3.3. Vehicle replacement and procurement plans should note opportunities to consolidate and “right-size” vehicles, when applicable. Underutilized vehicles provide an opportunity to meet fleet needs with fewer vehicles. “Right-sizing” considers replacement with a smaller vehicle, especially in cases where the duty cycle or use has changed.
3.4. Recommend where cost savings and efficiencies can be realized to offset the remaining procurement costs.
Payment Milestone: Task 2
50% of Task 2 fee as stated in Table 4 shall be payable upon completion of Task 2, Subtasks 1-
3. 4. Energy needs assessment.
4.1. Provide an assessment of energy needs for the electric fleet, including a calculation of
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each vehicle replacement’s estimated annual electricity needs. The assessment will consider the prime locations for where vehicles will reside and identify if electrical distribution upgrades or new electrical service will be necessary to accommodate the expected energy loads from the new and planned electric fleet. Document overall charger needs for all domicile facilities.
5. Deadlines and future opportunities.
5.1. The Fleet Replacement Plan shall specify any deadlines for fleet transition associated with State requirements, including California Air Resources Board (CARB) Advanced Clean Fleet regulations, and any other Member Agency goals for a zero-emission fleet.
5.2. The Fleet Replacement Plan will highlight vehicle and charging technologies that are on the horizon and align with CPA's vision of a clean energy future.
5.3. The Fleet Replacement Plan will also consider opportunities for municipal fleets to enhance grid resilience and allow critical facilities and services to remain operational during emergencies.
Payment Milestone: Task 2
Remaining 50% of Task 2 fee as stated in Table 4 shall be payable upon completion of Task 2, Subtasks 4-5.
Deliverables for Task #2:
1. Final Fleet Replacement Plan, including description of vehicle electrification scenarios, summary of total cost of ownership analysis, timeline for replacing vehicles, associated greenhouse gas (GHG) emissions reduction, and future opportunities.
1.1. Report shall include a summary of the data collection and listing of fleet assets with identified replacements, as well as a spreadsheet-based model with vehicle replacement schedules for Member Agency use.
1.2. Fleet summary by vehicle type and across agency departments, including public safety and medium/heavy-duty vehicles, noting existing replacement schedule and where the vehicles are located.
1.3. Table of options presenting the 1-to-1 vehicle replacement, highlighting ZEV options as necessary, and EV charger needs for domicile facilities.
1.4. Virtual presentation of results. Vehicle replacement schedule, pricing summary, and proposed energy needs for CPA and Member Agency review prior to finalization.
1.5. Other content as recommended by Contractor.
2. Template for agencies to track fleet data and replacement schedules moving forward, if needed.
3. Proprietary tools or software (e.g., Municipal Fleet Planning Tool) shall be made available to fleet staff for the duration of the project, if requested.
Timeline for Task #2:
1. Within three (3) months after Member Agency project kickoff with Contractor, and Member Agency delivers all necessary data, documents, and proposed siting feedback to Contractor.
Task #3: Charging Infrastructure Project Plan and Site Design Provide an assessment of key municipal facilities, chosen by the Member Agency, recommend charging infrastructure needs, and produce complete project plans for the installation of EV charging stations. Provide stamped construction engineering designs for key municipal facilities,
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if requested, for participating Member Agencies to use with any public bids they issue to hire contractors for infrastructure installation services for municipal fleet electrification.
1. Charging infrastructure recommendations.
1.1. Identify charging infrastructure types for each vehicle, accounting for estimated daily duty cycles and vehicle charging needs. Develop near-term and mid-term EV infrastructure installation timeframe to support charging needs as vehicles are procured and deployed.
1.2. Recommend specific charging infrastructure models needed for the vehicle replacements identified (Level 2, high-power Level 2, DC fast charging of various power capacities, etc.), and consider new technologies to best manage vehicle charging needs and energy capacity.
1.3. Provide recommendations for cooperative contract procurement options if available (e.g., Sourcewell, Drive EV Fleets, etc.).
2. Facility Assessment and Cost Estimate.
2.1. Assess the selected sites to determine the electrical infrastructure capacity needed to support recommended charging equipment, existing electrical service, potential connection points for EV charging infrastructure, identification of suitable locations for supporting electrical infrastructure (panels, transformers, etc.), ADA requirements as necessary, potential trenching and/or conduit run routes, and identify other site-specific challenges or opportunities to the project.
2.2. Recommend viability of community EV charging at selected facilities and outline what infrastructure capacity considerations are needed for future installation projects.
2.3. Identify if the selected sites are eligible for SCE’s Charge Ready or other programs to offset the costs of EV charging infrastructure. Other programs may be able to provide for the electricity upgrades and other infrastructure needs for eligible sites, reducing the capital costs of the recommended projects.
Payment Milestone: Task 3
50% of Task 3 fee as stated in Table 5 shall be payable upon completion of Task 3, Subtasks 1-
2. 3. Construction Engineering Site Design Documents.
3.1. Provide engineering site design documents that the Member Agency can use in a public bid to hire contractors for installation services. Arrange for a site walk with the local agency to gather information to complete this task, as necessary. Provide technical assistance to review proposals and/or bids, if requested. These documents will include:
3.1.1. Basis of Design.
3.1.1.1. Project summary and description.
3.1.1.2. Engineering requirements and performance specifications.
3.1.1.3. Identification of ADA compliant EV stalls, if required.
3.1.1.4. Considerations for grading, if required.
3.1.1.5. Equipment specifications and cutsheets.
3.1.1.6. Other documents, as required by the public agency, to bid these charging station installation projects or receive permits. (inclusion of demolition plans, erosion control plan, paving and asphalt standards, constructions means and methods, etc., are subject to extra cost and limit of remaining funding within each EFT program roadmap budget).
3.1.2. Schematic Design Documents.
3.1.2.1. Architectural site plans of the parking areas and other facilities, as relevant.
3.1.2.2. Electrical single-line diagrams.
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3.1.2.3. Trenching and/or conduit routes.
3.1.2.4. Panel schedules, if required.
3.1.3. Provide technical assistance to review Requests for Proposals or construction bids, by Member Agency request. (assistance with RFP review and proposal review are subject to extra cost and limit of remaining funding within each EFT program roadmap budget).
Payment Milestone: Task 3
Remaining 50% of Task 3 fee as stated in Table 5 shall be payable upon completion of Task 3, Subtask 3.
Deliverables for Task #3:
1. Charging infrastructure report for selected facilities, including a project overview for each site with the number and type of charging stations to be installed, phasing, and cost estimates.
Report will include an assessment of electrical capacity at the site to support the recommended infrastructure, and any future needs, including community EV charging if appropriate for the selected site (subject to extra cost within each EFT program roadmap budget limit).
2. Stamped electrical drawings and other site designs to expedite project planning and permitting, if requested by the Member Agency’s fleet staff.
3. Project cost estimates and virtual presentation of results.
Timeline for Task #3:
1. Within five (5) months of Member Agency project kickoff, following provision of the Fleet Replacement Plans to the Member Agencies. No later than two (2) months after completion of Task 2 deliverables.
Task #4: Funding Package
Prepare a funding overview for each participating agency to illustrate rebate and funding opportunities appropriate for the project, including the CPA funds available through this program.
1. Include information on the currently available funding options for zero-emission vehicles and charging infrastructure from relevant local, federal, and state agencies, utilities, CPA, and any other opportunities.
2. Identify opportunities to stack funding and note if there are any unique requirements of the funding agency, such as vehicle utilization, access, vehicle types or use cases.
3. At the start of the project, provide summary of relevant funding opportunities for the EFT program that have impending deadlines, including eligibility criteria. Create a final memo for use at the close of the project.
4. Summarize CPA funds remaining for Member Agencies to use towards purchase of EVs, EV charging equipment, or infrastructure installation.
Deliverables for Task #4:
1. Funding landscape memo with upcoming funding deadlines, and relevant application
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information including details about deadlines, eligibility, and limitations for all State of California and Federal grant opportunities, ongoing rebates and incentives, details about tax credits, LCFS credit monetization, and more.
2. Summarize funding opportunities in a table or spreadsheet to easily highlight funding that closes funding gap for recommended measures by vehicle type (light-duty, medium/heavy duty) and charging infrastructure, with associated application deadlines and requirements.
3. Identify CPA funds remaining for Member Agency use and summarize project costs and funding programs to include in final report.
Timeline for Task #4:
1. Initial summary table is expected within thirty (30) days of the Effective Date. Provide update in monthly progress meetings on relevant funding opportunities.
2. Funding memo is expected within 30-days of completion of Task #3.
3. As funding opportunities are dynamic, the information provided will need to be updated periodically throughout the 3-year program period.
Task #5: Charging Schedule and Optimization
Conduct an analysis of optimized and non-optimized charging costs to provide each member agency and their fleet staff with a complete understanding of EV fleet charging costs and utility bill impacts.
1. Recommend manufacturer and software developer agnostic generally available technologies that best support optimized charging to ensure operational costs for Member Agencies do not increase dramatically.
2. Incorporate findings into the Final Report for each agency.
3. Prepare simulated fifteen (15) minute charging load profiles based on vehicle behavior, duty cycles, and total energy needs, with and without charge optimization, and include the costs and other impacts of optimized and non-optimized charging.
