Central Coast Community Energy (3CE) Policy Board
September 17, 2026

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be materially and adversely affected by such amendment, waiver or modification as it relates to this Communications Protocol.

2.5 Amendment of Communications Protocol. No Relevant Party shall amend any provision of this Communications Protocol in a Relevant Contract without the consent of each other Relevant Party.

2.6 Waiver of Communications Protocol. No Relevant Party shall waive any provision of this Communications Protocol in a Relevant Contract without the consent of each other Relevant Party whose rights or obligations would be materially and adversely affected by such waiver.
3 DESIGNATION AND REPLACEMENT OF SCHEDULING ENTITIES

3.1 Designation of Delivery Scheduling Entity. The Delivering Entity may designate a new Delivery Scheduling Entity upon thirty (30) days written notice to Issuer substantially in the form of Attachment 4. Any Scheduling Entity designated in accordance with this Section 3.1 shall commence service at the beginning of a Month, unless mutually agreed in writing between the Delivering Entity and Issuer.

3.2 Assumption by Receipt Scheduling Entity. If any Delivery Scheduling Entity (other than the Delivering Entity) persistently fails to perform its obligations as contemplated under this Communications Protocol, the Receipt Scheduling Entity may, by notice to the Delivering Entity, require that the Delivering Entity deal directly with the Receipt Scheduling Entity until a new Delivery Scheduling Entity is designated in accordance with this Section 3.1.

3.3 Scheduling Coordinator. Project Participant shall designate a scheduling coordinator for the purposes of accepting Base Product delivery at the Base Delivery Point through the scheduling of ISTs.
4 INFORMATION EXCHANGE AND COMMUNICATION BETWEEN ISSUER AND

THE DELIVERING ENTITY

4.1 Communication of Operational Nomination Details.

4.1.1 Not later than three Days prior to each Day during which Base Product is required to be delivered under the Agreement, the Receipt Scheduling Entity for such Delivery Point may deliver an operational nomination in writing (the “Operational Nomination”) indicating any inability of the Project Participant to receive all of its Base Quantities during such Day, which Operational Nomination shall be without prejudice to any party’s rights under the Relevant Contracts for failure to receive Base Quantities.

If no changes to Base Quantities are so submitted, the Operational Nomination shall be deemed to nominate the full Base Quantities required to be delivered on a Day.

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4.1.2 Not later than three Days prior to each Day during which Base Product is required to be delivered under the Agreement, the Delivery Scheduling Entity for such Delivery Point may revise the Operational Nomination to indicate any inability of Prepay LLC to deliver all Base Quantities during such Day, which revised Operational Nomination shall be without prejudice to any party’s rights under the Relevant Contracts for failure to deliver Base Quantities.

4.2 Event-specific Communications.

4.2.1 Remarketing Notices issued by Issuer under the Master Power Supply Agreement shall be substantially in the form of Attachment 2 hereto. Any such notices to remarket must be delivered directly to Prepay LLC and the Delivery Scheduling Entity.

4.2.2 Each Scheduling Entity shall notify Prepay LLC, Issuer and the Project Participant as soon as practicable in the event of: (i) any deficiencies in Scheduling related to such Scheduling Entity; (ii) any deficiencies in Scheduling related to the other such Scheduling Entity; and (iii) any issues with Relevant Third Parties that that would reasonably be expected to create issues related to Product Scheduling under the Relevant Contract. 5 ACCESS AND INFORMATION

5.1 Verification of Product Scheduled. In addition to the delivery of and access to the records and data required pursuant to the Agreement, each Relevant Party agrees to provide relevant records from itself and other Relevant Third Parties necessary to document and verify Product Scheduled within and after the Month as needed to facilitate the Relevant Contracts.

5.2 View Rights. To the extent requested by a Delivery Scheduling Entity or Prepay LLC, the Receipt Scheduling Entities will use Commercially Reasonable Efforts to cooperate with the Delivery Scheduling Entity and Prepay LLC to ensure that Delivery Scheduling Entity and Prepay LLC has sufficient agency view rights from each such Scheduling Entity to allow Prepay LLC to view Base Product Scheduling at the Base Delivery Point.
6 NOTICES
Any notice, demand, request or other communication required or authorized by this Communications Protocol to be given by one Relevant Party to another Relevant Party shall be in writing, except as otherwise expressly provided herein. It shall either be sent by facsimile (with receipt confirmed by telephone and electronic transmittal receipt), courier, or personally delivered (including overnight delivery service) to the representative of the other Relevant Party designated in Attachment 1 hereto. Any such notice, demand, or request shall be deemed to be given (i) when sent by facsimile confirmed by telephone and electronic transmittal receipt or (ii) when

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actually received if delivered by courier or personal delivery (including overnight delivery service). Each Relevant Party shall have the right, upon written notice to the other Relevant Parties, to change its address at any time, and to designate that copies of all such notices be directed to another Person at another address. 7 NO IMPACT ON CONTRACTUAL OBLIGATIONS
Except as expressly set forth herein or in an applicable Relevant Contract, nothing in this Communications Protocol nor any Relevant Party’s actions or inactions hereunder shall have any impact on any Relevant Party’s rights or obligations under the Relevant Contracts.
8 ATTACHMENTS
Attachment 1 - Key Personnel
Attachment 2 - Remarketing Notice Form
Attachment 3 - Designation of Alternate Base Delivery Points Form Attachment 4 - Designation of Scheduling Entities Form

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Attachment 1
Key Personnel
Delivering Entity Marketing Personnel:

Timothy Capuano
Sales and Trading
Telephone: (212) 357-2542
[email protected]
Delivering Entity Scheduling Personnel:

Scheduling Team
Email: [email protected]
Direct Phone: (212) 902-8148
Fax: 212.493.9847
Matt Speltz
ICE Chat: mspeltz5
Email: [email protected]
Direct Phone: (212) 357-5429
Fax: (212) 493-9847
Other Delivering Entity Personnel:

Francois Gignac
Telephone: (212) 855-0880
[email protected]
Andres E. Aguila
Telephone: (212) 855-6008
Fax: (212) 291-2124
[email protected]
Issuer Personnel:
[email protected] and [email protected]
Project Participant Personnel:

As set forth in the Clean Energy Purchase Contract

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Attachment 2
Remarketing Notice Form
Date: [_____________]
To: Delivering Entity Scheduling
From: Project Participant Scheduling
This notice is being delivered pursuant to that certain Master Power Supply Agreement (the “Master Power Supply Agreement”) dated as of [____], 2026 by and between Aron Energy Prepay 65 LLC (“Prepay LLC”) and California Community Choice Financing Authority (“Issuer”) and relates to the Clean Energy Purchase Contract (the “Clean Energy Purchase Contract”) dated as of [____], 2026 by and between Issuer and Central Coast Community Energy (“Project Participant”). Capitalized terms not defined herein are defined in the Master Power Supply Agreement.

Check the box to indicate type of Remarketing Notice (The numbers of the Primary (“P”) and Alternate (“A”) Delivery Points below correspond to those same Primary and Alternate Delivery Points set forth in Exhibit A-1 of the Agreement, or as may be designated by the Parties from time to time):
 Monthly Remarketing Notice:

Month(s) for which remarketing is requested: _____________________, 20__ through _______________________, 20__.

Pursuant to Section 3(b) of Exhibit C of the Clean Energy Purchase Contract, Project Participant requests that the Delivering Entity remarket in such Month(s) the following Base Quantities of Product required to be delivered at the following Delivery Points:

Delivery Point (P/A, #) MWh/ Hour for each Hour in the Month  Daily Remarketing Notice:

Hours for which remarketing is requested: _____________________, 20__ through _______________________, 20__.

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Pursuant to Section 3(c) of Exhibit C of the Clean Energy Purchase Contract, Project Participant requests that the Delivering Entity remarket for such Hours the following Base Quantities of Product required to be delivered at the following Delivery Point:

Delivery Point (P/A, #) MWh/Hour
Submitted by Project Participant:

CENTRAL COAST COMMUNITY ENERGY
By: ________________________
Name:

Title:

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Attachment 3
Designation of Alternate Delivery Points Form
This designation is delivered pursuant to that certain Master Power Supply Agreement (the “Master Power Supply Agreement”) dated as of [____], 2026 by and between Aron Energy Prepay 65 LLC (“Prepay LLC”) and California Community Choice Financing Authority (“Issuer”) and the Clean Energy Purchase Contract (the “Clean Energy Purchase Contract”) dated as of [____], 2026 by and between Issuer and Central Coast Community Energy (“Project Participant”). Capitalized terms not defined herein are defined in the Master Power Supply Agreement and the Clean Energy Purchase Contract. [Project Participant and/or Issuer] hereby proposes the following Alternate Delivery Points for deliveries of Energy that would otherwise be made at the specified Primary Delivery Point:

ALTERNATE

DELIVERY POINT

PRIMARY

DELIVERY POINT

AFFECTED

COMMODITY

REFERENCE PRICE

PRICING POINT

ADDITIONAL

RESTRICTIONS
1 [e.g.
2 Vol. Limit:____
3 Time Limit:]___
(etc.)
Unless otherwise agreed among Delivering Entity, Issuer and Project Participant, an Alternate Delivery Point shall utilize the same Commodity Reference Price as the Primary Delivery Point it replaces or otherwise affects. Project Participant is not required to agree or accept this designation (or any change to the Commodity Reference Price) if it is being submitted by Issuer pursuant to the Master Power Supply Agreement only.

AGREED AND

ACCEPTED BY DELIVERING
ENTITY:
(if required)

AGREED TO AND ACCEPTED
BY PROJECT PARTICIPANT:
(if required)

AGREED TO AND ACCEPTED
BY ISSUER:

By:

Name:

Title:

By:

Name:

Title:

By:

Name:

Title:

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Attachment 4
Designation of Scheduling Entities Form
This designation is being delivered pursuant to that certain Master Power Supply Agreement (the “Master Power Supply Agreement”) dated as of [____], 2026 by and between Aron Energy Prepay 65 LLC (“Prepay LLC”) and California Community Choice Financing Authority (“Issuer”) and relates to the Clean Energy Purchase Contract (the “Clean Energy Purchase Contract”) dated as of [____], 2026 by and between Issuer and Central Coast Community Energy (“Project Participant”). Capitalized terms not defined herein are defined in the Master Power Supply Agreement and Clean Energy Purchase Contract. [If delivered by Project Participant:

Receipt Scheduling Entity:

Delivery Point: ________________________
Effective Date(s) of Service of Receipt Scheduling Entity (full Months only):
________________, ______ to ________________, ______, if applicable Notice Information for Receipt Scheduling Entity:

Name: ______________________________
Attention: ______________________________
Address: ______________________________
______________________________
Telephone: ______________________________
Fax: ______________________________]
[If delivered by the Delivering Entity:

Delivery Scheduling Entity:

Delivery Point: ________________________
Effective Date(s) of Service of Delivery Scheduling Entity (full Months only):
________________, ______ to ________________, ______, if applicable Notice Information for Delivery Scheduling Entity:

Name: ______________________________
Attention: ______________________________

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Address: ______________________________
______________________________
Telephone: ______________________________
Fax: ______________________________
Submitted by:
[Project Participant or the Delivering Entity]
By: _____________________________
Name: _____________________________
Title: _____________________________

Stradling draft as of September 4, 2026
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APPENDIX A

THE PROJECT PARTICIPANT

CENTRAL COAST COMMUNITY ENERGY
General
Central Coast Community Energy (“3CE”) is a joint powers authority organized and existing pursuant to the Joint Exercise of Powers Act (constituting Chapter 5 of Division 7 of Title 1 (commencing with Section 6500), as amended or supplemented from time to time) (the “Joint Powers Act”), as a “community choice aggregator” (“CCA”) as defined in Section 331.1 of the Public Utilities Code of the State of California, as amended (the “Public Utilities Code”). For a general description of CCAs in California, see the “COMMUNITY CHOICE AGGREGATORS” section in this Official Statement.
3CE was initially created in 2017 under the name “Monterey Bay Community Power Authority” as a CCA in California pursuant to a Joint Exercise of Powers Agreement, as amended, by and among the counties and cities participating in 3CE and named therein (the “JPA”). 3CE began providing service to customers in March 2018.
3CE comprises 35 member agencies across five counties. The agency serves over 1.2 million people through more than 515,000 customer accounts representing approximately 95% of the region’s electricity load. In Fiscal Year 2026-27, 3CE’s projected peak load is 892 MW, and 3CE expects to deliver approximately 5.395 million MWh of electricity to a mix of residential, commercial, and industrial customers.
3CE supports electrification in transportation, agriculture, and the build environment through its innovative, customer-focused energy programs and invests in new renewable energy projects to bring more clean energy onto the grid. In partnership with its customers, 3CE is strengthening grid resilience and advancing a cleaner, more sustainable future for the Central Coast.

Formation and History of 3CE
General. 3CE was formed in February 2017 as a “joint powers authority” to provide electric power and related benefits within its service area, including developing a wide range of renewable energy sources and local clean energy programs. The formation of 3CE was made possible by the passage of California Assembly Bill 117 in 2002, enabling communities to purchase power on behalf of their residents and businesses and creating competition in the electric power market. Under California Public Utilities Commission (“CPUC”) designations, 3CE (like other CCAs) is a “load-serving entity” (“LSE”) to the communities it serves. 3CE does not provide transmission, distribution, or billing services. Transmission, distribution, and billing services for 3CE customers are provided by the investor-owned utility (“IOU”) serving the customers’ geographic regions, specifically either Pacific Gas and Electric Company (“PG&E”) or Southern California Edison (“SCE”). Each IOU’s services and engagement with 3CE are defined by the State Legislature’s IOU Code of Conduct, each IOU’s electric rules, and a community choice aggregator service agreement between 3CE and each IOU.

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Commencement of Service and Expansion. 3CE began serving customers in 19 communities in Monterey, San Benito, and Santa Cruz Counties in March 2018. In subsequent years, 3CE’s Policy Board of Directors authorized service to new communities through a series of resolutions, which led to the expansion of 3CE’s service territory into San Luis Obispo and Santa Barbara Counties. As further described below, 3CE now serves 35 communities.

Service Area
Communities Served by 3CE. 3CE currently serves 35 jurisdictions in Monterey, Santa Cruz, San Benito, San Luis Obispo, and Santa Barbara Counties, as follows:

City of Arroyo Grande City of Atascadero City of Buellton City of Capitola City of Carmel-by-the-Sea City of Carpinteria City of Del Rey Oaks City of Goleta City of Gonzales
City of Greenfield City of Grover Beach City of Guadalupe City of Hollister City of Marina City of Monterey
City of Morro Bay City of Pacific Grove City of Paso Robles City of Pismo Beach City of Salinas City of San Juan Bautista City of San Luis Obispo City of Sand City City of Santa Cruz City of Santa Maria City of Scotts Valley City of Seaside City of Soledad City of Solvang City of Watsonville
County of Monterey County of San Benito County of San Luis Obispo County of Santa Barbara County of Santa Cruz
Service Area Map. The service area of 3CE is shown on the map below:

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Governance and Management
Boards of Directors. 3CE is governed by its Policy Board of Directors (the “Policy Board”) and its Operations Board of Directors (the “Operations Board” and, together with the Policy Board, the “Boards”). The Policy Board has the authority to make high-level decisions for 3CE, while the Operations Board oversees the implementation of such decisions. Membership is limited to nineteen seats on each Board, and Board members serve at the pleasure of their respective communities.

A Community Advisory Council provides feedback to the Policy Board and Operations Board on staff recommendations. An Executive Committee and an Audit and Finance Committee, whose members are appointed by the Boards, review and report to the Boards on various matters.

Active and well-informed Boards help ensure that 3CE’s energy procurement, risk management, rate setting, and programmatic activities are aligned with its mission. A Risk Management Committee, chaired by the Chief Executive Officer and comprised of officers of 3CE and members of the Boards, oversees compliance with 3CE’s Energy Risk Management Policy and approves exposures above the levels delegated to the Chief Executive Officer and within the Committee’s delegated authority.

Management.

Robert M. Shaw, Chief Executive Officer. Robert Shaw is the current CEO of Central Coast Community Energy (3CE), one of the largest Community Choice Aggregators in California.

Mr. Shaw is well-versed in finance, rate design, wholesale energy markets, regulatory matters, and emerging energy technologies. Mr. Shaw is committed to working with the agency’s boards and community stakeholders to eliminate the use of fossil fuels for energy generation.

In his most recent role as Chief Operating Officer for 3CE, Mr. Shaw provided oversight for the agency’s Power Supply Resources and Energy Programs departments, procuring more than 1,000 megawatts of new renewable energy storage and generation to serve an approximate 1.5 million population on the Central Coast, and deploying nearly $20 million in energy programs’ commitments to help residents and businesses electrify local building and transportation sectors.

Mr. Shaw has experience leading successful teams across a range of disciplines.

Dewayne Woods, Chief Power Officer. Seasoned administrative executive Dewayne Woods oversees the agency’s Power Services and Regulatory Affairs departments while providing enterprise-level leadership across 3CE’s operations, financial planning, regulatory environment, and strategic priorities.

Mr. Woods brings more than two decades of senior public-sector leadership experience, including more than 23 years with the County of Monterey, where he served as Assistant County Administrative Officer and County Budget Director. Since joining 3CE as Chief Financial Officer in 2023, he has strengthened transparent budgeting and reporting and built a finance team focused on accountability, precision, and service. He holds a Master of Public Administration and a Bachelor of Arts in Political Science from California State University, Chico.

Catherine Stedman, Chief Communications Officer. Catherine Stedman, who joined 3CE in 2022, oversees communications, account services, and energy programs. She leads strategic

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communications, media relations, community engagement, and customer-facing initiatives that support 3CE’s mission to provide affordable, clean energy and create public value for the Central Coast.

Ms. Stedman brings nearly two decades of utility-sector experience in community relations, government affairs, and external communications. Before joining, she led external affairs for California American Water’s Monterey Peninsula district operations for 16 years. Ms. Stedman holds a Master’s degree from the Monterey Institute of International Studies and a Bachelor of Arts in Liberal Studies from Hampshire College.

Chris Rich, Vice President of Business Operations. Chris Rich leads key internal business functions, including Finance, Data, Information Technology, Human Resources, and Facilities, and is responsible for strengthening operating systems, organizational alignment, business planning, performance management, and cross-functional execution.

Mr. Rich brings extensive strategy and operations leadership experience across high-growth and publicly traded technology companies. Before joining 3CE in 2025, he led Business Operations at Aviatrix, a cloud network security company, and held senior operations roles at AppFolio, Lull, and Sonos. His background includes strategic and annual planning, data and analytics, process improvement, enterprise systems, product and go-to-market operations, pricing, and organizational performance. Mr. Rich holds a Master of Public Administration in Public Finance from the University of Southern California and a Bachelor of Arts in English Literature from the University of California, Santa Barbara.

Juan P. Lopez, Director of Finance. Juan Lopez leads the agency’s financial planning, budgeting, accounting, treasury, financial reporting, and internal controls functions. He supports financial strategy and long-term planning, oversees the annual budget and financial statements, manages relationships with financial institutions and external auditors, and provides financial reporting to 3CE’s executive team and governing boards.

Mr. Lopez brings nearly a decade of public-sector finance and budget experience. Before joining 3CE in 2023, he served in progressively responsible roles in the County of Monterey’s County Administrative Office, Budget and Analysis Division, including Principal Administrative Analyst. His work included countywide budget development and reporting, fiscal and operational analysis, enterprise resource planning, debt financings and refundings, and coordination with bond counsel, underwriters, municipal advisors, and credit-rating agencies. He holds a Master of Public Administration from the University of Southern California and a Bachelor of Arts in Political Science from the University of California, Santa Cruz.

Customers
General. 3CE provides energy to more than 515,000 residential, commercial, and industrial meters, serving approximately 1.2 million in its service area. The current mix of 3CE’s customer base is approximately 34.6% residential and 65.4% commercial/industrial/municipal by the percentage of load served.

Customer Energy Choices. 3CE offers two different choices of energy service, referred to as 3Cchoice and 3Cprime. 3Cchoice is the default service provided to customers, and all customers

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are automatically enrolled in 3Cchoice by their local jurisdiction based on customer class and program participation. 3Cchoice includes an energy mix of approximately 35.8% eligible renewables as of 2025, and the Board(s) have adopted a policy to provide 100% by 2030.

Customers may also change their product and opt into 3Cprime after enrolling with 3CE to receive 100% renewable energy at an added cost of $0.008 per kWh.

In calendar year 2025, approximately 99.66% of 3CE’s customers were enrolled in 3Cchoice, representing approximately 97.6% of 3CE’s total retail load delivered. Approximately

0.34% of 3CE’s customers were enrolled in 3Cprime, representing approximately 2.4% of 3CE’s total retail load delivered.

Customer Opt-out of 3CE Service. Customers can opt-out of 3CE service and return to the service of an IOU electric service provider, either initially upon the transition to 3CE or at any time after 3CE becomes the energy provider. There is no charge for opting out of 3CE service sixty (60) days before or after service begins. There is a $5 or $25 opt-out fee for residential and non-residential accounts, respectively, if the customer opts out outside of the sixty (60) day grace period.

Since beginning service in 2018, 3CE has a cumulative opt-out rate of 6.4%. Customers moving into the service area are automatically enrolled in the 3CE service and can opt-out anytime.

There are no assurances that customer behavior with respect to opt-outs will continue in the event 3CE’s costs increase or that 3CE’s customers will not decide to opt-out for reasons unrelated to the cost of service.

Largest Customers. 3CE’s top ten customers represent about 8.1% of its load, with no customer representing more than 1% of its load. Since 2023, no top ten customer has left 3CE’s service.

Service Rates
General. Rates for 3CE energy are approved by its Policy Board and are not regulated by the CPUC. A customer’s total cost of electric service is determined by 3CE’s charges and IOU charges for transmission, distribution, and other non-by-passable charges. Additionally, 3CE customers pay for a power charge indifference adjustment (“PCIA”) and other non-by-passable load charges approved by the CPUC to compensate IOUs for investments in power generation and long-term power purchase contracts associated with when customers transitioned to CCA services.

The PCIA rate can vary annually based on several market factors, including benchmarks for regional energy costs, resource adequacy, and other considerations. Beginning on January 1, 2026, the CPUC implemented a revised methodology for calculating the PCIA, which has produced higher PCIA charges than the prior methodology.

Determination of Rates for Energy. The rates for 3CE customers are designed to ensure revenue sufficiency while providing customers with stable rates that are competitive with those offered by the IOUs. The rates charged by 3CE are based on the cost of providing service.

Current Rate Information. At a special public meeting held on February 11, 2026, the Policy Board approved an average 24% reduction in 3CE’s generation rates, effective February

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15, 2026, reducing the average generation rate from approximately $0.13/kWh to approximately $0.10/kWh. The rate reduction was intended to provide customers with more competitive generation costs while maintaining 3CE’s financial, reserve, and liquidity objectives.

Since adoption of these rates, increases in the Power Charge Indifference Adjustment (“PCIA”), which is established by the California Public Utilities Commission and collected from customers receiving generation service from community choice aggregators, have reduced the overall price advantage previously available to 3CE customers relative to bundled PG&E service.

As a result, depending on customer class, usage, and applicable PCIA vintage, the total generation-related charges paid by certain 3CE customers may currently exceed those that would apply under bundled IOU service.

To address customers for whom rate competitiveness is a primary concern, 3CE established 3CFlex, a program providing eligible customers considering a return to bundled utility service with an additional rate discount. Customer participation in the program has been limited. As of September 1, 2026, 27 of the approximately 516,972 meters served by 3CE were enrolled in 3CFlex, representing approximately 0.005% of meters served. To date, the change in 3CE’s relative price position has therefore not resulted in a material level of participation in 3CEFlex or otherwise indicated a material adverse effect on 3CE’s customer base.

California Renewable Portfolio Standards and Other Regulations General. CCAs such as 3CE are “load-serving entities” (“LSEs”) and, as such, are required to comply with California’s Renewable Portfolio Standard (“RPS”), Resource Adequacy (“RA”) requirements and Power Source Disclosure requirements described below.

Renewable Portfolio Standard. Renewable Portfolio Standard requires LSEs to supply their retail sales with minimum quantities of eligible renewable energy. Senate Bill 100 directs all LSEs to procure 60% of their portfolios from RPS-eligible resources by 2030 and 100% of their retail sales from zero-carbon resources (or eligible renewable resources) by 2045. 3CE has adopted a policy to achieve 100% of retail sales from zero-carbon resources by 2030, fifteen years before the State mandate. In 2025, 3CE’s retail sales contained X% RPS-eligible resources for 3Cchoice service. To date, 3CE has executed +21 power purchase and energy storage contracts of ten years or more in duration. It will continue to solicit and execute additional contracts to meet 3CE’s RPS long-term contracting requirements.

Resource Adequacy. Resource Adequacy, a California program jointly administered by the CPUC, the California Energy Commission (“CEC”), and the California Independent System Operator (“CAISO”), directs LSEs to secure forward capacity and offer it into the CAISO’s Day-Ahead and Real-Time markets to ensure that there will be enough supply in the right locations and with sufficient ramping capability to meet load. The RA program comprises three products:

System RA, Local RA, and Flexible RA. Local RA obligations have been assigned to a Central Procurement Entity starting in 2023. In addition, per CPUC Decision 19-11-016, LSEs are required to procure “Incremental System Capacity,” which is RA capacity that is in addition to the identified resources on the CPUC’s 2022 baseline list of resources.

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3CE has had RA deficiency in September 2020, August and September 2021, September 2022, and July and August 2023, and has since developed a new strategic approach toward RA compliance. Strategies to meet RA compliance include accelerating the buildout of 100% clean and renewable generation and storage projects (including the pursuit of baseload renewables), layering short and long-term RA contracts to hedge against price volatility, developing short and long-term load-shifting strategies that include demand response, and controlling existing traditional dispatchable resources that can perform in each hour of the 24-hour slice-of-day paradigm.

