Audit and Finance Committee
March 18, 2026
9:00 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 Committee members may also join the meeting from:
Marriott Marquis Washington, DC
901 Massachusetts Ave NW,
Washington, DC, 20001
County Sheriff’s Felton Substation
6062 Graham Hill Road, Suite A
Felton, CA 95018
City of Salinas
City Hall
200 Lincoln Avenue
Salinas, CA 93901
City of Grover Beach
City Hall
154 South 8th Street
Grover Beach, CA 93433
City of Santa Maria
City Hall
110 East Cook Street, Council Chambers
Santa Maria, CA 93454
Public may participate through ZOOM. For ZOOM participation please join by computer audio at:
https://us02web.zoom.us/j/83507087702
Or join by phone:
+1 669 900 6833 or +1 669 219 2599
Enter this Webinar ID Number: 835 0708 7702 when prompted. Please note there is no Participant Code, you will press # again after the recording prompts you.
You will be placed in the meeting as an attendee. To make a public comment:
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 Committee, please provide 15 copies to a member of 3CE staff or the Board Clerk, who will distribute the information to the Committee members and staff.
The public may comment on the consent agenda and matters not listed on the agenda but within the Committee's jurisdiction at the opening of the meeting. The Committee 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 Committee 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 Committee, 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 Committee 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 Committee 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 Committee 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 Committee who have received, and applicants, contractors or their agents who have made, campaign contributions totaling more than $250 to a Committee 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 Committee 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.
CONSENT CALENDAR
1. Approve minutes from the January 21, 2026, meeting of the Audit and Finance Committee
2. Financial Report for the period of October 1, 2025, through December 31, 2025
REGULAR AGENDA
3. Receive a presentation on 3CE’s FY 2024-25 audited financial statements
4. Authorization to Proceed with Second Energy Prepayment Transaction (Estimated $800 Million – $1.2 Billion)
5. Support seeking the Policy Board's approval to establish a temporary residential rate “3CFlex” to support customers impacted by the California Public Utilities Commission’s Power Charge Indifference Adjustment (PCIA) decisions.
And support seeking Policy Board approval of 3CFlex effective May 1, 2026, through December 31, 2026, with total residential enrollment capped at no more than 10% of residential load Adjournment
Audit and Finance Committee
January 21, 2026
2:00PM
Central Coast Community Energy
70 Garden Court, Suite 300
Monterey, CA 93940
City of Watsonville
City Hall
275 Main Street
Watsonville, CA 95076
Santa Cruz County Sheriff’s
Felton Substation
6062 Graham Hill Road,
Suite A
Felton, CA 95018
City of Salinas
City Hall
200 Lincoln Avenue
Salinas, CA 93901
City of Grover Beach
City Hall
154 South 8th Street
Grover Beach, CA 93433
City of Santa Maria
City Hall
110 East Cook Street, Council Chambers
Santa Maria, CA 93454
MINUTES
The meeting was called to order at 2:00PM with 4 members attending from 4 noticed locations and a quorum established.
Members Present: City of Grover Beach: Bronson
City of Santa Maria: Rowlands
City of Salinas: Vice Chair Mendez
City of Watsonville: Chair Dutra
Members Absent: Martinez (arrived at 2:03PM, County of Santa Cruz) Chair called for corrections or additions to the agenda.
Clerk announced that there were no changes to the agenda.
CONSENT CALENDAR
Chair opened public comment period on the Consent Calendar and items not listed on the agenda.
No public comments received.
Chair closed public comment period.
MOTION: Moved by Member Bronson, seconded by Member Rowlands, to approve the Consent Calendar ACTION: The Motion Carried with a roll call vote: 4/0/1 AYES: Bronson, Rowlands, Vice Chair Mendez, Chair Dutra NOES: None
ABSENT: Martinez
1. Approved Minutes from the August 27, 2025, meeting of the Audit and Finance Committee as submitted.
2. Financial Report for the period of October 1, 2025, through November 30, 2025
3. Investment Performance Report for the period of October 1, 2025, through December 31, 2025
REGULAR AGENDA
4. Support seeking the Policy Board adoption of cost-based generation rates through April 2027 The Chair opened the public comment period.
No public comment received.
The Chair Closed the public comment period.
MOTION: Moved by Member Bronson, seconded by Member Martinez, to support ACTION: The Motion Carried with a roll call vote: 5/0/0 AYES: Bronson, Martinez, Rowlands, Vice Chair Mendez, Chair Dutra NOES: None
ABSENT: None
Adjourned at 2:20 PM
Staff Report Item 2
TO: 3CE Audit & Finance Committee
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Gina Urmatan, Senior Accountant
SUBJECT: Financial Report for the period of October 1, 2025, through December 31, 2025 DATE: March 18, 2026
RECOMMENDATION:
Receive a financial report for the period October 1, 2025, through December 31, 2025.
SUMMARY:
During the three months of the current fiscal year ending on December 31, 2025, operating revenues amounted to $157.3 million, and operating expenses totaled $125.4 million for a net operating income of $31.9 million. Net non-operating revenue of $2.6 million, driven by interest and investment returns, resulted in a total increase in net position of $34.5 million.
Year-to-date operating revenue is $12.1 million over budget, primarily due to positive revenue performance in multiple customer classes. Non-operating revenue from investment returns from assets held in operating and investment accounts, and interest on collateral exceeded the budget with a variance of $0.3 million due to higher-than-anticipated investment yields. Year-to-date total revenue (operating & non-operating revenue) is $12.3 million higher than the budget, a positive variance of 8%.
Year-to-date operating expenditures excluding capital outlay are $34.5 million below budget, a variance of 22%. This variance is primarily attributable to lower-than-anticipated energy costs, which came in $32.4 million under budget. The variances reflect a convergence of factors, including lower market prices, the timing of invoicing of attributes such as Renewable Energy Credits (RECs), and higher-than-planned revenue from congestion revenue rights. These variances are expected to level out over the fiscal year as 3CE fulfills its energy obligations, including resource adequacy (RA) and renewable energy credits (RECs).
Non-energy operating costs were $2.2 million below budget due to lower-than-planned costs for contracted services, staff vacancies, and energy programs. The capital outlay exceeded the budget by $0.1 million due to ongoing work on the electric vehicle charging at the 3CE Santa Maria office. Non-energy operating costs are projected to level out over the fiscal year as participation in energy programs and capital projects continues to progress. Year-to-date total expenditures, including capital outlay, are $34.5 million lower than the budget, a favorable variance of 22%.
The net position at the end of December 31, 2025, totaled $297.2 million, an increase of $34.5 million from last fiscal year. The increase is primarily due to a reduction in the accrued cost of electricity and accounts payable, offset by a decrease in accounts receivable, other accrued revenue, and other receivables. Cash, cash equivalents, and investments totaled $240.6 million, a $17.7 million increase from the start of the fiscal year. The positive variance in liquidity was primarily attributed to the increase in cash from operating revenue.