3.1. These optimizations can include managed charging for total bill cost optimization based on local utility rates (reduction in demand charges and maximizing off-peak charging) and managed charging for optimization of load to remain below interconnection limit, if applicable.
Deliverables for Task #5:
1. Charging optimization memo with recommended charging schedules based on maximum cost-benefit to fleet, including time of use and demand charge optimization.
1.1. Memo will include charging cost scenarios for optimized and non-optimized charging, and estimated savings per site with managed charging and energy management software.
1.2. Updates to recommended charging infrastructure for site, including charger specs and number of chargers (if applicable)
1.3. Submit findings for CPA review prior to inclusion in Final Report.
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Timeline for Task #5:
1. Within five (5) months of the Member Agency project kickoff.
Task #6: Administrative and Outreach Activities
Provide general administrative support for the project and oversee outreach activities, including the following:
1. Monthly Progress Report and Calls.
1.1.Provide a monthly progress report and lead an associated conference call with the designated CPA program manager. The monthly progress report may be a table with links and will describe customers engaged, project progress by task, challenges encountered, a description of additional funding or resources secured, and task milestones for the following month. Include key performance indicators noted for the Annual Status Report below.
1.2. Major supplementary documentation developed in the course of work must be submitted with the Progress Report or as agreed with the CPA program manager.
This supplementary documentation may include technical designs, vehicle and/or charging infrastructure recommendations and/or specifications, and any materials developed for Member Agency use.
2. Annual Status Report.
2.1.Provide a high-level report to review annual progress that includes an executive summary, major accomplishments to date, lessons learned and recommendations for future work, fleet replacement plans and EV charging project plans delivered to date, and financial summary comparing actual expenditures to the project budget.
2.2.Draft reports will be submitted to CPA for review and approval before being finalized. The annual report should include key performance indicators such as:
2.2.1. Total fleets engaged, including a status summary.
2.2.2. Total fleets receiving support.
2.2.3. Expected number of EVs and charging infrastructure to be deployed, by fleet.
2.2.4. Reduction in total ownership costs to fleets.
2.2.5. Estimated fuel and emissions savings, per fleet.
2.2.6. Summary of funding opportunities recommended for each project.
3. Final Reports.
3.1. Provide a brief report at the close of each Member Agency engagement with project results and key performance indicators to summarize program impacts, challenges, and any next steps.
3.2.Provide a Final Report at the close of the program for public distribution, subject to review and approval by CPA. The report format will include an executive summary, challenges encountered, and lessons learned, best practices for other public agency fleets, case studies suitable for sharing with other fleets, summary
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of total program cost, and impact and key performance indicators utilized in annual reports. The final table of contents will be determined and approved by CPA prior to the start of the report.
4. Program Outreach and Best Practices.
4.1.Outreach Event 1 – Recruitment. Prepare presentation materials and lead event to promote the program to fleet managers and other key staff from Member Agencies, including an overview of fleet electrification processes, benefits and considerations of electrification, preview of project engagement steps and schedule, etc. This webinar or event is expected to take place within the first two (2) months of the program and is intended to solicit interest in the program and answer questions from Member Agency staff.
4.2. Outreach Event 2 - Promoting Results. Prepare presentation materials and lead an event that promotes project results, best practices and lessons learned, and benefits facilitated with fleet managers and Member Agencies, etc. to non-participating fleet staff to share information and encourage future participation in the program. This webinar is expected to take place after the first year of the program and is intended to share information and further encourage non-participating entities to begin electrification efforts.
Deliverables for Task #6:
1. Monthly progress calls and report with CPA staff.
1.1.Provide written monthly progress report that summarizes the previous month’s activities, including applications received, steps completed in modeling and analysis, deliverables reviewed and shared, anticipated activities for the upcoming reporting period, and notes about any events or issues that may impact performance. Distribute a meeting agenda and solicit input on agenda topics.
2. Annual Status Reports reviewing program results and recommendations for future work.
2.1. Includes an executive summary, major accomplishments to date, lessons learned and recommendations for future engagements, overview and assessment of fleet replacement plans and EV charging project plans delivered to date, and financial summary comparing actual expenditures to the project budget.
3. Final project reports for each Member Agency, and Final Report at the close of the program to assess the results of the Electric Fleet Transition program.
4. Two (2) outreach events or webinars.
Timeline for Task #6:
1. Ongoing over the duration of the Agreement.
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Exhibit B – Contractor’s Workplan and Schedule
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Exhibit C – Compensation
Contractor shall satisfactorily provide all the contemplated Services detailed in Exhibit A, Task #1 and Task #6, at the following hourly rates specified in the Table 1 below and in compliance with the terms and conditions of this Agreement.
Table 1 – Contractor’s Rate Schedule
Resource Hourly Rate
Officer in Charge $325
Director $210
Lead Analyst $190
Associate Analyst $180
Contractor shall not exceed the amounts specified for each of the Tasks listed in Table 2 and Table 3:
Table 2 - Task #1: Program Launch and Kickoff Meetings
Description Estimated
Hours
Maximum Authorized
Fees
EFT Program Launch 50 Up to $12,000
Member Agency Project Kickoff meetings 150 Up to $36,000 Maximum Authorized Fees for Task #1 Up to $48,000
Table 3 - Task #6: Administrative and Outreach Activities Description Estimated
Hours
Maximum Authorized
Fees
Monthly Progress Report and Calls 210 Up to $50,000
Annual Status Report 30 Up to $7,000
Final Reports 100 Up to $24,000
Program Outreach Activities 125 Up to $30,000
Maximum Authorized Fees for Task #6 Up to $111,000
Contractor shall satisfactorily provide all the contemplated Services detailed in Exhibit A, Task #2 – Task #5, at the fixed price per deliverable specified in Table 4 – Table 7 below and in compliance with the terms and conditions of this Agreement. Payment of each fixed fee service items in Tables 4-7 shall be paid upon completion of the associated task for each fleet engagement, except for Tasks 2 and 3, which shall be paid according to the 50% and 100% completion milestones given in Exhibit A.
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Table 4 - Task #2: Develop Fleet Replacement Plan and Energy Needs Assessment
Description Maximum Authorized Fees per
Member Agency
Estimated
Participating
Member
Agencies
Small Fleet $12,000 10
Medium Fleet $20,000 9
Ventura County $40,000 1
Los Angeles County Pricing to be agreed upon in
advance, in writing, by the parties 1
Maximum Authorized Fees for Task #2 Up to $340,000
Table 5 - Task #3: Charging Infrastructure Project Plan and Site Design Description
Maximum Authorized Fees per Member Agency
Small Fleet Medium
Fleet
Ventura
County
Los Angeles
County
Charging Infrastructure
Project Plan $8,000 $15,000 $35,000 Pricing to be
agreed upon
in advance, in
writing, by the
parties
Site Designs, per site $14,500 $24,000 $43,000
In-Person Site Walk
Contingency (total) $5,000 $5,000 $5,000
Estimated Participating
Member Agencies 10 9 1 1
Maximum Authorized Fees for Task #3 Up to $754,000
Table 6 - Task #4: Funding Package
Description Maximum Authorized Fees per
Member Agency
Estimated
Participating
Member Agencies
Small Fleet $5,000 10
Medium Fleet $5,000 9
Ventura County $5,000 1
Los Angeles County $25,000 1
Maximum Authorized Fees for Task #4 Up to $125,000
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Table 7 - Task #5: Charging Schedule and Optimization
Plan
Description Maximum Authorized Fees per
Member Agency
Estimated
Participating
Member Agencies
Small Fleet $12,000 10
Medium Fleet $12,000 9
Ventura County $12,000 1
Los Angeles County $60,000 1
Maximum Authorized Fees for Task #5 Up to $192,000
Any travel, administrative expenses, and materials (hereinafter, “Expenses”) will be billed in the amount incurred by Contractor for actual out-of-pocket cost, without any additional mark-up by Contractor. Any Expenses incurred shall be billed for the month in which the Expenses are incurred. Expense reports detailing all Expenses, along with receipts, shall be presented to CPA for reimbursement. All Expenses must be approved by CPA in advance writing before they are incurred. The following Expenses may be eligible for reimbursement under this Agreement:
Included in the amount specified above.
Maximum Authorized Expenses: $0
A project budget shall be presented and approved by CPA for each task before any work commences. CPA reserves the right to reject and to not pay costs that were not approved in compliance with this provision.
The maximum amount allocated to a single Member Agency, including any fees per Tasks #1 through #6 as detailed above, shall not exceed Two Hundred Fifty Thousand Dollars ($250,000) over the duration of this program. This amount includes the fees that CPA shall pay Contractor to provide the Services in this Agreement, Expenses in connection with any Member Agency project, and the funds issued to Member Agencies to implement the proposed measures.
The total maximum amount that CPA shall pay Contractor for all Services and Expenses to be provided under this Professional Services Agreement, including any payments to subcontractors that the Contractor may retain, shall not exceed One Million Five Hundred Thousand Dollars ($1,500,000) ("Not-to-Exceed" or "NTE").
