Executive Committee
June 18, 2025
11:30 AM
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
701 Ocean Street, Fifth Floor Redwood Room
Santa Cruz, CA 95060
County of Monterey
168 West Alisal St, 3rd Floor
Salinas, CA 93901
County of Santa Barbara
County Administration Building
105 East Anapamu Street,
Fourth Floor
Santa Barbara, CA 93101
Public may participate through ZOOM. For ZOOM participation please join by computer audio at:
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If joined by computer, please press the button to raise your hand If joined by phone, please push *9 on your keypad
If you have anything that you wish to be distributed to the Board, please provide 15 copies to a member of 3CE staff or the Board Clerk, who will distribute the information to the Board members and staff.
The public may comment on the consent agenda and matters not listed on the agenda but within the Board's jurisdiction at the opening of the meeting. The Board may not take action at this meeting on any item not listed on the Agenda other than to refer the matter to staff or set it for a future meeting. The public may comment on a specific item listed on this agenda when the Board considers that item.
Speakers are limited to 3 minutes each.
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://pub-3ce.escribemeetings.com/ REASONABLE ACCOMMODATIONS: In compliance with the Americans with Disabilities Act, any individuals who desire to request a reasonable accommodation or modification to observe or participate in the meeting may make such a request by sending an email to: [email protected] Copies of documents may be made in alternative formats, upon request. Requests for accommodations should be made no later than two (2) business days prior to the meeting to allow time for 3CE to address the request.
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 Items Not listed on the Agenda The public may address the Board on any matter within the jurisdiction of the Board but not on the agenda.
OPEN SESSION
1. Approve minutes from the January 31, 2025 meeting of the Executive Committee
2. Receive an update on 3CE’s 100% Clean and Renewable procurement strategy and provide direction regarding additional analysis regarding its implementation
CLOSED SESSION
3. Conference with Legal Counsel Re Existing Litigation – Clean Power Alliance, Central Coast Community Energy, et al. vs. Southern California Edison, Government Code Section 54956.9(d)(1), CPUC Proceeding C.24-11-006
4. Conference with Legal Counsel Re Potential Initiation of Litigation -- Government Code Section 54956.9(d)(4): One matter
Adjournment
Executive Committee
January 31, 2025
4:00 PM
Central Coast Community Energy
70 Garden Court, Suite 300
Monterey, CA 93940
City of Santa Cruz
Planning Department Conference Room
809 Center Street, Room 106
Santa Cruz, CA 95060
County of Monterey
Mid Valley Fire Station
8455 Carmel Valley Road, Community Room
Carmel Valley, CA 93924
County of San Luis Obispo
Katcho Achadjian Government Center
1055 Monterey Street, Fourth Floor
San Luis Obispo, CA 93408
County of Santa Barbara
County Administration Building
105 E Anapamu Street
Santa Barbara, CA 93101
County of Santa Barbara
3rd District Office
1745 Mission Dr
Solvang, CA 93463
MINUTES
The meeting was called to order at 4:05 PM with 5 members attending from 5 locations and a quorum established.
Members Present: City of Santa Cruz: Chair Keeley
County of Monterey: Daniels
County of San Luis Obispo: Vice Chair Ortiz-Legg
County of Santa Barbara: Miyasato
County of Santa Barbara 3rd District: Hartmann
Members Absent: Huffaker, Lewis
CONSENT CALENDAR
The Chair opened the public comment period on the consent calendar.
There were no public comments.
The Chair closed the public comment period.
MOTION: Moved by Member Hartmann, seconded by Vice Chair Ortiz- Legg to approve.
ACTION: Motion carried: 5/0/2
AYES: Daniels, Hartmann, Miyasato, Vice Chair Ortiz-Legg, Chair Keeley NOES: None
ABSENT: Huffaker, Lewis
1. Approve minutes from the December 11, 2024 meeting of the Executive Committee
CLOSED SESSION
2. Closed Session under Government Code 54950 relating to the following item a. Pursuant to Government Code section 54956.9(d)(4), the Board will confer with legal counsel regarding one matter
The Chair opened the public comment period.