FISCAL IMPACT:
There is no financial impact associated with receiving this report.
ATTACHMENT(S):
1. December 31, 2025 Financial Report
Compiled Financial Statements 1
Compiled Budgetary Comparison Schedule 6
Budget Variance Commentary 8
Investment Summary 9
Accounts Receivable Aging Summary 10
Table of Contents
FINANCIAL REPORT
Fiscal Year to Date
As of December 31, 2025
1 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 December 31, 2025, and the related statement of revenues, expenses, and changes in net position, and the statement of cash flows for the three months 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
January 30, 2026
1101 Fifth Avenue, Suite 200 San Rafael, CA 94901 415 459 1249 mahercpa.com
ASSETS
Current assets
Cash and cash equivalents - unrestricted 145,051,081$
Cash - restricted 2,963,358
Accounts receivable, net of allowance 46,290,964
Accrued revenue 34,604,668
Other receivables 1,349,011
Investments 85,498,426
Prepaid expenses 459,958
Deposits 32,483,449
Loan receivable 196,118
Total current assets 348,897,033
Noncurrent assets
Investments 10,016,650
Deposits 36,204
Loan receivable 1,037,262
Capital assets, net of depreciation and amortization 6,723,805 Total noncurrent assets 17,813,921
Total assets 366,710,954
LIABILITIES
Current liabilities
Accrued cost of electricity 47,928,866
Accounts payable 689,028
Other accrued liabilities 3,722,439
User taxes and energy surcharges due to other governments 2,100,232 Security deposits - energy suppliers 2,376,000
Lease liability 358,352
Total current liabilities 57,174,917
Noncurrent liabilities
Security deposits - energy suppliers 11,951,550
Lease liability 399,021
Total noncurrent liabilities 12,350,571
Total liabilities 69,525,488
NET POSITION
Net investment in capital assets 5,901,446
Restricted for security collateral 2,963,358
Unrestricted 288,320,662
Total net position 297,185,466$
As of December 31, 2025
STATEMENT OF NET POSITION
CENTRAL COAST COMMUNITY ENERGY
OPERATING REVENUES
Electricity sales, net 157,274,625$
Other income 22,044
Total operating revenues 157,296,669
OPERATING EXPENSES
Cost of electricity 114,908,908
Contract services 3,162,638
Staff compensation 3,236,673
Program incentives 3,039,342
Other operating expenses 846,653
Depreciation and amortization 161,742
Total operating expenses 125,355,956
Operating income (loss) 31,940,713
NONOPERATING REVENUES (EXPENSES)
Investment income 2,560,501
Interest expense (9,153)
Nonoperating revenues (expenses) 2,551,348
CHANGE IN NET POSITION 34,492,061
Net position at beginning of period 262,693,405
Net position at end of period 297,185,466$
Three Months Ended December 31, 2025
AND CHANGES IN NET POSITION
STATEMENT OF REVENUES, EXPENSES
CENTRAL COAST COMMUNITY ENERGY
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 182,011,965$
Receipts from wholesale sales and other operating revenue 6,171,905 Receipts of deposits and collateral 13,073,952
Payments to suppliers for electricity (151,252,270)
Payments for other goods and services (4,223,399)
Payments of deposits and collateral (17,363,542)
Payments for program incentives (3,735,638)
Payments for staff compensation (3,289,395)
Payments of taxes and energy surcharges to other governments (2,950,749) Net cash provided by operating activities 18,442,829
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments of lease (93,472)
Purchases of capital assets (407,949)
Net cash provided (used) by capital and related financing activities (501,421)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment income received 1,714,801
Proceeds from sales and maturities of investments 35,650,000 Loan principal received 96,699
Investment purchases (24,543,108)
Net cash provided (used) by investing activities 12,918,392 Net change in cash and cash equivalents 30,859,800
Cash and cash equivalents at beginning of year 117,154,639 Cash and cash equivalents at end of period 148,014,439$ Reconciliation to the Statement of Net Position
Cash and cash equivalents - unrestricted 145,051,081$
Cash - restricted 2,963,358
Cash and cash equivalents 148,014,439$
Change in fair value of investments 932,301$
Change in interest income receivable (86,601)$
NONCASH CAPITAL FINANCING ACTIVITIES
Capital acquisitions included in accounts payable
and other liabilities 64,986$
Three Months Ended December 31, 2025
STATEMENT OF CASH FLOWS
CENTRAL COAST COMMUNITY ENERGY
NONCASH INVESTING ACTIVITIES
Operating income (loss) 31,940,713$
Adjustments to reconcile operating income (loss) to net cash provided by operating activities
Depreciation and amortization expense 161,742
(Increase) decrease in:
Accounts receivable, net of allowance 16,171,628
Accrued revenue 5,739,642
Other receivables 2,682,041
Prepaid expenses (5,678)
Deposits (7,127,816)
Increase (decrease) in:
Accrued cost of electricity (32,809,098)
Accounts payable (2,656,841)
Other accrued liabilities 1,632,949
User taxes and energy surcharges due to other governments (124,679) Security deposits - energy suppliers 2,838,226
Net cash provided by operating activities 18,442,829$
CENTRAL COAST COMMUNITY ENERGY
STATEMENT OF CASH FLOWS (continued)
Three Months Ended December 31, 2025
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
1 ACCOUNTANTS’ COMPILATION REPORT
Board of Directors
Central Coast Community Energy
Management is responsible for the accompanying special purpose budgetary comparison schedule of Central Coast Community Energy (a California Joint Powers Authority) for the three months ended December 31, 2025, 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
January 30, 2026
1101 Fifth Avenue, Suite 200 San Rafael, CA 94901 415 459 1249 mahercpa.com
Actual Budget Amount % Actual Budget Amount % Budget
Annual Budget
Less Actual
YTD
REVENUES AND OTHER SOURCES
Electricity sales, net $ 51,833,630 $ 49,961,350 $ 1,872,280 4% $ 157,274,625 $ 145,216,598 $ 12,058,027 8% $ 578,022,716 $ 420,748,091 Interest and investment returns 929,621 758,333 171,288 23% 2,560,501 2,274,999 285,502 13% 9,100,000 6,539,499 Other income 7,962 6,250 1,712 27% 22,044 18,750 3,294 18% 75,000 52,956 Total revenues and other sources 52,771,213 50,725,933 2,045,280 4% 159,857,170 147,510,347 12,346,823 8% 587,197,716 427,340,546 EXPENDITURES AND OTHER USESCurrent Expenditures
Cost of energy 26,688,022 46,533,841 19,845,819 43% 115,127,133 147,556,762 32,429,629 22% 534,776,256 419,649,123 Salaries and benefits 1,117,918 1,207,161 89,243 7% 3,236,673 3,530,529 293,856 8% 14,260,774 11,024,101 Services and supplies 2,362,726 3,037,987 675,261 22% 6,923,879 8,797,275 1,873,396 21% 38,160,686 31,236,807 Capital outlay 64,985 100,000 35,015 35% 429,670 300,000 (129,670) -43% 1,200,000 770,330 Total current expenditures 30,233,651 50,878,989 20,645,338 41% 125,717,355 160,184,566 34,467,211 22% 588,397,716 462,680,361 Surplus (deficit) 22,537,562$ (153,056)$ 22,690,618$ 34,139,815$ (12,674,219)$ 46,814,034$ (1,200,000)$ (35,339,815)$ Favorable variances represent revenues exceeding budget or expenditures below budget.