Contractor shall satisfactorily perform and complete, in the judgement of CPA, all required Services in accordance with Exhibit A notwithstanding the fact that total payment from CPA shall not exceed the NTE.
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Exhibit D – Intentionally Left Blank
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Staff Report – Agenda Item 11
To: Board of Directors
From: Lindsay Descagnia, Vice President, Power Supply
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Approve and authorize the Chief Executive Officer to execute a 10- Year Resource Adequacy (RA) agreement with Sentinel Energy Center, LLC (SEC) (Attachment 2).
Date: March 7, 2024
RECOMMENDATION
Approve and authorize the Chief Executive Officer to execute a 10-Year Resource Adequacy (RA) agreement with Sentinel Energy Center, LLC (SEC), attached to this Staff Report as Attachment 2.
BACKGROUND
2023 Clean Energy and Reliability RFO
CPA launched its 2023 Clean Energy and Reliability Request for Offers (RFO) on June 9, 2023, with bids due on July 19. The goal of the solicitation was to fill a larger portion of CPA’s portfolio needs with long-term contracts and to reduce the need to procure products such as RA and renewable energy in short-term markets, which are often volatile.
CPA received a robust response to the RFO from 128 conforming offers. On September 18, 2023, a review team consisting of four Board members from the Energy Committee as well as senior staff consisting of the Chief Executive Officer, Chief Operating Officer, and Vice President, Power Supply met to analyze the submitted projects. These review team members evaluated confidential terms and conditions, including pricing, and
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Board of Directors Item 11
selected a shortlist of projects to be recommended to the Energy Committee. On September 27, 2023, the Energy Committee reviewed and approved the recommended shortlist, authorizing staff to proceed with contract negotiations.
In the 2023 RFO, CPA solicited, for the first time, proposals for long-term RA-only agreements. California’s RA program ensures that there is enough capacity and reserves for the grid operator to maintain a balanced supply and demand across the electric system. The California Public Utilities Commission (CPUC) requires suppliers and load-serving entities to have enough contracted capacity to meet RA requirements, which are determined using the forecasted peak electricity demand of a load serving entity, plus a reserve margin. Since an RA-only contract is for the capacity associated with a given facility, not the energy, the energy output of a resource with which CPA has an RA-only agreement is not delivered to CPA nor does it appear on CPA’s Power Content Label.
SEC submitted an offer for a 10-year RA-only agreement in the RFO. This offer was shortlisted by the Energy Committee in September 2023.
In the 2023 RFO, CPA also solicited, for the first time, proposals for existing dispatchable gas projects that could improve environmental performance by running on blended fuels, such as green hydrogen or renewable biogas. CPA received three proposals in this category with online dates beginning in 2027. All proposals offered to use hydrogen as the blended fuel at a 30-35% mix of hydrogen to traditional natural gas. SEC submitted one of the three proposals in this category. In September 2023, the Energy Committee authorized staff to enter bilateral discussions with SEC to see if there is a viable path to a contract that includes a 30% or more hydrogen blend that is price competitive and environmentally favorable. Negotiations on that proposal are in the early stages; the RA-only contract being presented to the Board is independent of that hydrogen-blend proposal and not dependent on the success or failure of the hydrogen-blend proposal.
Per CPA’s Energy Risk Management Policy, any transactions other than tolling or new build agreements with a maturity period of ten years or more require Board Approval.
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Board of Directors Item 11
CPA retained Todd Larsen with Clean Energy Counsel to represent CPA and its interests in the negotiation of the SEC agreement. Todd Larsen’s role was overseen by CPA’s General Counsel.
PROJECT DESCRIPTION
The Sentinel Energy Center is an existing, peaking, natural gas fired generation facility located north of Interstate 10 near Palm Springs in Unincorporated Riverside County. The facility began commercial operations in 2013 and is composed of eight individual combustion turbines totaling 850 MW of nameplate capacity. CPA will contract for a share of the total RA provided by the Facility, equivalent to two turbines worth, for a total of 211.85 MW of RA.
Under the proposed agreement, CPA will pay for 211.85 MW of RA at a fixed-price with no escalation for the full term of the 10-year contract. CPA is not entitled to any other product attributes from the facility, such as energy or ancillary services.
Developer
SEC owns and operates the facility. Subsidiaries of Diamond Generating LLC, an investor in SEC, perform operations, maintenance, and asset management services for SEC and have experience representing over 2,000 MWs of capacity in California and New York.
Evaluation Criteria
CPA ranks projects by economic value based on the net present value (NPV) and on a High, Medium, Neutral, and Low scale in five other qualitative evaluation criteria categories (development score, workforce development, environmental stewardship, benefits to disadvantaged communities, and project location). Below is the ranking assigned to this project in each of those categories.
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Board of Directors Item 11
Value
The SEC offer fell within the second quartile (Q2) of offer submissions ranked by NPV in the 2023 Clean Energy and Reliability RFO and was the third highest-ranked RA-only offer in the RFO.
Development Score
The project ranks High as it is in operations and thus has no development risk.
Workforce Development
The project ranks High. SEC used union workforce during construction of the project and continues to do so for major construction upgrades. The operations workforce is paid Prevailing Wages.
Environmental Stewardship
The project ranks Neutral as it is not located in an environmental avoidance area. The project has a good record of operating within California’s strict environmental compliance standards. As part of their submission, SEC provided the facility’s air permit citation history which CPA reviewed and found no concerns.
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Board of Directors Item 11
Benefits to Disadvantaged Communities
The project ranks Neutral on benefits to Disadvantaged Communities (DACs) as it is not located within a DAC and does not provide benefits to DACs.
Project Location
The project ranks Medium as it is located in California but not within Los Angeles or Ventura counties. The project is also located within a federally-designated energy community.
RATIONALE UNDER NEW RA COMPLIANCE REGULATIONS
The Sentinel agreement will help CPA meet its long-term RA obligations and reduce its need to procure RA in unstable short-term markets. Staff estimates that the SEC agreement will account for approximately 5.6% of CPA’s forecasted peak RA need in 2027. In addition, the agreement will be valuable under the California Public Utilities Commission’s revisions to RA compliance, which beginning in 2025 will count RA on a “Slice of Day” basis.
Prior to the Slice of Day RA requirement, a load serving entity (LSE) had to procure enough RA to meet a single capacity requirement for each month in the year. Under the new RA Slice of Day framework, LSE’s will have to meet a capacity requirement every hour of the day for each month of the year. Natural gas and other facilities that can count as “baseload” generation, such as geothermal, biomass, and nuclear, are able to contribute towards a LSE’s RA requirement in every hour of the day, unlike solar, wind, or storage resources which can only contribute to certain hours of the day.
To develop RA procurement targets in the 2023 Clean Energy RFO, staff estimated the volume of RA needed to have 90% of its RA portfolio under long-term contracts online by 2029. The resulting procurement targets are summarized in the table below.
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Board of Directors Item 11
Long Term Resource Adequacy Procurement Targets
Online Year 2026 2027 2028 2029
Procurement need
(MW) 400 400 400 400
Percent of RA
portfolio 75% 80% 85% 90%
With Board approval of the SunZia Wind and Drifter Energy Storage projects over the past several months, 450MW of the 2026/2027 goal of 800MW has been met, leaving CPA 350MW short of its goal for those two years. SEC would close this gap by 211MW.
ENVIRONMENTAL REVIEW
As an existing facility, the SEC project already completed the necessary CEQA review and permitting.
CONTRACTING
CPA has previously executed several short-term RA-only agreements with SEC for RA purchases through 2026. CPA and SEC have a pre-existing Edison Electric Institute (EEI) Master Agreement in place under which these short-term RA transactions are enabled.1 The 10-year RA-only Agreement being considered is incorporated as an RA confirmation under this Master Agreement and is appropriate since SEC is an existing resource and therefore many of the provisions of contracts designed for a new build resource would not apply.
POTENTIAL HYDROGEN CONVERSION
In the 2023 Clean Energy and Reliability RFO, CPA solicited proposals for existing dispatchable gas projects running on blended fuels, i.e. green hydrogen or renewable biogas. Although the technology is in an early stage and not yet widely deployed, 1 For the Board’s reference, a copy of CPA’s EEI Master Agreement with SEC is provided in Attachment 3 to this Staff Report. EEI Master Agreements are commonly used by the energy industry to contract for energy products at existing facilities. Confirmation agreements are appended to Master Agreements.
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Board of Directors Item 11
hydrogen can be introduced to the fuel mix of natural gas facilities, potentially showing reductions in CO2 emissions. The extent of emissions reduction (including GHG and other emission reductions) depends on how the hydrogen is produced and the proportion of hydrogen blending with the fossil fuel. CPA received 3 proposals for hydrogen blending, one of which was from SEC.
In September 2023, the Energy Committee authorized staff to enter bilateral discussions with SEC to see if there is a viable path to a contract that includes a 30% or more hydrogen blend that is price competitive and environmentally favorable. CPA and SEC are in early-stage discussions about the potential for green hydrogen blending at the site.