There were no public comments.
The Chair closed the public comment period.
General Counsel announced that there would be no reportable action taken in closed session.
Recessed into closed session at 4:08 PM
Adjourned at 4:41 PM
Staff Report Item 2
TO: 3CE Executive Committee
FROM: Robert M. Shaw, Chief Executive Officer
SUBJECT: Receive an update on 3CE’s 100% Clean and Renewable procurement strategy and provide direction regarding additional analysis regarding its implementation DATE: June 18, 2025
RECOMMENDATION:
This recommends the Executive Committee receive an update on 3CE’s 100% Clean and Renewable procurement strategy and provide direction regarding additional analysis regarding its implementation.
Staff propose the following additional analysis and briefings:
1. How do regulatory compliance frameworks define “clean” and “renewable” and how might these frameworks impact 3CE’s procurement strategy?
2. What risk management strategies can be employed to avoid adverse market exposure of long-term fixed price power purchase agreements?
3. How does 3CE’s procurement strategy impact 3CE’s competitive position and customer rates?
4. What effect does the Reliable and Clean Power Procurement Program have on 3CE’s procurement strategy?
BACKGROUND:
100% Clean and Renewable
At its September 2020 meeting, the Central Coast Community Energy (3CE) Policy Board1 adopted a revised procurement strategy to achieve 100% Renewable by 2030. The Policy Board’s recommendation eliminated the use of Carbon Free Attributes (CFAs)2to offset unspecified power purchases.3Furthermore, the Policy Board’s direction accelerated 3CE’s acquisition of new clean and renewable resources to meet 60% of retail demand by 2025 and 100% by 2030. Finally, the Policy Board directed staff to increase efforts to identify and evaluate local
1 At the time, the 3CE was Monterey Bay Community Power. 2 Credits from carbon free generation resources that are ineligible to meet California’s Renewable Portfolio Standards, such as large hydro generation and nuclear generation.
3 Unspecified Power purchases are financial transactions used to balance load and hedge financial risk.
generation procurement opportunities while also reducing greenhouse gas (GHG) emissions through electrification programs and support of local distributed energy resources. 3CE’s ambitious strategy to reach 100% clean and renewable retail sales 15 years ahead of California’s statutory requirement must also meet the regulatory and statutory requirements placed on 3CE as a load serving entity.4 At a minimum, these requirements include compliance with the California Public Utilities Commission’s (CPUC) resource adequacy (RA) program, the Renewable Portfolio Standards (RPS) compliance structure, procurement mandates, and any new or evolving requirements such as the proposed Reliable Clean Power Procurement Plan (RCPPP).
Resource Adequacy Procurement and Compliance
Following the CPUC’s effort to prevent 3CE from enrolling customers in the City of Atascadero and unincorporated San Luis Obispo County, 3CE developed a RA procurement strategy to ensure compliance while managing the impact to customer rates. Specifically, 3CE sought to strategically meet its RA requirements by:
1. Leveraging our accelerated buildout of 100% clean and renewable power purchase agreement (PPA) projects to maximize RA value, including pursuit of baseload renewables;
2. Accelerating our battery storage buildout with varied technologies and dispatch capabilities;
3. Layering short and long-term RA contracts to hedge against price volatility;
4. Control over existing traditional dispatchable resources that can perform in each hour of the 24-hour slice of day paradigm; and
5. Developing short and long-term load shifting strategies, including demand response.
Energy Risk Management
3CE’s 100% Clean and Renewable procurement strategy must be executed within the context and constraints of the greater economy, financial risk, cost to customers, regulatory or legislative mandates, and other structural changes in financial markets. These, and other, risks are managed through 3CE’s Board approved and monitored Energy Risk Management Policy – a strategic document intended to provide a framework for 3CE staff to design and execute procurement strategies to:
1. Preserve the financial health and stability of 3CE;
2. Provide stable rates for customers; and
3. Ensure the long-term viability of 3CE.5
The Energy Risk Management Policy utilizes several risk mitigation strategies including, but not limited to, developing a generation portfolio comprised of a diverse technology fleet, purposeful layered procurement, dollar cost averaging, and limiting the tenor and term of contract engagements.
