
 Increase CRR holdings on paths not related to 3CE’s generation, storage or inter-scheduler trades (ISTs)3
 Increase CRR holdings above expected generation, discharge or IST volumes on paths related to 3CE’s generation, storage or ISTs

5.2 Monitoring, Reporting and Instances of Exceeding Risk Limits The Middle Office is responsible for monitoring, and reporting compliance with, all limits within this Policythis ERMP. If a limit or control is violated, the Middle Office will notify the CEO and the RMC. The RMC will discuss the cause and potential remediation of the exceedance to determine next steps for curing the exceedance.

3 Inter-scheduler trades source at NP-15. In addition to purchasing CRRs at NP-15, 3CE may additionally purchase CRRs on paths that have been found to be good proxies for NP-15.

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25 SECTION 6: CREDIT POLICY
Counterparty and generalized credit risk are significant risks to 3CECCCE’s financial operations. The Office will conduct a thorough analysis of all candidate counterparties prior to approving them to transact. This analysis will include but not be limited to analyzing the proposed counterparty’s financial statements (if unrated), credit rating, liquidity, hedge levels, market sensitivity, and business operations. The Middle Office will determine whether to extend an unsecured or secured credit line to the candidate counterparty, as appropriate. The maximum unsecured credit line that can be extended to any counterparty is $50 Million.

In addition to individual counterparty limits, the Middle Office will set limits by credit rating, tenor, product, and, where appropriate, transaction type and delivery type. For example, it may set an overall limit of $50 million for counterparties rated BB+ that supersedes the BB+ counterparties’ individual credit approvals of $100 million. This will limit the concentration of credit risk.

Counterparty credit health and generalized credit conditions will be monitored on an ongoing basis.

Individual counterparty limits or aggregate credit limits by tenor/product/credit rating may be adjusted up or down to reflect current conditions. Counterparties who exceed limits must promptly post enough collateral to come into compliance or have risk having their positions liquidated.

26 SECTION 7: POSITION TRACKING AND MANAGEMENT REPORTING Minimum reporting requirements are shown below. The reports outlined below will be made available to RMC members:
 Monthly Financial Model Forecast
Latest projected financial performance, marked to current market prices, and shown relative to financial goals
 Monthly Net Position Report
LatestPrepare a forward net position reports of all product classes and report the results to the RMC
 Monthly Counterparty Credit Exposure
CThis report will show credit exposures for transactions executed by CCCE3CE  Monthly Risk Analysis
This wilTol include a stress test of financial forecast relative to financial goals

27 SECTION 8: POLICY REVISION PROCESS
CCC’s 3CE’s Energy Risk Management Policy (ERMP) will evolve over time as market and business change. At least on an annual basis, the RMC will review this Policythe ERMP and associated procedures determine if they should be amended, supplemented, or updated to account for changing business and/or regulatory requirements. If an amendment is warranted, the Policy ERMP amendment will be submitted to the 3CE CCCE Operations Board for approval. Changes to appendices to this Policythis approved by the RMC.

8.1 Acknowledgement of Policy
Any 3CE CCCE employee participating in any activity or transaction within the scope of this Policy the on an annual basis or upon any revision, a statement approved by the RMC that such employee:
 Read 3CECCCE’s Energy Risk Management PolicyERMP
 Understands the terms of said PolicyERMP
 Will comply with said PolicyERMP
 Understands that any violation of said Policy ERMP shall be subject to employee discipline up to and including termination of employment.

8.2 Policy Interpretations
Questions about the interpretation of any matters of this Policy ERMP should be referred to the CEO. matters stemming from this Policy ERMP will be referred to General Counsel.

28 SECTION 9: DELEGATION OF FINANCIAL AUTHORITY
The Policy and Operations Boards of Directors (Boards) explicitly delegates approval of transactions to the CEO and the RMC as outlined in the following table:

Position Maturity Limit Term Limit Value Limit ($)1
Risk Management Committee 96 Months 60 Months 110,000,000 Chief Executive Officer 96 Months 60 Months 65,000,000
1 “Value Limit” is the total notional value of the transaction, inclusive of any related procurement fees.

These delegated authorities may be further delegated and used to set hedging and procurement limits necessary to manage 3CE’s portfolio. For example, the CEO could authorize the Front Office to trade up to the CEO’s authority limits in approved products.

Additionally, to adapt to changing market conditions and to facilitate the daily operations of 3CE, the Boards have delegated authority to the CEO (or designee) to execute administrative amendments to duly approved transactions where such amendments do not exceed the CEO’s delegated authority as set forth above (for clarity, amendments exceeding Maturity, Term or Value limits shall require Operations Board approval) and further reduces 3CE’s risk in furtherance of this ERMP. Such administrative amendments must be reported during the next RMC meeting and Operations Board meeting.