A potential contract with hydrogen blending would be separate from the current RA-only agreement and would be brought to the Board for consideration at a later date if it meets the criteria of being price competitive and environmentally favorable, particularly in the area of ensuring that the production of the hydrogen uses renewable energy sources.
If approved today, the RA-only agreement with Sentinel will remain for the 10-year contract term, whether or not the parties reach agreement on a hydrogen contract.
ATTACHMENTS
1. Long Term RA-only Agreement Presentation
2. RA-only Agreement with Sentinel Energy Center2
3. EEI Master Agreement with Sentinel Energy Center (for reference only) 2 Consistent with industry practice, portions of the agreements have been redacted to protect market sensitive information.
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Resource Adequacy
Agreement (Item 11)
March 7, 2024
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CPA launched the 2023 Clean Energy and Reliability Request for Offer (RFO) in June 2023 to fill a larger portion of its portfolio needs with long-term contracts, reducing the need to procure products such as Resource Adequacy (RA) and Renewable Energy Credits (RECs) in short-term markets, which are often volatile CPA set ambitious targets for procuring energy and Resource Adequacy (RA) under long-term contracts to adequately reduce short-term market risk
CPA received 128 compliant bids. The majority of offers received were from standalone storage, however all product categories received a robust response
On September 27, 2023, the Energy Committee approved the RFO shortlist of 10 projects and waitlist of 17 projects.
Staff then entered into exclusivity for various shortlisted projects and some waitlisted projects before commencing negotiations. The Board previously approved two projects from the RFO, SunZia Wind and Drifter standalone storage Staff has now concluded negotiations with 1 additional project from the shortlist, Sentinel Energy Center, LLC (SEC) for a RA-only agreement, and is requesting Board approval for the Chief Executive Officer to execute this agreement In September 2023, Energy Committee also authorized staff to enter bilateral discussions with SEC to see if there is a viable path to a contract that includes hydrogen blending. Staff will be providing an overview of the hydrogen opportunity with SEC, which is separate and distinct from the RA-only agreement being considered today 2 Executive Summary
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Agenda
Action Requested
Project Overview
Green Hydrogen Update
3 Agenda Page 273
Project Agreement
Type Technology Capacity Contract Start Date
Contract
Length Process
Sentinel
Energy
Center (SEC)
RA-Only
Confirmation
Natural Gas
Generator 211.85 MW 1/1/2027 10 years 2023 RFO
Action Requested
4 CPA is seeking Board approval for the SEC RA-only Agreement (Attachment 2 to the Staff Report)
CPA and SEC have a pre-existing Edison Electric Institute (EEI) Master Agreement in place under which RA transactions are enabled. The agreement being considered today is incorporated as an RA confirmation under that Master Agreement Agenda Page 274
Project Overview
5 Agenda Page 275
Sentinel RA-Only
6 Project Overview
SEC has an existing natural-gas fired generation facility with a nameplate capacity of 850 MW
The proposed RA-Only agreement is for a 211.85 MW portion of RA provided by the facility and the agreement does not include any energy generation delivered to CPA and therefore are reported on CPA’s Power Content Label Location: North of Palm Springs in Unincorporated Riverside County Contract Start Date: January 1, 2027
Seller: Sentinel Energy Center, LLC
Rationale
The project will help CPA meet its RA compliance obligations over a long-term horizon, or about 5.6% of CPA’s 2027 forecasted peak RA need RA agreements with natural gas generators are valuable under the new Slice of Day RA compliance structure, implementation of which is planned for 2025 The project has a high Net Present Value (NPV) and scores well on qualitative criteria
While this contract is recommended on its own merits, there is an opportunity to work with the SEC on a blended fuel conversion at the same site in the future Criteria Rank
Quantitative Value 2nd NPV quartile
Environmental
Stewardship
Neutral
Benefits to DACs Neutral
Workforce
Development
High
Project Location Medium
Development Score High
Evaluation Summary
Agenda Page 276
RA Primer
7 California’s RA program ensures that there is
enough capacity and reserves for the grid
operator to maintain a balanced supply and
demand across the electric system
Since an RA contract is for the capacity
associated with a given resource, not the
energy, the annual energy generation of a
resource with which CPA has executed an
RA-only agreement is not delivered to CPA
and does not appear on CPA’s Power
Content Label
Resource
Adequacy
Program
LSE (CPA)
Resource CAISO
The resource offers its output (energy) to
CAISO according to CAISO’s availability
requirements for RA resources. If CAISO calls
on the resource to provide energy, this energy
is sold directly into the CAISO market and the
LSE does not pay for it or receive it.
The LSE executes an RA
contract with the
Resource. The Resource
guarantees that it will be
available during the
contract term and the
LSE pays for this
capacity guarantee.
The CAISO assigns
an RA value to the
resource that the
LSE can use to
fulfill its RA
obligation
Agenda Page 277
RA-only Contracts
8 RA-only Contract Typical PPA
RA
RA
RECs
Energy
Energy
Historically, RA compliance has been
measured on a monthly basis. Beginning in
2025, under the Slice of Day RA framework,
LSE’s must demonstrate RA compliance in
every hour of the day in each month
Under this Slice of Day framework,
dispatchable baseload resources, such as
gas, geothermal, biomass, and nuclear are
especially valuable as they can be shown at
their full nameplate during every hour of the
day
Agenda Page 278
Value of Baseload RA in Slice of Day
9 The charts show examples
of how much RA value a
sample 200 MW baseload,
solar, wind, or storage
resource would provide
under Slice of Day
framework
RA-only agreements
baseload generators are
valuable under the new
Slice of Day RA program
because the capacity can be
shown in every hour of the
day, at the full nameplate
value of the resource,
whereas renewable
technologies count for a
smaller portion of
nameplate capacity and
only at certain times of day.
0 50
100
150
200
250
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 MW NQC
Example September Slice of Day Resource
Adequacy Showing - Baseload Resource
0 20
40 60
80 100
120
140
160
180
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Example September Slice of Day Resource
Adequacy Showing - Solar Resource
0 5
10 15
20 25
30 35
40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 MW NQC
Hour of Day
Example September Slice of Day Resource
Adequacy Showing - Wind Resource
0 20
40 60
80 100
120
140
160
180
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Hour of Day
Example September Slice of Day Resource
Adequacy Showing - Storage Resource
Agenda Page 279
Green Hydrogen
Update
10 Agenda Page 280
In the 2023 Clean Energy and Reliability RFO, CPA solicited bids for existing dispatchable natural gas projects that utilize blended fuels, such as green hydrogen or renewable biogas Although the technology is early stage and not yet widely deployed, hydrogen can be introduced to the fuel mix of natural gas facilities, potentially showing reductions in CO2 emissions The extent of emissions reduction (including GHG and other emission reductions) depends on how the hydrogen is produced and the proportion of hydrogen blending with the fossil fuel CPA received three offers, one of which was from SEC, for existing dispatchable thermal resources with blended fuels, all using hydrogen as the blended fuel at a 30% to 35% mix of hydrogen with traditional methane gas
In September 2023, the Energy Committee authorized staff to enter bilateral discussions with SEC to see if there is a viable path to a contract that includes a 30% or more hydrogen blend that is price competitive and environmentally favorable
CPA is in early-stage talks with SEC on a green hydrogen contract, which would be separate and distinct from the RA-only contract being considered today, as it would involve energy delivery. Before bringing any agreement to the Board for consideration, CPA staff needs to be confident that such an agreement is price competitive and environmentally favorable, particularly ensuring that the production of hydrogen uses renewable energy sources
11 Blended Fuel Contracts
Agenda Page 281
12 Hydrogen Overview - Production
Colors of Hydrogen
Variable Grey Hydrogen Blue Hydrogen Turquoise Hydrogen Green Hydrogen Description
Hydrogen created
from natural gas
through steam
methane
reformation
Grey hydrogen that
has been paired with
carbon capture to
reduce CO2
emissions
Like grey and blue
hydrogen, uses methane
as a feedstock, but the
carbon produced is in solid
form, negating the need for
carbon capture.