Power Source Disclosure. California law requires LSEs to disclose the types of power resources used to supply retail sales. This mandate, known as the Power Source Disclosure Program (“PSDP”), is a consumer information program the CEC manages annually. The Power Content Label (“PCL”) is a key output of the PSDP. The PCL is an LSE-specific document that shows the breakdown of power resource types for each of the LSE’s energy products used to serve retail load, as well as a breakdown of resource types for the overall California grid. The PCL is distributed to customers each year.

Energy Demand
Long-term Load Forecast. 3CE’s long-term load forecast is a 6-year projection of the energy (reflected in Wh) its customers will consume annually. This forecast is driven primarily by the number and types of customers that 3CE expects to serve, in conjunction with weather projections. 3CE’s long-term load forecast starts with customers’ hourly consumption data and layers in the incremental effects of 3CE programs over time. The short-term estimates (current and following year) are based on a customer’s historical consumption over the last four years, grouped by the month, day of the week, holidays, and hour of the day to predict future usage, along with customer and usage growth trends based on the most recent data available. The forecast layers in the load-building effects of additional electric vehicle deployment (consistent with State goals regarding electric vehicle penetration where applicable) and building electrification, as well as the load-reducing impacts of energy efficiency.

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Sources of Energy
General. 3CE uses a portfolio risk-management approach in its power purchasing program, seeking low-cost supply as well as diversity among technologies, production profiles, project sizes and locations, counterparties, length of contract, and timing of market purchases. 3CE currently has [21] renewable and storage contracts from diversified sources and counterparties, totaling over $[2.7] billion in notional amount of energy contracts to provide energy to its customers over the next 25 years.

Energy Purchases. In [2025], 3CE procured approximately [3.9] million MWh of carbon-free electricity for its customers. 3CE anticipates that roughly [41.25]% of its total [2025] retail sales will be sourced from renewables and large hydroelectric energy. 3CE’s procurement strategy includes regularly procuring new projects to be 100% renewable by 2030 via contracts with terms of 10 years or more. These contracts will be in addition to the 790 MW of new California renewable projects and 410 MW of storage that 3CE has already procured. This strategy includes investments in wholesale storage capacity and stand-alone storage, as further described below.

Energy Load and Supply Risk Management. 3CE manages its forward load obligations and supply commitments pursuant to its Energy Risk Management Policy (the “ERMP”), most recently amended as the Sixth Revision and approved by the Operations Board in November 2025. The ERMP is intended to balance cost stability and cost minimization while preserving flexibility to respond to changing market conditions, customer load, and technological developments. Its objectives include preserving 3CE’s financial health and long-term viability, promoting rate stability, maintaining an “A-” or equivalent issuer credit rating, and managing power supply cost variance within established limits.

The ERMP establishes a risk-management framework that includes segregation of duties among Front, Middle, and Back Office functions. The Front Office develops procurement strategies and hedge plans and executes transactions; the independent Middle Office administers the ERMP, monitors positions and compliance with established limits, validates portfolio information, and reports to the Risk Management Committee; and the Back Office confirms and settles transactions. Third-party scheduling coordinators may support these functions and are required to operate consistent with the ERMP. The ERMP prohibits speculative transactions and requires transactions to be undertaken to hedge an identified underlying position.

Hedging and Position Management. The ERMP establishes minimum and maximum hedge-coverage ranges by product and tenor, including for fixed-price energy, renewable energy, resource adequacy capacity, carbon-free energy, and congestion-related products. Generally, required hedge coverage is greater for nearer-term delivery periods and decreases for longer-term periods, allowing 3CE to maintain greater flexibility as forecast uncertainty increases. 3CE also monitors its renewable energy positions against applicable calendar-year Portfolio Content Category requirements. Compliance with ERMP tolerances is monitored by the Middle Office, with exceedances reported to the Risk Management Committee for review and appropriate remediation. Changes to the tolerance ranges require approval of the Operations Board. 3CE receives regular position and pricing information from its scheduling coordinators, which is independently reviewed by the Middle Office. To manage exposure to CAISO day-ahead

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market prices, 3CE may enter into physical fixed-price purchases and financial fixed-for-floating transactions for volumes and hours not otherwise hedged through its supply portfolio. Certain transactions may require 3CE to post cash or letters of credit as collateral when contractual exposure thresholds are exceeded. See “[LIQUIDITY AND COLLATERAL].” As 3CE procures additional fixed-price renewable generation paired with storage and stand-alone storage, its need for fixed-price unspecified CAISO energy transactions may decline, although the extent and timing of any such reduction will depend on market conditions, load, and Board-approved procurement plans.

Procurement. 3CE procures energy and resource adequacy capacity consistent with the ERMP and applicable Board-approved procurement authority. Depending on the expected term and characteristics of a transaction, 3CE may use competitive solicitations, standard contract offerings, bilaterally negotiated agreements, scheduling coordinators, or independent energy brokers or marketers. Short-term transactions may be negotiated directly where appropriate, including for unique or time-sensitive transactions or in markets with sufficient transparency to support competitive outcomes.

Transactions are executed within the delegation of financial authority established by the Operations Board. Under the current delegation, the Chief Executive Officer may approve qualifying transactions up to $65 million in notional amount and the Risk Management Committee may approve qualifying transactions up to $110 million, in each case subject to applicable maturity, term, and other limitations. Transactions exceeding those delegated limits require Operations Board approval. CAISO market activity is excluded from those notional limits.

4939-1540-5513v5/201010-0002 A-10
Further descriptions of 3CE’s policies and procedures addressing energy procurement and risk management can be found on the 3CE website at www.3cenergy.org. The reference to this website address is presented herein for informational purposes only, and information on such website is not incorporated by reference into this Official Statement.

Energy Storage
3CE currently has approximately 436 MW of wholesale (i.e., in front of the meter) storage capacity contracted over the course of the next ten to twenty years. Of the 436 MW of already contracted storage capacity, approximately 170 MW will be paired with renewables, and 3CE is in the process of preparing and executing additional contracts, including for solar with storage and stand-alone storage.
3CE Data and Technology
3CE’s Data and Technology Department is staffed with six professionals. It follows industry standards and protocols to store valuable data and assets, detect breaches and threats, and respond to and recover from incidents. 3CE follows the principle of least privilege for access management, assigning only the privileges essential to performing an intended function, and it does not store payment method information.
3CE’s Power Services department manages the wholesale generation activities and utilizes industry best practices to manage, monitor, and optimize the energy portfolio. 3CE currently has

4939-1540-5513v5/201010-0002 A-11
twelve internal staff positions, two scheduling coordinators, and many service providers to provide these services for its customers.

Financial Information
Revenues from Energy Sales and Operating Expenses. 3CE derives its operating revenues primarily from energy sales to its customers. The primary driver of changes in energy sales revenue is rate adjustments reflecting changes in the cost of providing electric service, including energy procurement and other operating costs. Additionally, 3CE receives revenue from interest earned from 3CE accounts and dividends from investment accounts.

Financial Statements. For financial information related to 3CE, see the audited financial statements of 3CE for the fiscal years ended September 30, 2025, and 2024 attached to this Official Statement as Appendix B.

Deposit Accounts. 3CE maintains its cash in both interest-bearing and non-interest-bearing demand and term deposit accounts at River City Bank (“RCB”). 3CE’s deposits with RCB are subject to California Government Code Section 16521, which requires collateralization of public funds in excess of the Federal Deposit Insurance Corporation limit of $250,000. 3CE monitors its risk exposure on an ongoing basis. 3CE’s investment policy permits the investment of funds in depository accounts, certificates of deposit, and the Local Agency Investment Fund program operated by the California State Treasury, United States Treasury obligations, Federal Agency Securities, commercial paper, money market funds, and FDIC-insured placement service deposits.

In addition to RCB accounts, 3CE has Fidelity, West Coast Community Bank, JPMorgan Chase, and Charles Schwab accounts as additional sources of liquidity.

Credit Rating. S&P Global Ratings reaffirmed its “A” (stable) issuer credit rating to 3CE in October 2025. The S&P rating reflects 3CE’s strong enterprise and financial risk profile. Solid customer retention and a large customer base with robust income levels were key to the review. In addition, 3CE’s policies and procedures, such as fundamentally robust JPA contracts, robust long-term financial forecasting, and a balanced approach to power supply management and contract procurement, further reduce enterprise risk. 3CE’s strong liquidity and debt-free balance sheet reflect a strong financial risk profile.

Sheppard Draft 26 August 2026

AMENDMENT TO CLEAN ENERGY PURCHASE CONTRACT
This AMENDMENT TO CLEAN ENERGY PURCHASE CONTRACT (this
“Amendment”) is entered into as of [____], 2026, by and between Central Coast Community Energy, a California joint powers authority (“Purchaser”), and California Community Choice Financing Authority, a joint powers authority and a public entity of the State of California established pursuant to the provisions of the Joint Exercise of Powers Act (Article 1, Chapter 5, Division 7, Title 1, Section 6500 et seq. of the California Government Code, as amended) (“Issuer”). Each of Purchaser and Issuer is referred to herein as a “Party” and collectively as the “Parties”.

RECITALS:

WHEREAS, the Parties entered into that certain Clean Energy Purchase Contract, dated as of October 17, 2023 (the “Agreement”), for the purposes and the consideration set forth therein; and
WHEREAS, the Parties have agreed to amend the Agreement as set forth herein.

NOW, THEREFORE, in consideration of the mutual premises and obligations set forth herein, the Parties agree as follows:

Section 1. Definitions. Unless otherwise defined herein, capitalized terms used in this Amendment shall have the meanings ascribed to them in the Agreement.

Section 2. Amendment to Definition of Force Majeure. The definition of Force Majeure in Section 1.1 of the Agreement is hereby amended and restated as follows (with new text double-underlined (e.g., double underlined) and deleted text striked-through (e.g., striked through) for illustrative purposes only):
“Force Majeure” means an event or circumstance which prevents one Party from performing its obligations under this Agreement, which event or circumstance was not anticipated as of the date this Agreement was executed, which is not within the reasonable control of, or the result of the negligence of, the Claiming Party, and which, by the exercise of due diligence, the Claiming Party is unable to overcome or avoid or cause to be avoided; provided that, for the avoidance of doubt, the declaration of “Force Majeure” by an APC Party under a PPA (as defined in an Assignment Agreement) shall constitute Force Majeure hereunder. Force Majeure shall include, provided the criteria in the first sentence are met, riot, insurrection, war, labor dispute, natural disaster, vandalism, terrorism, sabotage.

Force Majeure shall not be based on (i) the loss of Purchaser’s markets; (ii) Purchaser’s inability economically to use or resell the Product purchased hereunder; (iii) the delay, loss or failure of Issuer’s supply; or (iv) Issuer’s ability to sell the Product at a higher price.

Neither Party may raise a claim of Force Majeure based in whole or in part on curtailment by a Transmission Provider unless (x) such Party has contracted for firm transmission with a Transmission Provider for the Product to be delivered to or received at the applicable Delivery Point and (y) such curtailment is due to “force majeure” or “uncontrollable force” or a similar term as defined under the Transmission Provider’s tariff; provided, however,

that existence of the foregoing factors shall not be sufficient to conclusively or presumptively prove the existence of a Force Majeure absent a showing of other facts and circumstances which in the aggregate with such factors establish that a Force Majeure as defined in the first sentence hereof has occurred. Force Majeure invoked by Prepay LLC under the Master Power Supply Agreement shall constitute Force Majeure in respect of Issuer hereunder to the extent the conditions set forth above have been satisfied with respect to Prepay LLC. Notwithstanding the foregoing or anything to the contrary herein, to the extent that an Assignment Agreement is terminated early, such termination shall constitute Force Majeure with respect to Issuer hereunder until the earlier of (I) the commencement of an “Assignment Period” under a replacement Assignment Agreement, (II) the commencement of a J. Aron EPS Energy Period or (III) the end of the first second Month following the Month in which such early termination occurs.

Section 3. Amendment to Definition of CCCE Custodial Agreement. The definition of CCCE Custodial Agreement in Section 1.1 of the Agreement is hereby amended and restated in its entirety to read as follows:
“CCCE Custodial Agreement” means that certain Consolidated, Amended and Restated Custodial Agreement, dated as of [____], 2026, by and among the Project Participant, Issuer, J. Aron and the CCCE Custodian.

Section 4. Amendment to Section 14.1(b)(ii). Section 14.1(b)(ii) is hereby amended and restated as follows (with new text double-underlined (e.g., double-underlined) and deleted text striked-through (e.g., striked through) for illustrative purposes only):
(ii) If For each Month of any Assignment Period, the Billing Statement for this Agreement that assumes all of the prepared by Issuer shall assume that all Assigned Prepay Quantities were delivered under the applicable each Assigned PPA were actually delivered for such Month. In such case, to To the extent that a Monthly Statement (as defined in the CCCE Custodial Agreement) for an Assigned PPA subsequently delivered under the CCCE Custodial Agreement reflects that less than the Assigned Prepay Quantities were actually delivered under any such Assigned PPA, then (A) the previously delivered Billing Statement shall be deemed to be updated in accordance with such Monthly Statement, (B) subject to the application of Section 12(b) of Exhibit C to the Master Power Supply Agreement regarding remediation by Assigned PAYGO Product delivered under any other Assigned PPA in the Month in which an Assigned Prepay Shortfall Amount (as defined in the CCCE Custodial Agreement) occurs, Prepay LLC shall be deemed under the remarketing provisions of the Master Power Supply Agreement to remarket and purchase such undelivered portion of the Assigned Prepay Quantities for its own account resulting in a Ledger Entry (as defined in the Master Power Supply Agreement) and (C) Issuer shall owe a resettlement payment to Purchaser in an amount equal to (I) the product of (x) the applicable APC Contract Price multiplied by (y) the portion of the Assigned Prepay Quantities not delivered in such Month, minus (II) any applicable Remarketing Fees under and as defined in the Master Power Supply Agreement.

The Parties acknowledge and agree that J. Aron shall have a separate resettlement payment obligation with respect to the amounts described in the clause (C) of the preceding sentence under the Electricity Sale and Service Agreement, and J. Aron’s payment of the J. Aron

Resettlement Payment as defined in and pursuant to the CCCE Custodial Agreement shall satisfy the corresponding obligations of the respective parties under each of the Electricity Sale and Service Agreement, the Master Power Supply Agreement and this Agreement.

Section 5. Entire Agreement. Except as expressly modified by this Amendment, all terms of the Agreement remain in full force and effect. This Amendment: (a) shall bind and benefit the Parties and their respective successors and assigns, and (b) shall be modified or amended only in the manner set forth in the Agreement.

Section 6. Counterparts. This Amendment may be executed in counterparts, each of which is deemed an original.
[Signature Page Follows]

Signature Page to Amendment to Clean Energy Purchase Contract IN WITNESS WHEREOF, the Parties have caused this Amendment to be duly executed and delivered by their respective duly authorized officers as of the date first written above.

CALIFORNIA COMMUNITY CHOICE

FINANCING AUTHORITY
By:___________________________________
Name: _____________________________
Title: ______________________________

CENTRAL COAST COMMUNITY ENERGY
By:___________________________________
Name: _____________________________
Title: ______________________________

Staff Report Item 11
TO: 3CE Policy Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Juan Lopez, Director of Finance
SUBJECT: Adopt Resolution No. PB-2026-05 approving the Fiscal Year 2026-27 Recommended Budget and revised FY 2026-27 Financial Policies DATE: September 17, 2026
RECOMMENDATION:

Adopt Resolution No. PB-2026-05 approving the Fiscal Year 2026-27 Recommended Budget and the revised FY 2026-27 Financial Policies.

BACKGROUND:

Annually, 3CE adopts a budget covering the fiscal year from October 1 through September 30. Under 3CE’s two-board structure, the Policy Board approves the annual budget and establishes customer rates.

Attached to the memorandum is the Recommended Budget Book, which outlines detailed information on the Fiscal Year (FY) 2026-27 Recommended Budget, including an Executive Summary, along with the resolution adopting it.

The Policy Board adopted the FY 2026-27 Financial Policies on June 17, 2026. Those policies govern the budget staff has recommended and set the tests it must satisfy, including: a balanced budget aligned to a cost-of-service revenue requirement; minimal reliance on reserves and one-time revenue for ongoing operations; an operating contingency equal to five percent of appropriations excluding cost of energy (COE); and a long-term credit rating objective of A+/A1 or higher. After the March–April mid-year financial forecast, each department submitted a baseline spending plan and augmentation requests for new staffing, programs, and capital. The CEO reviewed and prioritized those requests within the constraint of a balanced budget as governed by the Financial Policies.

The Audit and Finance Committee received the Recommended Budget at its August 26, 2026 regular meeting and recommended that the Policy Board adopt it. No changes have been made to the

Recommended Budget since that review. The Operations Board will receive the Recommended Budget and the revised Financial Policies at its September 16, 2026 regular meeting.

DISCUSSION/ANALYSIS:
3CE’s mission is to deliver reliable, clean, and affordable electricity, along with electrification programs that reduce greenhouse gas emissions and strengthen the local economy. The Recommended Budget is that mission expressed in dollars. It appropriates $500.7 million, financed by $515.3 million in estimated revenues; it is balanced, requires no use of reserves, and is projected to add approximately $14.6 million to net position, continuing to strengthen reserves. Appropriations are $87.7 million, or 14.9 percent, below the FY 2025-26 Adopted Budget.

Summary of the Recommended Budget
Detailed schedules, department narratives, and the position schedule appear in the FY 2026-27 Recommended Budget book.

The Recommended Budget
Cost of Energy
At $432.7 million, the Cost of Energy (COE) is 86 percent of appropriations and the least discretionary part of the budget: the electricity, capacity, and compliance attributes that serve 515,000 customer accounts across 35 member agencies and five counties. COE is down $102.1 million from the prior-year Adopted Budget, and that decline accounts for almost the entire $87.7 million reduction in total appropriations. Two forces explain it, and they are not equally durable. The first is contractual and lasting: four projects reached commercial operation in 2026, doubling the share of retail load served by 3CE’s own operating resources from roughly a quarter to more than half. That load is now priced under long-term agreements rather than subject to spot-market volatility. The second is market conditions, including lower energy market prices and decreased Resource Adequacy and Renewable Portfolio Standard attribute costs, which are favorable today but could reverse.

Non-Energy Costs – Investing in Staffing, Programs, and Capital Assets The remaining 14 percent of appropriations funds the people, programs, advocacy, and facilities through which 3CE delivers the rest of its mission. Non-COE appropriations total $68.0 million, which includes $6.9 million in one-time capital outlay and staffing growth from 59 to 72 Full-Time Equivalent (FTE).

These investments reflect a maturing agency. 3CE has finished extending into its service territory and now operates a portfolio it spent years assembling; the work ahead is to run what it has built well and to invest in the next generation of community energy.

The Recommended Budget includes $18.2 million for salaries and benefits, funding the people who turn a renewable portfolio into reliable, clean, and affordable service. The new positions do the work the portfolio creates (settling deliveries, administering contracts, validating counterparty charges, and forecasting results) work that scales with the operating portfolio and determines whether customers see the savings the portfolio was built to produce. They also provide initial staffing for the Department of Energy Solutions, whose first-year scope is deliberately modest: evaluating local generation and storage sites, providing member-agency technical support, and delivering the agency's capital projects. The same appropriation sustains the team already in place, funding competitive salaries and the benefits behind two consecutive Great Place to Work certifications while absorbing rising employer health care premiums. The investment repositions the agency to its current scale, from a young agency assembling a portfolio to a mature one operating it, rather than a new growth rate.

The Recommended Budget includes $42.8 million for services and supplies. Energy programs and advocacy carry the part of the mission that reaches customers directly. Energy programs remain the largest non-COE commitment, sustaining incentives across transportation, building, and agricultural electrification while adding bidirectional charging and virtual power plant operations that return capacity to the grid. Government and community relations invests further in federal presence; advocacy is a cost-control function as much as a policy one, as the procurement-order revisions 3CE secured this year — expected to avoid an estimated $1.6 billion over ten years — demonstrate. The Recommended Budget further funds customer experience and call center capability and agencywide artificial intelligence enablement, and holds the operating contingency at $3.5 million, five percent of non-COE appropriations, as the Financial Policies require.

Capital outlay of $6.9 million marks 3CE’s transition to owning facilities and infrastructure. Of that amount, $4.3 million advances a permanent headquarters, including funding for land acquisition, planning, permitting, and entitlement work, which aligns with Section 5.4 of the Financial Policies, which directs 3CE to secure permanent facilities that provide continuity of operations while stabilizing facility costs into the future. The remaining $2.6 million funds the first 3CE-owned public EV charging stations in Santa Maria and Monterey, preliminary local generation and storage design, and office and technology improvements across the agency’s four workplace locations.

These are the first investments of the owned-asset strategy the Department of Energy Solutions will carry forward, and they extend the mission from buying energy to owning and developing it: a purchased megawatt is a cost that recurs every year at whatever the market dictates, while an owned asset is a balance-sheet investment that builds local infrastructure and resilience on the Central Coast and returns value to customers for decades. Every figure is a planning-level estimate, and each project returns to the Policy Board or Executive Committee with its own funding and financing analysis before it proceeds.

Composition of FY 2026-27 appropriations by account type.

Pending Rate and Regulatory Outcomes
3CE sets rates to recover its cost of service, so lower energy costs flow through to customers rather than to the agency. That relationship is what allowed the Policy Board to reduce generation rates by an average of 25 percent across customer classes in February 2026, savings customers are receiving today.

The budget assumes no rate change. It is built on the current electric generation rates, which remain in effect under Resolution No. PB-2026-01, and staff will bring proposed 2027 rates to the Policy Board in March 2027. It also assumes no outcome from the regulatory decisions still pending: the CPUC’s 2027 Power Charge Indifference Adjustment (PCIA) decision and the Energy Resource Recovery Account (ERRA) proceedings that set IOU generation rates are not expected until the fall. Deferring the rate recommendation until those decisions are known is deliberate.

Reserves and Liquidity
3CE expects to close FY 2025-26 with approximately $320 million in unrestricted liquidity, roughly 233 days of cash on hand, and about 64 percent of budgeted annual expenditures, against the 180-day liquidity-on-hand target. That position was built through disciplined cost management and lower COE, not rate increases, and it allows the agency to hold rates stable through a volatile regulatory year. As FY 2025-26 concludes and year-end results solidify, staff will bring a multi-year reserve funding plan to the Boards during the year to formalize the allocation and support the pursuit of an A+ rating.

Revised FY 2026-27 Financial Policies
In preparing the budget for adoption, staff identified that the Financial Policies adopted in June assign defined financial responsibilities to a Chief Financial Officer (CFO), a position 3CE is not planning to fill in 86% 9%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
FY 2026-27
Cost of Energy — $432.7M (86%) Salaries and Benefits — $18.2M (4%) Services and Supplies — $42.8M (9%) Capital Assets — $6.9M (1%)

FY 2026-27, given shifting roles, responsibilities, and capabilities needed to lead 3CE in executing the strategic direction defined in this budget. Staff has therefore revised the policies to assign most of the CFO responsibilities to the Policy Board-appointed Treasurer. The revision is presented for adoption concurrently with the budget so the agency begins the fiscal year on October 1, 2026 with clean, current policy authority.

The revision is narrow and administrative. It reassigns to the Policy Board-appointed Treasurer the duties the June policies assigned to a Chief Financial Officer, with conforming changes to Sections 2.1,

3.3, 5.6, 8.3, and 8.4; redlined and clean versions are attached. Because the Recommended Budget document went to print before the revision was finalized, the Financial Policies reflect the June version; the resolution provides that the attached revised policies control in the event of any inconsistency.

FISCAL IMPACT:

The Policy Board’s adoption of the FY 2026-27 Recommended Budget funds $500.7 million in appropriations financed by $515.3 million in estimated revenues, allowing 3CE to continue operations with a balanced budget. Appropriations are $87.7 million, or 14.9 percent, below the prior-year Adopted Budget, driven primarily by a $102.1 million reduction in the cost of energy, with revenues declining $71.9 million as those savings and current rates hold for customers. The budget requires no use of reserves and is projected to add approximately $14.6 million to net position. No rate increase is anticipated to fund these appropriations.

CONCLUSION:

It is recommended that the Policy Board adopt Resolution No. PB-2026-06 approving the FY 2026-27 Recommended Budget and the revised FY 2026-27 Financial Policies. The budget is balanced, complies with the Financial Policies, expects to hold customer rates stable, and funds the staffing, programs, and capital investment required to operate the agency and its portfolio. It reinforces prudent energy portfolio management that serves the Central Coast, sustains electrification programs that reduce emissions, and extends the agency into owned local assets, advancing the energy transition on terms 3CE’s customers can afford.

ATTACHMENTS:

1. Resolution No. PB-2026-05 — Attachment A: FY 2026-27 Recommended Budget; Attachment B:

Revised FY 2026-27 Financial Policies (redline and clean)

2. FY 2026-27 Recommended Budget Book

2 About the cover: SunZia Wind, the largest renewable energy infrastructure project in U.S. history, is delivering clean, reliable power across the West.

Through its long-term commitment to receive 255 megawatts of energy from the project, 3CE helped make this landmark wind resource possible for the communities we serve. Photo Credit: Pattern Energy

Table of Contents
3 4
6 7
Leadership,
Community,
and Staff
Introduction
8 9
10 11
12 16
Policy Board
Operations Board
Community Advisory Council
About the Budget Process
Annual Highlights 2025-26
Organization Chart
Executive Letter
About 3CE
Our Boards
3CE Staff Positions Schedule
Executive Summary
Office of the CEO
Office of the General Counsel
Office of the COO
• General Services
• Finance
• Energy Risk Management
• Data Analytics & Information Technology
Office of the CPO
• Power Services
• Energy Solutions
Office of the CCO
• Customer Success
• Regulatory & Compliance
• Government & Community Relations
• Energy Programs
Energy Programs Overview
Financial Policies
Definition of Terms
FY 2026-27
Budget
Presentation
Office and
Department
Summaries
Appendices
17 20
26 28
30 36
40 48
50 58

Executive Letter
4 Dear Board Members, Customers,
and Community Partners,
The Board set an ambitious vision for Central Coast
Community Energy. Together we envisioned an
organization that would do more than procure clean
electricity. We set out to build a public power agency
that delivers affordable, reliable service, invests
in local communities, shapes energy policy, and
equips our customers with the tools to participate in
California’s clean energy future.