Annual
CENTRAL COAST COMMUNITY ENERGY
BUDGETARY COMPARISON SCHEDULE
Current Month and Three Months Ended December 31, 2025
Current Month
Variance
Favorable
(unfavorable)
Year-To-Date
Variance
Favorable
(unfavorable)
CCA Program surplus/(deficit)
per budgetary comparison schedule: 34,139,815$
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 84,318 Subtract depreciation expense (161,742)
Add back capital asset acquisitions 429,670
Change in Net Position 34,492,061$
REVENUES, EXPENSES AND CHANGES IN NET POSITION
CENTRAL COAST COMMUNITY ENERGY
BUDGET RECONCILIATION TO STATEMENT OF
Three Months Ended December 31, 2025
Budget Item
YTD Variance -
Favorable
(Unfavorable) Comment
Electric Sales Revenue, net 8.3% 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 22.0% 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.
Salaries and Benefits 8.3% Staffing expenses are under budget due to the timing of new hires.
Services and Supplies 21.3% This category includes accounting, IT, technical and other consultants.
Budget Commentary for significant items
CENTRAL COAST COMMUNITY ENERGY
October 1, 2025 through December 31, 2025
Return of Investments YTD Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep CASH AND CASH EQUIVALENTSRiver City Bank / Chase / West Coast Community Bank - Money Market and other Interest Earning AccountsFunds Invested - Average Balance 96,624,568$ 99,293,298$ 108,525,583$ Gains/Losses/Interest 1,007,073$ 331,876$ 320,565$ 354,632$ Average APY 4.12% 3.87% 3.92%INVESTMENTSSchwab/FidelityFunds Invested - Average Balance 131,114,341$ 131,499,666$ 131,948,441$ Gains/Losses/Interest 1,270,619$ 574,669.46 289,175.13 406,774.61 Average APY 5.26% 2.64% 3.70%
CENTRAL COAST COMMUNITY ENERGY
Investment Summary
October 1, 2025 through September 30, 2026
Current 0 - 30 Days 31 - 60 Days 61 - 90 Days > 91 Days A/R Balance 22,366,603$ 13,708,812$ 2,998,893$ 1,300,469$ 5,916,187$ 46,290,964$
CENTRAL COAST COMMUNITY ENERGY
Summary of Accounts Receivable, Net of Bad Debt Allowance As of December 31, 2025
Staff Report Item 3
TO: 3CE Audit and Finance Committee
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Gina Urmatan, Senior Accountant
SUBJECT: Receive a presentation on 3CE’s FY 2024-25 audited financial statements DATE: March 18, 2026
RECOMMENDATION:
Receive a presentation on 3CE’s FY 2024-25 audited financial statements.
BACKGROUND:
3CE is responsible for the preparation and fair presentation of its financial statements in accordance with generally accepted accounting principles (GAAP). The independent auditor, Sorren CPAs, conducted the audit in accordance with auditing standards generally accepted in the United States of America (GAAS). The auditors issued an unmodified ('clean') audit opinion, affirming that the financial statements present fairly, in all material respects, the financial position of 3CE as of September 30, 2025, and 2024.
The auditors reported no material weaknesses in internal controls and communicated no significant deficiencies. The audit included required communications with those charged with governance regarding scope, timing, and significant findings.
DISCUSSION/ANALYSIS:
The Independent Auditors’ Report (Report) affirms that 3CE’s financial statements fairly present, in all material respects, the organization’s financial position as of September 30, 2024, and 2025, along with the respective changes in financial position and cash flows. The report includes an unqualified, or "clean," audit opinion, indicating that the financial statements are free from material misstatements and comply with applicable accounting standards.
The report confirms that the auditors did not identify any internal control deficiencies classified as material weaknesses. Representatives from Sorren CPAs, the external auditors, will attend the Audit and Finance Committee meeting to provide insights and address any questions regarding their review.
FY 2024-25 Financial Highlights
Total Net Position of $262.7 million (up from $218.2 million); Unrestricted portion $254.1 million supports operations and future programs. Total net position change of 44.5 million. Ending Cash & Equivalents and short-term investments of $212.9 million (down from $219.2 million) net change of $6.3 million, with operating cash near breakeven, investments rebalanced, and capital purchases made.
Total Assets increased to $363.4 million (up from $327.2 million). This reflects higher receivables, accrued revenue, and investment balances.
Total Liabilities decreased to $100.7 million from $109.1 million, reflecting lower supplier security deposits and lease liability balances.
Operating Revenues of $667.2 million in FY 2024-25 vs. $544.5 million in FY 2024 (+22.6%), driven primarily by higher electricity load and territory expansion (Atascadero & unincorporated SLO County began service Jan 1, 2025).
Non-operating revenues decreased by $1.8 million from prior year due to the decrease in Federal Treasury rates compared to prior year and lower cash reserves. The cost of energy increased by approximately $44.7 million due to Resource Adequacy (RA) compliance, Renewable Portfolio Standard (RPS) requirements, and increase in other energy attributes.
Non-energy operating costs increased $8.0 million from the prior year, mainly from increased costs for higher participation in energy programs, personnel due to increased FTEs from the prior year, data manager fees, and increased community outreach.
FY 2024-25 Actuals Versus Budget
On May 21, 2025, the Audit and Finance Committee received the FY 2024-25 Mid-Year Budget Forecast.
The Forecast estimated expenditures of $642.8 million, 12% below the $730.3 million adopted budget.
The decrease is due to the non-energy costs such as lower capital asset expenditures for acquiring office locations in Monterey and Santa Cruz, lower personnel costs from staffing vacancies, and lower than expected professional services.
However, actual results showed expenditures reaching $633.7 million, with revenues totaling $678.2 million, leading to an increase in net position of $44.5 million.
FY 2024-25 Actuals Versus Budget Highlights
Revenue vs. Budget
Totalrevenue of $678.2million reached 90% ofthe budget, $74.8million short ofthe $753 million budget. The budget assumed higher volumes and rate recovery associated with territory expansion and compliance costs, but actual volumes came in lower than anticipated.