Hydrogen created
from water through
electrolysis powered
by renewable
electricity
GHG
Emissions High Medium Low Low / None
Hydrogen is the most abundant element on earth (the “H2” in H2O) Like natural gas, hydrogen gas can theoretically be used to fuel trucks, power plants, industrial manufacturing, aviation, and more
Hydrogen is created by splitting chemical compounds that contain hydrogen; the different methods of production determine how “clean” hydrogen is Agenda Page 282
13 Green Hydrogen for Electricity
Thermal power plants using natural gas can be converted to burn hydrogen with upgrades to the engines, plant
equipment, and fuel distribution systems
The extent of emissions reduction (including GHG and
other emission reductions) associated with hydrogen
blending depends on how the hydrogen is produced and
the proportion of hydrogen blending with the fossil fuel Lower hydrogen blends require fewer upgrades. To date,
100% hydrogen fuel is not considered commercially
feasible, though the technology is rapidly developing
The 2022 Federal Inflation Reduction Act (IRA) provides substantial incentives for green hydrogen
production, with incentives ranging from $0.65/kg to
$3.00/kg. Regulations governing these incentives are
subject to ongoing debate and are not yet finalized
Agenda Page 283
Section 45V of the Inflation Reduction Act (IRA) created a generous hydrogen Production Tax Credit (PTC). The incentive is tiered, with higher incentives going to hydrogen production with lower carbon emissions rates At the highest incentive level, hydrogen production can earn up to $3/kg of hydrogen produced, but the electricity used in the process must come from a carbon-free source, therefore typical grid-supplied electricity would not qualify under current rules
The US Treasury Department issued proposed regulations on which production processes will qualify as green hydrogen and be eligible for the full tax credit, and the IRS and Treasury Department are currently soliciting comments on the proposed guidelines
The proposed regulations would confirm a “well-to-gate” measurement which encompasses emissions through the point of production, including emissions associated with feedstock growth, gathering, extraction, processing, and delivery to a hydrogen production facility, as well as emissions associated with the hydrogen production process, inclusive of the electricity used by the hydrogen production facility and any capture and sequestration of carbon dioxide generated by the hydrogen production facility
These are generally considered “high-road” regulations and have received strong pushback from the fossil fuel industry
14 Defining Green Hydrogen
Agenda Page 284
15 Defining Green Hydrogen, continued
Issue Description Least
Restrictive
Middle
Option
Cleanest
Option
1. Incrementality The issue of whether clean energy used to create hydrogen should be from newly built clean resources. Producing green hydrogen adds to overall demand for energy. Even if existing clean resources are sourced to produce hydrogen, the increased overall demand would likely be met by existing emitting resources unless new renewables are added to the grid.
No incrementality
requirement
Require
incremental supply
of clean energy
2. Temporal matching The timeframe under which clean energy is matched to supply to meet the needs of hydrogen production. Current Treasury proposal is annual matching prior to 2028 then hourly matching thereafter. For reference, the California Renewable Portfolio Standard requires annual matching of renewable production against retail demand and indicated it could implement hourly tracking in three to five years.
Annual matching Monthly matching Hourly matching
3. Proximity of the clean
energy to
hydrogen production
The principle that the clean energy used to produce hydrogen should be directly connected to the hydrogen production.
Clean energy is
delivered in the
same grid (east,
west, Texas)
Clean Energy is
delivered to the same
balance area (CAISO,
LADWP, etc.)
Clean Energy
project is directly
connected to the
H2 production or in
close proximity
electrically
Although Green Hydrogen is defined as hydrogen generated by carbon-free energy, a debate is ongoing and comments are pending about how the clean energy is supplied. California may adopt additional guidelines and standards for GHG measurement and reporting.
Agenda Page 285
Summary
16 The SEC RA-only agreement will advance CPA’s goals for meeting RA procurement targets from the 2023 RFO
Baseload facilities are valuable under the new Slice of Day RA program and RA-only contracts avoid CPA taking energy delivery from GHG-emitting resources The project has good qualitative scores and is ranked in the second NPV quartile The proposed agreement stands on its own merits regarding its benefits to CPA. If green hydrogen discussions are not successful, the RA-only agreement with SEC will stay in place.
Action Requested: Approve and Authorize the Chief Executive Officer to execute the Sentinel Energy Center RA-only Agreement (Attachment 2) Agenda Page 286
Agenda Page 287
2 Product, Delivery Period, Contract Quantity, Contract Price and other specifics of the Product are described on page 1 of this Confirmation and in Appendix B. Appendices A, B, and C are incorporated into this Confirmation.
☐ Firm RA Product:
Seller shall provide Buyer with the Product from the Unit in the amount of the Contract Quantity.
If the Unit is not available to provide the full amount of the Contract Quantity for any reason, then Seller shall have the option to supply Alternate Capacity pursuant to Section 2.3 to fulfill the remainder of the Contract Quantity during such period. If Seller fails to provide Buyer with the Contract Quantity and has failed to supply Alternate Capacity to fulfill the remainder of the Contract Quantity during such period, then Seller shall be liable for damages and/or required to indemnify Buyer for penalties or fines pursuant to the terms of Section 2.5. ☒ Contingent Firm RA Product:
Seller shall provide Buyer with the Product from the Unit in the amount of the Contract Quantity.
If the Unit is not available to provide the full amount of the Contract Quantity as a result of any reduction or unavailability of the Contract Quantity of the Unit in accordance with Section 2.2, Seller shall have the option to notify Buyer that either (a) Seller will not provide the portion of the Contract Quantity attributable to such reduction or unavailability thereof and Seller shall be excused from delivering such Contract Quantity during the period of the reduction or non-availability; or (b) Seller will supply Alternate Capacity to fulfill the remainder of the Contract Quantity during such period pursuant to Section 2.3. If the Unit is not available to provide the full amount of the Contract Quantity as a result of any reason other than as provided in Section 2.2, then Seller shall have the option to supply Alternate Capacity pursuant to Section 2.3 to fulfill the remainder of the Contract Quantity during such period. If Seller fails to provide Buyer with the Contract Quantity from the Unit without being excused therefrom as provided in Section 2.2, and has failed to supply Alternate Capacity to fulfill the remainder of the Contract Quantity during such period, then Seller shall be liable for damages and/or required to indemnify Buyer for penalties or fines pursuant to the terms of Section 2.5.
ARTICLE 2
DELIVERY OBLIGATIONS AND ADJUSTMENTS
2.1 Sale and Delivery of Product
(a) For each Showing Month of the Delivery Period, Seller shall sell and deliver to Buyer, and Buyer shall purchase and receive from Seller, the Expected Contract Quantity of the Product from the Shown Unit(s).
(b) Seller shall deliver the Expected Contract Quantity by submitting to CAISO in its Supply Plan the Shown Unit(s) and the characteristics of the Shown Unit(s) and Product for Buyer, as further specified in Appendix B, all in compliance with this Confirmation.
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3 (c) Seller shall cause all Supply Plans to meet and be filed in conformance with the requirements of the CPUC and the Tariff. Seller shall submit, or cause the Shown Unit’s SC to submit, on a timely basis with respect to each applicable Showing Month, Supply Plans in accordance with the Tariff and CPUC requirements to identify and confirm the Product delivered to Buyer for each Showing Month of the Delivery Period. The total amount of Product identified and confirmed for each day of such Showing Month shall equal the Expected Contract Quantity. (d) Seller may sell and deliver Product from a Shown Unit that meets the requirements set forth in Appendix B. In no event shall a Shown Unit utilize coal or coal materials as a source of fuel or be a nuclear generating facility. A Shown Unit must be a specific resource that is connected directly to the CAISO controlled grid or be under the operational control of CAISO. A Shown Unit may not be an unspecified import. Seller shall identify the Shown Unit(s) and Expected Contract Quantity by providing Buyer with the specific information contemplated in Appendix B no later than the Notification Deadline for the relevant Showing Month. (e) By no later than fifteen (15) Business Days prior to the Showing Year Deadline for the following calendar year, Seller will provide Buyer with the expected Planned Outage schedule for the following year.
(f) If CAISO rejects either the Supply Plan or the Resource Adequacy Plan with respect to any part of the Expected Contract Quantity for the Shown Unit(s) in any Showing Month, the Parties shall confer, make such corrections as are necessary for acceptance, and resubmit the corrected Supply Plan or Resource Adequacy Plan for validation before the applicable deadline for the Showing Month. (g) The Product is delivered and received when the CIRA Tool shows that the Supply Plan submitted in compliance with Buyer’s instructions, including Buyer’s instructions to withhold all or part of the Expected Contract Quantity from Seller’s Supply Plan for any Showing Month during the Delivery Period, has been accepted for the Product from the Shown Unit(s) by CAISO. Seller has failed to deliver the Product if (i) Buyer has elected to submit the Product from the Shown Unit(s) in its Resource Adequacy Plan and such submission is accepted by the CPUC and the CAISO but the Supply Plan and Resource Adequacy Plan are not matched in the CIRA Tool and are rejected by CAISO notwithstanding performance of Section
2.1(f) or (ii) Seller fails to submit the volume of Expected Contract Quantity for any Showing Month in such amount as instructed by Buyer for the applicable Showing Month. Seller shall not have failed to deliver the Expected Contract Quantity if Buyer fails or chooses not to submit the Shown Unit(s) and the Product in its Resource Adequacy Plan with the CPUC or CAISO.
(h) The Shown Unit(s) must not have characteristics that would trigger the need for Buyer or Seller to file an advice letter or other request for authorization with the CPUC.
