Policy Board of Directors
March 19, 2025
2024
Annual Impact Report
Our 2024 Annual Report to the Community
Accomplishments
Benefits of 3CE
Customer-Focused
Campaign Highlights
Together,
Power for Good
3 Clean Energy Highlights
4 Sourced 409 Megawatts
of clean & renewable energy in 2024, enough to power 350,850 households with renewable energy.
Sourcing Renewable Energy
avoided more than 445,000 metric tons of CO2, the equivalent of taking 105,911 gasoline-powered passenger vehicles off the road for a year.
Willow Rock Energy Storage Center
Storage is essential for CA's transition to carbon-free energy Not a typical battery
Utilizes compressed air to generate power on demand
Largest Compressed Air Energy Storage Project in the world Innovation supports a resilient and sustainable energy future Building Capacity
New Renewable Energy Projects In Development
5 Building Capacity
New Renewable Energy Project Under Construction
6 Atlas Solar
1 gigawatt solar energy generation
150 megawatts for 3CE customers
Enough to power 105,100 homes
Aratina Solar + Storage
530 megawatts solar energy generation
600 megawatts battery storage capacity
120 megawatts for 3CE customers
Enough to power 90,000 homes
Building Capacity
New Renewable Energy Projects Under Construction
7 Victory Pass Solar + Storage
200 megawatts solar energy generation
50 megawatts battery storage capacity
100 megawatts for 3CE customers
Enough to power 68,000 homes
Generating Results
New Renewable Energy Projects Delivering Energy
8 3CE Gives Customers the Power to
Do More with their Energy
9 Customers plug in to rebates, transition to clean energy Since 2018, nearly 7,000 customers have received 3CE rebates $11 million in rebates distributed in 2024
$4 million in rebates distributed to income qualified customers and disadvantaged communities
Making a Difference Energy Program Incentives
10 Snapshot of Rebates & Incentives (CY 2024):
2,843 Electric Vehicles
2,085 EV Chargers
1,663 Projects for EV Readiness
38 Electric Buses
746 All-Electric Water Heaters & HVAC
1,458 All-Electric Affordable Housing Units
93 All-Electric Agriculture Equipment Projects
Tools for Customers to Take Control
11 Customer Choice
Ohm Connect partnership
Residential Battery Rebate Program
Community Investment
New Construction Electrification Program Rebates
12 200 new, all-electric affordable homes
Tabasa Gardens in Watsonville, Santa Cruz County
Pismo Terrace in Pismo Beach, SLO County
Bienestar Apartments in Live Oak, Santa Cruz County
Alfred Diaz-Infante Apartments in Marina, Monterey County
Covering Ground & Connecting with Customers
13 2024 Highlights:
160 community events
41 memberships and partnerships with CBOs
7 webinars in English and Spanish
2 community workshops
Speaking Your Language
14 Unique and diverse needs of the Central Coast
Spanish-language material and 1:1 service
Action Plan for Underserved Communities
Tailored workshops and forums
Promotional Campaigns
15 To Raise Customer Awareness & Engagement
Enrollment Mailers
Education, Awareness, Opt-Out info
Advertising Campaign
Digital, TV, Radio, Print
Facebook, Instagram, Hulu, NextDoor
NextDoor = highest engagement
Getting the Word Out
Campaign Report Customer Engagement
16 Total Users + 43%, Sessions +254%, Page Views +92% Homepage (Most Popular)
Rebates & Incentives (2nd)
Enrollment Webpage (3rd)
Campaign Report Customer Engagement
TOTAL USERS TRENDING
Enrollment campaign ended with strong metrics
Large spikes in total users on the site correlate to new ads Rincon Farms and Atascadero videos were key
ANALYTICS & METRICS
Total Users
+43.3% YOY
27,731
New Users
511
Sessions
+254.2% YOY
118,066
Enrollment Page Engagement
31.35%
Page Views
+92.2% YOY
149,937
Avg Benchmark Engagement Rate
14.99%
17 ADS IN ACTION
18 Ag Electrification with Rincon Farms
AG ELECT VIDEO LINK
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This Photo by Unknown Author is licensed under CC BY-NC 19 Consent Calendar
2. Approve minutes from the December 11, 2024, meeting of the Policy Board of Directors
3. Update on 3CE's Energy Programs
4. Regulatory and Legislative Quarterly Update
5. Financial report for the period October 1, 2023, through December 31, 2024
6. Investment Performance Report for the period of October 1, 2023, through September 30, 2024
7. Investment Performance Report for the period of October 1, 2024, through December 31, 2024
8. Adopt Resolution No. PB-2025-01 establishing a Claims Procedure Pursuant to Government Code Section 935
Item 9
CEO Report
Staffing Update
Community Advisory Council Report
EV Charger Asset Pilot Update
Power Supply Update
California Public Utilities Commission Action on General Order 167
Receive a presentation on the Power Charge Indifference Adjustment and provide staff direction Item 10
Power Charge Indifference Adjustment (PCIA) Overview
3CE Policy Board
March 19, 2025
24 PCIA Policy Goal
Public Utility Code Sections 366.1 and 366.2 require the CPUC to ensure that costs incurred on behalf of customers leaving the utility do not unfairly burden remaining utility customers. To create customer indifference, CCA and Direct Access customers, also called “departing load,” are required to pay a Power Charge Indifference Adjustment (PCIA).