Operating revenue from net electricity sales was $78.8 million below budget, primarily due to lower-than-expected retail volume, offset by reduced uncollectible accounts. Non-operating income of $11 million exceeded budget by $4 million, driven by favorable interest rates and active investment management.
Expenditures vs. Budget
Total expenditures of $634 million were lower than budget by 13%, coming in $96.6 million below the $730.3 million budget.
Cost of energy of $592 million was lower than budget by $73.4 million, an 11% variance.
The decrease is mainly attributed to the lower than anticipated volumes of load. Non-energy operating costs of $41.8 million were 36% under budget due to lower spending on energy programs, unspent contingencies, contracted services, and personnel vacancies.
CONCLUSION:
3CE’s FY 2025 financial results reflect solid operational performance, improved net position, and a strengthened financial foundation despite industry-wide cost pressures. The agency remains well-positioned to support ongoing operations, customer programs, and long-term energy procurement commitments.
FISCAL IMPACT:
There is no financial impact by receiving this report.
ATTACHMENT(S):
1. FY 2024-25 Audited Financial Statements
2. Central Coast Community Energy 9.30.2025 Report to the Board of Directors
Ph: (707) 542-3343 sorren.com
3562 Round Barn Cir, #200, Santa Rosa, CA 95403
Independent Auditor’s Report
To the Board of Directors
Central Coast Community Energy
Opinion
We have audited the accompanying financial statements of Central Coast Community Energy (3CE), which comprise the statements of net position as of September 30, 2025 and 2024, the related statements of revenue, expenses and changes in net position, and cash flows for the years then ended, and the related notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of 3CE as of September 30, 2025 and 2024, and the results of its operations and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of 3CE and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about 3CE’s ability to continue as a going concern within one year after the date that the financial statements are issued or available to be issued, including any currently known information that may raise substantial doubt shortly thereafter.
Independent Auditor’s Report (continued)
Auditor’s Responsibilities for the Audits of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
Exercise professional judgment and maintain professional skepticism throughout the audits.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audits in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of 3CE’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about 3CE’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audits, significant audit findings, and certain internal control-related matters that we identified during the audits.
Independent Auditor's Report (continued)
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that management’s discussion and analysis be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Santa Rosa, California
March 2, 2026
CPAs, PC
Report to the
Board of Directors
Central Coast Community Energy
For the year ended September 30, 2025
Ph: (707) 542-3343 sorren.com
3562 Round Barn Cir, #200, Santa Rosa, CA 95403
To the Board of Directors
Central Coast Community Energy
70 Garden Court, Suite 300
Monterey, CA 93940
We are pleased to present this report related to our audit of the financial statements of Central Coast Community Energy (“3CE”) as of and for the year ended September 30, 2025. Our report summarizes certain matters required by professional standards to be communicated to you in your oversight responsibility for 3CE’s financial reporting process.
This report is intended solely for the information and use of the Audit and Finance Committee, Board of Directors and management of 3CE and is not intended to be and should not be used by anyone other than these specified parties. It will be our pleasure to respond to any questions you have about this report. We appreciate the opportunity to continue to be of service to Central Coast Community Energy.
Santa Rosa, California
March 2, 2026
cc: Dewayne Woods, Chief Financial Officer
TABLE OF CONTENTS
Required Communications 1
Significant Accounting Estimates 3
Appendices
Appendix A—Significant Written Communications Between Management and Our Firm • Representation Letter 4
1 REQUIRED COMMUNICATIONS
The following required communications summarize our responsibilities regarding the financial statement audit as well as observations from our audit that are significant and relevant to your responsibility to oversee the financial reporting process.
Our Responsibilities
We described our responsibilities under auditing standards generally accepted in the United States of America have been described to you in our engagement letter dated October 10, 2024. Our audit of the financial statements does not relieve management or you of your responsibilities, which are also described in that letter.
Planned Scope and Timing
We previously issued a separate communication dated December 2, 2025 regarding the planned scope and timing of our audit and identified significant risks.
Accounting Policies and Practices
Preferability of Accounting Policies and Practices
Under accounting principles generally accepted in the United States of America, in certain circumstances, management may select among alternative accounting practices. In our view, in such circumstances, management has selected the preferable accounting practice.
Adoption of, or Change in, Accounting Policies
Management has the ultimate responsibility for the appropriateness of the accounting policies used by 3CE. 3CE did not change any existing significant accounting policies. As disclosed in Note 11, 3CE adopted GASB 102-104 which did not have a significant effect on the financial statements.
Significant Accounting Policies
We did not identify any significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus.
Significant or Unusual Transactions
We did not identify any significant unusual transactions.
Management’s Judgments and Accounting Estimates
Summary information about the process used by management in formulating particularly sensitive accounting estimates and about our conclusions regarding the reasonableness of those estimates is in the attached Summary of Significant Accounting Estimates.
Audit Adjustments and Uncorrected Misstatements
Management chose to pass on one adjustment related to GASB 96 which management concluded wasn't material. We are not aware of any other passed adjustments that were not trivial.
2 Observations About the Audit Process
Disagreements With Management
We encountered no disagreements with management over the application of significant accounting principles, the basis for management’s judgments on any significant matters, the scope of the audit or significant disclosures to be included in the financial statements.
Consultations With Other Accountants
We are not aware of any consultations management had with other accountants about accounting or auditing matters.
Significant Issues Discussed With Management
No significant issues arising from the audit were discussed or were the subject of correspondence with management.
Significant Difficulties Encountered in Performing the Audit We did not encounter any significant difficulties in dealing with management during the audit.
Shared Responsibilities for Independence
Auditor independence is a joint responsibility and is managed most effectively when management, audit committees, and audit firms work together in considering compliance with applicable independence rules.
For Sorren CPAs, P.C. (the Firm) to fulfill its professional responsibility to maintain and monitor independence, management, the Board of Directors, and the Firm each play an important role.
Our Responsibilities
• We are required to maintain both independence of mind and in appearance when providing audit and other attestation services. It is our responsibility to ensure that the general requirements for performing nonattest services are adhered to and included in all letters of engagement. • We are required to maintain a system of quality management over compliance with independence rules and firm policies.
3CE’s Responsibilities
• Timely inform the Firm, before the effective date of transactions or other business changes, of the following:
− New affiliates, directors, or officers.
• Understand and conclude on the permissibility, prior to 3CE’s, officers, directors, or persons in a decision-making capacity, engaging in business relationships with the Firm. • Not entering into relationships resulting in close family members of the Firm covered persons, temporarily or permanently acting as an officer, director, or person in an accounting or financial reporting oversight role at 3CE.
Significant Written Communications Between Management and Our Firm Copies of significant written communications between our firm and the management of 3CE, including the representation letter provided to us by management, are attached as Appendix A.