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4 2.2 Adjustments to ContractQuantity
If during any period the Unit described in Appendix B is not available to provide the full amount of the Contract Quantity as a result of the reduction in the Unit EFC or Unit NQC of such Unit (other than as a result of a Planned Outage), or due to Force Majeure, then (i) Seller shall notify Buyer by the Notification Deadline of the amount, if any, of the Contract Quantity that Seller will not sell and deliver during such period (taking into account any portion of the Contract Quantity of Product delivered from a Replacement Unitin accordance with Section 2.3), and
(ii) Seller will be excused from providing such Contract Quantity of the Product and will not be liable to Buyer for damages or penalties for the failure to deliver such portion of the Contract Quantity;
provided, that
(I) if there is a reduction in the aggregate Unit NQC in an amount equal to ten percent (10%) or more of the Contract Quantity (exclusive of any reduction attributable to an issue that affects gas-fired generation generally (such as ambient derates)) (the “Reduced NQC”) that continues for two (2) years from the first day of the first Showing Month in which such reduction is effective (such initial date, the “Reduction Commencement Date” and such two (2) year period, the “Reduced NQC Period”) and
(II) Seller does not offer on or before the end of the one (1) year period commencing on the Reduction Commencement Date (the “Reduced NQC Notice Period”) to replace 100% of the Reduced NQC by dedicating additional Product from Replacement Units to be sold to Buyer upon the terms and conditions set forth herein for the period commencing no later than the end of the Reduced NQC Period and continuing for the remainder of the Delivery Period, then Buyer shall have a right to terminate this Confirmation by providing written notice to Seller no later than the end of the sixty (60)-day period commencing upon the earlier of
(a) the conclusion of the Reduced NQC Notice Period and (b) the date upon which Seller provides written notice to Buyer that it is electing not to replace such Reduced NQC.
Any such termination pursuant to this Section 2.2 shall be effective on the first day after the Reduced NQC Period; provided, that if as of such date the Reduced NQC is no longer effective because of an increase in the Unit NQC, then such termination shall not be effective, and Buyer shall have the right to terminate this Confirmation following any future Reduced NQC event pursuant to this Section 2.2.
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5 Upon any termination pursuant to this Section 2.2, neither Party shall have any further liability to the other Party hereunder (other than any liabilities that arose prior to the date of such termination), and Seller shall be entitled to a refund of the credit support provided to Buyer pursuant to Section 6.1 (subject only to the payment of any liabilities that arose prior to the date of such termination); provided further, that
(A) if Buyer has the right to terminate this Confirmation in accordance with this Section 2.2 and does not provide timely written notice as required of its election to do so, or
(B) if Seller offers to replace the reduced Unit NQC in accordance with this Section 2.2 and Buyer does not accept such offer
then, in either case, Buyer shall be deemed to have irrevocably waived its rights to terminate this Confirmation in accordance with this Section 2.2 in the future.
In the case of reduction in the Unit EFC or Unit NQC, such reduction shall be calculated in accordance with the following formulas:
In the case of reduction in the Unit EFC:
Amount of reduction in the Unit EFC * Prorated Percentage of Unit Flexible Factor In the case of reduction in the Unit NQC:
Amount of reduction in the Unit NQC * Prorated Percentage of Unit Factor Without limiting the foregoing, in the event Seller is unable to provide the Contract Quantity for any portion of a Showing Month for any reason, Seller has the option, but not the obligation, to provide Product for such portions of such Showing Month from Replacement Units, provided Seller provides and identifiessuch Replacement Unitsin accordance with Section 2.3.
2.3 Seller’s Option To Provide Alternate Capacity
If Seller is unable to provide the full Contract Quantity for each day of each Showing Month for any reason, including, without limitation, as provided in Section 2.2, or Seller desires to provide some or all of the Contract Quantity for any day of a Showing Month from a different generating unit other than the Unit, then Seller may, at its sole option and without obligation, at the Contract Price, provide Buyer with replacement Product from one or more Replacement Units in an amount such that the total amount of Product provided to Buyer from the Unit and any Replacement Unit(s) for each day of the Showing Month is not more than the Contract Quantity, provided that in each case:
(a) Seller shall notify Buyer in writing of its intent to provide Alternate Capacity and shall identify the Replacement Unit(s) from which such Alternate Capacity shall be provided before the Notification Deadline for such Showing Month; and
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7 2.6 Buyer’s Re-Sale of Product
(a) Buyer may re-sell all or part of the Product; provided that any such re-sale must not increase Seller’s obligations hereunder other than as set forth in this Section 2.6(a).
For any such a resale, the Resource Adequacy Plan of Buyer as used herein will refer to the Resource Adequacy Plan of Subsequent Buyer. Seller shall, or shall cause the Shown Unit’s SC, to follow Buyer’sinstructions with respect to providing such resold Product to Subsequent Buyers, to the extent such instructions are consistent with Seller’s obligations under this Confirmation. Seller shall, and shall cause the Shown Unit’s SC, to take all commercially reasonable actions and execute all documents or instruments reasonably necessary to allow such Subsequent Buyers to use such resold Product in a manner consistent with Buyer’s rights under this Confirmation. If Buyer incurs any liability to a Subsequent Buyer due to the failure of Seller or the Shown Unit’s SC to comply with this Confirmation, Seller shall be liable to Buyer for the amounts Seller would have owed Buyer under this Confirmation if Buyer had not resold the Product.
(b) Buyer shall notify Seller in writing of any resale of Product and the Subsequent Buyer no later than two (2) Business Days before the Notification Deadline for each Showing Month for which Buyer has resold Product. Buyer shall notify Seller of any subsequent changes or further resales no later than two (2) Business Days before the Notification Deadline for the Showing Month. (c) If CAISO or CPUC develops a centralized capacity market, Seller shall not offer, bid, or otherwise submit the Expected Contract Quantity for re-sale to any person or entity other than Buyer or Buyer’s designee into such market, and Seller and the Unit’s SC shall comply with the Buyer’s direction and Buyer shall retain and receive all revenues from such re-sale.
ARTICLE 3
PAYMENTS
3.1 Payment
Buyer shall pay for the Product as provided in Article Six of the Master Agreement and this Confirmation. Buyer shall make a monthly payment to Seller for each Unit by the later of (i) ten (10) Business Days after Buyer’s receipt of Seller’s invoice (which may be given upon first day of the Showing Month) and (ii) the twentieth (20th) of the Showing Month, or if the twentieth (20th) is not a Business Day the next following Business Day (“Monthly RA Capacity Payment”). The Monthly RA Capacity Payment shall equal the product of (a) the applicable Contract Price for the relevant Showing Month, (b) the Expected Contract Quantity for the Showing Month, and (c) 1,000, rounded to the nearest penny (i.e., two decimal places); provided, however, that the Monthly RA Capacity Payment shall be adjusted to reflect any portion of Expected Contract Quantity for the Showing Month that was not delivered in accordance with Section 2.1 for such Showing Month. If there is a change in applicable law that prevents Buyer from using the Unit EFC or Unit NQC for its Compliance Showings as a result of the Contract Quantity being subject to a Forced Outage, then the Monthly RA Capacity Payment for such Showing Month shall be
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8 adjusted to reflect any portion of the Expected Contract Quantity that was not delivered unless Seller provides Product for such portions of such Showing Month from Replacement Units in accordance with the last paragraph of Section 2.2.
3.2 Allocation of Other Payments and Costs
(a) Seller shall receive any revenues from, and must pay all costs charged by, CAISO or any other third party with respect to the Shown Unit(s) for (i) start-up, shutdown, and minimum load costs, (ii) capacity for ancillary services, (iii) energy sales, (iv) flexible ramping product, or (v) black start or reactive power services. Buyer must promptly report receipt of any such revenues to Seller. Buyer must pay to Seller any such amounts described in this Section 3.2(a) received by Buyer or a Subsequent Buyer. Without prejudice to its other rights and remedies, Seller may setoff and recoup any such amounts that are not paid to it pursuant to this Section
3.2(a) against any amounts owed to Buyer under the Master Agreement. (b) Buyer is to receive and retain all revenues associated with the Expected Contract Quantity of Product during the Delivery Period, including any capacity and availability revenues from the Capacity Procurement Mechanism, or its successor, RUC Availability Payments, or its successor, but excluding payments described in Section 3.2(a)(i)-(v) or 3.2(c). Seller shall promptly report receipt of any such revenues to Buyer. Seller shall pay to Buyer within thirty (30) days of receipt any such amounts received by Seller, or a Shown Unit’s SC, owner, or operator.
Without prejudice to its other rights, Buyer may set off and recoup any such amounts that are not paid to it against amounts owed to Seller under the Master Agreement.
(c) Any Availability Incentive Payments or Non-Availability Charges are for Seller to receive and pay.
ARTICLE 4
OTHER BUYER AND SELLER COVENANTS
4.1 CAISO Requirements
Seller shall schedule or cause the Shown Unit’s SC to schedule or make available to CAISO the Expected Contract Quantity of the Product during the Delivery Period, in compliance with the Tariff, and perform all, or cause the Shown Unit’s SC, owner, or operator to perform all, obligations under applicable law and the Tariff relating to the Product. Buyer is not liable for, and Seller shall indemnify and hold Buyer harmless from, the failure of Seller or the Shown Unit’s SC, owner, or operator to comply with the Tariff, and for any penalties, fines or costs imposed on Seller or the Shown Unit’s SC, owner, or operator for noncompliance.
4.2 Seller’s and Buyer’s Duties to Take Actions to Allow Product Utilization Throughout the Delivery Period, Buyer and Seller shall take all commercially reasonable actions and execute all documents or instruments reasonably necessary to ensure (a) Buyer’s rights to the
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9 Expected Contract Quantity for the sole benefit of Buyer or any Subsequent Buyer, and (b) that Buyer may use the Expected Contract Quantity to meet its Compliance Obligations. Such commercially reasonable actions shall include, without limitation, cooperating with and providing, and causing each Shown Unit’s SC, owner, or operator to cooperate with and provide, requested and supporting documentation to the CAISO, the CPUC, or any other Governmental Body responsible for administering the applicable Compliance Obligations, including to demonstrate that the Expected Contract Quantity can be delivered to the CAISO controlled grid for the minimum hours required to satisfy the Compliance Obligations, as applicable, pursuant to the “deliverability” standards established by the CAISO or other Governmental Body of competent jurisdiction.