Today, that vision is taking shape.

This past year reminded us that progress is rarely
linear. The California Public Utilities Commission’s
decision to dramatically increase the Power Charge
Indifference Adjustment (PCIA) exacerbated the
affordability crisis for Californians. To support
customers, the Policy Board took decisive action
to reduce rates below the investor owned utilities
and we made a deliberate decision to engage
directly with our communities. Through proactive
communications, transparent public education,
and targeted outreach to customers, local officials,
and community partners, we helped customers
understand not only what was changing, but why.

Despite these unprecedented market pressures, 3CE
maintained its market share — a testament to the
trust we have built through years of transparency and
community engagement.

At the same time, our long-term planning and
investment are yielding tangible results.

Several of the clean energy projects we committed
to years ago entered commercial operation during
the past year, adding approximately 348 megawatts
of new renewable generation and 85 megawatts of
energy storage to California’s electric grid. These
projects represent more than infrastructure, they
demonstrate that community choice agencies are
leading the development of new clean energy
resources while supporting grid reliability.

Our work extends well beyond power procurement.

Throughout the year, 3CE continued to advocate
for policies that protect our customers and
strengthen California’s energy future. We remained
deeply committed to meaningful engagement in
state regulatory proceedings affecting electricity
affordability, resource adequacy, and PCIA reform
while working with legislators and industry partners
to advance practical solutions that balance reliability, affordability, and California’s clean energy goals.

Ensuring that local communities have a meaningful
voice in statewide energy policy remains one of the
most important responsibilities entrusted to us by our
member communities.

Internally, we have also continued to evolve.

As the agency has matured, our focus has expanded
from building an energy portfolio to building an
organization capable of delivering lasting value
directly within our communities. This year, we are
building a new Department of Energy Solutions,
which represents a commitment to integrate local
project development into our power portfolio and
the next phase of 3CE’s evolution. The department
will position 3CE to complement its core business of
procuring utility-scale clean energy with a growing
portfolio of local energy initiatives. Through our
shared vision and ambition, 3CE will soon be
developing local energy projects, managing strategic
assets, supporting member agencies with technical
expertise, and delivering innovative energy solutions
that improve resilience, strengthen local economies,
and create long-term value for our customers.

Looking back, I am proud of how much we have
accomplished together. The strategic priorities
we established several years ago — expanding
renewable energy resources, maintaining competitive
rates, investing in innovative customer programs,
strengthening our financial foundation, and
becoming a stronger voice in California energy policy
— are no longer aspirations. They have become
defining characteristics of this organization.

Looking ahead, our work is far from complete.

California’s energy landscape continues to evolve
rapidly, bringing new opportunities and new
challenges. We remain committed to delivering
affordable, reliable, and increasingly clean electricity while helping our communities navigate that
transition with confidence. We will continue investing
in local energy solutions, advocating for fair and
effective public policy, and ensuring that the benefits of the clean energy economy are realized here on the
Central Coast.

None of this would be possible without the vision
of our Board of Directors, the dedication and
professional expertise of our employees, and the
trust of the communities we serve. Thank you for your
continued partnership as we build the next chapter
of Central Coast Community Energy.

With gratitude,
September 2026
Robert M. Shaw, Chief Executive Officer
Central Coast Community Energy Page 487 of 564
5 Page 488 of 564
About 3CE
6 Central Coast Community Energy (3CE) is a Community Choice Aggregator (CCA) — a local public agency working to accelerate the transition to 100% clean and renewable energy.

Guided by our Boards and supported by professional staff, we serve customers across the Central Coast by providing reliable, clean, and affordable electricity, along with electrification programs that reduce greenhouse gas emissions and strengthen our local economy. 3CE comprises 35 member agencies across five counties. The agency serves over 1.2 million people through more than 515,000 customer accounts representing approximately 95% of the region’s electricity load. In Fiscal Year 2026-27, 3CE’s projected peak load is 892 MW, and we expect to deliver approximately 5.395 million MWh of electricity to a mix of residential, commercial, and industrial customers.
3CE supports electrification in transportation, agriculture, and the built environment through our innovative, customer-focused energy programs and invests in new renewable energy projects to bring more clean energy onto the grid. In partnership with our customers, 3CE is strengthening grid resilience and advancing a cleaner, more sustainable future for the Central Coast.

7 Our Boards
3CE is governed by two boards that work to guide the agency’s mission and operations: our Policy Board and Operations Board. Together, they provide oversight and leadership on behalf of our 35 member agencies, with each board composed of 19 appointed representatives.

The Policy Board of Directors is made up of local elected officials appointed by their respective jurisdictions. This Board is responsible for setting the agency’s strategic direction through informed oversight, approving the annual budget, establishing customer rates, and authorizing major non-energy capital expenditures.

The Operations Board of Directors includes senior city and county executives from 3CE’s member agencies. The Operations Board ensures policies are effectively implemented, provides day-to-day guidance, and approves contracts and agreements.

This two-board structure ensures that both community priorities and operational expertise shape 3CE’s decisions and long-term planning. 7 Page 490 of 564
Policy Board
Dawn Ortiz-Legg
Vice Chair
County of San Luis Obispo
Fred Keeley
Chair
City of Santa Cruz
Bruce Delgado
City of Marina
Joan Hartmann
County of Santa
Barbara
Dolores Morales
City of Hollister
Alice Patino
City of Santa Maria
Kate Daniels
County of Monterey
Open Seat
City of Grover Beach
Jose Luis Barajas
City of Salinas
Monica Martinez
County of Santa Cruz
8 Angela Curro
County of San Benito
David Silva
City of Buellton
Tyller Williamson
City of Monterey
Robert White
City of Greenfield
Derek Timm
City of Scotts Valley
Carla Wixom
City of Morro Bay
Charles Bourbeau
City of Atascadero
Wade Nomura
City of Carpinteria
Jimmy Dutra
City of Watsonville

Operations Board
Jim Lewis
Vice Chair
City of Atascadero
Matt Huffaker
Chair
City of Santa Cruz
Matthew Bronson
City of Grover Beach
Scott Wolfe
City of Buellton
Sonia de la Rosa
County of Monterey
Dante Hall
City of Monterey
Matt Mogensen
City of Marina
Mali LaGoe
City of Scotts Valley
Esparanza Colio-Warren
County of San Benito
Peter Imhof
City of Goleta
Rene Mendez
City of Salinas
Matt Pontes
County of San Luis
Obispo
Ana Cortez
City of Hollister
John Craig
City of Morro Bay
Megan Hunter
City of Soledad
Kimberly Petersen
County of Santa Cruz
Jana Petersen
County of Santa
Barbara
David W. Rowlands
City of Santa Maria
Tamara Vides
City of Watsonville
9 Page 492 of 564
1010
Community Advisory Council
Gine Johnson
Chair
County of Santa Cruz
Norman Tuitavuki
Vice Chair
County of Monterey
The Community Advisory Council (CAC) is composed of community members serving three-year terms. The Council currently has five vacancies, with new appointments considered by the Policy Board at the annual meeting. The CAC provides valuable input on energy programs and outreach strategies, helping to strengthen the connection between 3CE and the diverse communities we serve across the Central Coast.

Lew Bauman
County of Monterey
Jason Sedano
County of Monterey
Rosemary Soto
County of Monterey
Celina Stotler
County of San Benito
Ivor John
County of Santa Barbara
Kris Damhorst
County of Santa Cruz
Dennis Osmer
County of Santa Cruz

11 About the Budget Process
3CE’S ANNUAL BUDGET

IS DEVELOPED THROUGH

A FIVE-STAGE PROCESS

1. Budget Initiation
Mid-year Forecast 2.

Budget Development 3.

4. Budget Adoption
Budget Management 5.
3CE’s annual budget cycle begins with budget
initiation and a mid-year update to the three-year
financial forecast. The updated forecast informs
departmental budget proposals for the coming
fiscal year, including baseline operating needs and
requests for new or increased funding.

The CEO reviews and prioritizes these proposals
based on the reasonableness of financial
assumptions, demonstrated organizational
benefit, and alignment with Policy Board priorities.

This process results in a fiscally responsible
Recommended Budget that advances 3CE’s
mission, strategic priorities, and reliable operations
in the coming year.

The Recommended Budget for Fiscal Year 2026-27
will be reviewed by the Audit & Finance Committee
and the Operations Board before being presented
to the Policy Board for consideration and possible
adoption at its September 17, 2026, meeting.
• Departments
provide current-year estimates
and forecast
market outlook.
• Boards and
Audit & Finance
Committee
receive forecast.
• Departments
submit baseline
budget and
augmentation
requests.
• Policy Board
approves the
Financial Policies.
• Audit & Finance
Committee receives
the Recommended
Budget.
• Operations Board
receives the
Recommended
Budget.
• Policy Board
considers
adoption of the
Recommended
Budget.
• Management
monitors
expenditures
and estimated
revenues.
• Boards and
Audit & Finance
Committee
receive monthly
and quarterly
financial reports.

MID-YEAR

FORECAST
(MARCH-APRIL)
BUDGET

DEVELOPMENT
(MAY-AUGUST)
BUDGET

ADOPTION
(SEPTEMBER)
BUDGET

MANAGEMENT
(ONGOING)

12 12
ANNUAL

HIGHLIGHTS
2025-26

13 POWER SUPPLY RESOURCES

FINANCE
Aratina Solar & Storage Project
Comes Online
Another large-scale California clean energy
project has come online, in part due to 3CE’s
support. Aratina 1 in Kern County will provide
enough energy to power 93,000 homes statewide,
delivering 120 MW of solar power and 75 MW of
energy storage to 3CE customers. Altogether, this
project will deliver long-term contributions toward
3CE’s 100% clean and renewable energy goal.
3CE Extends Geothermal
Agreement through 2032
3CE extended its agreement with the Mammoth
Casa Diablo IV Geothermal Project, providing
customer access to round-the-clock renewable
energy. In addition to powering 22,000 homes
and offsetting 160,000 tons of carbon emissions,
this project brought over $13 million in economic
benefits to the Mammoth Lakes region and
created more than 180 construction jobs.

Innovative Partnership Generates
Local Renewable Energy
In partnership with ReGen Monterey, 3CE began
generating renewable energy locally through an
innovative landfill gas-to-energy biomass facility
that captures harmful emissions and uses them
to generate energy. Electricity generated from
landfill gas provides steady, around-the-clock
power.
3CE Policy Board Votes to Lower
Generation Rates
On February 11, 3CE’s Policy Board voted
to lower rates by an average generation rate
decrease of 25% across customer classes,
reflecting lower costs in the energy market,
disciplined financial management, and a
commitment to return savings directly to
customers. This decrease followed increases in
investor-owned utility fees, such as the Power
Charge Indifference Adjustment.

Reduced Energy Costs through
Second Prepayment Transaction
The Finance team initiated 3CE’s second energy
prepayment transaction on its PPA portfolio to
reduce future energy costs.

OPERATIONS
3CE Again Earns Great Place to
Work Certification
For the second consecutive year, 3CE achieved
Great Place to Work Certification through Our
Best Workplaces™. As 3CE works to fill open
positions, recognition as an employer of choice
will help attract and retain talent.
3CE Opens New Regional Santa
Barbara Office and Relocates
Headquarters
In addition to relocating its main office in
Monterey, 3CE celebrated the opening of its
new regional office in downtown Santa Barbara.

Located near the County Administration
Building, City Hall, and key community partners,
the new office gives 3CE a home base in the
region’s largest city with a place to listen,
collaborate, and work more closely with the
South County communities it serves.

14 GOVERNMENT &

COMMUNITY RELATIONS
3CE Staff Learn, Share, and
Collaborate at Annual CalCCA
Conference
3CE staff joined more than 1,000 energy leaders,
innovators, and policymakers in Sacramento
for the 2026 CalCCA Annual Conference. CEO
Robert Shaw moderated a high-profile panel
on California’s 2026 legislative agenda while
Energy Programs Analyst Paige Callaghan and
Director of Government & Community Relations
Das Williams shared their expertise through
presentations.

Passage of the Clean Energy Safety
Act
Secured passage and signing of the Pathways
Initiative (AB 825) and the Clean Energy Safety
Act (SB 283) through sustained advocacy in the
final weeks of the legislative session, including
stakeholder and coalition outreach, letters of
support, and in-person canvassing of Senate and
Assembly offices.

PCIA Transparency and Hourly RA
Trading
Staff advocated for two pieces of sponsored
legislation, including AB 1761 (PCIA transparency,
Assemblymember Rogers) and SB 1138 (hourly
RA trading, Senator Padilla) by meeting with
legislators, committee staff, and stakeholders
to advance 3CE’s broader agenda on large load
interconnection, Diablo Canyon Nuclear Power
Plant, CCA autonomy, and more.

EMISSIONS
689,890 Metric Tons of CO2 Emissions
Avoided through PPAs & Electrification
Equivalent to removing 60,920 gasoline-powered
passenger vehicles from the road for a year.

REGULATORY
CPUC Advocacy Resulted in $1.6
Billion Reduction to Procurement
Costs
Successfully advocated for revisions to a California
Public Utilities Commission (CPUC) procurement
order, resulting in an estimated $1.6 billion in
avoided procurement costs over 10 years by
aligning the order with resources already within
3CE’s portfolio.

First CCA to Secure BioMAT
Program
Led 3CE’s participation in the CPUC’s Bioenergy
Market Adjusting Tariff (BioMAT) Program,
becoming the first CCA to secure a project and
apply for cost recovery through the program.

BioMAT receives procurement funding through
a Public Purpose Program fund — a cost that
all Californians pay into, but from which CCA
customers had not previously received benefits.

Continued Progress on PCIA
Reform
Successfully reduced mid-year changes to the
2026 Power Charge Indifference Adjustment and
established a venue with the CPUC for broader
reform efforts for the 2027 Forecasted PCIA and
beyond.
14 Page 497 of 564
15 CUSTOMER SUCCESS
Brought Energy Bill Relief to Rural
Communities
Committed to addressing customer needs and
meeting them where they are, 3CE staff hosted
events in rural communities to provide bill
assistance and solutions that ease the burden of
energy costs. The Greenfield event took place at
an apartment community with units set aside for
income-qualified and farmworker households,
providing Spanish-language support for those who
needed it.

Advanced Customer Intelligence
Advanced Customer Intelligence by
connecting accounts, people, interactions,
customer inquiries, and energy program
participation data into structured customer
hierarchies, creating a more complete
organizational view of key customers and
reducing dependence on manual reports
and institutional knowledge.

PCIA Outreach & Education to
Strategic Accounts
Directed proactive outreach to 250 strategic
accounts ahead of the January PCIA increase,
delivering targeted customer education and
relationship-based support that helped retain
customers, reduce customer uncertainty, and
deepen engagement with key contacts.

ENERGY PROGRAMS
Electrify Your Home Program
Adds Renter-Friendly Offerings
In the prior fiscal year, 3CE hosted community
workshops to gather community input about
the Electrify Your Ride Program. The resulting
program updates — adding induction
cooktops and ranges as well as heat pump
space conditioners — provide more choices
for customers plus a renter-friendly option for
heating and cooling.

Pilot Project Powers Community
Benefits through Public Chargers
In partnership with the City of Santa Maria,
3CE launched a pilot program to own and
operate EV charging infrastructure across the
Central Coast, expanding access to affordable,
reliable public charging in high-use community
locations.

Electrify Your Ride Expands
Offerings and Impacts
3CE expanded its Electrify Your Ride (EYR)
Program, adding rebates for bi-directional
chargers. This two-way charging capability
helps customers maximize EV investment by
supporting energy resilience, grid reliability,
and smarter home energy use. Since 2021, EYR
has helped nearly 4,000 residential customers
purchase or lease an EV, saving them more than
$9 million.

Electric Bus Program Drives
Clean Public Transportation
Infrastructure
3CE staff continues to build relationships
and collaborate with Member Agencies.

In November 2025, the Electrify Your Fleet
program awarded $350,000 toward four
electric transit buses for the San Luis Obispo
Regional Transit Authority. These buses
benefit passengers, the environment, the city’s
bottom line, and expand clean transportation

16 16
Organization Chart
Policy & Operations Boards
Chief Executive
Officer
General Counsel
Office
Operations Office Power Office Customer Office
Finance
Department
Data Analytics & IT
Department
Energy Risk
Management
Department
General Services
Department
Energy Solutions
Department
Power Services
Department
Communications &
Government Relations
Department
Energy Programs
Department
Regulatory
& Compliance
Department
Customer Success
Department

17 3CE Staff Positions Schedule
Office/Department Position Title FY
2024-25
FY
2025-26
FY
2026-27
Change from
Prior Year
Office of the
CEO
Chief Executive Officer 1 1 1 0
Board Clerk 1 1 1 0
Principal Management Analyst 0 1 1 0
To Be Determined 1 0 0 0
Total Positions 3 3 3 0
Office of the
General Counsel
General Counsel 1 1 1 0
Deputy General Counsel 1 1 0 -1
Total Positions 2 2 1 -1
Office of the
COO
Chief Operating Officer 1 1 1 0
General Services Director of General Services 1 1 1 0
Senior Manager of Human Resources 0 0 1 1
Facilities Coordinator 0 0 1 1
Human Resources Analyst 1 1 2 1
Administrative Specialist 1 1 1.5 0.5
Subtotal 4 4 7.5 3.5
Finance Director of Finance 1 1 1 0
Controller 0 0 1 1
Senior Accountant 1 1 1 0
Accountant 1 1 1 0
Administrative Specialist 1 1 1 0
Financial Planning and Analysis Analyst 0 0 2 2
Senior Billing Operations & Rates Analyst 1 1 1 0
Billing Operations & Rates Analyst 1 1 1 0
Subtotal 6 6 9 3
Energy Risk
Management
Director of Energy Risk Management 1 1 1 0
Energy Risk Analyst 1 2 2 0
Subtotal 2 3 3 0
17 Page 500 of 564
18 Office/Department Position Title FY
2024-25
FY
2025-26
FY
2026-27
Change from
Prior Year
Data & IT Director of Data Analytics and IT 1 1 1 0
Manager of Information Technology 1 1 1 0
Data Analyst 1 1 1 0
Data Engineer 1 1 1 0
Business Applications Developer 0 1 1 0
Information Technology Specialist 1 1 1 0
Subtotal 5 6 6 0
Total Positions 17 19 25.5 6.5
Office of the CPO Chief Power Officer 1 1 1 0
Power Supply Director of Power Supply Resources 1 1 1 0 Manager of Planning & Portfolio
Management 1 1 1 0
Manager of Market Operations 1 1 1 0
Power Resources & Markets Manager 1 1 1 0
Power Resources Planner 2 2 2 0
Contract Lifecycle/Commerical
Operations Manager 0 0 1 1
Power Supply Asset Manager 1 1 1 0
Manager of Settlements 0 0 1 1
Energy Transaction & Portfolio Analyst 0 0 1 1
Power Supply Analyst 1 1 1 0
Settlements Analyst 2 2 2 0
Administrative Specialist 0 0 0.5 0.5
Subtotal 11 11 14.5 3.5
Energy Solutions Director of Energy Solutions 0 0 1 1
Manager of Project Delivery 1 1 1 0
Manager of Business Development 0 0 1 1
Subtotal 1 1 3 2
Total Positions 12 12 17.5 5.5
3CE Staff Positions Schedule

19 Office/Department Position Title FY
2024-25
FY
2025-26
FY
2026-27
Change from
Prior Year
Office of the CCO Chief Customer Officer 1 1 1 0
Customer Success Director of Customer Success 1 1 1 0
Manager of Customer Accounts &
Services 1 1 1 0
Senior Customer Accounts Manager 2 2 2 0
Customer Accounts Manager 2 2 2 0
Administrative Specialist 1 1 1 0
Subtotal 8 8 8 0
Regulatory &
Compliance
Director of Regulatory Affairs &
Compliance 1 1 1 0
Senior Policy Advisor 0 0 1 1
Policy Advisor 2 2 2 0
Subtotal 3 3 4 1
Government
& Community
Relations
Director of Government & Community
Relations 0 1 1 0
Manager of Communications 1 1 1 0
Community Relations Manager 2 2 2 0
Communications Specialist 2 2 2 0
Subtotal 5 6 6 0
Energy Programs Director of Energy Programs 1 1 1 0
Manager of Energy Programs 1 1 1 0
VPP Programs Manager 0 0 1 1
Energy Programs Analyst 4 4 4 0
Subtotal 6 6 7 1
Total Positions 22 23 25 2
3CE GRAND TOTAL 56 59 72 13

Executive Summary
20 Introduction
Fiscal Year (FY) 2026-27 will mark another year of progress for Central Coast Community Energy (3CE), as the agency now serves more than 1.2 million people and 515,000 customer accounts across residential, commercial & industrial, and agricultural industries. We are proud to be the energy provider for these customers and communities, working hand in hand with 35 local agencies in five counties to serve approximately 95% of our region’s total electricity load.

The Recommended Budget aligns 3CE’s resources with its mission: to deliver reliable, clean, affordable electricity and electrification programs that reduce greenhouse gas emissions and strengthen the local economy. That mission places 3CE at the center of California’s energy transition — and carries a corresponding commitment to make that transition affordable for the customers who fund it. Guided by Financial Policies adopted annually by the Policy Board, this budget reflects proactive strategic and financial stewardship: investing in 3CE’s growth and protecting affordability, while navigating and shaping an uncertain regulatory environment, to deliver the best outcomes for our customers and stakeholders.

The Recommended Budget totals $500.7 million in appropriations, funded by $515.3 million in projected revenues.

The budget is balanced and is projected to add approximately $14.6 million to net position — strengthening reserves while maintaining rates stable for customers. Total appropriations are $87.7 million (14.9%) below the prior-year Adopted Budget, driven almost entirely by lower cost of energy (COE). Given these market conditions, 3CE can invest in the agency’s service commitment to customers, which includes continued progress on our renewable goals and ensuring fair and stable customer rates. These investments show up as robust energy contract administration, building internal capabilities to reduce reliance on outside vendors, promoting engagement through market driven energy programs, developing 3CE owned generation assets, and enhancing 3CE’s legislative and regulatory advocacy.

That choice is disciplined by three investment commitments that run through this budget and through the agency’s Financial Policies:
• Investing in growth: the staffing, programs, and portfolio that let 3CE operate at the scale it has reached; • Investing in robust fiscal discipline: the reserves, risk controls, and owned assets that let the agency withstand market and regulatory shocks; and • Investing in affordability: holding rates stable, building long-term value, and promoting local economic investment, as well as helping customers lower their overall energy costs through electrification.

How the Budget Was Built
The Recommended Budget is the product of 3CE’s five-stage annual process, developed within the framework of the Financial Policies the Policy Board adopts each year. Those policies set the agency’s guiding commitments; a balanced budget aligned to a cost-of-service revenue requirement, minimal reliance on reserves for ongoing operations, stable and fair rates, and quantified liquidity and credit-rating targets. Following the mid-year forecast, each department submitted a baseline spending plan — the cost to continue current operations — along with augmentation requests to staff new functions and business lines, for programs, and capital projects. The CEO reviewed and prioritized these submissions based on accuracy, demonstrated benefit, and alignment with Policy Board priorities. The result is a comprehensive and balanced recommendation.

FY 2025-26 Budget Summary
Prior Year
Actuals
2024-25
Adopted
Budget
2025-26
Mid-Year
Estimate
2025-26
Recommended
Budget
2026-27
Recommended
Change from
Adopted
Net Electricity Sales 658,974,802 578,022,716 555,527,132 505,582,881 (72,439,835) Deferred Revenue - - (39,527,962) - -
Interest and Investment Returns 11,037,533 9,100,000 9,942,617 9,450,000 350,000 Other Income 159,518 75,000 136,849 250,000 175,000
Revenue for Damages 8,101,745 - - - -
Sub-Total Revenues 678,273,598 587,197,716 526,078,636 515,282,881 (71,914,835) Capital Infrastructure Reserve - 1,200,000 6,741,324 - (1,200,000) Total Financing Sources 678,273,598 588,397,716 532,819,960 515,282,881 (73,114,835) Cost of Energy 593,415,108 534,776,256 452,043,477 432,693,327 (102,082,929) Salaries and Employee
Benefits 10,765,707 14,260,774 12,601,420 18,235,160 3,974,386 Services and Supplies 29,288,173 38,160,686 36,211,516 42,790,622 4,629,936 Capital Assets 276,648 1,200,000 383,219 6,941,500 5,741,500 Total Financing Uses 633,745,636 588,397,716 501,239,632 500,660,609 (87,737,107) Total Budgeted Change to
Net Position 44,527,962 0 31,580,328 14,622,272 14,622,272 Cost of Energy: Understanding the Decline
COE is 3CE’s largest and most volatile expense, comprising 86% of total appropriations. COE covers the electricity needed to serve customer load, regulatory compliance products such as Resource Adequacy (RA) and Renewable Portfolio Standard (RPS) attributes, as well as grid-operation services managed by the California Independent System Operator (CAISO). At $432.7 million, the COE is down $102.1 million (19%) from the prior-year Adopted Budget and well below the $593.4 million recorded in FY 2024-25. 3CE sets rates to recover its cost of service; a lower COE flows through to customers as lower rates and to the agency as lower revenue. The corresponding $71.9 million reduction in budgeted revenues reflect a declining energy market while keeping the budget balanced. Understanding both why COE ran high in recent years and why it is now declining is central to this budget.

Market Volatility and Regulatory Impacts Pushed Costs Higher In past years, COE rose due to a combination of forces largely outside 3CE’s direct control. The COVID pandemic and resulting supply chain challenges delayed new generation projects, requiring the agency to purchase a larger share of its energy on the open market rather than take delivery from its own contracted, fixed-price resources.

With less of its load hedged by operating projects, the agency was more exposed to that market volatility driven by macroeconomic pressures and seasonal events such as summer and fall heat waves. At the same time, surging RA costs, driven by heightened statewide demand and constrained supply, inflated the cost of meeting compliance obligations.