3 SIGNIFICANT ACCOUNTING ESTIMATES
Accounting estimates are an integral part of the preparation of financial statements and are based upon management’s current judgment. The process used by management encompasses their knowledge and experience about past and current events, and certain assumptions about future events. You may wish to monitor throughout the year the process used to determine and record these accounting estimates. The following summarizes the significant accounting estimates reflected in 3CE’s September 30, 2025 financial statements.
Significant Accounting Estimates
Accrued Revenue
Accounting policy/
Management’s estimation
process
Management’s estimate of accrued revenue includes historical trends and anticipated energy usage.
Basis for our conclusion on
the reasonableness of the
estimate
We tested management’s estimate analytically and determined management’s estimate to be reasonable in relation to the financial statements taken as a whole.
Cost of Electricity
Accounting policy/
Management’s estimation
process
Management’s estimate of accrued cost of electricity includes historical trends and anticipated energy usage.
Basis for our conclusion on
the reasonableness of the
estimate
We tested management’s estimate through subsequent
disbursements and analytical procedures and determined
management’s estimate to be reasonable in relation to the financial statements taken as a whole.
Allowance for Uncollectible Accounts
Accounting policy/
Management’s estimation
process
Management’s estimate of the allowance for uncollectible accounts includes historical collection trends and anticipated future collections.
Basis for our conclusion on
the reasonableness of the
estimate
We evaluated the key factors and assumptions used to develop the estimate in determining that the allowance is reasonable in relation to the financial statements taken as a whole.
APPENDIX A
Significant Written Communications Between Management and Our Firm
Central Coast Community Energy
70 Garden Court, Suite 300
Monterey, CA 93940
888.909.6227
3Cenergy.org
March 2, 2026
Sorren CPAs, P.C.
3562 Round Barn Circle, Suite 200
Santa Rosa, CA 95403
This representation letter is provided in connection with your audit of the basic financial statements of Central Coast Community Energy (3CE) as of and for the years ended September 30, 2025 and 2024 for the purpose of expressing an opinion on whether the financial statements are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America (U.S.
GAAP).
We confirm, to the best of our knowledge and belief, that as of March 2, 2026:
Financial Statements
1. We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated October 10, 2024 for the preparation and fair presentation of the financial statements referred to above in accordance with U.S. GAAP.
2. We acknowledge our responsibility for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
3. We acknowledge our responsibility for the design, implementation and maintenance of controls to prevent and detect fraud.
4. The methods, data, and significant assumptions used by us in making accounting estimates and their related disclosures are appropriate to achieve recognition, measurement, or disclosure that is reasonable in the context of U.S. GAAP, and reflect our judgment based on our knowledge and experience about past and current events, and our assumptions about conditions we expect to exist and courses of action we expect to take.
5. Related-party transactions have been recorded in accordance with the economic substance of the transaction and appropriately accounted for and disclosed in accordance with the requirements of U.S.
GAAP.
6. The financial statements properly classify all funds and activities in accordance with GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, as amended.
7. All events subsequent to the date of the financial statements, and for which U.S. GAAP requires adjustment or disclosure, have been adjusted or disclosed.
8. The effects of all known actual or possible litigation and claims have been accounted for and disclosed in accordance with U.S. GAAP.
9. Management has followed applicable laws and regulations in adopting, approving and amending budgets.
Docusign Envelope ID: 82A70B6D-9534-471E-98F9-32F77A3EFA87
Sorren CPAs, P.C.
March 2, 2026
Central Coast Community Energy
10. Risk disclosures associated with deposit and investment securities and derivative transactions are presented in accordance with GASB requirements.
11. Provisions for uncollectible receivables have been properly identified and recorded.
12. Capital assets, including infrastructure, intangible assets, and right of use assets are properly capitalized, reported and, if applicable, depreciated.
13. The government properly separated information in debt disclosures related to direct borrowings and direct placements of debt from other debt and disclosed any unused lines of credit, collateral pledged to secure debt, terms in the debt agreements related to significant default or termination events with finance-related consequences and significant subjective acceleration clauses in accordance with GASB Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements.
14. Components of net position (net investment in capital assets, restricted, and unrestricted) and classifications of fund balance (nonspendable, restricted, committed, assigned, and unassigned) are properly classified and, if applicable, approved.
15. Leases have been properly identified, recorded, and disclosed in accordance with GASB Statement No. 87, Leases.
16. 3CE does not have any material subscription-based technology information arrangements (SBITAs) that need to be disclosed in accordance with GASB Statement No. 96, Subscription-Based Information Technology Arrangements.
17. There are no concentrations or constraints requiring disclosure in accordance with GASB Statement No. 102, Certain Risk Disclosures.
18. We have no direct or indirect legal or moral obligation for any debt of any organization, public or private, or to special assessment bond holders, that is not disclosed in the financial statements.
19. We have complied with all aspects of laws, regulations and provisions of contracts and agreements that would have a material effect on the financial statements in the event of noncompliance. In connection therewith, we specifically represent that we are responsible for determining that we are not subject to the requirements of the Single Audit Act because we have not received, expended or otherwise been the beneficiary of the required amount of federal awards during the period of this audit.
20. We have no knowledge of any uncorrected misstatements in the financial statements.
Information Provided
21. We have provided you with:
a. Access to all information of which we are aware that is relevant to the preparation and fair presentation of the basic financial statements such as records, documentation and other matters. b. Additional information that you have requested from us for the purpose of the audit. c. Unrestricted access to persons within 3CE from whom you determined it necessary to obtain audit evidence.
Docusign Envelope ID: 82A70B6D-9534-471E-98F9-32F77A3EFA87
Sorren CPAs, P.C.
March 2, 2026
Central Coast Community Energy
d. Minutes of the meetings of the governing board and committees, or summaries of actions of recent meetings for which minutes have not yet been prepared.
22. All transactions have been recorded in the accounting records and are reflected in the basic financial statements.
23. We have disclosed to you the results of our assessment of risk that the basic financial statements may be materially misstated as a result of fraud.
24. We have no knowledge of allegations of fraud or suspected fraud affecting 3CE’s basic financial statements involving:
a. Management.
b. Employees who have significant roles in internal control. c. Others where the fraud could have a material effect on the basic financial statements.
25. We have no knowledge of any allegations of fraud or suspected fraud affecting 3CE’s basic financial statements received in communications from employees, former employees, analysts, regulators or others.
26. We have no knowledge of noncompliance or suspected noncompliance with laws and regulations.
27. We are not aware of any pending or threatened litigation, claims or assessments; unasserted claims or assessments that are probable of assertion and must be disclosed in accordance with Accounting Standards Codification (ASC) Topic 450, Contingencies; violations or possible violations of laws and regulations; or other matters, including gain or loss contingencies, whose effects should be considered when preparing the financial statements.
28. We have disclosed to you the identity of all of 3CE’s related parties and all the related-party relationships and transactions of which we are aware.