If necessary, the Parties further agree to negotiate in good faith to amend this Confirmation to conform this Transaction to subsequent clarifications, revisions, or decisions rendered by CAISO or an applicable Governmental Body to maintain the benefits of the Transaction.
4.3 Seller’s Representations and Warranties
Seller represents and warrants to Buyer throughout the Delivery Period that:
(a) No part of the Contract Quantity during the Delivery Period has been committed by Seller to any third party to satisfy Compliance Obligations or analogous obligations in any CAISO or non-CAISO markets;
(b) The Shown Unit(s) qualify to provide the Product under the Tariff, and the Shown Unit(s) and Seller are capable of delivering the Product; (c) The aggregation of all amounts of Capacity Attributes that Seller has sold, assigned, or transferred for the Shown Unit(s) during the Delivery Period does not exceed the Shown Unit’s Net Qualifying Capacity and, if applicable, the Effective Flexible Capacity for the Shown Unit(s);
(d) If applicable, Seller has notified either the Shown Unit’s SC or the entity from which Seller purchased the Product that Seller has transferred the Contract Quantity of Product for the Delivery Period to Buyer; and
(e) Seller has notified or will notify the Shown Unit’s SC that Buyer is entitled to the revenues set forth in Section 3.2(b), and such Shown Unit’s SC is obligated to promptly deliver those revenues to Buyer, along with appropriate documentation supporting the amount of those revenues.
4.4 Market Based Rate Authority
Upon Buyer’s written request, Seller shall, in accordance with FERC Order No. 697, submit a letter of concurrence in support of any affirmative statement by Buyer that this contractual arrangement does not transfer “ownership or control of generation capacity” from Seller to Buyer as the term “ownership or control of generation capacity” is used in 18 CFR Section 35.42. Seller
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11 5.3 Dodd-Frank Act
The Parties intend this Transaction to be a “customary commercial arrangement” as described in Section II.A.1 of Commodity Futures Trading Commission, Proposed Guidance, Certain Natural Gas and Electric Power Contracts, 81 Fed. Reg. 20583 at 20586 (Apr. 8, 2016) and a “Forward Capacity Transaction” within the meaning of Commodity Futures Trading Commission, Final Order in Response to a Petition From Certain Independent System Operators and Regional Transmission Organizations To Exempt Specified Transactions Authorized by a Tariff or Protocol Approved by the Federal Energy Regulatory Commission, 78 Fed. Reg. 19,880 (Apr. 2, 2013).
5.4 Change in Law
If any action by the CPUC, CAISO or any Governmental Body having jurisdiction results in any change in applicable law occurring after the Confirmation Effective Date that (i) materially changes Buyer’s or Seller’s obligations with regard to the Products sold hereunder, (ii) has the effect of changing the transfer and sale procedure set forth in this Confirmation so that the performance of this Confirmation becomes impracticable, or (iii) changes the requirements for Resource Adequacy Requirements such that the Product can no longer be counted towards Buyer’s Resource Adequacy Requirements (a “Change in Law”), the Parties shall work in good faith, without being obligated, to revise this Confirmation so that the Parties can perform their obligations regarding the purchase and sale of the Product sold hereunder in order to maintain the original intent.
5.5 Governing Law
This Confirmation, including the provisions and requirements of the Tariff and the definition of the Product and its components, and any portion of the Master Agreement applicable to this Transaction shall be governed by and construed in accordance with the laws of the State of California, without regard to the conflicts of laws rules thereof.
Nothing contained in this Confirmation shall be construed as a grant of CPUC jurisdiction over a Party not otherwise subject to such jurisdiction by law.
5.6 Intentionally Omitted
5.7 Counterparts
This Confirmation may be signed in any number of counterparts with the same effect as if the signatures to the counterparts were upon a single instrument. The Parties may rely on electronic, facsimile or scanned signatures as originals under this Confirmation. Delivery of an executed signature page of this Confirmation by facsimile or electronic mail transmission (including PDF) shall be the same as delivery of a manually executed signature page.
5.8 Entire Agreement; No Oral Agreements or Modifications This Confirmation sets forth the terms of the Transaction into which the Parties have entered and shall constitute the entire agreement between the Parties relating to the contemplated purchase and sale of the Product. Notwithstanding any other provision of the Agreement to the contrary, this
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DB2/ 46968344.30 Appendix A - 1
APPENDIX A
DEFINED TERMS
“Alternate Capacity” means replacement Product which Seller has elected to provide to Buyer in accordance with the terms of Section 2.3.
“Annual Supply Plan” has the meaning set forth in the CAISO Tariff. “CAISO” means the California ISO or the successor organization to the functions thereof. “Capacity Attributes” means attributes of the Shown Unit that may be counted toward Compliance Obligations, including: flexibility, dispatchability, physical location or point of electrical interconnection of the Shown Unit; Unit ability to generate at a given capacity level, provide ancillary services, or ramp up or down at a given rate; any current or future defined characteristics, certificates, tags, credits, or accounting constructs of the Shown Unit, howsoever entitled, identified from time to time by the CAISO or a Governmental Body having jurisdiction over Compliance Obligations.
“CIRA Tool” means the CAISO Customer Interface for Resource Adequacy. “Compliance Obligations” means, as applicable, RAR, Local RAR and FCR. “Compliance Showings” means the applicable LSE’s compliance with the Resource Adequacy Requirements of the CPUC for an applicable Showing Month. “Contingent Firm RA Product” has the meaning set forth in Article 1 herein. “CPUC Decisions” means any currently effective or future decisions, resolutions, or rulings related to the Resource Adequacy Requirements.
“CPUC Filing Guide” is the document issued annually by the CPUC which sets forth the guidelines, requirements and instructions for load serving entities to demonstrate compliance with the CPUC’s resource adequacy program.
“Credit Watch” means the S&P or Moody's ratings outlook, i.e., “Watch Negative”, “Possible Downgrade” “Review for Downgrade”, “Review for Possible Downgrade” or other similar terminology.
“Effective Flexible Capacity” has the meaning given in the CAISO Tariff. “Environmental Costs” means (i) costs incurred in connection with acquiring and maintaining all environmental permits and licenses for the Product, (ii) the Product’s compliance with all applicable environmental laws, rules, and regulations, including capital costs for pollution mitigation or installation of emissions control equipment required to permit or license the Product, (iii) all operating and maintenance costs for operation of pollution mitigation or control equipment, (iv) costs of permit maintenance fees and emission fees as applicable, (v) the costs of all emission reductions that have been authorized by a local air pollution control district or emissions trading credits or units pursuant to the California Health & Safety Code, market based incentive programs such as the South Coast Air Quality Management District’s Regional Clean Air Incentives Market,
Agenda Page 301
DB2/ 46968344.30 Appendix A - 2
authorizations to emit sulfur dioxide and oxides of nitrogen by the Environmental Protection Agency, and any costs related to greenhouse gas emissions required by any applicable environmental laws, rules, regulations, or permits to operate, and (vi) costs associated with the disposal, clean-up, decontamination or remediation, on or off site, of hazardous substances. “Expected Contract Quantity” means,with respect to any particular day of any Showing Month of the Delivery Period, (a) for Firm RA Product, the Contract Quantity of Product, including the amount of Contract Quantity of Product that Seller has elected to provide Alternate Capacity with respect to such day, and (b) for Contingent Firm RA Product, the Contract Quantity of Product for such Showing Month, including the amount of Contract Quantity of Product that Seller has elected to provide Alternate Capacity with respect to such day, less any reductions to Contract Quantity for such day consistent with the definition of Contingent Firm RA Product and Section
2.2 with respect to which Seller has not elected to provide Alternate Capacity. “Firm RA Product” has the meaning set forth in Article 1 herein. “Flexible Capacity” or “FCR” means the flexible capacity requirements established for LSEs by the CPUC pursuant to the CPUC Decisions, the CAISO pursuant to the Tariff, or other Governmental Body having jurisdiction over Compliance Obligations and includes any non-binding advisory showing which an LSE is required to make with respect to flexible capacity. “Governmental Body” means any federal, state, local, municipal or other government; any governmental, regulatory or administrative agency, commission or other authority lawfully exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power; and any court or governmental tribunal. “Local RAR” means the local Resource Adequacy Requirements established for LSEs by the CPUC pursuant to the CPUC Decisions, by CAISO pursuant to the Tariff, or by any other Governmental Body having jurisdiction over Compliance Obligations. “LSE” means “Load Serving Entity” as such term is used in Section 40.9 of the Tariff. “MW” means megawatt.