The Budget at a Glance
21 Page 504 of 564
Executive Summary (continued)
22 Prudent Management and Informed Oversight Drive Lower Cost Outcomes The decline in the cost of energy projected FY 2026-27 reflects a structural improvement in 3CE’s hedge performance and maturing portfolio, not just a favorable market. New long-term clean generation and storage resources are coming online and delivering, reducing our need to buy power on the open market. For 3CE, advancing the energy transition and protecting affordability are complementary objectives. Four factors compound:
• More projects online. 2026 is a breakout year for 3CE’s build-out. Four new projects reached commercial operation in 2026, adding roughly 25% of retail load. With them, 3CE’s operational portfolio grows to approximately 11 projects covering more than half of retail load, up from roughly a quarter the prior year. • More energy delivered from owned contracts. As these projects deliver, energy generated under 3CE’s Power Purchase Agreements (PPAs) displaces market purchases. 3CE is buying more of its power from contracted resources at known, long-term prices and less from the volatile spot market. • Lower market prices and effective hedging. 3CE’s hedging strategy has locked in favorable pricing during favorable market conditions, and has reduced RA and RPS costs. 3CE’s effective position management, conducted in compliance with the board-adopted Energy Risk Management Policy and the board’s strategic approach to RA compliance, has also contributed to lower cost outcomes. • Lower-cost financing of energy supply. 3CE’s 2023 “prepayment” transaction, a bond issuance through the California Community Choice Financing Authority, discounted a portion of the power delivered under it by roughly $5 million per year. A second prepayment transaction opportunity will be presented to the Policy Board for approval alongside this budget as another strategy to ultimately lower costs for our customers; because it is not yet final, no savings from this proposed transaction are yet reflected in the Recommended Budget.

The result is energy costs that are both lower and more stable than in recent years, with far less of the portfolio exposed to spot-market swings. That is the payoff of a long-term procurement strategy reaching maturity, financing decisions which reduced COE, and advocacy for compliance rules that lower RA and RPS costs.

Investing in the Organization
Salaries and benefits account for 3.6% of the total Recommended Budget. The recommended $18.2 million represents an increase of $4.0 million, or 27.9%, over the $14.3 million adopted for FY 2025-26. Roughly a quarter of that increase ($1.0 million) reflects potential salary adjustments and higher employer health care premiums – investments the agency is making to retain our talented staff. The remaining $3.0 million, funds 13 new positions, including two in the new Energy Solutions department, as described later in this summary.

The new additions are in operational and analytical roles in Power Services and Finance — settlement, contract administration, portfolio analysis, and financial planning — functions that must scale with a growing portfolio, or areas that the agency can avoid costly outside contractors and conditions where available consultants have been Historical COE

23 over consolidated, leaving few qualified vendors. Other additions deepen senior specialist capacity in regulatory policy and virtual power plant program management, and add internal operations, facilities, and human resources capacity for an expanded workforce and property footprint. Building this expertise internally reduces reliance on consultants, keeps institutional knowledge within the organization, and gives 3CE direct command of the technical work that determines its costs and its standing before regulators.

Services and supplies of $42.8 million include $3.8 million in new spending to support customers. Energy Programs grows by $2.2 million, maintaining funding levels across transportation, building, and agricultural electrification while expanding offerings such as bidirectional charging and virtual power plant operations that shift the portfolio from one-way incentives toward programs that return capacity to the grid. Roughly $950,000 strengthens 3CE’s voice with the customers and policymakers who shape its operating environment — including strengthening its federal advocacy presence. A further $700,000 modernizes how the agency serves and understands its customers, funding new customer experience and call center capability, agencywide artificial intelligence enablement, and the technical support behind the agency’s move into owned assets. The operating contingency remains at $3.5 million, 5% of non-COE, thereby preserving the flexibility required by the approved Financial Policies without expanding the agency’s cost base.

Capital outlay investments reach $6.9 million — with the majority, $4.3 million, advancing a permanent 3CE headquarters, including $3.5 million to acquire the land and $800,000 for planning, permitting, and entitlement work that must precede construction. These investments will consolidate the agency’s core operations into a facility it owns. The remaining $2.6 million funds the first 3CE-owned public EV charging stations in Santa Maria and Monterey, preliminary microgrid design, and improvements to existing offices and technology infrastructure across our four workplace locations in Monterey County, Santa Cruz County, San Luis Obispo County, and Santa Barbara County.

Every figure here is a planning-level estimate, and every project returns to the Policy Board or Executive Committee for approval before it proceeds, with its own funding and financing analysis.

Operating Revenue
Appropriations are funded by revenues of $515.3 million, $71.9 million below the prior-year Adopted Budget, reflecting lower COE and savings passed on directly to customers. Net electricity sales of $505.6 million are down

12.5%, driven by lower COE. Interest and investment returns are budgeted at $9.5 million, a deliberately conservative figure in anticipation of a softening short-term rate environment.

Staff will bring proposed 2027 electric generation rates to the Policy Board for consideration in March 2027, in accordance with the rate development timeline established in 2026. Based on the Recommended Budget as presented, no rate increase is expected to fund the appropriations described above. The declining cost of energy is sufficient to support the agency’s investments while maintaining a balanced budget and meeting its cost-of-service revenue requirement.

Building on a Year of Accomplishment
This Recommended Budget builds on a year that demonstrated commitment to 3CE’s mission. The agency’s clean-energy portfolio expanded significantly — 3CE onboarded four Power Purchase and Energy Storage Agreement projects, including receiving energy from the local ReGen Monterey project — while strengthening load forecasting, a new cost of energy review process, and the in-house Energy Trading and Risk Management (ETRM) system improved the discipline with which that growing portfolio is managed. Regulatory and legislative advocacy delivered direct customer value, most notably CPUC procurement-order revisions expected to avoid an estimated $1.6 billion in costs over ten years, alongside the signing of the Pathways Initiative (AB 825), Clean Energy Safety Act (SB 283), and sponsoring of bills on Power Charge Indifference Adjustment (PCIA) transparency (AB 1761) and hourly Resource Adequacy trading (SB 1138).

24 Customers saw benefits in record program participation, greenhouse gas reductions, equity program participation levels, the launch of improved Electrify Your Home, and the first 3CE-owned public EV charging station under construction in Santa Maria. Just as important, 3CE reinforced the financial framework underpinning this budget:
it updated its Financial Policies to add credit-rating and liquidity targets and GASB 62/63 reserve treatment, advanced a second energy prepayment transaction now before the Policy Board, and modernized administrative and financial controls on which prudent stewardship depends.

Priorities for the Year Ahead
The investments in this budget are directed toward a clear and connected set of priorities. At the center is the clean-energy portfolio itself: with a rapidly expanding resource base, 3CE will build out the Power Services team and develop an ETRM roadmap for end-to-end contract, settlement, and financial coverage, ensuring the agency can manage a portfolio that will span dozens of projects. Alongside that operational work, 3CE will continue to advance PCIA reform and regulatory advocacy — through CalCCA and direct engagement — to protect customers from rate shock and inequitable cost shifts while pressing for incremental reforms to the PCIA calculation and other CPUC initiatives that erode local control.

Two initiatives extend 3CE’s mission in new directions. The agency will establish the new Energy Solutions department and its owned-asset strategy, and launch a Virtual Power Plant (VPP) program built on a Distributed Energy Resource Management System (DERMS), piloting residential battery enrollment to optimize grid operations and deliver customer benefits through load shifting. Both reflect a deliberate move from buying energy toward shaping how and when it is generated and used.

Underpinning it all are financial and customer capacity. 3CE will pursue a credit-rating upgrade to A+ as part of its biannual review, evaluate adoption of an enterprise resource-planning (ERP) system, update electric generation rates in preparation for 2027 implementation, and advance a multi-year plan to sustain reserves at policy-target levels. On the customer side, the agency will operationalize a new customer load-analysis tool, expand CRM adoption agencywide, and continue delivering on the Underserved Communities Outreach and Engagement Action Plan.

A Long-Term Initiative: The Energy Solutions Department The most significant new investment in this budget is establishing the Department of Energy Solutions (DES). With the Policy Board’s support, this department is tasked with translating 3CE’s clean-energy procurement success into local energy infrastructure, member-agency support, customer value, and long-term business resilience. It represents a deliberate evolution in strategy: supplementing our foundational approach of purchasing energy through traditional PPA structures to directly owning and developing energy assets that the agency controls throughout their full useful lives.

The DES is built to also establish a project development capability. Its initial work includes an EV charging master plan to scale affordable, 3CE-owned public charging at critical sites; identifying and evaluating local microgrid and grid-scale storage projects; and delivering the agency’s office capital projects, including the new headquarters.

The long-term logic is straightforward. Owned generation, storage, EV charging infrastructure, and microgrids give 3CE a durable tool to advance grid reliability and resiliency in its own communities, to make measurable progress toward its greenhouse gas emission targets, and — over time — to convert capital investment into rate-stabilizing value rather than recurring market expense. Where a purchased megawatt is a cost that recurs every year at whatever the market dictates, an owned asset is a balance-sheet investment whose benefits accrue to customers for decades.

Regulatory and Market Uncertainty
Maintaining stable and fair rates is central to 3CE’s mission, and the single largest source of near-term rate uncertainty remains the PCIA — a fee set annually by the CPUC and collected by the Investor-Owned Utilities from CCA customers to recover the utilities’ legacy generation costs. The PCIA is not a 3CE charge. It is a CPUC established and IOU collected fee that appears on customers’ bills and can move sharply from year to year, creating volatility largely outside the agency’s control. A CPUC methodology change, effective January 1, 2026, increased the charge for CCA customers, and 3CE has joined the California Community Choice Association (CalCCA) in formally challenging the CPUC’s decision.

What customers ultimately pay depends on decisions still pending: the challenge to the 2026 change, a broader CPUC rulemaking on how the charge is calculated, and the annual benchmarks that are not final until the fall. Given that uncertainty, the Recommended Budget takes a deliberately conservative posture: current rates are maintained, Page 507 of 564 25 and staff will assess the CPUC’s final 2027 PCIA and IOU generation-rate decisions before recommending any adjustments. 3CE continues to advocate — through CalCCA, its Board committees, and its regulatory and legislative teams, including sponsored legislation on PCIA transparency (AB 1761) — for a PCIA that is fair, transparent, and predictable for the communities it serves. At the same time, 3CE has been building connections with customers to ensure our long-term value proposition and partnership resonate, despite whatever year-to-year regulatory challenges may come our way.

Longer-term uncertainty rests in how Senate Bill 100’s zero-carbon requirement will be defined and what new compliance structures may be introduced, such as the Clean Energy Standard and Reliable Clean Power Procurement Program (RCPPP). Similarly, the RCPPP implementation may further limit local decision-making by converting the Integrated Resource Plan to an enforceable procurement mandate. These efforts could create unnecessary costs for customers by requiring load serving entities to procure beyond their need, or conversely, could discourage load serving entities from proactively addressing portfolio needs.

Reserves and Liquidity
Prudent financial management is core to 3CE’s ability to navigate market and regulatory uncertainty, and strong liquidity is the foundation of that resilience. Aided by the stronger-than-budgeted current year, 3CE expects to close FY 2025-26 with approximately $320 million in unrestricted liquidity available for reserves — equivalent to roughly 64% of budgeted annual expenditures, or about 233 days of cash on hand. This position reflects disciplined cost management and the lower Cost of Energy described throughout this summary, rather than any rate increase.

Central to this strength is the Energy Rate Stability Reserve, which provides the financial capacity to absorb revenue impacts in challenging years while maintaining fair and stable rates. By continuing to build reserves alongside regulatory advocacy and market strategies, 3CE strengthens its ability to manage risk, stabilize rates, and protect the long-term interests of its communities. Robust liquidity is also a key factor credit rating agencies weigh when assessing financial stability — supporting 3CE’s objective of maintaining and improving its credit standing.

Looking Ahead
This Recommended Budget reflects 3CE at an inflection point: financially strong enough to invest, and strategically clear about where those investments should go. The agency has fully extended into its service territory footprint; a maturing clean-energy portfolio is bringing energy costs down and making them more predictable; a strong liquidity position anchors the agency’s resilience; and a new Department of Energy Solutions extends 3CE’s mission into owned assets that advance grid reliability and greenhouse gas reduction for decades to come. The regulatory path, particularly around the PCIA, remains uncertain; 3CE’s response is to stay disciplined, stay engaged, and continue acting as a careful steward of the public resources entrusted to it — advancing the energy transition on terms its customers can afford.
25 Page 508 of 564
26 Office Summary
Office of the CEO
The Office of the Chief Executive Officer provides leadership and directs the implementation of 3CE’s business functions, programs, and initiatives to ensure alignment with the Policy Board’s strategic vision and policies. An integral part of this work involves communication and collaboration with customers and stakeholders, the cultivation of strong relationships with 3CE’s Member Agencies, and the facilitation of programs that advance the Board’s goals.

The Chief Executive Officer works to accelerate the adoption of renewable energy resources, overseeing the negotiation of Power Purchase Agreements (PPAs) and ensuring 3CE’s plans align with its mission to provide reliable, clean, affordable electricity and electrification programs that reduce greenhouse gas emissions and strengthen the local economy. At its heart, the Executive Office focuses on leading 3CE in a way that serves its customers, empowers its staff, and brings economic and environmental benefits to its communities.

The Recommended Budget for the Office of the CEO totals $1,607,816, with $1,460,816 allocated to salaries and benefits and $147,000 for services and supplies. This reflects a $440,731 increase from the FY 2025-26 Adopted Budget of $1,167,085. Personnel costs increase $426,731, of which $247,266 is an approved augmentation for a contracted Board Clerk. Services and supplies increase $14,000, primarily for travel costs. Three permanent positions are authorized for this office in FY 2026-27.

FY 2026-27 Budget Summary — Office of the CEO
Prior Year
Actuals
2024-25
Adopted
Budget
2025-26
Mid-Year
Estimate
2025-26
Recommended
Budget
2026-27
Recommended
Change from
Adopted
Salaries and Employee
Benefits
961,954 1,034,085 1,069,600 1,460,816 426,731
Services and Supplies 114,005 133,000 103,446 147,000 14,000 Total Financing Uses 1,075,958 1,167,085 1,173,046 1,607,816 440,731 Change in Net Position (1,075,958) (1,167,085) (1,173,046) (1,607,816) (440,731)

27 Office of the CEO: Chief Executive Officer
FY 2025-26 ACCOMPLISHMENTS
• Led a coordinated, agency-wide response
to unprecedented PCIA pressures, aligning
regulatory advocacy, customer outreach,
rate design and executive decision-making
to protect customer value and achieve 100%
retention among strategically engaged
accounts.
• Advanced the creation of the Department of
Energy Solutions, securing Board direction to
develop an implementation framework that will
help 3CE move from supporting local energy
concepts to developing and operating local
energy projects.
• Strengthened executive oversight and
organizational accountability by realigning
leadership responsibilities across Power
Services, Regulatory Affairs, Finance, Data
and IT, Human Resources and Facilities —
streamlining decision-making and reinforcing
audit-ready controls.
• Guided major strategic decisions defining
3CE’s next phase, including the transition
from standalone battery rebates toward a
Virtual Power Plant, expansion of the agency’s
renewable portfolio and development of 3CE-owned public-facing EV charging infrastructure. • Expanded 3CE’s regional presence and
institutional strength through service expansion
to Atascadero and unincorporated San Luis
Obispo County, establishment of the Santa
Barbara regional office, relocation of the
Monterey headquarters, completion of the
annual financial audit and maintenance of the
agency’s “A” credit rating.

FY 2026-27 FOCUS AREAS
• Support the Boards’ vision and lead an
enterprise strategy that aligns 3CE’s
affordability, renewable energy, customer
engagement, policy, financial, and
community-investment priorities.
• Strengthen executive-team coordination
and accountability through clear priorities,
performance measures, decision-making
responsibilities, and regular board reporting.
• Guide the successful launch of the Energy
Solutions Department, ensuring its project-development, financing, governance, and partnership models support member-agency priorities while appropriately managing risk.
• Strengthen relationships with board
members, member agencies, public-power
partners, and industry leaders to advance
shared priorities and identify strategic
opportunities for 3CE.
• Build a high-performing organizational
culture grounded in collaboration,
accountability, professional development,
transparent governance, and service to
customers and communities.

28 Office Summary (continued)
Office of the General Counsel
The Office of the General Counsel manages 3CE’s legal affairs, compliance, contract review and negotiation, and dispute resolution. The office also coordinates with outside counsel on specialized legal matters such as power purchase agreements, regulatory proceedings, real property transactions, and litigation. The General Counsel serves under a professional services agreement and will continue in that capacity in FY 2026-27.

The Recommended Budget totals $2,294,000, a decrease of $ 475,108 from the FY 2025-26 Adopted Budget. The FY 2025-26 Adopted Budget included two positions in salaries and employee benefits, General Counsel and Deputy General Counsel, totaling $698,108. Neither is budgeted for FY 2026-27. The General Counsel cost is now budgeted in services and supplies within the legal services line, consistent with how the function is contracted and paid, and the Deputy General Counsel position is not carried forward.

The reclassification accounts for a $240,000 increase in legal services; the balance of the reduction reflects the elimination of the Deputy General Counsel position and decreases across travel and other auxiliary expenses.

Services and supplies total $2,294,000; of that amount, $2,240,000 supports legal services, comprising the contracted General Counsel and outside counsel engaged on power supply, real property, regulatory, litigation, and dispute resolution matters.

Legal spending varies significantly year to year with transaction volume and the timing of contested proceedings, and the budget is set to maintain capacity for matters that cannot be forecast at adoption.

FY 2025-26 ACCOMPLISHMENTS
• Drafted and negotiated contracts and amendments
supporting all agency offices and departments.
• Advised on real-property negotiations and the
purchase of 3CE’s Santa Cruz County office.
• Supported Energy Programs procurements, capital-improvement initiatives, electrification projects and grants.
• Advised the Boards on closed-session matters,
public-agenda business and agency policy updates.
• Managed pending litigation with outside counsel
and advised on advocacy and comments in CPUC
proceedings.

FY 2026-27 FOCUS AREAS
• Provide timely, accurate legal advice and
services that support staff and board
priorities.
• Manage litigation and advise on contracts,
regulatory developments, and other legal
matters affecting the agency.
• Develop, review, and maintain agency
policies in coordination with staff and the
boards.
28 FY 2025-26 Budget Summary — Office of General Counsel Prior Year
Actuals
2024-25
Adopted
Budget
2025-26
Mid-Year
Estimate
2025-26
Recommended
Budget
2026-27
Recommended
Change from
Adopted
Salaries and Employee Benefits 293,224 698,108 137,237 - (698,108) Services and Supplies 459,413 2,071,000 831,247 2,294,000 223,000 Total Financing Uses 752,637 2,769,108 968,484 2,294,000 (475,108) Change in Net Position (752,637) (2,769,108) (968,484) (2,294,000) 475,108

2929 Page 512 of 564
30 Office Summary (continued)
Office of the Chief Operations Officer
FY 2026-27 Budget Summary — Office of the COO
Prior Year
Actuals
2024-25
Adopted
Budget
2025-26
Mid-Year
Estimate
2025-26
Recommended
Budget
2026-27
Recommended
Change from
Adopted
Interest and Investment Returns 9,731,643 9,100,000 9,223,535 9,450,000 350,000 Other Income 91,090 75,000 75,775 50,000 (25,000)
Sub-Total Revenues 9,822,733 9,175,000 9,299,310 9,500,000 325,000 Capital Infrastructure Reserve - 1,200,000 6,741,324 - (1,200,000) Total Financing Sources 9,822,733 10,375,000 16,040,634 9,500,000 (875,000) Salaries and Employee Benefits 3,179,023 4,314,396 4,095,262 5,968,743 1,654,347 Services and Supplies 9,751,046 15,212,433 13,901,048 15,883,050 670,617 Capital Assets 276,648 500,000 118,219 3,560,000 3,060,000 Total Financing Uses 13,206,718 20,026,829 18,114,529 25,411,793 5,384,964 Change in Net Position (3,383,985) (9,651,829) (2,073,895) (15,911,793) (6,259,964) The Office of the Chief Operations Officer oversees four departments: General Services, Finance, Energy Risk Management, and Data Analytics & Information Technology. This office is responsible for 3CE’s financial planning, treasury and investment management, rates and billing operations, and internal controls; for the independent monitoring and measurement of energy risk exposures; for the stewardship of customer usage and transaction data and the agency’s information technology infrastructure; and for the human resources, facilities, and administrative services that develop, retain, and enable 3CE staff.
30 The Recommended Budget for the Office of the Chief Operations Officer totals $25,411,793, with $5,968,743 allocated to salaries and benefits, $15,883,050 to services and supplies, and $3,560,000 to capital assets. This is a $5,384,964 increase from the FY 2025-26 Adopted Budget of $20,026,829, driven principally by planned capital projects and staffing augmentations. Salaries and benefits also include $152,616 for two contracted positions and three summer interns; these costs are budgeted within salaries and benefits but are excluded from the office’s position count.

The Recommended Budget for the office is partially financed by $9,500,000 in estimated revenue, consisting of $9,450,000 in interest income on self-managed investments and $50,000 in rental income from the San Luis Obispo office building.

No draw on the Capital Infrastructure Reserve is budgeted in FY 2026-27, compared to $1,200,000 in the prior year. Twenty-six positions, or 25.5 full-time equivalents, across its four departments are authorized for this office.

31 FY 2026-27 Budget Summary — General Services
Prior Year Actuals
2024-25
Adopted Budget
2025-26
Mid-Year
Estimate
2025-26
Recommended
Budget
2026-27
Recommended
Change from
Adopted
Salaries and Employee
Benefits
466,782 659,777 712,795 1,255,739 595,962
Services and Supplies 577,570 786,600 388,125 1,433,000 646,400 Capital Assets - - 10,000 - -
Total Financing Uses 1,044,352 1,446,377 1,110,920 2,688,739 1,242,362 Change in Net Position (1,044,352) (1,446,377) (1,110,920) (2,688,739) (1,242,362) The General Services Department (formerly Administrative Services and Human Resources) supports 3CE’s mission by developing, retaining, and enabling a diverse, productive workforce, and by managing the agency’s facilities, insurance, risk, and administrative operations across its office locations.

Office of the COO — General Services
The Recommended Budget for the General Services Department totals $2,688,739, with $1,255,739 in salaries and benefits and $1,433,000 in services and supplies. This is a $1,242,362 increase from the FY 2025-26 Adopted Budget of $1,446,377.

Personnel costs increase by $595,962, reflecting approved augmentation requests — a Senior Manager of Human Resources, a Facilities Coordinator, an additional Human Resources Analyst, a half-share of a shared Administrative Specialist, and additional workers’ compensation. Personnel costs also include funding for a limited-term contractor and for the agency’s summer internship program.

Services and supplies increase $646,400, driven largely by the realignment of agencywide facilities and risk costs from the Finance Department to General Services — including rent, liability insurance, utilities, and building maintenance.

Seven positions, or 6.5 full-time equivalents, are authorized for this department.

FY 2025-26 ACCOMPLISHMENTS
• Opened new 3CE Santa Barbara regional office
and moved the agency headquarters in Monterey
to 20 Ryan Ranch Road.
• Switched benefit providers, maintaining
competitive offerings while continuing to fund
100% of employee costs and 90% of employee
dependent costs.
• Achieved Great Place to Work certification for
second consecutive year.

FY 2026-27 FOCUS AREAS
• Improve Ryan Ranch office to add
collaborative team workspaces, modern
video conference facilities, and space for
future employee headcount growth.
• Work with employees to build a best-in-class workplace — one that invests in staff engagement, professional development, and
growth so our team has what it needs to
thrive on behalf of customers.
• Enhance the recruitment and onboarding
processes to secure top talent for all
departmental vacancies and support the
establishment of the new Department of
Energy Services.

32 Office Summary (continued)
FY 2026-27 Budget Summary — Finance
Prior Year
Actuals
2024-25
Adopted
Budget
2025-26
Mid-Year
Estimate
2025-26
Recommended
Budget
2026-27
Recommended
Change from
Adopted
Interest and Investment Returns 9,731,643 9,100,000 9,223,535 9,450,000 350,000 Other Income 91,090 75,000 75,775 50,000 (25,000)
Sub-Total Revenues 9,822,733 9,175,000 9,299,310 9,500,000 325,000 Capital Infrastructure Reserve - 1,200,000 6,741,324 - (1,200,000) Total Financing Sources 9,822,733 10,375,000 16,040,634 9,500,000 (875,000) Salaries and Employee Benefits 1,429,831 1,516,863 1,606,485 2,340,641 823,778 Services and Supplies 8,682,344 13,294,333 12,896,533 13,292,050 (2,283) Capital Assets 143,272 500,000 100,000 3,500,000 3,000,000 Total Financing Uses 10,255,448 15,311,196 14,603,018 19,132,692 3,821,496 Change in Net Position (432,715) (4,936,196) 1,437,616 (9,632,692) (4,696,496) The Finance Department oversees financial planning and budgeting, financial reporting and analysis, electric generation rates, billing operations, treasury and investment management, debt and financing transactions, internal controls and compliance, and financial strategy. Key duties include developing the annual Recommended Budget, recommending electric generation rates, producing the mid-year budget forecast, supporting the annual financial audit, and developing and monitoring financial policies.

By aligning financial operations with regulatory and market dynamics, the department plays a central role in sustaining 3CE’s operational and programmatic success.

Office of the COO — Finance
The Recommended Budget for the Finance Department totals $19,132,692, including $2,340,641 in salaries and benefits, $13,292,050 in services and supplies, and $3,500,000 in capital assets. This is a $3,821,496 increase from the FY 2025-26 Adopted Budget of $15,311,196.

Personnel costs increase $823,778, of which $506,270 reflects approved augmentation requests for a Controller and two Financial Planning Analysts. The remaining increase is largely due to increased health benefit costs.

Services and supplies are essentially flat, decreasing $2,283 on a net basis: with increases in data management, IOU service fees, and accounting services costs offset by the transfer of rent, insurance, utilities, and building maintenance to General Services. Capital assets increase $3,000,000 for planned agencywide capital projects, including real estate purchases related to the build-out of the Monterey headquarters.

