Executive Committee MeetingJune 18, 2025
Market Impacts on Long-Range Power Procurement
2 Summary
2030 Goals Progress
Development of New Regulatory Procurement Programs
Navigating Market Realities
Next Steps
2030 Goals Progress
3CE’s Clean and Renewable Procurement Strategyas adopted by Policy Board September 2020 Contract for clean and renewable generation resources to meet 100% of 3CE electric demand by 2030
100% of 3CE’s electric demand by 2030A More Impactful Approach Focusing on Results rather than Regulatory Accounting
Clean and Renewable Resources
60% RPS Renewable by 2025
100% RPS Renewable by 2030
Acceleration of Electrification Programs and Evaluation of Local Generation, Distributed Energy Resources, and Storage Photo Credit: 2020 Rutgers, The State University of New Jersey
3CE’s Online Renewable Projects
31%
2025 Retail Sales
409 MW (Energy)
110 MW (Storage)
COSO - JAN 2022
66 MW Geothermal
10% Annual Load
SLATE – MAR 2022
68 MW Solar
34 MW Storage
3% Annual Load
MAMMOTH CASA DIABLO IV - JUL 2022
7 MW Geothermal
1% Annual Load
MOUNTAIN VIEW - JUL 2022
33 MW Wind
2% Annual Load
RABBITBRUSH – OCT 2022
60 MW Solar
12 MW Storage
3% Annual Load
YELLOW PINE – JUL 2023
75 MW Solar
39 MW Storage
4% Annual Load
VICTORY PASS-
MAR 2024
100 MW Solar
25 MW Storage
5% Annual Load
3CE’s retail sales expansion since adoption of its 100% clean and renewable energy by 2030 strategy
3CE's Progress – Contracted Projects Only
Supply chain issues and interconnection delays have impacted majority of contracted projects
3CE's Progress – PPA Negotiations
Inclusive of current and potential negotiations for additional projects Actively negotiating power purchase agreements (PPAs) which, if successful, would serve an additional 43% of retail sales by 2030 and 48% by 2031 Currently, evaluating responses to recent RFO, which could include generation capacity to satisfy another 20% to 35% by 2030-2032
2030 Goals Progress
Development of New Regulatory Procurement Programs
CPUC’s Reliable and Clean Power Procurement Program (RCPPP) & Clean Energy Standard (CES) • New long-term clean reliability procurement program being developed by the CPUC. Overlaps current Integrated Resource Planning (IRP), Renewable Portfolio Standards (RPS) and Resource Adequacy (RA) Programs. • Intended to replace or evolve the current Mid-Term Reliability (MTR) procurement mandates as they phase out • 10-year Reliability Procurement Need (RPN) and multi-year Reliability Procurement Requirement (RPR) allocations. • Annual administrative and binding compliance filings by LSEs • Potential Clean Energy Standard (CES) overlay that mandates a minimum % of carbon-free or GHG-free energy in the portfolio
New Regulatory Pressures on Procurement Strategy
Regulatory Development & Next Steps
Continue monitoring the CPUC proceeding (R.23-09-008)
Advocate to ensure existing portfolio resources maintain compliance value Support transparent allocation of procurement requirements, clear compliance rules, and early release of planning data Ensure Clean Energy Standards (CES) reduce emissions, not just shift accounting methods Evaluate procurement strategy impacts and alignment with CES definitions Milestone
3CE Earliest Estimated Date
Notes
ALJ Ruling with Revised Proposal
Late August 2025
Proposed framework based on workshops and party comments Opening Comments on ALJ Ruling
Early September 2025
Formal party feedback to inform final decision
Reply Comments on ALJ Ruling
Late September 2025
Parties respond to each other’s positions
Proposed Decision Issued
November 2025
ALJ drafts Proposed Decision based on full record
Proposed Decision on CPUC Agenda
December 2025/ January 2026
Estimated target for Commission vote and program adoption
III. Navigating Market Realities
The New Cost Reality—Market Pressures
Spot energy market stable (top right)
Forward energy prices up ~60% since 2020 (bottom right) RA and REC costs more than doubled since 2020 (below)
Initial affordability goals challenged
External Shockwaves—Tariffs, Tax Credit, and Delays
Tariff impact: New and uncertain tariffs
Short-term price shocks: Battery/solar costs up 10–20%
Long-term forecast increases of 12% - 50% for batteries, depending on trade scenario ITC/PTC cliff or phaseout: Both House (OBBB Act) and Senate (Finance Committee Draft) eliminate wind and solar credits by 2028 Senate allows energy storage ITC for projects starting 2026-2033 Project delays:
Only 15% of CAISO-queued projects now expected to come online on schedule Median interconnection wait is 5–8 years (was 2–3 years pre-2020) Source: CAISO Interconnection Queue Report, May 2024.
Text
Curtailments: Owning Solar in the Era of Falling Value
Curtailments rise each year in the CAISO and are on track to quadruple from 2019 levels, as necessary transmission expansion and battery storage lags solar buildout Solar supply large and increasing: 49 GW (2024) with 24 GW more forecast by 20291—but demand flat Solar energy value fell short of PPA cost in 2023 for the first time in five years, increasing reliance on the RA and REC compliance product values (red ellipse, right) [1] Source: CAISO Summer 2024 Fact Sheet; CPUC Integrated Resource Plan 2023–2024.
Risk Transfer & the Opt-Out Spiral: CCAs’ Unique Challenges IOUs and CCAs now diverge in risk:
IOUs now rarely sign new long-term contracts unless mandated—leaning heavily on spot market purchase Existing-contract stranded cost recovery via PCIA
No safety net for CCAs:
When CCA customers opt out, fixed PPA costs are spread over a smaller base.
Unlike IOUs, there’s no PCIA “parachute” for CCAs—costs don’t depart with the customer Opt-out math and feedback risk:
5% loss in customer load raises per-customer PPA cost by ~5.3%.
As rates rise, more customers leave, triggering a self-reinforcing “customer attrition cycle” Inflexible LT PPAs present most challenge to tactical or strategic shifts
Strategic Flexibility: Building a Resilient Supply Portfolio Layered procurement: Combine long-term, medium-term (3–5 year), and short-term (1–3 year) PPAs for risk agility ISTs as a tool: Used to sell surplus contracted energy or to hedge expected shortfalls—giving flexibility to match position to market risk, not just to reduce spot market volatility Distributed Energy Resources (DER): Flexible, locally deployed technologies (batteries, solar, EVs, demand response) that support grid reliability, reduce market risk, and provide resilience outside of traditional long-term contracts Real-World Examples:
At least two other CCAs now keep >40% of portfolio flexible through layered procurement Southwest Airlines uses rolling, laddered fuel hedges—weathering oil price shocks that crippled competitors Germany’s Energiewende: After massive negative pricing, pivoted to incentivize flexible, dispatchable resources and grid upgrades—not just more solar/wind Distributed Energy Resources
IV. Next Steps
Obligations Impact to 3CE Goals
Affordability
Renewable Goals
3CE Mission
Next Steps – Summary
Areas for Executive Committee Review
Timing
Risk Management Policy Review, and Portfolio COE Impacts Q3/Q4 2025
RCPPP and Identification of "Clean" Resources
Q1/Q2 2026
Customer Rate Stability Impacts
Q2/Q3 2026