29. We are aware of no significant deficiencies in internal control over financial reporting, including significant deficiencies or material weaknesses, in the design or operation of internal controls that could adversely affect 3CE’s ability to record, process, summarize and report financial data.
30. There have been no communications from regulatory agencies concerning noncompliance with, or deficiencies in, financial reporting practices.
Required Supplementary Information
31. With respect to the Management’s Discussion and Analysis presented as required by GAAP and the Governmental Accounting Standards Board to supplement the basic financial statements:
a. We acknowledge our responsibility for the presentation of such required supplementary information.
b. We believe such required supplementary information is measured and presented in accordance with guidelines prescribed by U.S. GAAP.
c. The methods of measurement or presentation have not changed from those used in the prior period.
Docusign Envelope ID: 82A70B6D-9534-471E-98F9-32F77A3EFA87
Sorren CPAs, P.C.
March 2, 2026
Central Coast Community Energy
Dewayne Woods, Chief Financial Officer
Central Coast Community Energy
Mike Maher, Accountant
Docusign Envelope ID: 82A70B6D-9534-471E-98F9-32F77A3EFA87
Staff Report Item 4
TO: 3CE Audit and Finance Committee
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Dewayne Woods, Chief Financial Officer
SUBJECT: Authorization to Proceed with Second Energy Prepayment Transaction (Estimated $800 Million – $1.2 Billion)
DATE: March 18, 2026
RECOMMENDATION:
Staff recommends the Audit and Finance Committee support that the Policy Board authorize the Chief Executive Officer to proceed with the development, structuring, and execution of a second energy prepayment transaction in 2026, with an estimated par amount between $800 million and $1.2 billion.
Staff further recommends support of the Audit and Finance Committee to engage PFM Financial Advisors LLC as Financial Advisor with a contract not to exceed $250,000; PFM as GIC Bidding Agent with a contract not to exceed $50,000; and Goldman Sachs & Co. LLC as Senior Managing Underwriter for the transaction.
BACKGROUND:
Central Coast Community Energy (3CE) continues to pursue financial strategies designed to lower long-term power supply costs, increase rate stability, and enhance financial flexibility. In 2023, 3CE successfully executed its first energy prepayment transaction utilizing tax-exempt bonds issued through a Joint Powers Authority (JPA) structure.
Energy prepayment transactions allow a Load Serving Entity to prepay for a long-term supply of energy using non-recourse tax-exempt bond proceeds. The structure has been used successfully by 3CE, multiple other Community Choice Aggregators, and municipal utilities across the country generating a historical savings of approximately 7–12% relative to contracted market pricing, depending on market conditions.
Based on the success of 3CE’s previous transaction and favorable market conditions, staff proposes initiating a second prepayment transaction in 2026 sized between $800 million and $1.2 billion, subject to market conditions, savings thresholds, and Board approval of final documentation.
DISCUSSION/ANALYSIS:
Prepayment transactions are complex financings involving multiple counterparties and a specially formed Joint Powers Authority (JPA) issuer. The general structure of the transaction is as follows:
3CE partially assigns one or more existing or newly executed power purchase agreements to a counterparty.
3CE enters into a Clean Energy Purchase Contract with a JPA formed to facilitate the financing. The JPA issues non-recourse tax-exempt bonds to investors. Bond proceeds are used to prepay the energy supplier for a long-term supply of power (typically up to 30 years).
The supplier delivers energy under a Master Power Supply Agreement to the JPA. The JPA delivers energy to 3CE.
3CE makes periodic payments to the JPA at a discounted rate relative to prevailing market pricing.
The JPA uses those revenues to repay bondholders.
The bonds are structured as non-recourse obligations of the JPA, payable solely from revenues derived from the energy supply contract. 3CE’s payment obligation is tied to energy deliveries, and the structure is designed to insulate 3CE from direct bondholder recourse.
Initial financing terms are typically structured for 4–6 years with anticipated refinancings over the life of the prepaid energy term. Investor demand for tax-exempt securities, interest rate conditions, and federal tax law considerations materially influence transaction economics.
PROPOSED FINANCING TEAM
Staff proposes the following financing team for the 2026 prepayment transaction:
• Financial Advisor: PFM Financial Advisors LLC
• Senior Managing Underwriter: Goldman Sachs & Co. LLC
• Bond, Tax, and Disclosure Counsel: To be designated subject to Board authorization • Energy Supplier/Counterparty: To be selected based on market pricing and credit considerations PFM will provide financial modeling, transaction structuring advice, pricing analysis, and support during bond marketing and closing. Goldman Sachs will underwrite and distribute the bonds to tax-exempt investors and assist with market execution strategy.
BENEFITS AND RISKS
Potential Benefits:
• Long-term energy cost savings and improved rate competitiveness • Diversification of energy procurement and financing strategies • Budget certainty and long-term supply price stability • No direct recourse to 3CE beyond contractual energy payments Key Risks:
• Interest rate and tax law changes prior to bond issuance • Counterparty credit and performance risk
• Regulatory or legislative changes affecting tax-exempt financing • Market savings may not meet established thresholds, in which case staff would not proceed FISCAL IMPACT:
Transaction costs, including underwriting fees, advisory fees, legal fees, and issuance expenses, are expected to be paid from bond proceeds at closing. There is no anticipated impact on 3CE’s Operational Expenses outside of staff time and preliminary structuring expenses prior to closing such as advisement fees.
Final execution of the transaction will be subject to achieving savings targets established by staff and reviewed by the Board prior to pricing.
CONCLUSION:
Staff recommends that the Audit and Finance Committee support seeking Policy Board approval for the CEO to proceed with development and execution of a second energy prepayment transaction in 2026 in an amount between $800 million and $1.2 billion, and that the Operations Board engage PFM Financial Advisors LLC as Financial Advisor and Goldman Sachs & Co. LLC as Senior Managing Underwriter, subject to final documentation and market conditions.
ATTACHMENT(S):
1. PFM Scope of Services
Central Coast Community Energy | Proposal for MA Services Related to a Prepay Transaction Proposed Scope of Services
Energy Prepayment – PFM Financial Advisors LLC
Task 1. Supplier Evaluation and Selection
A. Drafting the RFP and incorporating any edits 3CE may have after which PFM would issue the RFP.
B. Upon receipt of all the responses, PFM would summarize and present them to 3CE for review.
C. PFM would provide additional feedback or context to 3CE regarding the RFP responses if there is deficient information from proposers.
D. Attend and participate in meetings required to put together a working group.
E. PFM will help 3CE evaluate and provide our independent recommendations.
Task 2. Communications
A. Serve as the “prepay bond” subject matter expert to 3CE.
B. Present at Board of Directors meetings and briefings or preparing presentation materials.
C. Create, facilitate, and attend weekly Prepayment Transaction calls after the initial distribution of documentation.
Task 3. Project Management Support
A. Work with the Underwriter as well as the other parties in the working group including Bond Counsel, Disclosure Counsel, Supplier’s Counsel and Underwriter’s Counsel to ensure that the proposed timeline of issuing the prepaid bonds is acceptable to 3CE.