The appropriation for operational contingencies, which equals five percent (5%) of recommended appropriations excluding cost of energy (COE), is budgeted under this department. Page 515 of 564
3333
FY 2025-26 ACCOMPLISHMENTS
• Updated Financial Policies to incorporate
credit rating and liquidity targets, Government
Accounting Standards Board (GASB) 62/63
reserve accounting treatment, and capital
governance enhancements.
• Initiated 3CE’s second energy prepayment
transaction on its PPA portfolio to reduce
future energy costs.
• Continued investment in automation,
validation, and check request processes to
improve customer support and experience.
• Implemented a new purchase card and travel
reimbursement platform, strengthening
internal financial controls and expense
management.

FY 2026-27 FOCUS AREAS
• Position 3CE for an A+ credit rating by
strengthening liquidity, reserves, and financial
governance and completing a well-supported
credit rating review process.
• Execute the second PPA prepayment
transaction to achieve meaningful, long-term
savings in power purchase costs and deliver
measurable value to customers.
• Strengthen finance and accounting capabilities
through process standardization, stronger
internal controls, and evaluation of an ERP
system and implementation roadmap.
• Develop and implement a multi-year reserve
funding plan that establishes a sustainable
path to policy targets while addressing rate
affordability, market volatility, and out-year cost
pressures.

The Recommended Budget for the department is financed by $9,450,000 in interest and investment returns and $50,000 in rental income from the San Luis Obispo office building.

No draw on the Capital Infrastructure Reserve is budgeted, compared to $1,200,000 in the prior year. The department is led by the Director of Finance and is authorized ten positions, or 10.0 full-time equivalents, including the Chief Operations Officer position, which is budgeted within the department.

Office Summary (continued)
The Energy Risk Management Department independently monitors, measures, and reports risk exposures; oversees compliance with the agency’s Energy Risk Management Policy; provides analytics, valuation, and counterparty credit management; and serves as a control and check on procurement activities.

The Recommended Budget for the Energy Risk Management Department totals $858,770, including $781,770 in salaries and benefits and $77,000 in services and supplies. This is a $17,247 decrease from the FY 2025-26 Adopted Budget of $876,017.

Personnel costs decrease $37,247 based on updated position and benefit assumptions.

Services and supplies increase $20,000 for ancillary costs such as analytical service subscriptions and professional development. The department is led by the Director of Energy Risk Management and is authorized three positions, or 3.0 full-time equivalents.

FY 2026-27 Budget Summary — Energy Risk Management
Prior Year
Actuals
2024-25
Adopted
Budget
2025-26
Mid-Year
Estimate
2025-26
Recommended
Budget
2026-27
Recommended
Change from
Adopted
Salaries and Employee Benefits 311,212 819,017 620,622 781,770 (37,247) Services and Supplies 21,711 57,000 33,711 77,000 20,000 Total Financing Uses 332,922 876,017 654,333 858,770 (17,247) Change in Net Position (332,922) (876,017) (654,333) (858,770) 17,247 Office of the COO — Energy Risk Management
34 FY 2025-26 ACCOMPLISHMENTS
• Completed the 2025 Energy Risk Management
Policy (ERMP) annual review (adopted by
the Operations Board in November 2025),
delivered the 2026 staff and agent training and
acknowledgement cycle, and launched the 2026
revision — benchmarking peer policies and scoping
a substantial slate of governance and control
enhancements for Board adoption later in the year.
• Authored a Risk Office operating-model framework
establishing an independent, auditable risk function
with explicit model, valuation, and consultant
governance, benchmarked against peer CCAs and
utilities.
• Advanced 3CE’s in-house ETRM to production
(deal entry, position, mark-to-market, RA and RPS
compliance, credit/collateral) and deployed internal
Energy and Credit/Collateral Dashboards for real-time prices and portfolio views, reducing reliance on external systems and consultants.
• Strengthened trade-lifecycle controls — trade
validation, price-source governance, and
counterparty and collateral exposure monitoring —
with monthly reporting to the RMC, and contributed
risk and portfolio analysis to the October 2025
Executive Committee staff report and the Long-Range Portfolio Strategy Working Group.

FY 2026-27 FOCUS AREAS
• Complete and adopt the 2026 ERMP revision,
strengthening escalation and budget-deviation
reporting, Middle Office compliance independence,
advisor governance and attestation, delegation
provisions, and Back Office confirmation review, and
aligning hedge tolerances with Long-Range Portfolio
Strategy and PCIA developments.
• Formalize the independent Risk Office as an
enterprise-facing control and analytics function
— a documented charter, standing interfaces with
Finance, Legal, Regulatory, and Data/IT, direct risk
reporting to executive and board committees, and
clear dual-key controls where risk oversight meets
business execution.
• Mature the ETRM (Version II) and Energy Dashboard
toward a single governed system of record for
positions, valuation, compliance, and exposure
reporting.
• Establish formal model and valuation governance —
a model inventory, change control, and documented
price-source hierarchies and assumptions — to
further reduce dependence on outside consultants.
• Deepen analyst-team capability and cross-training to
ensure the continuity, independence, and resilience
of the risk function as portfolio complexity grows.

The Data Analytics & Information Technology Department oversees 3CE’s customer usage and transaction data for more than 515,000 accounts and provides strategic analysis to inform business decisions. The department’s primary objective is to empower the organization with information and insights derived from a consolidated data environment that increases visibility into agency operations. The department also includes 3CE’s information technology team, which builds, maintains, and defends the agency’s technology infrastructure and ensures data security.

The Recommended Budget for the Data Analytics & Information Technology Department totals $2,731,592, with $1,590,592 in salaries and benefits, $1,081,000 in services and supplies, and $60,000 in capital assets. This is a $338,353 increase from the FY 2025-26 Adopted Budget of $2,393,239.

Personnel costs increase $271,853, reflecting higher salary and health care premium benefit expenses based on competitive market conditions. Services and supplies increase $6,500 on a net basis, driven by an augmentation for agencywide artificial intelligence enablement, partially offset by lower contractor services. Capital assets of $60,000 are budgeted for end-user equipment and network security hardware. The department is authorized six positions, or 6.0 full-time equivalents. Salaries and benefits also include $100,000 for a contracted part-time backfill, which is not counted in the position total.

FY 2025-26 Budget Summary — Data Analytics & Information Technology Prior Year
Actuals
2024-25
Adopted
Budget
2025-26
Mid-Year
Estimate
2025-26
Recommended
Budget
2026-27
Recommended
Change from
Adopted
Salaries and Employee Benefits 971,198 1,318,739 1,155,360 1,590,592 271,853 Services and Supplies 469,421 1,074,500 582,679 1,081,000 6,500 Capital Assets 133,376 - 8,219 60,000 60,000
Total Financing Uses 1,573,995 2,393,239 1,746,258 2,731,592 338,353 Change in Net Position (1,573,995) (2,393,239) (1,746,258) (2,731,592) (338,353) Office of the COO — Data Analytics & Information Technology 35 FY 2025-26 ACCOMPLISHMENTS
• Strengthened data governance and compliance
by implementing additional Advanced Metering
Infrastructure (AMI) audit readiness measures,
including annual scanning of vendors with access
to AMI-related data.
• Created and implemented the Agency’s AI Policy
to support the safe, responsible, and consistent
use of AI across the agency.
• Advanced the Agency’s data and technology
foundation through continued support of core
analytics, reporting, and operational systems.

FY 2026-27 FOCUS AREAS
• Expand ETRM 2.0 to include additional
contract management capabilities and power
supply-specific use cases, improving visibility
across transactions, settlements, financial
tracking, and operational decision-making.
• Enable the Agency’s AI infrastructure to
support safe, responsible AI innovation
across departments, including approved
tools, governance, training, and practical use
cases.
• Strengthen documentation of existing
systems, including schemas, data flows,
business logic, ownership, and system
dependencies to improve continuity,
supportability, and long-term governance.

The Office of the Chief Power Officer oversees two departments: Power Services and Energy Solutions. This office is responsible for securing competitively priced, reliable, clean, and renewable electricity for 3CE customers; for managing the agency’s wholesale portfolio, settlements, and long-term resource planning; and for developing and operating 3CE-owned energy assets and distributed energy resource solutions that create additional value for customers and the grid.

The Recommended Budget for the Office of the Chief Power Officer totals $443,590,628, including $432,693,327 in cost of energy, $5,033,802 in salaries and benefits, $2,482,000 in services and supplies, and $3,381,500 in capital assets. This is a $96,895,045 decrease from the FY 2025-26 Adopted Budget of $540,485,673, driven almost entirely by a $102,082,929 reduction in the cost of energy.

The Recommended Budget for the office is financed by $505,782,881, consisting of $505,582,881 in net electricity sales and $200,000 in grant-supported other income.

The office is authorized 18 positions, or 17.5 full-time equivalents, across its two departments. Salaries and benefits also include $221,957 for a part-time contracted position, which is not counted in the position total.

Office of the Chief Power Officer
FY 2026-27 Budget Summary — Office of the Chief Power Officer Prior Year
Actuals
2024-25
Adopted
Budget
2025-26
Mid-Year
Estimate
2025-26
Recommended
Budget
2026-27
Recommended
Change from
Adopted
Net Electricity Sales 658,974,802 578,022,716 555,527,132 505,582,881 (72,439,835) Deferred Revenue - - (39,527,962) - -
Interest and Investment Returns 1,305,890 - 716,029 - - Other Income - - - 200,000 200,000
Revenue for Damages 8,101,745 - - - -
Total Financing Sources 668,382,437 578,022,716 516,715,199 505,782,881 (72,239,835) Cost of Energy 593,415,108 534,776,256 452,043,477 432,693,327 (102,082,929) Salaries and Employee Benefits 2,281,186 3,293,777 2,753,122 5,033,802 1,740,025 Services and Supplies 1,321,307 2,415,640 1,402,485 2,482,000 66,360 Capital Assets - - - 3,381,500 3,381,500
Total Financing Uses 597,017,600 540,485,673 456,199,084 443,590,628 (96,895,045) Change in Net Position 71,364,837 37,537,043 60,516,115 62,192,252 24,655,209 Office Summary (continued)
36 Page 519 of 564
3737
The Power Services Department secures competitively priced, reliable, clean, and renewable electricity for 3CE customers. This is achieved through a mix of short-term and long-term contracts designed to increase cost certainty and ensure compliance with all regulatory procurement requirements. Other departmental functions include power settlements, scheduling coordination, and long-term resource planning, as well as continued participation in joint procurement efforts through California Community Power (CC Power).

Power Services staff operate within a dynamic and often volatile energy market, where prices can shift unpredictably and significantly. In addition to market variability, evolving regulatory and legislative frameworks may lead to structural changes that impact energy pricing and procurement obligations. To navigate these challenges, 3CE adheres to its Energy Risk Management Policy — helping to mitigate risk, promote rate stability, and support the agency’s commitment to securing clean and renewable energy resources.

The Recommended Budget for the Power Services Department totals $439,074,835, including $432,693,327 in cost of energy, $4,319,509 in salaries and benefits, and $2,062,000 in services and supplies. This is a $101,410,838 decrease from the FY 2025-26 Adopted Budget of $540,485,673.

The cost of energy decreases $102,082,929, reflecting lower energy purchase and CAISO day-ahead costs, reduced capacity purchases, and increased generation credits from 3CE’s expanding portfolio of executed power purchase agreements. Personnel costs increase $1,025,732, of which $663,834 reflects approved augmentation requests for a Manager of Settlements, a Contract Lifecycle and Commercial Operations Manager, an Energy Transaction and Portfolio Analyst, and a half-share of a shared Administrative Specialist. The remaining increase is largely due to increased health care premium benefit costs. Services and supplies decrease $353,640 on a net basis, with a reduction in technical consultants partially offset by legal services and membership and project costs associated with CC Power.

Office of the CPO — Power Services
FY 2026-27 Budget Summary — Power Services
Prior Year
Actuals
2024-25
Adopted Budget
2025-26
Mid-Year
Estimate
2025-26
Recommended
Budget
2026-27
Recommended
Change from
Adopted
Net Electricity Sales 658,974,802 578,022,716 555,527,132 505,582,881 (72,439,835) Deferred Revenue - - (39,527,962) - -
Interest and Investment Returns 1,305,890 - 716,029 - - Revenue for Damages 8,101,745 - - - -
Total Financing Sources 668,382,437 578,022,716 516,715,199 505,582,881 (72,439,835) Cost of Energy 593,415,108 534,776,256 452,043,477 432,693,327 (102,082,929) Salaries and Employee Benefits 2,281,186 3,293,777 2,753,122 4,319,509 1,025,732 Services and Supplies 1,321,307 2,415,640 1,402,485 2,062,000 (353,640) Total Financing Uses 597,017,600 540,485,673 456,199,084 439,074,835 (101,410,838) Change in Net Position 71,364,837 37,537,043 60,516,115 66,508,045 28,971,002

38 The Recommended Budget for the department is financed by $505,582,881 in estimated net electricity sales, a $72,439,835 decrease from the prior year, driven by lower generation rates as a result of the rate adjustment that the Policy Board approved in early 2026 driven by lower energy costs. The Recommended Budget assumes no rate adjustment, but staff will continue to monitor per the rate development schedule. The department is authorized 15 positions, or 14.5 full-time equivalents, including the Chief Power Officer position, which is budgeted within the department. Salaries and benefits also include $221,957 for a part-time contracted position, which is not counted in the position total.

FY 2025-26 ACCOMPLISHMENTS
• Onboarded six PPA/ESA into operation,
including Sunzia Wind, Angela Solar+Storage
and Aratina Solar+Storage. These are 3CE’s first
new build projects since 2022. Signed a PPA and
began receiving energy from ReGen Monterey, a
local landfill gas project.
• Completed an audit of the Settlements division,
identifying strengths and opportunities.
• Improved internal processes to facilitate COE
performance monitoring and optimize hedging
strategy to benefit customers.
• Implemented load forecasting enhancements to
reduce forecasting errors by nearly two thirds,
improving budgeting and planning.

FY 2026-27 FOCUS AREAS
• Evaluate a settlements system to
improve resource-level revenue tracking
and validation of counterparty and
vendor charges, with potential midyear
procurement.
• Develop an ETRM roadmap with Energy
Risk Management and Data Analytics and
IT to guide future portfolio and contract
management enhancements.
• Implement a Power Services staffing
strategy to manage the agency’s growing
portfolio.

Office Summary (continued)
Office of the CPO — Energy Solutions
The Energy Solutions Department is a new department in FY 2026-27. It develops, owns, and operates 3CE energy assets and customer-sited solutions — including electric vehicle charging infrastructure, distributed energy resources, and storage — that expand customer access to clean energy, strengthen local resilience, and aims to create new revenue streams that support rate stability. The department also serves as 3CE’s capital project delivery function, managing tenant improvement and office buildout projects on behalf of the agency.

FY 2026-27 Budget Summary — Energy Solutions
Prior Year
Actuals
2024-25
Adopted
Budget
2025-26
Mid-Year
Estimate
2025-26
Recommended
Budget
2026-27
Recommended
Change from
Adopted
Other Income - - - 200,000 200,000
Total Financing Sources - - - 200,000 200,000
Salaries and Employee Benefits - - - 714,293 714,293
Services and Supplies - - - 420,000 420,000
Capital Assets - - - 3,381,500 3,381,500
Total Financing Uses - - - 4,515,793 4,515,793

39 The Recommended Budget for the Energy Solutions Department totals $4,515,793, with $714,293 in salaries and benefits, $420,000 in services and supplies, and $3,381,500 in capital assets covering both energy asset development and agency facility buildouts.

Because FY 2026-27 is the department’s first budgeted year, there is no comparable prior-year adopted budget, and the full amount is presented as an increase.

Personnel costs of $714,293 fund the department’s initial staffing component, including approved augmentations for a Director of Energy Solutions and a Manager of Business Development, both budgeted from January 1, with a Manager of Project Delivery transferred from the Energy Programs Department.

Services and supplies of $420,000 include consulting for program development, site assessment, and technical support. The budget also funds ongoing operations and maintenance of 3CE-owned charging assets at three sites. Capital assets of $3,381,500 fund three areas of work: $1.4 million for electric vehicle charger asset program (EVCAP) infrastructure and planning, $0.5 million for microgrid analysis and preliminary design, and $1.5 million for agency facility buildouts delivered by the department in its capital project management role.

The Recommended Budget for the department is financed in part by $200,000 in grant revenue from the Santa Barbara County Air Pollution Control District for EVCAP infrastructure. The department is authorized three positions, or 3.0 full-time equivalents.

FY 2025-26 ACCOMPLISHMENTS
• Received Policy Board direction to
establish a new department of Energy
Solutions with a mission to convert clean
energy procurement success into local
energy infrastructure, member agency
support, customer value, and long-term
business resilience.

FY 2026-27 FOCUS AREAS
• Establish and resource department, including hiring
staff, reviewing active support opportunities across
service area, and establishing short-term, medium-term, and long-term strategic priorities. • Identify and evaluate sites for local generation
projects to utilize battery storage and generation
assets to enhance energy resiliency, reduce utility
costs, and support transition to 100% renewable
energy.
• Manage 3CE capital projects, including renovation
of existing Soquel office and preliminary planning of
new main headquarters.

40 Office Summary (continued)
The Office of the Chief Customer Officer leads 3CE’s efforts to drive lasting community impact through strong, transparent relationships with customers and member communities. This office oversees four departments: Customer Success, Regulatory & Compliance, Communications & Government Relations, and Energy Programs. Together they guide customer service and experience, regulatory advocacy and compliance, legislative and community engagement, and the delivery of energy programs that provide meaningful benefits across the Central Coast.

By promoting accessible, community-driven programs for residents, businesses, and public agencies, and by advocating for 3CE customers before state and federal regulators and legislators, the Office of the Chief Customer Officer fosters trust, encourages participation, and magnifies the value of 3CE service.

Office of the Chief Customer Officer
FY 2026-27 Budget Summary — Office of the Chief Customer Officer Prior Year
Actuals
2024-25
Adopted Budget
2025-26
Mid-Year
Estimate
2025-26
Recommended
Budget
2026-27
Recommended
Change from
Adopted
Interest and Investment Returns - - 3,053 - -
Other Income 68,428 - 61,074 - -
Total Financing Sources 68,428 - 64,127 - -
Salaries and Employee Benefits 4,050,321 4,920,408 4,546,199 5,771,799 851,391 Services and Supplies 17,642,403 18,328,613 19,973,290 21,984,572 3,655,959 Capital Assets - 700,000 265,000 - (700,000)
Total Financing Uses 21,692,723 23,949,021 24,784,489 27,756,371 3,807,350 Change in Net Position (21,624,295) (23,949,021) (24,720,362) (27,756,371) (3,807,350) s
40 The Recommended Budget for the Office of the Chief Customer Officer totals $27,756,371, a $3,807,350 increase from the FY 2025-26 Adopted Budget of $23,949,021.

Salaries and benefits account for $5,771,799 and services and supplies for $21,984,572.

No capital assets are budgeted in FY 2026-27, compared to $700,000 in the prior year, as ownership of charging assets will be transferred to the Energy Solutions Department.

The increase reflects continued investment in customer-facing programs and advocacy.

Salaries and benefits grow $851,391, of which $400,927 funds approved augmentations — a Senior Policy Advisor and a Virtual Power Plant Programs Manager — with the remainder reflecting merit and benefit cost adjustments across existing positions.

Services and supplies grow $3.7 million: $2.2 million for energy program delivery, including direct customer incentive payments and $1.5 million to expand communications, customer experience capacity, and legislative and community engagement.

The office is authorized 25 positions, or 25.0 full-time equivalents, across its four departments. Page 523 of 564
41 Office of the CCO — Customer Success
The Customer Success Department (formerly Communications & Outreach) provides direct customer support services, helping customers access benefits and understand their energy choices. Following the completion of 3CE’s regional enrollment, the department is reoriented toward post-enrollment operations: customer accounts and service delivery, call center performance, customer experience systems, and the measurement of customer satisfaction.

The Recommended Budget for the Customer Success Department totals $2,506,507, with $1,984,007 in salaries and benefits and $522,500 in services and supplies. This is a $1,437,502 decrease from the FY 2025-26 Adopted Budget of $3,944,009. The reduction reflects a change in organizational structure, which moved the agency’s communications staff to the Government & Community Relations Department.

Personnel costs decrease $257,252 versus the prior year because of the transfer of communications staff to the Government & Community Relations Department, which is partially offset by an increase in merit and benefit cost adjustments across remaining positions.

Services and supplies decrease $1,180,250, reflecting the reorganization that transfers the agency’s advertising, communications consulting, website, promotional items, noticing, and required mailings budgets to the Government & Community Relations Department. These decreases are partially offset by an augmentation for a new customer experience systems contract and a planned assessment of call center capabilities.

The department is led by the Director of Customer Success, and is authorized eight positions, or 8.0 full-time equivalents.

FY 2026-27 Budget Summary — Customer Success
Prior Year
Actuals
2024-25
Adopted
Budget
2025-26
Mid-Year
Estimate
2025-26
Recommended
Budget
2026-27
Recommended
Change from
Adopted
Salaries and Employee Benefits 2,409,030 2,241,259 2,009,434 1,984,007 (257,252) Services and Supplies 1,646,356 1,702,750 1,055,614 522,500 (1,180,250) Total Financing Uses 4,055,386 3,944,009 3,065,048 2,506,507 (1,437,502) Change in Net Position (4,055,386) (3,944,009) (3,065,048) (2,506,507) 1,437,502

42 Office Summary (continued)
42 FY 2025-26 ACCOMPLISHMENTS
• Strengthened customer intelligence and service
delivery by connecting account, contact,
interaction and program-participation data in
Salesforce; centralizing customer escalations;
and advancing the Customer Insights Report to
support more informed decision-making.
• Conducted proactive outreach to 250 strategic
accounts ahead of the January PCIA increase,
providing targeted education and relationship-based support that reduced uncertainty, strengthened engagement and supported
customer retention.
• Enhanced rate-related customer support by
developing communications and service plans for
3Cflex, supporting a new rate-analysis tool and
positioning 3Cprime as a source of sustainability,
rate stability and strategic value.
• Expanded customer and community education
through ten webinars — including bilingual rates
and programs sessions — and partnerships with
community-based organizations and social-service
representatives.
• Advanced community and equity initiatives by
coordinating climate-action planning research
across 35 member agencies and implementing
most actions in the Underserved Communities
Outreach and Engagement Action Plan, including
improved communications, bilingual feedback,
program refinements and strategic partnerships.

FY 2026-27 FOCUS AREAS
• Expand agencywide Salesforce CRM
adoption through intuitive dashboards,
custom views, reports, mobile access, and
training.
• Launch a load-analysis tool that improves
billing transparency, models bill impacts,
and provides account-specific cost and
usage information for strategic customers.
• Strengthen strategic-account retention
through proactive engagement with key
commercial and public-sector customers,
emphasizing rate education, sustainability
value, relationship-building, and early
identification of opt-out risk.
• Prepare customer account managers to
support future Energy Solutions offerings
by identifying large-load customers and
member agencies with generation or
storage potential, mapping key contacts
and needs, and tracking projects in
development.
• Evaluate high-value, responsibly governed
AI applications for customer support and
account intelligence and develop a pilot
roadmap for CRM- and website-enabled
tools.

Office of the CCO — Regulatory & Compliance
The Regulatory & Compliance Department ensures 3CE meets all regulatory requirements and actively engages with the agencies that oversee energy markets and Community Choice Aggregators. The department supports statewide goals related to reliability, clean energy, and affordability through proceedings addressing Integrated Resource Planning, Resource Adequacy, the Renewable Portfolio Standard, the Reliable and Clean Power Procurement Program, and the Power Charge Indifference Adjustment.

FY 2026-27 Budget Summary — Regulatory & Compliance
Prior Year
Actuals
2024-25
Adopted Budget
2025-26
Mid-Year
Estimate
2025-26
Recommended
Budget
2026-27
Recommended
Change from
Adopted
Salaries and Employee Benefits 640,004 634,995 613,241 1,016,313 381,318 Services and Supplies 580,925 1,279,500 856,904 1,319,500 40,000 Total Financing Uses 1,220,929 1,914,495 1,470,145 2,335,813 421,318 Change in Net Position (1,220,929) (1,914,495) (1,470,145) (2,335,813) (421,318)

43 FY 2025-26 ACCOMPLISHMENTS
• Secured revisions to a CPUC procurement order
that recognized resources already in 3CE’s
portfolio, resulting in an estimated $1.6 billion in
avoided procurement costs over 10 years.
• Advanced customer affordability and billing
protections by limiting midyear changes to the
2026 PCIA, establishing a pathway for broader
PCIA reform and filing a proposed settlement
with PG&E to improve CCA billing data, bill-design
flexibility and correction procedures.
• Expanded recognition and value for CCA
resources by becoming the first CCA to secure
a BioMAT project and apply for cost recovery,
earning recognition for prudent contract
management and enabling co-located Energy-Only resources to support storage-charging requirements.
• Strengthened long-term planning and forecasting
by establishing CCAs as the default energy
provider within their service areas, securing access
to interconnection data and completing 3CE’s
Integrated Resource Plan through 2045.
• Maintained rigorous compliance and regulatory
advocacy, completing more than 100 filings and
requirements on time with no penalties, submitting
over 650 pages of 3CE-specific comments and
participating in more than 16 CalCCA working
groups.

FY 2026-27 FOCUS AREAS
• Work with CalCCA and industry stakeholders
to protect customers from rate shock and
inequitable cost shifts arising from Power
Charge Indifference Adjustment decisions.
• Advance regulatory and policy changes that
accelerate resource integration and enable
load shifting in support of 3CE’s 100% clean
and renewable energy goal.
• Advocate for statewide policies aligned
with 3CE’s existing and planned resource
portfolio to maximize customer value and
avoid unnecessary procurement costs.
• Improve compliance valuation for short- and
long-duration storage, so it reflects each
resource’s contribution to reliability and
greenhouse-gas reduction.

The Recommended Budget for the Regulatory & Compliance Department totals $2,335,813, with $1,016,313 allocated to salaries and benefits and $1,319,500 for services and supplies.

This is a $421,318 increase from the FY 2025-26 Adopted Budget of $1,914,495.