PCIA in Concept
Legacy costs
Cca formations
Iou portfolio management
PCIA impact
Indifference is Fair & Reasonable
Without the PCIA, the remaining utility customers would need to assume costs that the IOUs incurred with the expectation of serving the customers that now receive electric service from CCAs or Direct Access providers.
PCIA Variables and Swings ($/kwh)
PCIA Variables and Swings
High PCIA
Low PCIA
Market Price Benchmarks
IOU Trigger Applications
Types of transactions that are counted
Annual Energy Resource Recovery Account (ERRA) Proceeding
Timeline of Structural PCIA Changes
33 PCIA components influences a range of operational factors:
How does the PCIA impact 3CE’s customers?
The PCIA does not change 3CE’s Generation Rates directly, but indirectly:
A high PCIA can impact customer opt out rates.
If large amounts of customers opt out, 3CE could be over procured, which would increase remaining customer rates. 3CE does not have a stranded cost recovery mechanism like the PCIA, which provides a one-way benefit. 3CE considers PCIA in looking at overall competitiveness during its rate design process.
How 3CE can reduce volatility:
Questions?
Presentation of the FY 2023-24 Audited Financial Statements ITEM 11
Summary
3CE received a clean audit opinion of its FY 2023-24 financial statements FY 2023-24 was a year of increased cost of electricity
To mitigate the increased cost, especially energy attributes, the Policy Board adopted increases in rates in PG&E service territory on October 1, 2023 and January 1, 2024 Energy costs exceeded estimates and at year-end net position totaled $218 million, a $24 million decrease from the prior year 41 The Audit
3CE engaged the services of Pisenti & Brinker for auditing of the financial statements and internal controls Midway into the audit, Pisenti & Brinker merged practices with Kosmatka Donnelly & Co. - no changes to staffing or contractual terms Auditors issued an unmodified opinion, affirming the material accuracy of the financial statements No adjustments to the statements nor weaknesses in internal controls Auditors from Kosmatka Donnelly & Co. are available for any questions regarding the audit at the end of the presentation 42 Financial Highlights
FY 2023-24 Highlights:
The net position decreased by $24 million
Cash, cash equivalents, and short-term investments decreased by $29 million over the prior year Operating revenues grew by $93 million from the prior year, driven primarily by the two rate adjustments to reflect the increased cost of energy The cost of energy increased by approximately $149 million due to rising energy attribute costs, Resource Adequacy (RA) and Renewable Energy Certificates (RECs) Non-energy operating costs increased by $6 million, mainly from higher participation in energy programs and personnel due to increased FTEs and data manager fees 43 Budget vs Actuals
The Mid-Year Forecast projected a $13 million decrease in net position by year end from higher than budgeted RA costs Actual expenditures were higher than budget and the forecast and revenues were slightly lower, leading to a larger-than-anticipated operating shortfall of $24 million 44 Revenue vs. Budget
Total revenue of $557 million reached 99% of the budget Operating revenue from electricity sales was $12 million below budget, primarily due to lower-than-expected retail volume and decreases in SCE service area rates from the prior IOU-minus rate methodology, offset by reduced uncollectible accounts Non-operating income of $13 million exceeded budget by over $6 million, driven by favorable interest rates and active investment management 45 Expenditures vs. Budget
Total expenditures of $581 million exceeded budget by 3% or $19 million above budget Cost of energy was higher than budget by $29 million, a 5% variance. The increase is mainly attributed to higher-than-budgeted costs for RECs and RA compliance.