B. Throughout the transaction, review all of the key documents, discussed below:
i. Basic Documents
• Preliminary and Final Official Statements
• Trust Indenture
• Prepaid Energy Sales Agreement
• Bond Purchase Contract
• Re-Pricing Agreement
• Front-End and Back-End Custodial Agreements
• Continuing Disclosure Undertaking
• Debt Service Account Investment Agreement
• Energy Provider Guarantees
• Power Supply Contract
• Limited Assignment Agreement
• Tax Certificate
ii. Issuer Documents
• Resolutions
Central Coast Community Energy | Proposal for MA Services Related to a Prepay Transaction Task 4. Prepay Transaction Risk and Risk Mitigant Identification and Evaluation There are many benefits and considerations that must be evaluated in order to make informed decisions throughout a prepayment transaction. Throughout the prepayment transaction work, the following considerations will evolve and ad-hoc reporting and discussion will be provided by PFM to assess prepay transaction risk and mitigating factors:
A. Maximizing Term / Savings
B. PPA Production Considerations
C. CA Regulatory Framework – Long Term Contracting
D. Segmented Structure / Re-Pricing
E. LLC Structure
Task 5. Prepay Transaction Management, Technical Support and Analysis A. Run point on technical support and analysis.
B. Independently help 3CE review various PPAs and scenarios to help formulate its desired finance plan.
C. Work in tandem with the banks to ensure both parties agree on assumptions, deal specifics etc.
D. Review and provide feedback on any supplemental investor materials including investor roadshows and other marketing materials.
E. Provide minute-by-minute analysis during the order period, negotiate with the rating agencies regarding their fees, and communicate to 3CE these details.
F. Proactively collect and consolidate all other costs of issuance expenses.
G. On the prepayment transaction, provide the tax certificate supporting the reasonable expectation that the prepay bonds will run to term assuming at least one successful repricing.
H. Generate the FA provided certificate for tax counsel and assist 3CE in issuing an RFP for a bidding agent for the reserve fund and debt service fund investment.
Task 6. Post-Pricing Activities
A. Coordinate any post-closing activities, including reviewing the closing memorandum provided by the Underwriter and ensuring the timing and accurate transfer of funds.
B. Collect and verify all the invoices from the working group to provide to the Bond Trustee.
C. Timely provide a transaction report in PowerPoint presentation or memo format summarizing the executed prepayment transaction.
Energy Prepayment – PFM Swap Advisors LLC
PFMSA will serve 3CE as Municipal Advisor and designated Qualified Independent Representative (“QIR”) in the provision of general swap advisory services related to any swap-related communication, interaction or other discussion (“Swap Communication”) between 3CE and Swap Dealers (as such term is defined by the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”)).
Central Coast Community Energy | Proposal for MA Services Related to a Prepay Transaction PFMSA is obligated to comply with the applicable requirements of CFTC Regulation 17 CFR 23.450(b)(1) in providing QIR services to 3CE:
• As QIR to 3CE, PFMSA will make available qualified professionals to participate in discussions and other interactions with Swap Dealers as 3CE finds necessary or desirable. Additionally, PFMSA will assist 3CE with analysis of any proposals from Swap Dealers. PFMSA may assist 3CE with other swap related tasks such as helping write a swap policy or other related analysis upon 3CE’s request. PFMSA will also assist 3CE, as needed, in completing the ISDA Dodd-Frank Protocols and other matters to comply with the regulatory requirements imposed under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
• Analyze and model alternative hedge structures and provide price indications. • Review and comment on all hedge documentation and business terms. • Assist in counterparty selection and developing terms for a request for bids (if desired). • Review competitive bids and make a recommendation for award or if so determined. • Negotiate the pricing terms and structure with the Counterparty(s). • Coordinate the closing of the transaction.
Line of Credit – PFM Financial Advisors LLC
A. Educate 3CE on the current options in the bank credit market.
B. Review, finalize, and distribute the Request for Proposal package for the Line of Credit.
C. Review and edit the list of potential providers for the RFP.
D. Field and coordinate answers in conjunction with the 3CE team to questions from potential credit providers.
E. Collect, review and analyze RFP responses.
F. Assist 3CE in best and final solicitations.
G. Assist 3CE in determining best course of action.
H. Participate in bank negotiations including consulting with 3CE on business terms, reviewing and commenting on proposed liquidity facility terms.
I. Assist in the document review and negotiations with the bank(s) chosen to proceed.
J. Assist with any other related matters at the direction of 3CE.
Staff Report Item 5
TO: 3CE Audit and Finance Committee
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Dewayne Woods, Chief Financial Officer
SUBJECT: Support seeking the Policy Board's approval to establish a temporary residential rate “3CFlex” to support customers impacted by the California Public Utilities Commission’s Power Charge Indifference Adjustment (PCIA) decisions. And support seeking Policy Board approval of 3CFlex effective May 1, 2026, through December 31, 2026, with total residential enrollment capped at no more than 10% of residential load
DATE: March 18, 2026
RECOMMENDATION:
This recommends the Policy Board support seeking the Policy Board's approval to establish a temporary residential rate “3CFlex” to support customers impacted by the California Public Utilities Commission’s Power Charge Indifference Adjustment (PCIA) decisions. And support seeking Policy Board approval of 3CFlex effective May 1, 2026, through December 31, 2026, with total residential enrollment capped at no more than 10% of residential load.
BACKGROUND:
Effective January 1, 2026, PG&E implemented new generation rates, which include the California Public Utilities Commission’s (CPUC) retroactive application of additional costs for unbundled customers, resulting in a significant increase in the Power Charge Indifference Adjustment (PCIA) for unbundled customers in the 2026 rate year.
The CPUC’s retroactive adjustment to established calculation methodologies did not include any change in existing rates, which now requires a substantial true-up of prior-year under-collections created by the CPUC’s change in rules. As a result, unbundled customers, including CCA customers, are subject to materially higher PCIA charges in 2026, while bundled PG&E customers receive bundled PCIA credit embedded in their generation rate structure.
This regulatory action creates a substantial one-year cost shift in 2026 that may burden 3CE customers.
At a January 28, 2026 special meeting, the Policy Board reduced 3CE’s generation rates by 25% at a system level after considering 3CE’s prudent management of energy costs, risk strategy, and conservative approach to operational costs.
DISCUSSION/ANALYSIS:
On a weighted Residential E-TOU-C basis, 3CE’s base generation rate remains lower than PG&E’s generation rate before PCIA is applied. 3CE’s generation rate is approximately 9–10% lower than PG&E’s on a comparable basis.