Personnel costs increase $381,318, of which $202,714 funds a new Senior Policy Advisor position, budgeted to begin January 1. The remaining increase is largely due to increased health benefit costs. Services and supplies increase $40,000, primarily from an increase in industry memberships and dues supporting participation in CalCCA, the statewide trade association for CCAs.

The department is led by the Director of Regulatory Affairs and is authorized four positions, or 4.0 full-time equivalents.

44 Office of the CCO — Government & Community Relations Office Summary (continued)
The Government & Community Relations Department leads 3CE’s engagement with Member Agencies, local officials, community-based organizations, and state and federal policymakers. Mid-fiscal year, the department grew to encompass the agency’s brand, advertising, and public communications functions, positioning 3CE to speak with one voice across community, legislative, and customer audiences.

The Recommended Budget for the Government & Community Relations Department totals $4,360,444, with $1,328,944 allocated to salaries and benefits and $3,031,500 for services and supplies. This is a $3,182,444 increase from the FY 2025-26 Adopted Budget of $1,178,000.

Personnel costs increase $606,944, which reflects communications positions consolidated into the department through the mid-year reorganization rather than net new staffing; underlying growth is approximately $70,000 and includes increases in merit and benefit cost adjustments across remaining positions and an augmentation for a year-round intern.

Services and supplies increase by $2,575,500; of that, $2.4 million is a mixture of ongoing and augmented funding for advertising, communications, notice, and required mailings functions transferred from the Customer Success Department. The remaining increase supports expanded advocacy, including further funding to increase federal and state lobbying presence and further strengthen community sponsorships.

The department is led by the Director of Government & Community Relations and is authorized six positions, or 6.0 full-time equivalents.

FY 2026-27 Budget Summary — Government & Community Relations Prior Year
Actuals
2024-25
Adopted
Budget
2025-26
Mid-Year
Estimate
2025-26
Recommended
Budget
2026-27
Recommended
Change from
Adopted
Salaries and Employee Benefits - 722,000 723,666 1,328,944 606,944 Services and Supplies - 456,000 406,461 3,031,500 2,575,500 Total Financing Uses - 1,178,000 1,130,127 4,360,444 3,182,444 Change in Net Position - (1,178,000) (1,130,127) (4,360,444) (3,182,444) 44 Page 527 of 564
45 FY 2025-26 ACCOMPLISHMENTS
• Helped secure passage and signing of AB 825 and SB
283 through coalition building, stakeholder outreach,
letters of support and direct legislative advocacy.
• Advanced 3CE-sponsored legislation, including AB
1761 on PCIA transparency and SB 1138 on hourly
resource-adequacy trading, while advocating on large-load interconnection, Diablo Canyon, CCA autonomy and related priorities.
• Strengthened member-agency engagement through
presentations to 31 agencies across all five counties
and targeted PCIA briefings for county supervisors
and city officials.
• Expanded 3CE’s state, federal and regional presence
by participating in Federal Advocacy Days for the first time, engaging federal agencies and congressional
staff, and representing 3CE at more than 50
community events and public meetings.
• Delivered 3CE’s strongest-performing advertising
campaigns to date, quadrupling year-over-year
website traffic and increasing website engagement by
more than 50%.

FY 2026-27 FOCUS AREAS
• Expand public awareness through additional
advertising and community partnerships.
• Tell 3CE’s story through the new website,
social media, advertising, and impact-focused content.
• Implement a strategic communications plan
that guides public relations, earned media,
and executive visibility.
• Advance 3CE priorities in Sacramento,
including reforms to the Power Charge
Indifference Adjustment and Resource
Adequacy program and policies addressing
the grid impacts of large producers and
consumers.
• Represent 3CE in regional, statewide, and
national energy discussions and ensure
Central Coast perspectives inform policy
development.
45 Office of the CCO — Energy Programs
The Energy Programs Department leads 3CE’s efforts to empower customers to take part in the renewable energy transition and reduce greenhouse gas emissions. Through a range of incentives and technical assistance, the department helps customers replace fossil-fuel-powered vehicles, equipment, and appliances with clean, all-electric alternatives.

Programs also support customers in shifting when and how they use energy to improve cost effectiveness and reduce strain on the grid.

FY 2026-27 Budget Summary — Energy Programs
Prior Year Actuals
2024-25
Adopted Budget
2025-26
Mid-Year Estimate
2025-26
Recommended
Budget
2026-27
Recommended
Change from
Adopted
Salaries and Employee Benefits - 722,000 723,666 1,328,944 606,944 Services and Supplies - 456,000 406,461 3,031,500 2,575,500 Total Financing Uses - 1,178,000 1,130,127 4,360,444 3,182,444 Salaries and Employee Benefits 1,001,287 1,322,154 1,199,858 1,442,535 120,381 Services and Supplies 15,415,122 14,890,363 17,654,311 17,111,072 2,220,709 Capital Assets - 700,000 265,000 - (700,000)
Total Financing Uses 16,416,409 16,912,517 19,119,169 18,553,607 1,641,090 Change in Net Position (16,347,981) (16,912,517) (19,055,042) (18,553,607) (1,641,090)

46 Office Summary (continued)
The Recommended Budget for the Energy Programs Department totals $18,553,607, with $1,442,535 allocated to salaries and benefits and $17,111,072 for services and supplies.

This is a $1,641,090 increase from the FY 2025-26 Adopted Budget of $16,912,517. No capital assets are budgeted in FY 2026-27, compared to $700,000 in the prior year, as ownership of charging assets moves to the Energy Solutions Department.

Personnel costs increase $120,381, of which $178,431 is an approved augmentation for a Virtual Power Plant Programs Manager budgeted from January 1, partially offset by baseline reductions from the transfer of the Manager of Project Delivery. Services and supplies increase $2,220,709, driven by a $1.1 million increase in direct customer incentive payments and a $1.1 million increase in energy program delivery and implementation.

The department is led by the Director of Energy Programs and is authorized seven positions, or 7.0 full-time equivalents.
46 FY 2025-26 ACCOMPLISHMENTS
• Developed Agricultural Electrification

2.0 in partnership with the Community
Advisory Council, customers and agricultural
stakeholders, incorporating new offerings
informed by industry research and direct
feedback.
• Launched improved Electrify Your Home,
expanding contractor eligibility and adding
induction-cooktop and portable space-conditioning rebates to better serve renters and homeowners.
• Established Energy Optimization as a new
portfolio focus, building on the Residential
Battery Rebate Program’s achievement of
more than 8 MWh of daily load shifting.
• Expanded 3CE-owned EV charging
infrastructure by operationalizing workplace
chargers at the San Luis Obispo and Soquel
offices — contributing to a 50% increase
in staff EV adoption — and beginning
construction of public chargers in Santa Maria.
• Improved program access, performance and
equity through stronger communications and
budget management, record participation
and emissions-reduction results, and support
for a mobile-home park’s CEC Coordinated
Holistic Inverter-based Resources (CHOIR)
grant application for a potential microgrid
and distributed energy resource management
system.

FY 2026-27 FOCUS AREAS
• Develop a long-term Energy Programs
strategic plan with input from the Community
Advisory Council, communities, and
stakeholders.
• Launch a Virtual Power Plant supported by
a Distributed Energy Resource Management
System, including a residential battery-enrollment pilot that shifts load to improve grid operations and customer value.
• Launch the EV Launchpad Program to provide
planning and technical assistance for fleet,
workplace, multifamily, public, and community
EV-charging projects.
• Offer virtual home assessments that
help residential customers understand
electrification options, available financial
support, project requirements, and potential
bill impacts.
• Expand agricultural electrification through
enhanced incentives, technical assistance, and
demonstration events.
• Continue improving the CRM platform and
integrate Salesforce Marketing Cloud to
automate customer touchpoints, reduce
escalations, and streamline the program
application experience.

47 47 Page 530 of 564
48 Energy Programs 2026-27 Overview
Supports customers to transition from fossil fuels to electricity for all vehicles including charging infrastructure
Supports agricultural customers to transition from fossil fuel to electric equipment and automation options
Supports customers to transition from fossil fuels to electricity for various end uses in new and existing residential buildings

CHARGE & ELECTRIFY YOUR FLEET
member community incentives to purchase fleet EVs &
install EV Chargers - $1.45mil

EV LAUNCHPAD TECHNICAL ASSISTANCE
EV fleet & EV infrastructure development assistance for member communities, nonresidential, and multifamily
customers - $1.2mil

ELECTRIFY YOUR RIDE
residential & commercial incentives to purchase EVs
& install EV Chargers - $4mil

E-BUS PROGRAM
incentives for all-electric buses in public schools,
districts, & transit agencies - $1.6mil

AG-POWER ELECTRIC SHOWCASE
opportunity for customers to demo available electric
equipment and learn financing options - $25k
“The support we received from 3CE allowed us to
purchase a fully electric excavator to help trench new
irrigation lines to support our expansion efforts. This is a critical part of our growth. Without the Ag program, we would have struggled to maintain our farm, let alone expand it.“ - Our Parent Company, Watsonville

AG ELECTRIFICATION PROGRAM
residential & commercial incentives to
purchase EVs & install EV Chargers - $800k

AG TECHNICAL ASSISTANCE PILOT
Energy assessments and technical support to
electrify and optimize energy use at farms and
ag facilities - $70k

REACH CODES PROGRAM
technical assistance to adopt and codify building codes that promote electrification - $80k

VIRTUAL HOME ENERGY ASSESSMENTS
providing customized recommendations on home
electrification projects, incentives available, bill impacts, and more - $164k

ELECTRIFY YOUR HOME
residential & commercial incentives to purchase EVs
& install EV Chargers - $2.9mil

NEW CONSTRUCTION ELECTRIFICATION
incentives to develop new, all-electric single-family
and multifamily housing - $1.2mil

TRANSPORTATION ELECTRIFICATION

AGRICULTURAL ELECTRIFICATION

BUILDING ELECTRIFICATION

49 ENERGY OPTIMIZATION
Supports agricultural customers to transition from fossil fuel to electric equipment and automation options

VIRTUAL POWER PLANT PROGRAM
residential & commercial incentives to
purchase EVs & install EV Chargers - $2.8mil

1. Install smart electric
devices in your home

2. Connect devices to Distributed
Energy Resource Management
System (DERMS)

3. Devices aggregated
to support cleaner,
reliable grid
HOURLY FLEX PRICING PILOT 1 & 2
dynamic pricing for agricultural, residential, and
commercial customers to enable load shifting - $100k
3 community discussions
with 3CE’s community advisory council consisting of representa-tives from five counties 12 engagement workshops
including focus groups, roundtable discussions, one-on-on inter-views, and presentations 50+ attendees
including growers, shippers, farm operators, agricultural workers, Resource Conservation Districts, and Farm Bureaus
23 survey responses
engaging past program particpants and grower networks

Financial Policies
50 1.0 Purpose and Background
The prudent and responsible stewardship of public assets is a principal obligation of Central Coast Community Energy (3CE) officials and managers. The development and maintenance of financial policies enable 3CE officials to protect those public assets, ensure transparency, and build public trust. Financial policies define a shared understanding of how 3CE administers its financial affairs and communicates how the agency manages its resources to deliver the highest value to the communities served.

This document centralizes 3CE’s financial policies and establishes a framework for overall fiscal planning, management, and decision-making related to public assets controlled by 3CE. These policies are reviewed, updated, and brought before the Policy Board as needed, but at least annually for adoption. This continued review and adoption promote sound financial management and help maintain 3CE’s stability, efficiency, and effectiveness by ensuring the Policy Board’s financial policy guidance is provided before 3CE takes any financial actions. The policies also offer guidelines for evaluating both current activities and proposals for future programs and direct 3CE’s financial resources toward meeting its objectives and strategic initiatives.

These policies provide general guidance in the management of 3CE’s fiscal affairs and are to be used by all 3CE employees to meet their obligation to operate in a financially prudent manner. The Recommended Budget is developed in accordance with this framework.

2.0 General Financial Policy
The cornerstone and highest priority of 3CE’s financial policies is fiscal integrity. It shall be the goal of 3CE to achieve a strong financial condition with the ability to:
• Sustain adequate financial liquidity to meet operating and contingent obligations; • Ensure a sufficient financial base is maintained to withstand local, regional, national, and global economic impacts;
• Foster the ability to adjust efficiently to the community’s changing service requirements; • Maintain and improve infrastructure and capital assets; • Regularly review operations and operational methods to improve processes that result in higher productivity and eliminate repetitive and duplicative functions;
• Encourage collaboration with other government entities, the private sector, and public-private partnerships where cost and risk are minimized in the delivery of services; • Promote sharing of costs and benefits by service users; • Ensure the legal use of financial resources through an effective system of internal controls; • Support sound financial management by providing accurate and timely information on 3CE’s financial condition; and
• Provide a framework for the wise and prudent use of debt financing and maintain a strong credit rating in the financial community, with the long-term goal of achieving and sustaining a rating in the A category or higher.

2.1 THE ANNUAL BUDGET
The Chief Executive Officer (CEO) will recommend a balanced budget that:
• Aligns annual expenditures with the revenue requirement established through a cost-of-service methodology; • Minimizes reliance on reserves and one-time funding sources for ongoing operations; and • Maintains competitive, cost-based rates while supporting 3CE’s renewable energy goals.

Through the CEO, the Chief Financial Officer (CFO) will consult with 3CE Officers and seek their input in developing the Recommended Budget through cooperative discussions and financial education. The CEO will keep the Policy Board apprised of the condition of 3CE’s finances and emerging fiscal issues. Page 533 of 564 51 Subheader

3.0 Roles and Functions

3.1 ROLE OF CHIEF EXECUTIVE OFFICER
The CEO serves as the chief policy advisor to the Policy Board, Operations Board, and the various Board committees. The CEO promotes responsible resource allocation, strives to protect 3CE’s financial position and integrity, and provides independent analysis on policy and financial issues. The CEO is the fund manager for 3CE’s enterprise fund and any other funds that may be created.

3.2 PRINCIPAL FUNCTIONS OF THE CHIEF EXECUTIVE OFFICER
Principal functions of the CEO include:
• Promoting continuous improvement of the structures, systems, processes, and effectiveness of operations; • Preparing the annual financial plan (Recommended Budget); • Evaluating potential federal, state, and local budget impacts; • Developing financial forecasts;
• Monitoring revenues and expenditures for conformance with the annual budget; • Recommending effective fiscal policies to carry out the 3CE mission; • Verifying Policy Board policies are consistently applied; and • Ensuring items brought before the Policy Board are transparent, accurate, complete, fully justified, and reviewed by appropriate stakeholders.

3.3 PRINCIPAL FUNCTIONS OF THE CHIEF FINANCIAL OFFICER
The CFO is 3CE’s Policy Board-appointed Treasurer and considered the subject-matter expert for the financial management of the agency. The CFO is responsible for:
• Carrying out financial operations efficiently and cost-effectively while adhering to all 3CE, state, and federal laws, regulations, and policies;
• Preparing budgets and financial estimates with attention to accuracy based on financial expertise, state, and federal funding and regulatory changes, and economic indicators affecting revenues, expenditures, and service levels;
• Reviewing, evaluating, and assessing potential federal and state budget and regulatory issues that may impact the agency;
• Developing and performing financial forecasts;
• Overseeing Middle Office responsibilities as identified in 3CE’s Energy Risk Management Policy; • Monitoring monthly revenue, expenditure, and cash flow performance and conformance with the Adopted Budget;
• Meeting the Policy Board’s strategic financial initiatives and policies; and • Ensuring items brought before the Policy Board are transparent, accurate, complete, fully justified, and reviewed by all appropriate stakeholders.

3.4 PRINCIPAL FUNCTIONS OF THE AUDIT AND FINANCE COMMITTEE The Audit and Finance Committee’s principal functions include receiving staff updates on financial issues and providing oversight and direction to staff in developing and modifying the budget and audits.

3.5 PRINCIPAL FUNCTIONS OF THE ENERGY RISK MANAGEMENT COMMITTEE The Energy Risk Management Committee is formed by the CEO to implement and maintain the Energy Risk Management Policy, which requires 3CE to maintain sufficient financial reserves to:
• Establish long-term business sustainability;
• Build collateral for power procurement activities;
51 Page 534 of 564
52 Subheader
• Maintain an investment-grade credit rating;
• Develop funding sources for investment in generation and other local initiatives; and • Reduce the business and customer impact of year-to-year volatility in energy markets and procurement costs.

4.0 Services and Fund Structure

4.1 ENTERPRISE FUND
3CE operates as an enterprise fund. The enterprise fund accounts for revenues and expenditures for all 3CE activities. The fund’s operations are financed and operated like private business enterprises, with services primarily funded through user charges (electric generation rates).

4.2 EXPENSES
Enterprise fund expenses and revenues will be established at sufficient levels to properly maintain the fund’s infrastructure and provide significant capital development.

4.3 RATE STRUCTURE AND NET POSITION
The enterprise fund will maintain an adequate rate structure to cover the cost of all operations, including cash flow, capital replacement and maintenance, debt service if applicable, contingency funding, reserve contributions, and depreciation. Rates may be offset from the available unreserved net position, including the Energy Rate Stabilization Reserve, only after these requirements are met.

5.0 Operating Budget

5.1 THE BUDGET
The Recommended Budget is the central financial planning document that sets the agency’s goals, objectives, priorities, levels of service, and the associated operating revenue and expenditures. Expenditures are recommended based on the relationship between expected expenditures and revenue. If revenues are estimated to fall below expected amounts, the agency will take all actions available to reestablish a revenue and expenditure relationship that conforms to the operating requirements.

The Recommended Budget shall be presented to the Policy Board for adoption in September of each year and clearly presented to a general audience of the public.

5.2 BALANCE BUDGET
A budget is balanced when the total estimated financing sources (beginning net position plus revenues) equal the total expenditures. At no time shall spending in a given year exceed total current estimated revenues plus any net positive position (reserved and non-reserved).

5.3 ONGOING OPERATIONS NEEDS
3CE will adequately fund ongoing maintenance and operational needs with ongoing annual revenue. Without prior direction and approval from the Policy Board, the use of one-time revenues or short-term borrowing is not allowed as a resource for financing ongoing operational needs.

5.4 CAPITAL FACILITIES AND EQUIPMENT
3CE shall establish as a primary fiscal responsibility the acquisition, preservation, maintenance, improvement, and, when applicable, orderly replacement of 3CE’s capital facilities and equipment. 3CE shall endeavor to purchase a permanent headquarters and appropriate regional offices to provide continuity of location and operations while stabilizing and controlling facility costs into the future. 3CE will acquire and maintain high-quality equipment to maximize useful life and ensure efficient operations.

5.5 APPROPRIATIONS AND TRANSFERS
The agency enterprise fund is not constrained by appropriation controls. The CEO is charged with maintaining the relationship between financing uses and sources and shall report to the Policy Board any deviation exceeding 52 Page 535 of 564
53 Subheader
the adopted budget. The CEO is authorized to make appropriation transfers between departments within the enterprise fund as necessary to adequately reflect the agency’s expenditure needs.

5.6 RESPONSIBILITY FOR BUDGET MANAGEMENT AND BUDGETARY CONTROL 3CE shall maintain a budgetary control system to help it adhere to the adopted budget. The CEO has budgetary control and authority over expenditures. The CFO shall administer and maintain the system utilized for budgetary control. As the administrator of the budgetary control system, the CFO shall notify the CEO when a department approaches its expenditure limit. The CFO shall seek guidance from the CEO on all issues relating to expenditures and controls.
3CE Officers, in coordination with the CFO, have primary responsibility for managing departmental budgets by:
• Providing accurate and timely budget estimates;
• Monitoring revenues to ensure timely receipt in the amounts anticipated; • Ensuring that expenditures comply with the law, adopted resolutions, policies, and align appropriations relative to revenues;
• Providing prompt notification to the CEO when either revenues or expenditures are not as anticipated; and • Preparing and justifying budget revisions when necessary

5.7 PREPARATION OF FINANCIAL REPORTS
The CEO annually prepares or causes to be prepared:
• An Annual Comprehensive Financial Report (ACFR) that reports on 3CE’s financial position and activities, adhering to Generally Accepted Accounting Principles (GAAP) or state law requirements, to provide readers with a broader understanding of the agency’s financial operations; • A mid-year estimate to provide current-year performance and three-year forecast to advise the Policy Board on future challenges and provide a base for building the following year’s Recommended Budget; and • Additional reports, as appropriate, to keep the Policy Board informed on current financial performance and developments.

The CEO has oversight and contract management over the external auditors reviewing the ACFR.

External auditors shall report to the CEO or designated officer on audit findings. The CEO will thereafter take the audit findings to the Policy Board.

5.8 PUBLICATION OF BUDGET
The CEO shall publish annually a Recommended Budget document that satisfies nationally recognized standards for effective budget presentation. The Recommended Budget will be provided to the Policy Board a minimum of two weeks in advance of the annual budget hearings.

5.9 BUDGET DEVELOPMENT
Budget development is an annual process incorporating the Policy Board’s priorities and weighing competing requests for 3CE resources within expected fiscal constraints. The process begins with departments preparing “baseline” budgets proposing levels of service and staffing that can be carried out within expected resources (e.g., revenues). Departments may submit “augmentation requests” for additional resources to mitigate potential impacts, increase staffing/services, or invest in infrastructure. The CEO evaluates baseline budgets and augmentation requests within the constraints of a balanced budget and builds the annual Recommended Budget.

Staff considers the following criteria in formulating recommendations for the annual budget and subsequent mid-year budget modifications:
• Mandated by current law, regulation, or Policy Board policy; • Alignment with 3CE’s strategic initiatives and priorities; • Necessary to maintain the current level of mission-critical services/operations; • Substantiation of compelling public need (e.g., health, safety, economic vitality, quality of life) that cannot be met within existing resources; 53 Page 536 of 564
54 Subheader
• Likelihood of success based on prior performance, degree of planning/specificity, requested resources, and assumed timeline;
• Leverages sustainable financial support from non-3CE sources; • Appropriate placement of responsibility (federal, state, or local); • Degree of urgency; and
• Critical infrastructure investment to ensure productivity and continuity of operations.

Criteria in the listing are not exhaustive or in any particular order, nor are they mutually exclusive; funding recommendations may align with more than one criterion.

5.10 AMENDMENTS TO THE ADOPTED BUDGET
Modifications to the Adopted Budget require the approval of a majority of Policy Board members. Amendments to the Adopted Budget will be made in compliance with Policy Board policies. As an enterprise fund, the relationship between financing uses and financing sources is the overriding principle; thus, appropriation controls are not required.

5.11 BUDGETARY BASIS
3CE uses the full accrual basis of accounting following GAAP. The budgetary basis is appropriation-based, beginning on October 1 and ending on the last day of September each year. 3CE is an enterprise fund that is appropriation-based budgeted; however, accounting is on a full accrual basis.

5.12 CAPITAL ASSET DEFINITION
3CE defines capital assets as assets with initial, individual costs of $5,000 or more and an estimated useful life greater than one year, except infrastructure, for which the threshold is set at $100,000. Capital assets include both tangible and intangible assets categorized by asset type for reporting purposes.

Infrastructure refers to long-lived capital assets that are typically stationary and can be preserved for significantly longer than most other capital assets. Infrastructure assets typically include, but are not limited to, energy generation and storage facilities, electric distribution systems, and grid interconnection infrastructure.

5.13 APPROPRIATIONS FOR CONTINGENCIES
3CE annually budgets for contingencies to provide sufficient working capital and a margin of safety for unplanned operational needs. The contingency is utilized only after all other budget resources have been examined.

The budgeted amount for operational contingencies shall be equal to five percent (5%) of recommended appropriations, excluding cost of energy (COE), unless expressly modified by the Policy Board as part of the annual budget adoption.

6.0 Net Position and Reserve Policies

6.1 NET POSITION
Net position is a measurement of available financial resources. It is the difference between total assets and total liabilities. The Policy Board recognizes that maintaining a positive net position is essential to preserving 3CE’s financial integrity. Sufficient net position and reserve levels are a critical component of 3CE’s overall financial management strategy. They are key factors in the ability to sustain service delivery and obtain external financing.

Rating agencies analyze net position when considering 3CE’s overall financial strength and creditworthiness.

Adequate reserves enable flexible financial planning in developing rate structures, future capital projects, dealing with unforeseen emergencies, and changes in general economic conditions.

6.2 STRATEGIC RESERVE
A strategic reserve is essential to provide an adequate financial backstop throughout the year. 3CE shall adopt a strategic reserve equal to twenty-five percent (25%) of budgeted appropriations. The strategic reserve will provide sufficient working capital (cash flow), fund settlements of legal judgments against 3CE in excess of reserves specifically designated for litigation, for natural disasters as determined by the CEO or Policy Board, and for one-time-only budget overruns that could not be addressed through the annual appropriations for contingencies. 54 Page 537 of 564
55 Subheader
If the strategic reserve is utilized to provide temporary funding for unforeseen needs, 3CE shall take the measures necessary to prevent its use in the following fiscal year by increasing revenues and/or decreasing expenditures to regain balance. 3CE shall also restore the strategic reserve to the minimum level of twenty-five percent (25%) of budgeted appropriations within three fiscal years following the fiscal year in which the event occurred. The plan to restore the strategic reserve shall be included and highlighted in the Recommended Budget.

6.3 ENERGY RATE STABILIZATION RESERVE
The agency shall maintain an energy rate stabilization reserve equal to twenty percent (20%) of the budgeted COE. This reserve serves as a financial buffer to absorb fluctuations in energy costs and to respond to unforeseen changes in market conditions or regulatory requirements that may increase power procurement expenses beyond what rate adjustments can cover.

The central purpose of this reserve is to support rate smoothing and long-term rate stability. By strategically using this reserve, 3CE pursues stable customer rates even during periods of cost volatility, strengthening its position as a load-serving entity and sustaining customer trust.

The reserve may be partially or fully accounted for under Government Accounting Standards Board (GASB) Statement 62 and GASB Statement 63, which govern the presentation of deferred outflows and inflows of resources and their effects on net position. A transfer into the reserve reduces revenue and the change in net position in the year of deferral by the same amount. A transfer from the reserve increases revenues and changes net position in the year the transfer occurs.