Non-energy operating costs of $33 million were 23% under budget due to lower spending on energy programs, unspent contingencies, contracted services, and personnel vacancies 46 Expenditures vs. Budget (continued)
Energy Attribute Costs:
RA compliance costs exceed the budget by $13 million. Limited demand and high costs while balancing compliance for regulatory approval of 2025 enrollment of the City of Atascadero and San Luis Obispo County $15 million higher-than-budgeted cost for RECs to meet Renewables Portfolio Standard (RPS) compliance for the 2021-2024 multi-year compliance period Of the $15 million, $6 million for RECs allocated for the two last months of Fiscal Year 2022-23 47 Impact on Reserves
Net position experienced a decline but is within a manageable range Assets such as liquidity remain healthy and the plan to build reserves began in FY 2024-25 48 Three Year Plan to Meet Reserve Targets
Although the budget shortfall was higher than forecasted, 3CE is still on track to reach its reserve targets by FY 2026-27 49 Questions
50 Adopt Resolution No. PB-2025-02 Approving Adjustments to the 2025 Rates, Effective April 1 ITEM 12
Developments that Affect 3CE’s Competitiveness & Rates
3CE’s 2025 generation rates were adopted in September 2024 as part of the budget process. Since then, two factors entail 3CE to propose adjustments:
Final PCIA (power charge indifference adjustment) rates and IOU generation rates approved late into December 2024 3CE adjustments rates at the code level to maintain competitiveness by customer class Downward adjustment to forecasted load for FY 2024-25
52 Developments that Affect 3CE’s Rates: PCIA & IOU Rates CPUC-approved PCIA rates don’t impact 3CE’s cost recovery efforts from its customers but are used to benchmark competitiveness 3CE considers PCIA when measuring competitiveness during its rate design The length of the ERRA proceeding produces a forecasting challenge for rate design at the rate code level The ERRA proceeding begins in May and concludes in December.
It’s longer than the budget and rate design process that requires 3CE to forecast the IOU and PCIA rates for competitiveness purposes based on preliminary IOU ERRA filings 53 Developments that Affect 3CE’s Rates: PCIA & IOU Rates 54 Outcomes of the ERRA Proceeding
Higher PCIA rates for 3CE customers than projected
Lower IOU generation rates than projected
Factors that led to this outcome:
Late Adjustments to Market Price Benchmarks (MPB)
Unexpected regulatory decisions and methodology changes contributed to a higher-than-anticipated PCIA for CCA customers Overhead Cost Allocation Change
CPUC approved the revised overhead allocation, increasing PCIA rates for 3CE customers – shifting from bundled to non-bundled Recategorization of Resource Adequacy
Recategorized value of RA from system to local to lower impact on bundled customers 55 Outcomes of the ERRA Proceeding
competitiveness declined to 5% system-wide, 2% for residential 56 Takeaways of the ERRA Proceeding
Regulatory and market developments outside of 3CE’s control have an impact on PCIA rates and IOU generation rates, adding a variable to competitiveness during a time of increasing energy costs 3CE must engage with industry experts on these developments throughout the entire ERRA proceeding to adjust rate forecasts after budget adoption 57 Takeaways of the ERRA Proceeding
A strong Energy Rate Stabilization Reserve is essential for ensuring rate stability for 3CE customers 58 Developments that Affect 3CE’s Rates: Revised Load
Assessment of load led to a downward adjustment of 5% for the fiscal year From 5.7 million MWh to 5.5 million MWh
Changes in weather forecast and historical trends, less extreme weather events in prior years The downward adjustment requires cost recovery over a reduced base, increasing per-unit cost ($/kWh) Lower volume = same operating costs to spread over a revised volume If rates aren’t adjusted for this lower volume, 3CE is projected to under-collect $12 million by year-end 59 Approach to the Proposed Rate Adjustment
60 Proposed Rate Adjustments from Revised Load
The rate change averages $0.004 per kWh, generating $12 million across all customer classes in the last six months of FY 2024-25 On average a 3% increase
The adjustments would be effective April 1
Estimate competitive headroom at 1.0% lower than the IOUs for residential customers and 3% for commercial and agricultural customers 61 Audit and Finance Committee
The Audit and Finance Committee received the rate adjustment proposal at its February 27 special meeting The Committee supported the proposed adjustment
62 Conclusion
It is recommended that the Policy Board adopt Resolution No. PB-2025-02 approving adjustments to the calendar year 2025 electric generation rates effective April 1, 2025. 63 Questions
64 Supplemental Slides
65 Outcomes of the ERRA Proceeding
IOU generation vs forecast
PCIA rate – 3CE customer in PG&E service territory
On average, competitiveness declined to 5% system wide
66 Estimated Competitiveness By Service Area
67 Rate Change Detail by Customer Class - System
68 Rate Change Detail by Customer Class – PG&E
69 Rate Change Detail by Customer Class – SCE
70 PCIA Rate by Vintage
PG&E Residential
SCE Residential
71 Closed Session
Closed session under Government Code 54950 et. seq. relating to the following item:
b. Pursuant to Government Code section 54957(b), the Board will confer regarding evaluation of performance for the Chief Executive Officer