These authorities will be applied to wholesale power activity executed outside of the California Independent System Operator (“CAISO”) markets. These limits provide 3CE needed authorities to manage risks as they arise. Transactions falling outside the delegations above require Board approval prior to execution. Activity with CAISO is excluded from this table due to the nature of the market, where prices for activity may not be known until after transactions are committed.

All procurement executed under the delegation above must align with the 3CE’s underlying risk exposure (locational, volume and temporal) that is being hedged consistent with the approved Procurement Strategy.

The point of delivery for all products must be at a location on the CAISO transmission grid.

29 Appendix A: AUTHORIZED TRANSACTION TYPES, REGIONS, AND MARKETS All transaction types listed below must be executed within the limits set forth in this PolicyERMP. (The Over the Counter Products
 CAISO Market Products
o Day-ahead and Real-time Energy
o Congestion Revenue Rights
o Convergence bids
o Inter Scheduling Coordinator Transactions
o Tagging into and out of CAISO
 Physical Power Products
o Power
o Physical Over-the-counter Options
o Physical Resource Adequacy Capacity
o Import Capability Rights
 Physical Transmission Products
o Physical WECC transmissionTransmission
 Physical Environmental Products
o Renewable Energy Credits
o Specified Source Power
o Carbon Allowances and Obligations
 Financial Power Products
o Power
o Financial Over-the-counter Options
 Broker Fees

30 Appendix B: NEW TRANSACTION APPROVAL FORM
New or Non-Standard Transaction Approval Form
Prepared By:

Date:

New or Non-Standard Transaction Name:

Business Rationale and Risk Assessment:
 A description of the benefit to CCCE3CE, such as decreasing costs, managing volatility etc.  The role of the new product in 3CECCCE’s overall portfolio and risk management strategies  Middle Office risk analysis that identifies the specific risks mitigated by the new product and illustrates its application
 Transaction process, initial risk limits and settlement process  An assessment of the legal, tax, and regulatory aspects of the product  Proposed valuation methodology (including pricing model, where appropriate)  Proposed reporting requirements, including any changes to existing procedures and system requirements necessary to support the new transaction type  Proposed accounting methodology
Reviewed by:

Chief Operating Officer Date
Chief Financial Officer Date
General Counsel Date
Chief Executive Officer Date

31 Appendix C: DEFINITIONS
Back Office: That part of a trading organization which handles transaction accounting, confirmations, management reporting, contract administration and working capital management, which reports to the Chief Operating Officer.

Bilateral Transaction: Any physical or financial transaction between two counterparties, neither of whom is an Exchange or market entity such as CAISO.

Cash Flow at Risk: A measure of the potential shortfall in cash flow from a specified level during a specified period of time at a specified confidence level.

CAISO: California Independent System Operator. CAISO operates a California bulk power transmission grid, administers the State’s wholesale electricity markets, and provides reliability planning and generation dispatch.

California Energy Commission (CEC): CEC is the primary energy policy and planning agency for California.

California Fair Political Practices Commission (FPPC): FPPC is a five-member independent, non-partisan commission that has primary responsibility for the impartial and effective administration of the Political Reform Act.

California Public Utilities Commission (CPUC): CPUC is a regulatory agency that regulates privately owned public utilities in the state of California, including electric power, telecommunications, natural gas and water companies.

Community Choice Aggregator (CCA): CCAs allow local government agencies such as cities and/or counties to purchase and/or develop generation supplies on behalf of their residents, businesses, and municipal accounts.

Commodity Futures Trading Commission (CFTC): The CFTC is a U.S. federal agency that is responsible for regulating commodity futures and swap markets. It goals include the promotion of competitive and efficient futures markets and the protection of investors against manipulation, abusive trade practices and fraud.

Clearing: Clearing is the process of reconciling purchases and sales of a commodity, as well as the direct transfer of funds from one financial institution to another. The process validates the availability of funds, records the transfer, and in the case of financial securities, ensure the delivery to the buyer.

Commodity: A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities aremost often used asinputsin the production of other goods orservices. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commoditiesmust alsomeetspecifiedminimum standards, also known as a basis grade.

Confirmation Letter: A letter agreement between two counterparties that details the specific commercial terms (e.g., price, quantity and point of delivery) of a transaction.

Congestion Revenue Right: A point-to-point financial instrument in the Day-Ahead Energy Market that entitles the holder to receive compensation for or requires the holder to pay certain congestion related transmission charges that arise when the transmission system is congested.