The reserve balance is recorded on the Statement of Net Position as unrestricted net position and, if deferred, in a separate section following liabilities, entitled Deferred Inflows of Resources. Transfers to and from the reserve are recorded in the Statements of Revenues, Expenses, and Changes in Net Position under Operating Revenues.

Any material or sustained use of the reserve shall be reflected in the Recommended Budget, including a long-term plan to replenish the reserve. This reserve may be utilized throughout the fiscal year at the direction of the CEO, with subsequent reporting to the Audit & Finance and Energy Risk Management committees and the Boards.

6.4 RENEWABLE ENERGY INNOVATION AND INITIATIVES RESERVE The agency shall maintain a renewable energy innovation and initiatives reserve equal to five percent (5%) of the budgeted COE. This reserve shall be utilized for investments in furtherance of the Boards’ goals to accelerate the utilization of 100% clean and renewable energy through the commitment to new or emerging, but scalable, technologies that can address the challenges of an intermittent renewable grid and reduce dependency on fossil fuels for electricity generation.

6.5 CAPITAL INFRASTRUCTURE RESERVE
The agency shall establish a capital infrastructure reserve sufficient to provide for the operation, routine scheduled maintenance, reasonably anticipated unplanned repair, and orderly replacement of 3CE’s capital infrastructure, including enterprise software, real estate, and electric generation and storage facilities. Funding contributions to this reserve shall be established annually through the budget process or otherwise amended by Policy Board resolution.

6.6 MEASUREMENT OF RESERVE TARGETS
Due to the nature of the agency’s business, the mechanism for funding the four reserves shall be cash, cash equivalents, and short-term investments, including any balance in the Energy Rate Stabilization Reserve held as deferred inflows. The reserves must be liquid and available to ensure they can be used for their intended purpose.

7.0 Capital Facilities and Improvement Policies

7.1 CAPITAL INVESTMENTS
3CE is responsible for investing in the preservation, maintenance, and improvement of owned assets, including buildings, equipment, and other capital infrastructure.

Projects in excess of $100,000 with an estimated useful life of at least five years and non-recurring costs are considered capital projects and should be evaluated against other uses and priorities. All capital projects should be included in the Adopted Budget or taken to the Policy Board for approval and amendment to the Adopted Budget. 55 Page 538 of 564
56 Subheader
Per Resolution No. PB-2025-04, the Executive Committee is delegated to approve capital projects that do not exceed $5,000,000 per project, with CEO approval of any necessary contracts or agreements to effectuate the approved projects within that limit.

8.0 Credit Rating, Coverage, and Liquidity Targets

8.1 RATIONALE
A strong credit profile reduces 3CE’s borrowing costs, expands access to power-supply counterparties without onerous collateral postings, and signals financial discipline to ratepayers and member agencies. 3CE manages its finances to achieve and sustain an investment-grade issuer credit rating, with the long-term objective of reaching and maintaining a rating in the A category or higher.

8.2 FINANCIAL-METRICS TARGETS
Reserves shall support a DLOH (Days Liquidity on hand) target equal to 180 days. The Financial Policies seek to achieve a long-term target of a strong investment-grade rating (A+/A1 or higher) or an equivalent rating from any nationally recognized rating organization.

8.3 LIQUIDITY FACILITIES
3CE may maintain a committed liquidity facility (revolving credit agreement or equivalent) with one or more investment-grade financial institutions. The CFO shall report annually to the Audit and Finance Committee on the status of the liquidity facility, including pricing, covenants, available headroom, and any anticipated renewal or replacement activity.

8.4 CREDIT-RATING MAINTENANCE
3CE shall maintain active relationships with at least one nationally recognized credit rating organization. The CFO shall provide the Policy Board with any updates to 3CE’s rating actions and outlook changes.

9.0 Debt Management
Due to its length and complexity, the Debt Management Policy is reviewed by the Policy Board separately from these policies.
56 Page 539 of 564
5757 Page 540 of 564
58 3CE Central Coast Community Energy
ACFR Annual Comprehensive Financial Report
BioMAT Bioenergy Market Adjusting Tariff
CAC Community Advisory Council
CAISO California Independent System Operator
CalCCA California Community Choice Association
CBO Community-Based Organization
CCA Community Choice Aggregator
CCO Chief Customer Officer
CEC California Energy Commission
CEO Chief Executive Officer
CFO Chief Financial Officer
CIR Capital Infrastructure Reserve
COE Cost of Energy
COO Chief Operations Officer
COS Cost of Service
CPO Chief Power Officer
CPUC California Public Utilities Commission
CRM Customer Relationship Management
DERMS Distributed Energy Resource Management System
ERRA Energy Resource Recovery Account
ETRM Energy Trading and Risk Management
FTE Full-Time Equivalent
GAAP Generally Accepted Accounting Principles
HRIS Human Resources Information Systems
IOU Investor-Owned Utility
kWh Kilowatt-hour
LSE Load Serving Entity
MPB Market-Price Benchmark
MWh Megawatt-hour
PCIA Power Charge Indifference Adjustment
PPA Power Purchase Agreement
RA Resource Adequacy
RPS Renewable Portfolio Standard
VPP Virtual Power Plant
Definition of Terms

5959 Page 542 of 564

RESOLUTION NO. PB-2026-05

A RESOLUTION OF THE CENTRAL COAST COMMUNITY ENERGY POLICY BOARD OF DIRECTORS ADOPTING THE FISCAL YEAR 2026-27 RECOMMENDED BUDGET AND REVISED FINANCIAL POLICIES WHEREAS, Central Coast Community Energy (3CE) is a Joint Powers Authority (JPA) established and operated pursuant to California Government Code sections 6500 et seq. to study, promote, develop, conduct, operate, and manage energy programs in the California Central Coast region of Santa Cruz, Monterey, San Benito, Santa Barbara, and San Luis Obispo counties; and
WHEREAS, 3CE is a community choice aggregator (CCA), as such term is defined in section 331.1 of the Public Utilities Code of the State of California (Public Utilities Code), that is a public agency, as such term is defined in the JPA law, which has implemented a CCA program pursuant to section 366.2 of the Public Utilities Code, and possesses the power to purchase and sell electric energy and enter related contracts for such purposes; and WHEREAS, pursuant to sections 3.3.1 and 3.3.3 (d and f) of the Joint Exercise of Powers Agreement, as amended from time to time, the Policy Board is responsible for adopting the annual operating budget and setting the 3CE electric generation rates consistent with California’s Constitution and applicable state law; and WHEREAS, on June 17, 2026, the Policy Board adopted the FY 2026-27 Financial Policies, which establish the framework within which the Recommended Budget is developed, including a balanced budget aligned to a revenue requirement determined through a cost-of-service methodology, minimal reliance on reserves and one-time funding sources for ongoing operations, competitive and stable cost-based rates, defined reserve types and targets, capital project governance thresholds, and quantified liquidity and credit-rating targets; and WHEREAS, the Financial Policies adopted in June 2026 assign defined financial responsibilities to a Chief Financial Officer, a position the agency does not maintain, and staff have therefore revised the Financial Policies to assign those responsibilities to the Policy Board-appointed Treasurer, with conforming changes to Sections 2.1, 3.3, 5.6,

8.3, and 8.4 and a corresponding update to the table of contents, as shown in redlined and clean form in Attachment B; and
WHEREAS, adopting the revised Financial Policies concurrently with the FY 2026-27 Recommended Budget provides the agency with clean and current policy authority at the commencement of the fiscal year on October 1, 2026; the Financial Policies reproduced at pages 50 through 57 of the printed FY 2026-27 Recommended Budget document reflect the version adopted on June 17, 2026, and Attachment B Revised Financial Polices shall control in the event of any inconsistency between the two; and
WHEREAS, the Recommended Budget was developed through 3CE’s five-stage annual budget process, under which each department submitted a baseline spending plan reflecting the cost to continue current operations together with augmentation requests for new or expanded staffing, programs, and capital projects, and the Chief Executive Officer reviewed and prioritized those submissions based on the reasonableness of financial assumptions, demonstrated organizational benefit, and alignment with Policy Board priorities; and WHEREAS, the Recommended Budget document was published and provided to the Policy Board not less than two weeks in advance of the annual budget hearing, consistent with Section 5.8 of the Financial Policies; and WHEREAS, the FY 2026-27 Recommended Budget totals $500,660,609 in appropriations funded by $515,282,881 in estimated financing sources; is balanced within the meaning of Section 5.2 of the Financial Policies; requires no use of reserves or one-time funding sources to finance ongoing operations; and is projected to increase net position by approximately $14,622,272; and

WHEREAS, it is recommended that currently effective rates be maintained as set forth in Resolution No. PB-2026- 01, pending additional information arising out of the Energy Resource Recovery Account (ERRA) proceedings and Power Charge Indifference Adjustment (PCIA) rates; and
WHEREAS, the FY 2026-27 Recommended Budget was presented to the Audit & Finance Committee on August 26, 2026, which recommended that the Policy Board adopt it, and the FY 2026-27 Recommended Budget and the revised Financial Policies were presented to the Operations Board on September 16, 2026; and WHEREAS, the Policy Board has carefully considered the Staff Report and accompanying exhibits, public comment, customer input, the revised Financial Policies, and comments at its publicly noticed September 17, 2026 meeting;

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

1. The Policy Board hereby adopts:
a. The FY 2026-27 Recommended Budget, with $500,660,609 in appropriations funded with $515,282,881 in operating revenue as set forth in Attachment A Summary. b. The revised FY 2026-27 Financial Policies, as set forth in Attachment B, which supersede and restate in their entirety the Financial Policies adopted by the Policy Board on June 17, 2026, take effect upon adoption of this Resolution, govern the administration of the FY 2026-27 Adopted Budget, and control over the Financial Policies reproduced in the printed FY 2026-27 Recommended Budget document in the event of any inconsistency.

2. The Policy Board hereby finds:
a. The above recitals are true and correct and substantial evidence supports them. b. Notice of public meetings at which this Resolution was considered was properly given, and all oral and written presentations made to and heard by the Policy Board were properly considered. c. The adoption of the FY 2026-27 Recommended Budget accurately represents the reasonable cost to serve customers.
d. The FY 2026-27 Recommended Budget is balanced as defined in Section 5.2 of the Financial Policies, was developed in accordance with the Financial Policies adopted herein and relies on no reserves or one-time funding sources to finance ongoing operational needs. e. That this Resolution is not subject to the California Environmental Quality Act (“CEQA”) and, therefore, an environmental review is not required pursuant to Section 21080(b)(8) of the California Public Resources Code and Sections 15273(a) and 15061(b)(3) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3 because CEQA does not apply to the establishment, modification, restructuring, or approval of rates and other charges by public agencies for purposes such as those set forth herein.

3. The Policy Board directs and authorizes:
a. The electric generation rates, effective February 15, 2026, per Resolution No. PB-2026-01 to remain in effect until the Policy Board acts on proposed 2027 electric generation rates, which staff will present for consideration in March 2027 in accordance with the rate development timeline established in 2026, pending additional information from the ERRA proceedings and 2027 PCIA rates.
b. Staff to return to the Policy Board with proposed 2027 cost-of-service rates that align revenues with the Fiscal Year 2026-27 Recommended Budget, ensuring sufficient funding of appropriations and consistency with the Board’s adopted financial policies. c. Staff to evaluate the effectiveness of its rates on an annual basis for the next fiscal year to update the approved cost of service model for the purpose of determining whether an annual rate change is necessary.

d. Staff to monitor and determine when market or industry conditions beyond 3CE’s control require the approved cost of service model and subsequent 3CE customer rates to be modified between the annual evaluations.
e. Staff to incorporate the revised Financial Policies into the agency’s official policy record and to reflect them in the next publication of the Recommended Budget document; reprinting of the FY 2026-27 Recommended Budget document is not required.
f. The CEO to take such other and further actions as may be necessary and appropriate to implement the intent and purpose of this resolution.
g. In the event of a fiscal emergency or the emergence of a significant shift in market or industry conditions threatening the fiscal stability of 3CE such that its credit rating or fiscal outlook is in danger of a downgrade, the Policy Board authorizes the Chief Executive Officer (CEO) to take immediate action to adjust the approved rates between meetings of the Policy Board when needed to achieve the goals set by the Policy Board.
h. In the event of such a fiscal emergency or threatened downgrade requiring the CEO to adjust rates between meetings of the Policy Board, the CEO shall place a report on the agenda of the next regular meeting of the Policy Board explaining the adjustment and the reasons for the adjustment and requesting that the Policy Board ratify the actions of the CEO. i. This Resolution is adopted under the authority of the Joint Exercise of Powers Agreement and state law. If any section, subsection, clause or phrase is declared invalid or otherwise void by a court of competent jurisdiction, it shall not affect any remaining provision hereof. In this regard, the Policy Board finds and declares that it would have adopted this measure notwithstanding any partial invalidity hereof.

PASSED AND ADOPTED this 17th Day of September 2026, by the following vote:

AYES:

NOES:

ABSENT:
__________________________________
Chair, Fred Keeley
__________________________________
Board Clerk, Gail Borkowski

ATTACHMENT A
FY 2026-27 Recommended Budget Summary
Prior Year
Actuals
2024-25
Adopted
Budget
2025-26
Mid-Year
Estimate
2025-26
Recommended
Budget
2026-27
Requested
Change from
Adopted
Net Electricity Sales 658,974,802 578,022,716 555,527,132 505,582,881 (72,439,835) Deferred Revenue - - (39,527,962) - -
Interest and Investment Returns 11,037,533 9,100,000 9,942,617 9,450,000 350,000 Other Income 159,518 75,000 136,849 250,000 175,000
Revenue for Damages 8,101,745 - - - -
Sub-Total Revenues $ 678,273,598 $ 587,197,716 $ 526,078,636 $ 515,282,881 $ (71,914,835) Capital Infrastructure Reserve - 1,200,000 6,741,324 - (1,200,000) Total Financing Sources $ 678,273,598 $ 588,397,716 $ 532,819,960 $ 515,282,881 $ (73,114,835) Cost of Energy 593,415,108 534,776,256 452,043,477 432,693,327 (102,082,929) Salaries and Employee Benefits 10,765,707 14,260,774 12,601,420 18,235,160 3,974,386 Services and Supplies 29,288,173 38,160,686 36,211,516 42,790,622 4,629,936 Capital Assets 276,648 1,200,000 383,219 6,941,500 5,741,500 Total Financing Uses $ 633,745,636 $ 588,397,716 $ 501,239,632 $ 500,660,609 $ (87,737,107) Total Budgeted Change to Net Position $ 44,527,962 $ 0 $ 31,580,328 $ 14,622,272 $ 14,622,272

ATTACHMENT B
Revised FY 2026-27 Financial Policies - redline

1.0 Purpose and Background
The prudent and responsible stewardship of public assets is a principal obligation of Central Coast Community Energy (3CE) officials and managers. The development and maintenance of financial policies enable 3CE officials to protect those public assets, ensure transparency, and build public trust. Financial policies define a shared understanding of how 3CE administers its financial affairs and communicates how the agency manages its resources to deliver the highest value to the communities served.

This document centralizes 3CE’s financial policies and establishes a framework for overall fiscal planning, management, and decision-making related to public assets controlled by 3CE. These policies are reviewed, updated, and brought before the Policy Board as needed, but at least annually for adoption.

This continued review and adoption promote sound financial management and help maintain 3CE’s stability, efficiency, and effectiveness by ensuring the Policy Board’s financial policy guidance is provided before 3CE takes any financial actions. The policies also offer guidelines for evaluating both current activities and proposals for future programs and direct 3CE’s financial resources toward meeting its objectives and strategic initiatives.

These policies provide general guidance in the management of 3CE’s fiscal affairs and are to be used by all 3CE employees to meet their obligation to operate in a financially prudent manner. The Recommended Budget is developed in accordance with this framework.

2.0 General Financial Policy
The cornerstone and highest priority of 3CE’s financial policies is fiscal integrity. It shall be the goal of 3CE to achieve a strong financial condition with the ability to:
• Sustain adequate financial liquidity to meet operating and contingent obligations; • Ensure a sufficient financial base is maintained to withstand local, regional, national, and global economic impacts;
• Foster the ability to adjust efficiently to the community’s changing service requirements; • Maintain and improve infrastructure and capital assets; • Regularly review operations and operational methods to improve processes that result in higher productivity and eliminate repetitive and duplicative functions; • Encourage collaboration with other government entities, the private sector, and public-private partnerships where cost and risk are minimized in the delivery of services; • Promote sharing of costs and benefits by service users; • Ensure the legal use of financial resources through an effective system of internal controls; • Support sound financial management by providing accurate and timely information on 3CE’s financial condition; and
• Provide a framework for the wise and prudent use of debt financing and maintain a strong credit rating in the financial community, with the long-term goal of achieving and sustaining a rating in the A category or higher.

2.1 The Annual Budget
The Chief Executive Officer (CEO) will recommend a balanced budget that:
• Aligns annual expenditures with the revenue requirement established through a cost-of-service methodology;

• Minimizes reliance on reserves and one-time funding sources for ongoing operations; and • Maintains competitive, cost-based rates while supporting 3CE’s renewable energy goals.

Through the CEO, the Treasurer will consult with 3CE Officers and seek their input in developing the Recommended Budget through cooperative discussions and financial education. The CEO will keep the Policy Board apprised of the condition of 3CE’s finances and emerging fiscal issues.

3.0 Roles and Functions

3.1 Role of Chief Executive Officer
The CEO serves as the chief policy advisor to the Policy Board, Operations Board, and the various Board committees. The CEO promotes responsible resource allocation, strives to protect 3CE’s financial position and integrity, and provides independent analysis on policy and financial issues. The CEO is the fund manager for 3CE’s enterprise fund and any other funds that may be created.

3.2 Principal Functions of the Chief Executive Officer
Principal functions of the CEO include:
• Promoting continuous improvement of the structures, systems, processes, and effectiveness of operations;
• Preparing the annual financial plan (Recommended Budget); • Evaluating potential federal, state, and local budget impacts; • Developing financial forecasts;
• Monitoring revenues and expenditures for conformance with the annual budget; • Recommending effective fiscal policies to carry out the 3CE mission; • Verifying Policy Board policies are consistently applied; and • Ensuring items brought before the Policy Board are transparent, accurate, complete, fully justified, and reviewed by appropriate stakeholders.

3.3 Principal Functions of the Treasurer
Principal functions of the Treasurer include:
• Carrying out financial operations efficiently and cost-effectively while adhering to all 3CE, state, and federal laws, regulations, and policies;
• Preparing budgets and financial estimates with attention to accuracy based on financial expertise, state, and federal funding and regulatory changes, and economic indicators affecting revenues, expenditures, and service levels;
• Reviewing, evaluating, and assessing potential federal and state budget and regulatory issues that may impact the agency;
• Developing and performing financial forecasts;
• Monitoring monthly revenue, expenditure, and cash flow performance and conformance with the Adopted Budget;
• Meeting the Policy Board’s strategic financial initiatives and policies; and • Ensuring items brought before the Policy Board are transparent, accurate, complete, fully justified, and reviewed by all appropriate stakeholders.
• In the absence or unavailability of the Treasurer, or during a vacancy in the office, the CEO or a 3CE employee designated by the CEO in writing may perform the functions and responsibilities assigned to the Treasurer under this policy.

3.4 Principal Functions of the Audit and Finance Committee The Audit and Finance Committee’s principal functions include receiving staff updates on financial issues and providing oversight and direction to staff in developing and modifying the budget and audits.

3.5 Principal Functions of the Energy Risk Management Committee The Energy Risk Management Committee is formed by the CEO to implement and maintain the Energy Risk Management Policy, which requires 3CE to maintain sufficient financial reserves to:
• Establish long-term business sustainability;
• Build collateral for power procurement activities;
• Maintain an investment-grade credit rating;
• Develop funding sources for investment in generation and other local initiatives; and • Reduce the business and customer impact of year-to-year volatility in energy markets and procurement costs.

4.0 Services and Fund Structure

4.1 Enterprise Fund
3CE operates as an enterprise fund. The enterprise fund accounts for revenues and expenditures for all 3CE activities. The fund’s operations are financed and operated like private business enterprises, with services primarily funded through user charges (electric generation rates).

4.2 Expenses
Enterprise fund expenses and revenues will be established at sufficient levels to properly maintain the fund’s infrastructure and provide significant capital development.

4.3 Rate Structure and Net Position
The enterprise fund will maintain an adequate rate structure to cover the cost of all operations, including cash flow, capital replacement and maintenance, debt service if applicable, contingency funding, reserve contributions, and depreciation. Rates may be offset from the available unreserved net position, including the Energy Rate Stabilization Reserve, only after these requirements are met.

5.0 Operating Budget

5.1 The Budget
The Recommended Budget is the central financial planning document that sets the agency’s goals, objectives, priorities, levels of service, and the associated operating revenue and expenditures.

Expenditures are recommended based on the relationship between expected expenditures and revenue. If revenues are estimated to fall below expected amounts, the agency will take all actions available to reestablish a revenue and expenditure relationship that conforms to the operating requirements.

The Recommended Budget shall be presented to the Policy Board for adoption in September of each year and clearly presented to a general audience of the public.

5.2 Balance Budget
A budget is balanced when the total estimated financing sources (beginning net position plus revenues) equal the total expenditures. At no time shall spending in a given year exceed total current estimated

revenues plus any net positive position (reserved and non-reserved).

5.3 Ongoing Operations Needs
3CE will adequately fund ongoing maintenance and operational needs with ongoing annual revenue.

Without prior direction and approval from the Policy Board, the use of one-time revenues or short-term borrowing is not allowed as a resource for financing ongoing operational needs.

5.4 Capital Facilities and Equipment
3CE shall establish as a primary fiscal responsibility the acquisition, preservation, maintenance, improvement, and, when applicable, orderly replacement of 3CE’s capital facilities and equipment. 3CE shall endeavor to purchase a permanent headquarters and appropriate regional offices to provide continuity of location and operations while stabilizing and controlling facility costs into the future. 3CE will acquire and maintain high-quality equipment to maximize useful life and ensure efficient operations.

5.5 Appropriations and Transfers
The agency enterprise fund is not constrained by appropriation controls. The CEO is charged with maintaining the relationship between financing uses and sources and shall report to the Policy Board any deviation exceeding the adopted budget. The CEO is authorized to make appropriation transfers between departments within the enterprise fund as necessary to adequately reflect the agency's expenditure needs.

5.6 Responsibility for Budget Management and Budgetary Control 3CE shall maintain a budgetary control system to help it adhere to the adopted budget. The CEO has budgetary control and authority over expenditures. The Treasurer shall administer and maintain the system utilized for budgetary control. As the administrator of the budgetary control system, the Treasurer shall notify the CEO when a department approaches its expenditure limit. The Treasurer shall seek guidance from the CEO on all issues relating to expenditures and controls. 3CE Officers, in coordination with the Treasurer, have primary responsibility for managing departmental budgets by:
• Providing accurate and timely budget estimates;
• Monitoring revenues to ensure timely receipt in the amounts anticipated; • Ensuring that expenditures comply with the law, adopted resolutions, policies, and align appropriations relative to revenues;
• Providing prompt notification to the CEO when either revenues or expenditures are not as anticipated; and
• Preparing and justifying budget revisions when necessary

5.7 Preparation of Financial Reports
The CEO annually prepares or causes to be prepared:
• An Annual Comprehensive Financial Report (ACFR) that reports on 3CE’s financial position and activities, adhering to Generally Accepted Accounting Principles (GAAP) or state law requirements, to provide readers with a broader understanding of the agency’s financial operations; • A mid-year estimate to provide current-year performance and three-year forecast to advise the Policy Board on future challenges and provide a base for building the following year’s Recommended Budget; and
• Additional reports, as appropriate, to keep the Policy Board informed on current financial performance and developments.

The CEO has oversight and contract management over the external auditors reviewing the ACFR.

External auditors shall report to the CEO or designated officer on audit findings. The CEO will thereafter take the audit findings to the Policy Board.

5.8 Publication of Budget
The CEO shall publish annually a Recommended Budget document that satisfies nationally recognized standards for effective budget presentation. The Recommended Budget will be provided to the Policy Board a minimum of two weeks in advance of the annual budget hearings.

5.9 Budget Development
Budget development is an annual process incorporating the Policy Board’s priorities and weighing competing requests for 3CE resources within expected fiscal constraints. The process begins with departments preparing “baseline” budgets proposing levels of service and staffing that can be carried out within expected resources (e.g., revenues). Departments may submit “augmentation requests” for additional resources to mitigate potential impacts, increase staffing/services, or invest in infrastructure.

The CEO evaluates baseline budgets and augmentation requests within the constraints of a balanced budget and builds the annual Recommended Budget. Staff considers the following criteria in formulating recommendations for the annual budget and subsequent mid-year budget modifications:
• Mandated by current law, regulation, or Policy Board policy; • Alignment with 3CE’s strategic initiatives and priorities; • Necessary to maintain the current level of mission-critical services/operations; • Substantiation of compelling public need (e.g., health, safety, economic vitality, quality of life) that cannot be met within existing resources;
• Likelihood of success based on prior performance, degree of planning/specificity, requested resources, and assumed timeline;
• Leverages sustainable financial support from non-3CE sources; • Appropriate placement of responsibility (federal, state, or local); • Degree of urgency; and
• Critical infrastructure investment to ensure productivity and continuity of operations.

Criteria in the listing are not exhaustive or in any particular order, nor are they mutually exclusive; funding recommendations may align with more than one criterion.

5.10 Amendments to the Adopted Budget
Modifications to the Adopted Budget require the approval of a majority of Policy Board members.

Amendments to the Adopted Budget will be made in compliance with Policy Board policies. As an enterprise fund, the relationship between financing uses and financing sources is the overriding principle; thus, appropriation controls are not required.

5.11 Budgetary Basis
3CE uses the full accrual basis of accounting following GAAP. The budgetary basis is appropriation-based, beginning on October 1 and ending on the last day of September each year. 3CE is an enterprise fund that is appropriation-based budgeted; however, accounting is on a full accrual basis.

5.12 Capital Asset Definition
3CE defines capital assets as assets with initial, individual costs of $5,000 or more and an estimated useful life greater than one year, except infrastructure, for which the threshold is set at $100,000. Capital assets include both tangible and intangible assets categorized by asset type for reporting purposes.