The Energy Risk Management Policy requires 3CE to evaluate and consider the magnitude of risk exposure and take necessary steps to manage and reduce those risks, which may include adjusting strategies.
4 SB 100, codified at Public Utility Code section 454.53, mandates that 100% of electric retail sales in California must come from renewable and “zero-carbon” generation sources by 2045. While “zero-carbon” is not defined, various state agencies have identified large hydro, nuclear, hydrogen, and yet-to-be commercialize technologies as potential sources. 5 3CE Energy Risk Management Policy at Section 2.1.
Additionally, following a March 19, 2025 presentation on the Power Charge Indifference Adjustment’s (PCIA) impact on 3CE’s competitive position, the Policy Board directed staff to, among other things, evaluate procurement and risk management strategies to address and mitigate negative regulatory impacts from recent PCIA rulemaking by the CPUC regarding how the components of the PICA are valued and calculated.
DISCUSSION:
It is prudent and necessary to review the progress toward 3CE’s 100% Clean and Renewable procurement strategy, especially in the current context of significant shifts in market conditions and the regulatory environment. As the energy landscape continues to evolve and the cost, availability, and timing of key resources shift, regularly assessing where we stand ensures our approach remains realistic, adaptive, and aligned with both our mission and regulatory expectations. 3CE’s procurement and risk management strategies are inevitably shaped by external circumstances – some anticipated, others unforeseen. Evaluating these external circumstances will enable 3CE to adjust strategies to balance the urgency for a clean energy transition while also responding to the affordability crisis that threatens that transition.
Progress toward 3CE’s 100% Clean and Renewable
Delays to long term PPAs and high costs of renewable energy credits have forestalled 3CE’s interim target of supplying 60% clean and renewable by 2025. While 3CE’s 100% clean and renewable by 2030 goal remains achievable, short- and long-term market conditions will bring continued challenges. 3CE’s retail sales in 2025 are roughly 14.6% greater than the anticipated 2021 load that the Policy Board considered when it set its ambitious 100% strategy.6 Despite this load growth, 3CE was on target to meet its interim goal (having contracted roughly 67% of 3CE’s load for delivery prior to 2025). Those deliveries, however, are not anticipated this year due to significant delays encountered by project developers. 3CE has restructured many of its PPAs to facilitate developers’ ability to effectively mitigate their supply chain, financing, interconnection, and entitlement risks. In 2025, 3CE’s seven active long term PPAs will comprise roughly 31% of retail sales (depending on final volumes generated) with short term RPS purchases providing “bridge product” capacity for an additional 14.53%. 3CE currently anticipates all contracted generation projects to be operational by 2028. Some developers, however, may not be capable of effectively managing their projects, even after 3CE’s best efforts to de-risk and restructure projects in development. Given that reality, it remains a risk for 3CE that some projects may fail to meet even their revised contract delivery dates, further impacting 3CE’s goals and risk management strategies.
In addition to its currently executed agreements, 3CE is actively negotiating power purchase agreements which, if successful, would serve an additional 43% of retail sales by 2030 and 48% by 2031. Moreover, 3CE is currently
6 The expansion 2021 expansion to 11 additional jurisdictions was anticipated by the Policy Board and reflected in the assumed retail sales during the construction of the 100% goal. In raw numbers, current load projections are roughly 63% greater than 2020.
evaluating responses to its recent Request for Offers, which could include generation capacity to satisfy another 20% to 35% of retail load by 2030-2032.
While 3CE will hold all developers to the terms of their agreements, we do not anticipate that all projects will be delivered as scheduled and prudent planning requires 3CE consider and mitigate potential impacts to customers.