32 Counterparty Credit Risk: The risk of financial loss resulting from a counterparty to a transaction failing to fulfill its obligations.

Counterparty Credit Exposure: This measures the known exposures and is represented by the sum of both (a)Realized exposure and (b) Forward exposure, as those terms are defined below:

Realized exposure: payable or receivable amount owed between counterparties, is a measurement of cash flow for billed and unbilled transactions.

Forward exposure: measure of current unrealized exposure and includes the measure of a counterparty’s incentive to fulfill contractual obligations. Forward exposure measures the risk associated with having a payment default or the need to replace a transaction in the event of delivery default.

Edison Electric Institute (EEI): EEI is an association that represents all U.S. investor-owned electric companies.

Day-ahead Market: The short-term forward market for efficiently allocating transmission capacity and facilitating purchases and sales of energy and scheduled bilateral transactions; conducted by CAISO prior to the operating day.

Delivery point: the point at which a commodity will be delivered and received.

Federal Energy Regulatory Commission (FERC): FERC is a federal agency that regulates the interstate transmission of electricity, natural gas, and oil. FERC also reviews proposals to build liquefied natural gas terminals, interstate natural gas pipelines, as well as licenses hydroelectric generation projects.

Front Office: That part of a trading organization which solicits customer business, services existing customers, executes trades and ensures the physical delivery of commodities, which reports to the Chief Operating Officer.

Hedging products: Hedging products means capacity, energy, renewable energy credits or other products related to a specific transaction.

Hedging Transaction: A transaction designed to reduce the financial exposure of a specific outstanding position or portfolio; “fully hedged” equates to complete elimination of the targeted risk and “partially hedged” implies a risk reduction of less than 100%.

InterContinental Exchange (ICE): ICE s an American company formed in 2000 that operates global financial exchanges, clearing houses and provides mortgage technology, data and listing services.

Investor OwnedInvestor-Owned Utility (IOU): An IOU is a business organization providing electrical and/or natural gas services to both retail and wholesale consumers and is managed as a private enterprise. Pacific Gas & Electric Company (PG&E) and Southern California Edison (SCE) are examples of IOUs.

Middle Office: That part of a trading organization that measures and reports on market risks, develops risk management policies and monitors compliance with those policies, manages credit, and keeps management and the Board informed on risk managementissues, which reports to the Chief Financial Officer.

Speculation: Speculation is the act of trading an asset with the expectation of realizing financial gain resulting from a change in price in the asset being transacted.

Value-at-Risk (VaR): VaR is a risk tolerance metric that quantifies the extent of possible financial losses within a firm, portfolio, or position over a specific time frame.

33 Western Systems Power Pool (WSPP): WSPP is an organization of electrical wholesale market entities that have developed and utilize a standardized agreement (WSPP Agreement) to execute trading opportunities, allowing WSPP members to manage power delivery and price risk.

34 Appendix D: DELEGATION OF FINANCIAL AUTHORITY
1 “Value Limit” is the total notional value of the transaction, inclusive of any related procurement fees.

RESOLUTION NO. PB-2024-03

A RESOLUTION OF THE CENTRAL COAST COMMUNITY ENERGY OPERATIONS BOARD OF

DIRECTORS APPROVING AMENDMENTS TO THE ENERGY RISK MANAGEMENT POLICY WHEREAS, Central Coast Community Energy (3CE) is a Joint Powers Authority (JPA) established and operated pursuant to California Government Code sections 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, 3CE’s Energy Risk Management Policy (“ERM” Policy) was originally adopted by the Policy Board of Directors on March 7, 2018; and
WHEREAS, the ERM Policy was revised and amended on September 5, 2018, November 4, 2020, and June 30, 2022 by the Operations Board of Directors; and WHEREAS, the ERM Policy requires that it be reviewed at least annually to ensure it evolves to address potential market, regulatory, or business changes that impact 3CE’s procurement of energy and energy related products; and

NOW, THEREFORE, THE CENTRAL COAST COMMUNITY ENERGY OPERATIONS BOARD OF DIRECTORS DOES HEREBY RESOLVE, DETERMINE, AND ORDER AS FOLLOWS:

1. The amended Central Coast Community Energy, Energy Risk Management Policy, which is attached hereto as Attachment A, is hereby approved.

2. The Resolution shall take effect immediately upon adoption.

PASSED AND ADOPTED this 9
th Day of October 2024, by the following vote:

AYES:

NOES:

ABSENT:
__________________________________
Chair, Jamie Goldstein
Attest:
_________________________________
Board Clerk, Heather Vowell