Infrastructure refers to long-lived capital assets that are typically stationary and can be preserved for significantly longer than most other capital assets. Infrastructure assets typically include, but are not limited to, energy generation and storage facilities, electric distribution systems, and grid interconnection infrastructure.

5.13 Appropriations for Contingencies
3CE annually budgets for contingencies to provide sufficient working capital and a margin of safety for unplanned operational needs. The contingency is utilized only after all other budget resources have been examined. The budgeted amount for operational contingencies shall be equal to five percent (5%) of recommended appropriations, excluding cost of energy (COE), unless expressly modified by the Policy Board as part of the annual budget adoption.

6.0 Net Position and Reserve Policies

6.1 Net Position
Net position is a measurement of available financial resources. It is the difference between total assets and total liabilities. The Policy Board recognizes that maintaining a positive net position is essential to preserving 3CE’s financial integrity. Sufficient net position and reserve levels are a critical component of 3CE’s overall financial management strategy. They are key factors in the ability to sustain service delivery and obtain external financing. Rating agencies analyze net position when considering 3CE’s overall financial strength and creditworthiness. Adequate reserves enable flexible financial planning in developing rate structures, future capital projects, dealing with unforeseen emergencies, and changes in general economic conditions.

6.2 Strategic Reserve
A strategic reserve is essential to provide an adequate financial backstop throughout the year. 3CE shall adopt a strategic reserve equal to twenty-five percent (25%) of budgeted appropriations. The strategic reserve will provide sufficient working capital (cash flow), fund settlements of legal judgments against 3CE in excess of reserves specifically designated for litigation, for natural disasters as determined by the CEO or Policy Board, and for one-time-only budget overruns that could not be addressed through the annual appropriations for contingencies.

If the strategic reserve is utilized to provide temporary funding for unforeseen needs, 3CE shall take the measures necessary to prevent its use in the following fiscal year by increasing revenues and/or decreasing expenditures to regain balance. 3CE shall also restore the strategic reserve to the minimum level of twenty-five percent (25%) of budgeted appropriations within three fiscal years following the fiscal year in which the event occurred. The plan to restore the strategic reserve shall be included and highlighted in the Recommended Budget.

6.3 Energy Rate Stabilization Reserve
The agency shall maintain an energy rate stabilization reserve equal to twenty (20%) of the budgeted COE.

This reserve serves as a financial buffer to absorb fluctuations in energy costs and to respond to unforeseen changes in market conditions or regulatory requirements that may increase power procurement expenses beyond what rate adjustments can cover.

The central purpose of this reserve is to support rate smoothing and long-term rate stability. By

strategically using this reserve, 3CE pursues stable customer rates even during periods of cost volatility, strengthening its position as a load-serving entity and sustaining customer trust.

The reserve may be partially or fully accounted for under Government Accounting Standards Board (GASB) Statement 62 and GASB Statement 63, which govern the presentation of deferred outflows and inflows of resources and their effects on net position. A transfer into the reserve reduces revenue and the change in net position in the year of deferral by the same amount. A transfer from the reserve increases revenues and changes net position in the year the transfer occurs.

The reserve balance is recorded on the Statement of Net Position as unrestricted net position and, if deferred, in a separate section following liabilities, entitled Deferred Inflows of Resources. Transfers to and from the reserve are recorded in the Statements of Revenues, Expenses, and Changes in Net Position under Operating Revenues.

Any material or sustained use of the reserve shall be reflected in the Recommended Budget, including a long-term plan to replenish the reserve. This reserve may be utilized throughout the fiscal year at the direction of the CEO, with subsequent reporting to the Audit and Finance and Energy Risk Management committees and the Boards.

6.4 Renewable Energy Innovation and Initiatives Reserve The agency shall maintain a renewable energy innovation and initiatives reserve equal to five percent (5%) of the budgeted COE. This reserve shall be utilized for investments in furtherance of the Boards’ goals to accelerate the utilization of 100% clean and renewable energy through the commitment to new or emerging, but scalable, technologies that can address the challenges of an intermittent renewable grid and reduce dependency on fossil fuels for electricity generation.

6.5 Capital Infrastructure Reserve
The agency shall establish a capital infrastructure reserve sufficient to provide for the operation, routine scheduled maintenance, reasonably anticipated unplanned repair, and orderly replacement of 3CE’s capital infrastructure, including enterprise software, real estate, and electric generation and storage facilities. Funding contributions to this reserve shall be established annually through the budget process or otherwise amended by Policy Board resolution.

6.6 Measurement of Reserve Targets
Due to the nature of the agency's business, the mechanism for funding the four reserves shall be cash, cash equivalents, and short-term investments, including any balance in the Energy Rate Stabilization Reserve held as deferred inflows. The reserves must be liquid and available to ensure they can be used for their intended purpose.

7.0 Capital Facilities and Improvement Policies

7.1 Capital Investments
3CE is responsible for investing in the preservation, maintenance, and improvement of owned assets, including buildings, equipment, and other capital infrastructure.

Projects in excess of $100,000 with an estimated useful life of at least 5 years and non-recurring costs are considered capital projects and should be evaluated against other uses and priorities. All capital projects

should be included in the Adopted Budget or taken to the Policy Board for approval and amendment to the Adopted Budget.

Per Resolution No. PB-2025-04, the Executive Committee is delegated to approve capital projects that do not exceed $5,000,000 per project, with CEO approval of any necessary contracts or agreements to effectuate the approved projects within that limit.

8.0 Credit Rating, Coverage, and Liquidity Targets

8.1 Rationale
A strong credit profile reduces 3CE’s borrowing costs, expands access to power-supply counterparties without onerous collateral postings, and signals financial discipline to ratepayers and member agencies. 3CE manages its finances to achieve and sustain an investment-grade issuer credit rating, with the long-term objective of reaching and maintaining a rating in the A category or higher.

8.2 Financial-Metrics Targets
Reserves shall support a DLOH (Days Liquidity on hand) target equal to 180 days. The Financial Policies seek to achieve a long-term target of a strong investment-grade rating (A+/A1 or higher) or an equivalent rating from any nationally recognized rating organization.

8.3 Liquidity Facilities
3CE may maintain a committed liquidity facility (revolving credit agreement or equivalent) with one or more investment-grade financial institutions. The Treasurer shall report annually to the Audit and Finance Committee on the status of the liquidity facility, including pricing, covenants, available headroom, and any anticipated renewal or replacement activity.

8.4 Credit-Rating Maintenance
3CE shall maintain active relationships with at least one nationally recognized credit rating organization.

The Treasurer shall provide the Policy Board with any updates to 3CE’s rating actions and outlook changes.

9.0 Debt Management
Due to its length and complexity, the Debt Management Policy is reviewed by the Policy Board separately from these policies.

Revised FY 2026-27 Financial Policies – clean

1.0 Purpose and Background
The prudent and responsible stewardship of public assets is a principal obligation of Central Coast Community Energy (3CE) officials and managers. The development and maintenance of financial policies enable 3CE officials to protect those public assets, ensure transparency, and build public trust. Financial policies define a shared understanding of how 3CE administers its financial affairs and communicates how the agency manages its resources to deliver the highest value to the communities served.

This document centralizes 3CE’s financial policies and establishes a framework for overall fiscal planning, management, and decision-making related to public assets controlled by 3CE. These policies are reviewed, updated, and brought before the Policy Board as needed, but at least annually for adoption.

This continued review and adoption promote sound financial management and help maintain 3CE’s stability, efficiency, and effectiveness by ensuring the Policy Board’s financial policy guidance is provided before 3CE takes any financial actions. The policies also offer guidelines for evaluating both current activities and proposals for future programs and direct 3CE’s financial resources toward meeting its objectives and strategic initiatives.

These policies provide general guidance in the management of 3CE’s fiscal affairs and are to be used by all 3CE employees to meet their obligation to operate in a financially prudent manner. The Recommended Budget is developed in accordance with this framework.

2.0 General Financial Policy
The cornerstone and highest priority of 3CE’s financial policies is fiscal integrity. It shall be the goal of 3CE to achieve a strong financial condition with the ability to:
• Sustain adequate financial liquidity to meet operating and contingent obligations; • Ensure a sufficient financial base is maintained to withstand local, regional, national, and global economic impacts;
• Foster the ability to adjust efficiently to the community’s changing service requirements; • Maintain and improve infrastructure and capital assets; • Regularly review operations and operational methods to improve processes that result in higher productivity and eliminate repetitive and duplicative functions; • Encourage collaboration with other government entities, the private sector, and public-private partnerships where cost and risk are minimized in the delivery of services; • Promote sharing of costs and benefits by service users; • Ensure the legal use of financial resources through an effective system of internal controls; • Support sound financial management by providing accurate and timely information on 3CE’s financial condition; and
• Provide a framework for the wise and prudent use of debt financing and maintain a strong credit rating in the financial community, with the long-term goal of achieving and sustaining a rating in the A category or higher.

2.1 The Annual Budget
The Chief Executive Officer (CEO) will recommend a balanced budget that:
• Aligns annual expenditures with the revenue requirement established through a cost-of-service methodology;
• Minimizes reliance on reserves and one-time funding sources for ongoing operations; and • Maintains competitive, cost-based rates while supporting 3CE’s renewable energy goals.

Through the CEO, the Treasurer will consult with 3CE Officers and seek their input in developing the Recommended Budget through cooperative discussions and financial education. The CEO will keep the Policy Board apprised of the condition of 3CE’s finances and emerging fiscal issues.

3.0 Roles and Functions

3.1 Role of Chief Executive Officer
The CEO serves as the chief policy advisor to the Policy Board, Operations Board, and the various Board committees. The CEO promotes responsible resource allocation, strives to protect 3CE’s financial position and integrity, and provides independent analysis on policy and financial issues. The CEO is the fund manager for 3CE’s enterprise fund and any other funds that may be created.

3.2 Principal Functions of the Chief Executive Officer
Principal functions of the CEO include:
• Promoting continuous improvement of the structures, systems, processes, and effectiveness of operations;
• Preparing the annual financial plan (Recommended Budget); • Evaluating potential federal, state, and local budget impacts; • Developing financial forecasts;
• Monitoring revenues and expenditures for conformance with the annual budget; • Recommending effective fiscal policies to carry out the 3CE mission; • Verifying Policy Board policies are consistently applied; and • Ensuring items brought before the Policy Board are transparent, accurate, complete, fully justified, and reviewed by appropriate stakeholders.

3.3 Principal Functions of the Treasurer
Principal functions of the Treasurer include:
• Carrying out financial operations efficiently and cost-effectively while adhering to all 3CE, state, and federal laws, regulations, and policies;
• Preparing budgets and financial estimates with attention to accuracy based on financial expertise, state, and federal funding and regulatory changes, and economic indicators affecting revenues, expenditures, and service levels;
• Reviewing, evaluating, and assessing potential federal and state budget and regulatory issues that may impact the agency;
• Developing and performing financial forecasts;
• Monitoring monthly revenue, expenditure, and cash flow performance and conformance with the Adopted Budget;
• Meeting the Policy Board’s strategic financial initiatives and policies; and • Ensuring items brought before the Policy Board are transparent, accurate, complete, fully justified, and reviewed by all appropriate stakeholders.
• In the absence or unavailability of the Treasurer, or during a vacancy in the office, the CEO or a 3CE employee designated by the CEO in writing may perform the functions and responsibilities assigned to the Treasurer under this policy.

3.4 Principal Functions of the Audit and Finance Committee The Audit and Finance Committee’s principal functions include receiving staff updates on financial issues and providing oversight and direction to staff in developing and modifying the budget and audits.

3.5 Principal Functions of the Energy Risk Management Committee The Energy Risk Management Committee is formed by the CEO to implement and maintain the Energy Risk Management Policy, which requires 3CE to maintain sufficient financial reserves to:
• Establish long-term business sustainability;
• Build collateral for power procurement activities;
• Maintain an investment-grade credit rating;
• Develop funding sources for investment in generation and other local initiatives; and • Reduce the business and customer impact of year-to-year volatility in energy markets and procurement costs.

4.0 Services and Fund Structure

4.1 Enterprise Fund
3CE operates as an enterprise fund. The enterprise fund accounts for revenues and expenditures for all 3CE activities. The fund’s operations are financed and operated like private business enterprises, with services primarily funded through user charges (electric generation rates).

4.2 Expenses
Enterprise fund expenses and revenues will be established at sufficient levels to properly maintain the fund’s infrastructure and provide significant capital development.

4.3 Rate Structure and Net Position
The enterprise fund will maintain an adequate rate structure to cover the cost of all operations, including cash flow, capital replacement and maintenance, debt service if applicable, contingency funding, reserve contributions, and depreciation. Rates may be offset from the available unreserved net position, including the Energy Rate Stabilization Reserve, only after these requirements are met.

5.0 Operating Budget

5.1 The Budget
The Recommended Budget is the central financial planning document that sets the agency’s goals, objectives, priorities, levels of service, and the associated operating revenue and expenditures.

Expenditures are recommended based on the relationship between expected expenditures and revenue. If revenues are estimated to fall below expected amounts, the agency will take all actions available to reestablish a revenue and expenditure relationship that conforms to the operating requirements.

The Recommended Budget shall be presented to the Policy Board for adoption in September of each year and clearly presented to a general audience of the public.

5.2 Balance Budget
A budget is balanced when the total estimated financing sources (beginning net position plus revenues) equal the total expenditures. At no time shall spending in a given year exceed total current estimated

revenues plus any net positive position (reserved and non-reserved).

5.3 Ongoing Operations Needs
3CE will adequately fund ongoing maintenance and operational needs with ongoing annual revenue.

Without prior direction and approval from the Policy Board, the use of one-time revenues or short-term borrowing is not allowed as a resource for financing ongoing operational needs.

5.4 Capital Facilities and Equipment
3CE shall establish as a primary fiscal responsibility the acquisition, preservation, maintenance, improvement, and, when applicable, orderly replacement of 3CE’s capital facilities and equipment. 3CE shall endeavor to purchase a permanent headquarters and appropriate regional offices to provide continuity of location and operations while stabilizing and controlling facility costs into the future. 3CE will acquire and maintain high-quality equipment to maximize useful life and ensure efficient operations.

5.5 Appropriations and Transfers
The agency enterprise fund is not constrained by appropriation controls. The CEO is charged with maintaining the relationship between financing uses and sources and shall report to the Policy Board any deviation exceeding the adopted budget. The CEO is authorized to make appropriation transfers between departments within the enterprise fund as necessary to adequately reflect the agency's expenditure needs.

5.6 Responsibility for Budget Management and Budgetary Control 3CE shall maintain a budgetary control system to help it adhere to the adopted budget. The CEO has budgetary control and authority over expenditures. The Treasurer shall administer and maintain the system utilized for budgetary control. As the administrator of the budgetary control system, the Treasurer shall notify the CEO when a department approaches its expenditure limit. The Treasurer shall seek guidance from the CEO on all issues relating to expenditures and controls. 3CE Officers, in coordination with the Treasurer, have primary responsibility for managing departmental budgets by:
• Providing accurate and timely budget estimates;
• Monitoring revenues to ensure timely receipt in the amounts anticipated; • Ensuring that expenditures comply with the law, adopted resolutions, policies, and align appropriations relative to revenues;
• Providing prompt notification to the CEO when either revenues or expenditures are not as anticipated; and
• Preparing and justifying budget revisions when necessary

5.7 Preparation of Financial Reports
The CEO annually prepares or causes to be prepared:
• An Annual Comprehensive Financial Report (ACFR) that reports on 3CE’s financial position and activities, adhering to Generally Accepted Accounting Principles (GAAP) or state law requirements, to provide readers with a broader understanding of the agency’s financial operations; • A mid-year estimate to provide current-year performance and three-year forecast to advise the Policy Board on future challenges and provide a base for building the following year’s Recommended Budget; and
• Additional reports, as appropriate, to keep the Policy Board informed on current financial performance and developments.

The CEO has oversight and contract management over the external auditors reviewing the ACFR.

External auditors shall report to the CEO or designated officer on audit findings. The CEO will thereafter take the audit findings to the Policy Board.

5.8 Publication of Budget
The CEO shall publish annually a Recommended Budget document that satisfies nationally recognized standards for effective budget presentation. The Recommended Budget will be provided to the Policy Board a minimum of two weeks in advance of the annual budget hearings.

5.9 Budget Development
Budget development is an annual process incorporating the Policy Board’s priorities and weighing competing requests for 3CE resources within expected fiscal constraints. The process begins with departments preparing “baseline” budgets proposing levels of service and staffing that can be carried out within expected resources (e.g., revenues). Departments may submit “augmentation requests” for additional resources to mitigate potential impacts, increase staffing/services, or invest in infrastructure.

The CEO evaluates baseline budgets and augmentation requests within the constraints of a balanced budget and builds the annual Recommended Budget. Staff considers the following criteria in formulating recommendations for the annual budget and subsequent mid-year budget modifications:
• Mandated by current law, regulation, or Policy Board policy; • Alignment with 3CE’s strategic initiatives and priorities; • Necessary to maintain the current level of mission-critical services/operations; • Substantiation of compelling public need (e.g., health, safety, economic vitality, quality of life) that cannot be met within existing resources;
• Likelihood of success based on prior performance, degree of planning/specificity, requested resources, and assumed timeline;
• Leverages sustainable financial support from non-3CE sources; • Appropriate placement of responsibility (federal, state, or local); • Degree of urgency; and
• Critical infrastructure investment to ensure productivity and continuity of operations.

Criteria in the listing are not exhaustive or in any particular order, nor are they mutually exclusive; funding recommendations may align with more than one criterion.

5.10 Amendments to the Adopted Budget
Modifications to the Adopted Budget require the approval of a majority of Policy Board members.

Amendments to the Adopted Budget will be made in compliance with Policy Board policies. As an enterprise fund, the relationship between financing uses and financing sources is the overriding principle; thus, appropriation controls are not required.

5.11 Budgetary Basis
3CE uses the full accrual basis of accounting following GAAP. The budgetary basis is appropriation-based, beginning on October 1 and ending on the last day of September each year. 3CE is an enterprise fund that is appropriation-based budgeted; however, accounting is on a full accrual basis.

5.12 Capital Asset Definition
3CE defines capital assets as assets with initial, individual costs of $5,000 or more and an estimated useful life greater than one year, except infrastructure, for which the threshold is set at $100,000. Capital assets include both tangible and intangible assets categorized by asset type for reporting purposes.

Infrastructure refers to long-lived capital assets that are typically stationary and can be preserved for significantly longer than most other capital assets. Infrastructure assets typically include, but are not limited to, energy generation and storage facilities, electric distribution systems, and grid interconnection infrastructure.

5.13 Appropriations for Contingencies
3CE annually budgets for contingencies to provide sufficient working capital and a margin of safety for unplanned operational needs. The contingency is utilized only after all other budget resources have been examined. The budgeted amount for operational contingencies shall be equal to five percent (5%) of recommended appropriations, excluding cost of energy (COE), unless expressly modified by the Policy Board as part of the annual budget adoption.

6.0 Net Position and Reserve Policies

6.1 Net Position
Net position is a measurement of available financial resources. It is the difference between total assets and total liabilities. The Policy Board recognizes that maintaining a positive net position is essential to preserving 3CE’s financial integrity. Sufficient net position and reserve levels are a critical component of 3CE’s overall financial management strategy. They are key factors in the ability to sustain service delivery and obtain external financing. Rating agencies analyze net position when considering 3CE’s overall financial strength and creditworthiness. Adequate reserves enable flexible financial planning in developing rate structures, future capital projects, dealing with unforeseen emergencies, and changes in general economic conditions.

6.2 Strategic Reserve
A strategic reserve is essential to provide an adequate financial backstop throughout the year. 3CE shall adopt a strategic reserve equal to twenty-five percent (25%) of budgeted appropriations. The strategic reserve will provide sufficient working capital (cash flow), fund settlements of legal judgments against 3CE in excess of reserves specifically designated for litigation, for natural disasters as determined by the CEO or Policy Board, and for one-time-only budget overruns that could not be addressed through the annual appropriations for contingencies.

If the strategic reserve is utilized to provide temporary funding for unforeseen needs, 3CE shall take the measures necessary to prevent its use in the following fiscal year by increasing revenues and/or decreasing expenditures to regain balance. 3CE shall also restore the strategic reserve to the minimum level of twenty-five percent (25%) of budgeted appropriations within three fiscal years following the fiscal year in which the event occurred. The plan to restore the strategic reserve shall be included and highlighted in the Recommended Budget.

6.3 Energy Rate Stabilization Reserve
The agency shall maintain an energy rate stabilization reserve equal to twenty (20%) of the budgeted COE.

This reserve serves as a financial buffer to absorb fluctuations in energy costs and to respond to unforeseen changes in market conditions or regulatory requirements that may increase power procurement expenses beyond what rate adjustments can cover.

The central purpose of this reserve is to support rate smoothing and long-term rate stability. By

strategically using this reserve, 3CE pursues stable customer rates even during periods of cost volatility, strengthening its position as a load-serving entity and sustaining customer trust.

The reserve may be partially or fully accounted for under Government Accounting Standards Board (GASB) Statement 62 and GASB Statement 63, which govern the presentation of deferred outflows and inflows of resources and their effects on net position. A transfer into the reserve reduces revenue and the change in net position in the year of deferral by the same amount. A transfer from the reserve increases revenues and changes net position in the year the transfer occurs.

The reserve balance is recorded on the Statement of Net Position as unrestricted net position and, if deferred, in a separate section following liabilities, entitled Deferred Inflows of Resources. Transfers to and from the reserve are recorded in the Statements of Revenues, Expenses, and Changes in Net Position under Operating Revenues.

Any material or sustained use of the reserve shall be reflected in the Recommended Budget, including a long-term plan to replenish the reserve. This reserve may be utilized throughout the fiscal year at the direction of the CEO, with subsequent reporting to the Audit and Finance and Energy Risk Management committees and the Boards.

6.4 Renewable Energy Innovation and Initiatives Reserve The agency shall maintain a renewable energy innovation and initiatives reserve equal to five percent (5%) of the budgeted COE. This reserve shall be utilized for investments in furtherance of the Boards’ goals to accelerate the utilization of 100% clean and renewable energy through the commitment to new or emerging, but scalable, technologies that can address the challenges of an intermittent renewable grid and reduce dependency on fossil fuels for electricity generation.

6.5 Capital Infrastructure Reserve
The agency shall establish a capital infrastructure reserve sufficient to provide for the operation, routine scheduled maintenance, reasonably anticipated unplanned repair, and orderly replacement of 3CE’s capital infrastructure, including enterprise software, real estate, and electric generation and storage facilities. Funding contributions to this reserve shall be established annually through the budget process or otherwise amended by Policy Board resolution.

6.6 Measurement of Reserve Targets
Due to the nature of the agency's business, the mechanism for funding the four reserves shall be cash, cash equivalents, and short-term investments, including any balance in the Energy Rate Stabilization Reserve held as deferred inflows. The reserves must be liquid and available to ensure they can be used for their intended purpose.

7.0 Capital Facilities and Improvement Policies

7.1 Capital Investments
3CE is responsible for investing in the preservation, maintenance, and improvement of owned assets, including buildings, equipment, and other capital infrastructure.

Projects in excess of $100,000 with an estimated useful life of at least 5 years and non-recurring costs are considered capital projects and should be evaluated against other uses and priorities. All capital projects

should be included in the Adopted Budget or taken to the Policy Board for approval and amendment to the Adopted Budget.

Per Resolution No. PB-2025-04, the Executive Committee is delegated to approve capital projects that do not exceed $5,000,000 per project, with CEO approval of any necessary contracts or agreements to effectuate the approved projects within that limit.

8.0 Credit Rating, Coverage, and Liquidity Targets

8.1 Rationale
A strong credit profile reduces 3CE’s borrowing costs, expands access to power-supply counterparties without onerous collateral postings, and signals financial discipline to ratepayers and member agencies. 3CE manages its finances to achieve and sustain an investment-grade issuer credit rating, with the long-term objective of reaching and maintaining a rating in the A category or higher.

8.2 Financial-Metrics Targets
Reserves shall support a DLOH (Days Liquidity on hand) target equal to 180 days. The Financial Policies seek to achieve a long-term target of a strong investment-grade rating (A+/A1 or higher) or an equivalent rating from any nationally recognized rating organization.

8.3 Liquidity Facilities
3CE may maintain a committed liquidity facility (revolving credit agreement or equivalent) with one or more investment-grade financial institutions. The Treasurer shall report annually to the Audit and Finance Committee on the status of the liquidity facility, including pricing, covenants, available headroom, and any anticipated renewal or replacement activity.

8.4 Credit-Rating Maintenance
3CE shall maintain active relationships with at least one nationally recognized credit rating organization.

The Treasurer shall provide the Policy Board with any updates to 3CE’s rating actions and outlook changes.

9.0 Debt Management
Due to its length and complexity, the Debt Management Policy is reviewed by the Policy Board separately from these policies.

Staff Report Item 12
TO: 3CE Policy Board of Directors
FROM: Policy Board Nominating Committee
PREPARED BY: Gail T. Borkowski, Board Clerk
SUBJECT: Consider and Appoint Candidates for Policy Board Chair and Vice Chair DATE: September 17, 2026
RECOMMENDATION:

The Policy Board Nominating Committee will present its Policy Board Chair and Vice Chair candidates for consideration and action by the full Policy Board.

BACKGROUND / DISCUSSION:

Pursuant to Section 3.9 of the 3CE Joint Powers Authority Agreement and Article VI, Section 4, of the 3CE Operating Rules and Procedures the Chair and Vice Chair serve one-year terms with no limit to the number of terms they may serve. Further, the term does not expire until the annual meeting of the Board.

Chair Keeley appointed a Nominating Committee consisting of himself, Director Hartmann, and Director Daniels. The Committee solicited interest from Directors and subsequently confirmed that the nominated individuals were willing to serve in the capacity for which they are nominated.

The Committee is putting forth Director Ortiz-Legg as Chair for 2026-2027 and Director Barajas as Vice Chair.

The Board may also accept nominations from the floor.

FISCAL IMPACT:

None