When developers are unable to meet the agreed upon dates (as may be extended for certain specifically articulated reasons) there are ramifications to 3CE’s GHG emission reduction goals, increases 3CE’s market exposure risk, and potential destabilization in customer rates requiring mid-cycle rate adjustments. Moreover, when delays cause multiple projects to come online together instead of spreading fixed PPA prices over time, it disrupts 3CE’s strategic layering strategy that seeks to reduce customer exposure to market swings.
In 2021, 3CE ran its “Local Only” procurement solicitation and contracted for four local battery storage facilities.
Subsequently, we have received proposals for locally sited energy storage facilities without restricting submissions to local projects. Each of the contracted for projects have experienced delays and financing challenges similar to other projects in 3CE’s portfolio.
In 2024, 3CE launched two pilot efforts, the Charger Asset Program and the Residential Battery Rebate Program.
Through each, 3CE is exploring the role that distributed energy resources can play in meeting 3CE’s greenhouse gas emissions reduction and procurement goals. Both programs lay the groundwork for robust load shifting programs that utilize demand side customer engagement to accelerate the energy transition.
Challenges to New Renewable Generation Development in California 3CE’s effort to accelerate the development of incrementally new renewable generation in California has been delayed as developers failed to effectively navigate project development risks associated with interconnection
queue congestion, global economic and geopolitical shifts, as well as the resulting energy market volatility and financing challenges.
Applications for wholesale generation projects to connect to California’s grid are submitted through an interconnection queue process, referred to as clusters. In 2024, the California Independent System Operator (CAISO) reached a decision point when it saw the rapid growth of renewable generation and energy storage projects result in 91 GW of interconnection requests in Cluster 13, 94 GW in Cluster 14, and 347 GW of new generation interconnections requests in Cluster 15 alone. In response, CAISO initiated an ongoing reform process. The initial process enhancements sought to trim the interconnection queue by identifying and prioritizing commercially viable projects. A second track of process enhancements seeks to align transmission plan deliverability allocations while considering and streamlining the needed grid updates to accommodate the incredible demand for new renewable generation. While these enhancements may improve the interconnection process in the long-term, the five-to-ten-year horizon will continue to see extended delays as the CAISO continues its coordination with stakeholders, the CPUC, and California Energy Commission.
Coinciding with the dramatic increase in the demand for renewable energy generation projects, developers experienced previously unseen supply chain disruptions resulting from the COVID-19 pandemic and tariffs imposed during the first Trump administration. The combination of constrained supply and increased demand for equipment stemming from renewable demand and regulatory mandates (along with high energy attribute costs) resulted in higher PPA pricing. Today, the Trump administration’s potential new tariffs and proposed appeal of Investment and Production tax credits (ITC and PTC, respectively), re continuing to drive uncertainty and even higher prices in power purchase agreements that 3CE is evaluating and negotiating. In addition, developers and their financing partners have claimed, without evidence, that higher insurance and borrowing costs are also contributing to a lack of capable project financing.
The industry and financing community are closely monitoring H.R. 1, the budget reconciliation bill approved by the U.S. House of Representatives on May 22. In addition to eliminating residential and consumer credits, the bill would phase out the ITC and PTC for utility-scale projects by December 1, 2028. It would also prevent any project that incorporates parts or materials from China, or a company with ties to China, from receiving ITC or PTC benefits. The bill would retain a tax credit for nuclear power production, and advanced manufacturing for certain components, clean fuels, and geothermal projects. While there is still considerable uncertainty surrounding what the final version of H.R. 1 will include, disrupting the ITC or PTC structure could shift private and equity investment away from renewable project financing.
MANAGING RISK AND CUSTOMER RATE IMPACTS
3CE closely monitors changes and developments in the global economy and the renewable energy industry to understand and mitigate potential increased risk to 3CE and its customers. Specifically, we are evaluating the potential increase in market and customer opt-out risks resulting from significantly higher long-term power
costs, overbuilding of solar generation, the potential repeal of ITC and PTC financing structures, and regulatory policy changes.