This demonstrates that 3CE’s procurement strategy remains cost competitive and that renewable-forward purchasing has not increased underlying generation costs relative to PG&E.
The 2026 cost-shift impacts are attributable to the CPUC determined PCIA framework. To remain consistent with the Policy Board’s direction for cost-based rates, staff evaluated service offerings to determine opportunities to create a market flexible rate responsive to individual customer’s affordability concerns caused by the CPUC’s retroactive PCIA cost shift. Securing system purchases lower than anticipated budget, removing energy program eligibility, and permitting the rate to adjust to meet the investor-owned utility rate swings, enables 3CE to provide a rate alternative for certain eligible customers up to 10% of retail load. The rate addresses the highest PCIA exposure for 3CE customers, enabling a conservative benchmark to bundled rates.
Approach of 3CFlex to ensure it remains narrowly tailored as an affordability relief:
• Match bundled generation rate (including bundled PCIA) calibrated at 2021 PCIA vintage. • Automatically sunset December 31, 2026, with customers returning to 3CChoice. • Cap enrollment at no more than 10% of residential load. 3CFlex provides a limited affordability tool for customers who value cost parity more than 3CE’s investment in new clean and renewable resources, rate stability, and innovative energy programs. The limited time duration of the proposed 3CFlex preserves 3CE’s clean and renewable buildout commitments and long-term financial stability. Customers electing 3CFlex will not be eligible to participate in 3CE Energy Programs during enrollment in the 3CFlex, which includes if they received rebate funding anytime within FY 25-26 and then the balance of calendar year2026. Additionally, NEM customers are on a special program with unique billing requirements and will not be eligible for 3CFlex for technical implementation reasons.
By participating in the 3CFlex pilot rate structure, customers are forgoing 3CE’s considerable Energy Program benefits available in each fiscal year to customers:
• EV charger rebates: $500–$3,000
• Income-qualified EV incentives: $2,000–$5,000
• Heat pump water heater rebates: $1,000–$3,500
• Home battery incentives: $1,000–$5,000+
Participation in these programs provides value exceeding the annual impact of temporary PCIA-related rate differences.
Alignment with Board Priorities include:
• Affordability – Provides targeted, time-limited relief. • Financial Stability – Enrollment cap limits fiscal exposure. • Clean and Renewable – Maintains Renewable procurement targets. • Customer Trust – Demonstrates local responsiveness to regulatory impacts.
FISCAL IMPACT:
The 3CFlex is limited to May 1, 2026, through December 31, 2026, and capped at 10% of residential load. The estimated fiscal exposure ranges from $4 million to $7 million depending on enrollment levels and length of participation. The program is transparent, quantifiable, time-limited, and designed to remain within reserve and liquidity targets.
CONCLUSION:
3CE’s 3CFlex residential generation rate remains lower than the investor-owned utilities during a time that customers are facing affordability challenges driven by a one-year CPUC PCIA methodology adjustment. This temporary 3CFlex rate provides targeted relief without altering 3CE’s renewable mission or long-term rate stability.
ATTACHMENT(S):
1. Resolution No. PB-2026-02
2. 3CFlex Table
RESOLUTION NO. PB-2026-XX
A RESOLUTION OF THE CENTRAL COAST COMMUNITY ENERGY POLICY BOARD OF DIRECTORS APPROVING A TEMPORARY RESIDENTIAL E-TOU-C “BASIC RATE” ELECTRIC GENERATION RATE EFFECTIVE MAY 1, 2026 THROUGH DECEMBER 31, 2026
WHEREAS, Central Coast Community Energy (3CE) is a Joint Powers Authority (JPA) established pursuant to California Government Code sections 6500 et seq.; and WHEREAS, 3CE operates a Community Choice Aggregation (CCA) program pursuant to Public Utilities Code section 366.2; and
WHEREAS, the Policy Board is responsible for setting electric generation rates consistent with state law and the 3CE Joint Powers Agreement; and
WHEREAS, effective January 1, 2026, PG&E implemented new generation rates reflecting a significant increase in the Power Charge Indifference Adjustment (PCIA) applied to unbundled customers due to a CPUC-approved retroactive methodology adjustment; and WHEREAS, this PCIA adjustment creates a one-year affordability impact in calendar year 2026 that is not attributable to 3CE procurement or renewable program decisions; and WHEREAS, 3CE’s base generation rate remains lower than PG&E’s generation rate prior to application of the PCIA; and
WHEREAS, the Policy Board finds it appropriate to establish a temporary Residential Basic Rate to provide targeted regulatory relief while maintaining 3CE’s renewable commitments and financial stability; and
NOW, THEREFORE, BE IT RESOLVED:
The above recitals are true and correct.
Notice of public meetings at which this Resolution was considered was properly given.
The Basic Rate established herein applies only to Residential customers on the E-TOU-C rate schedule.
The Basic Rate shall be effective May 1, 2026, and shall automatically sunset December 31, 2026.
Enrollment in the Basic Rate shall be capped at no more than 10% of total residential load.
Customers electing the Basic Rate shall not be eligible to participate in 3CE Energy Programs during enrollment in the Basic Rate. Customers who have already received an Energy Program Rebate in calendar year 2026 are not eligible for enrollment in this Basic Rate.
NEM customers are ineligible for enrollment in this Basic Rate.
This Resolution is not subject to CEQA pursuant to Public Resources Code section 21080(b)(8) and CEQA Guidelines sections 15273(a) and 15061(b)(3).
The Policy Board Approves:
The establishment of a temporary Residential E-TOU-C Basic Rate is calibrated subtracting as matching the PGE bundled rate including bundled PCIA credit which was approved to be effective on January 1, 2026. This Basic Rate will be limited duration effective May 1, 2026, through December 31, 2026.
The Policy Board Directs and Authorizes:
Staff to implement and administer the Residential Basic Rate consistent with this Resolution.
The CEO to take such further actions as may be necessary to implement the intent and purpose of this Resolution.
This Resolution is adopted under the authority of the 3CE Joint Powers Agreement and State law.
PASSED AND ADOPTED this ___ day of __________, 2026, by the following vote:
AYES:
NOES:
ABSENT:
__________________________________
Chair
__________________________________
Board Clerk
ATTACHMENT B
Basic Rate – Residential E-TOU-C
Effective May 1, 2026, through December 31, 2026, the Residential E-TOU-C “Basic Rate” shall be as follows:
Rate Schedule Basic Rate ($/kWh)
Basic Rate Residential $0.05264
The above rate reflects the fully equalized generation rate designed to match the bundled generation rate structure with 2021 PCIA credit for a limited term. Customers enrolled in the Basic Rate are not eligible for Energy Program Rebates throughout calendar year 2026.
Customers who have already received an Energy Program Rebate in calendar year 2026 are not eligible for enrollment in this Basic Rate. NEM customers are ineligible for enrollment in this Basic Rate.