Market and customer opt-out risk are interrelated and can often compound each other. Volatility in energy pricing can result in significant shifts in 3CE’s cost of providing power to its customers and/or adversely impact the value of hedges (including long-term PPAs) relied on to reduce that same risk. Large enough adverse pricing shifts will create instability in customer rates and may lead to subsequent opt-outs. In turn, customer departures require the cost of energy to be spread across a smaller customer base, further eroding 3CE’s competitive position.
Since 2020, the California renewable energy industry has seen dramatic increases in long-term renewable energy projects and storage costs. 3CE has run a minimum of one solicitation each year for long-term generation projects, energy storage, and associated energy projects. Over these years, we have seen consistently increasing prices, at times for the same projects across multiple successive solicitations. Solar and four-hour battery systems projects pricing has increased by 200% – despite the technologies themselves falling in costs – due to supply chain, transmission interconnection, regulatory, and other issues.
Within the CAISO market, a troubling tipping point was reached in 2023 when the average long-term PPA price exceeded the sum of the energy and capacity market values.
While higher RA and Renewable Energy Credit (REC) values in 2024 and 2025 have buoyed the value of existing long-term PPAs in 3CE’s portfolio, that short-term cost avoidance value has been offset by increased requirement costs for those products. Further, there have been corresponding price increases for the potential
new long-term contracts that 3CE’s renewable plan contemplates. The repeal of the tax credit subsidies that developers have relied on for many years would necessarily further increase long-term contract pricing.
Moreover, the lack of transmission infrastructure and energy storage capacity needed to support the solar buildout has caused curtailments to steadily increase in volume and start earlier each year. Long-term solar PPAs that were entered into when the market price of energy was higher become increasingly unfavorable to short-term energy market purchases, which our competitors may be capitalizing on. This reduction in energy value is also noteworthy, as the other two value streams—RA and RECs—are compliance products and are subject to potentially large value reductions due to unforeseeable regulatory changes.
These trends, coupled with the potential ITC and PTC disruption discussed above, could make long-term PPAs more costly and less valuable as a financial hedge when compared to the short-term energy market.
In short, committing to expensive, long-term fixed price contracts could reduce 3CE’s ability to offer competitive rates, especially when price drivers are tied to transitory market conditions such as supply constraints, financing availability, and shifts in federal policy.
IMPACTS OF THE PROPOSED RELIABLE CLEAN POWER PROCUREMENT PROGRAM At this early stage, the impact of the Reliable Clean Power Procurement Program (RCPPP) on long-term PPAs is uncertain. It is, however, important to evaluate and understand how the RCPPP could impact 3CE’s 100% procurement strategy.
The RCPPP is intended to replace ad hoc “emergency” procurement orders and is split into two components.
The first component includes two options for reliable procurement. The second is a proposal for greenhouse gas reduction procurement. Unfortunately, rather than consolidate costly regulatory processes, the RCPPP builds a
new regulatory framework on top of existing Integrated Resource Planning, the Renewable Portfolio Standards, Resource Adequacy, and potential utilization of centralized procurement. It is also unclear if the RCPPP will help define the SB 100 requirement for “zero-carbon” generation.
It is uncertain how RCPPP directed procurement may be inconsistent with 3CE’s procurement strategies, customer needs, or energy risk management strategies. CPUC staff have recommended a penalty driven enforcement structure that could result in compounding penalties for LSE’s whose compliance relies on developers to deliver projects as committed in their contracts. 3CE is engaged in the development of the RCPPP program to ensure it can help meet 3CE’s goals and insulate customers from costs associated with unnecessary penalties.
FINANCIAL IMPACT:
There is no fiscal impact related to this update. Future analysis will evaluate the fiscal impact associated with 3CE’s Clean and Renewable procurement strategy.
CONCLUSION:
The Executive Committee’s consideration and direction surrounding key issues threatening 3CE’s procurement and risk mitigation strategies is an important component to ensure both that customers are protected from significant market exposure, and that 3CE remains a stable and viable entity over the long term.