“Net Qualifying Capacity” has the meaning given in the CAISO Tariff. “Notification Deadline” is twenty (20) Business Days before the relevant deadlines for the corresponding Compliance Showings applicable to the relevant Showing Month. “PlannedOutage” means, subject to and as further described in the CPUC Decisions, a CAISO-approved, planned or scheduled disconnection, separation or reduction in capacity of the Unit that is conducted for the purposes of carrying out routine repair or maintenance of such Unit, or for the purposes of new construction work for such Unit. “Product” means RAR, Local RAR and/or FCR for the Delivery Period, Unit, Contract Quantity, Contract Price and other specifications described on page 1 of this Confirmation and contained in Appendix B.
“Prorated Percentage of Unit Factor” means the percentage, as specified in Appendix B, of the Unit NQC as of the Effective Date that is dedicated to Buyer under this Transaction.
Agenda Page 302
DB2/ 46968344.30 Appendix A - 3
“Prorated Percentage of Unit Flexible Factor” means the percentage, as specified in Appendix B, of the Unit EFC as of the Effective Date that is dedicated to Buyer under this Transaction. “Prudent Operating Practice” means (a) the applicable practices, methods and acts required by or consistent with applicable laws and reliability criteria, and otherwise engaged in or approved by a significant portion of the electric power industry during the relevant time period in the Western United States, or (b) any of the practices, methods and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety and expedition. Prudent Operating Practice is not intended to be limited to the optimum practice, method or act to the exclusion of all others, but rather to acceptable practices, methods or acts generally accepted in the electric power industry in the Western United States. “Reduced NQC” has the meaning set forth in Section 2.2 herein. “Reduced NQC Notice Period” has the meaning set forth in Section 2.2 herein. “Reduced NQC Period” has the meaning set forth in Section 2.2 herein. “Reduction Commencement Date” has the meaning set forth in Section 2.2 herein. “Replacement Unit” means a generating unit meeting the requirements specified in Section 2.3. “Resource Adequacy Requirements” or “RAR” means the resource adequacy requirements established for LSEs by the CPUC pursuant to the CPUC Decisions, by CAISO pursuant to the Tariff, or by any other Governmental Body having jurisdiction over Compliance Obligations. “Resource Category” shall be as described in the annual CPUC Filing Guide, as such may be modified, amended, supplemented or updated from time to time. “SC” means Scheduling Coordinator as defined in the Tariff. “Showing Month” means the calendar month of the Delivery Period that is the subject of the related Compliance Showing.
“Showing Year Deadline” means the annual deadline for LSE’s to submit Annual Supply Plans to the CAISO.
“Shown Unit” means the Unit, or any Replacement Unit meeting the requirements of Section 2.3 of this Confirmation and specified by Seller in a Supply Plan, but not necessarily identified by Seller to Buyer on the Effective Date.
“Subsequent Buyer” means the Buyer of Product from Buyer in a re-sale of Product by Buyer. “Tariff” means the CAISO Tariff, including any current CAISO-published “Operating Procedures” and “Business Practice Manuals,” in each case as amended or supplemented from time to time.
“Unit” means the generation unit described in Appendix B. A Unit may not be a nuclear or coal-fired generating facility.
Agenda Page 303
DB2/ 46968344.30 Appendix A - 4
“Unit EFC” means the lesser of the Unit’s Effective Flexible Capacity as set by CAISO as of the Effective Date and that of the Unit on a subsequent date of determination. “Unit EFC Category” shall be as described in the annual CPUC Filing Guide, as such may be modified, amended, supplemented or updated from time to time. “Unit NQC” means the lesser of the Unit’s Net Qualifying Capacity as set by CAISO as of the Effective Date and that of the Unit on a subsequent date of determination.
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Staff Report – Agenda Item 12
To: Board of Directors
From: Gina Goodhill, Senior Director, Government Affairs Approved By: Ted Bardacke, Chief Executive Officer
Subject: Income Graduated Fixed Charge
Date: March 7, 2024
RECOMMENDATION
Receive presentation on Proposed Income-Graduated Fixed Charges (IGFC) and related legislative proposals.
ATTACHMENT
1. Presentation on Proposed IGFC and Related Legislative Proposals
Agenda Page 369
Proposed Income Graduated Fixed
Charge and Associated Legislative
Proposals
March 7, 2024
Agenda Page 370
Summary
In 2022, AB 205, a budget trailer bill spearheaded by the Governor’s office, was signed into law. One little understood clause in the bill directed the California Public Utilities Commission (CPUC) to authorize an income-graduated fixed charge (IGFC) for residential rates by July 1, 2024 and then to implement it one year later In November 2022, the CPUC opened a proceeding on the IGFC, and has since been considering a range of proposals from various parties on how to craft this new charge In February 2024, Assemblywoman Jacqui Irwin introduced a bill (AB 1999) to repeal the IGFC provision in AB 205 and replace it with a fixed charge of no more than $5 for residential customers on the CARE rate, and no more than $10 for all other residential customers
This item is for information only and no action is requested. The Legislative & Regulatory Committee directed staff to watch the bill and take no position at this time Agenda Page 371
What is a “Fixed Charge”?
Historically, customers of California’s investor-owned utilities pay their share of the costs associated with running the power grid through the volumetric rates (kwh) only; the more electricity they consume, the higher their bill Some stakeholders contend that many costs currently contained in the volumetric rate are “fixed” i.e. they do not vary depending on usage. These costs include wildfire safety/mitigation, infrastructure upgrades, and legislatively-mandated customer programs. These stakeholders contend that as energy infrastructure costs increase, volumetric rates are an inequitable way to pay for these fixed costs A fixed charge would add a set, monthly charge to residential customer bills regardless of how much electricity they use. Proponents argue that this more accurately reflects the costs that it takes to serve all customers, regardless of electricity usage.
Most utilities in the country, as well as the California POUs, have a fixed charge 3 Agenda Page 372
What is a IGFC and What Has Been Proposed?
An Income Graduated Fixed Charge is an unusual twist on a fixed charge. Under an IGFC, higher income customers would pay a higher fixed charge, and lower income customers would pay a lower fixed charge
At the same time, volumetric rates would decrease. The total amount of money collected by the IOUs would be the same
An IGFC would go on the delivery side of the bill. It will not directly impact CPA customers in relation to non-CCA customers
The CPUC is considering various proposals on how to structure the IGFC. The proposals are varied in complexity, with the IOUs suggesting a fixed charge of as much as $85 per month for the highest income bracket in SCE territory
The proposals from the IOUs have gotten the most attention as they have the largest fixed charges, but proposals from the Sierra Club, California Environmental Justice Alliance, CalAdvocates (PAO) and others are more nuanced and/or include lower fixed charges and more tiers
4 Agenda Page 373
Arguments in Support
Electricity bills are rising across
California. Low-income customers
are especially vulnerable to these
bill increases.
As the state prepares for
increasing electrification, charging
customers solely on volume fails
to fully capture common expenses
not linked to energy usage, such
as infrastructure, grid hardening
costs, and legislatively-mandated
programs
According to the CPUC’s Public
Advocates office, those charges
make up more than half of the
IOUs costs
CPUC Public Advocates Office
5 Agenda Page 374
Arguments in Support
A IGFC would not change the amount
of money that utilities collect from
ratepayers as it would be paired with
a lower volumetric rate. Rather, it
would change the distribution of the
payments
Generally higher-income customers
would pay more and low-income
customers would pay less. (Actual
results would be highly differential
based on climate zone, individual
investments in energy
efficiency/solar, income)
Because energy investments are
broad societal services, they are
appropriate for differential charges
based on income
Supported by The Utility Reform
Network (TURN), NRDC, Public
Advocates and others
Testimony of NRDC and TURN in CPUC proceeding R.22-07-006 6 Agenda Page 375
Arguments in Opposition
The process by which the CPUC was
directed to implement a fixed charge was purposely opaque. Such a big policy decision should go through the normal
legislative process
California is encouraging people to
conserve energy and prioritize energy
efficiency. Current rate structures are
designed to send a price signal to
customers to conserve energy.
Uncoupling this price signal could curb
household efforts to reduce energy
usage or invest in rooftop solar.
Adding a fixed charge would
redistribute who pays for electricity but
it would do nothing to reduce the rising
costs of electricity overall
7 Agenda Page 376
Arguments in Opposition
The complexity of determining income brackets
may mean that low and middle income
customers will get lumped in with ultra high-income customers and see large bill increases Almost every proposal relies on income
data that utilities do not have
CPA CARE customers who are not at the
lowest income level could pay more under
SCE’s proposal than they do now
The fixed charges that are being suggested are
some of the highest in the country, with the
IOUs proposing fixed charges at 4x the national
average
Opposed by various grassroots environmental
and environmental justice groups, the rooftop
solar industry, and anti-tax organizations
8 EQ Research
Agenda Page 377
Range of Proposals9
Proposals fall roughly in three buckets:
High Fixed Charge (IOUs); Modest
Fixed Charges across more income tiers
(NRDC/TURN/Public Advocates Office);
Low fixed charge and distinct TOU
rates (SEIA/Clean Coalition)
SEIA is the only proposal that would
not require new income information
This chart represents the median only:
SDGE has suggested the highest fixed
charge at $128 for high income
customers and The California
Environmental Justice Alliance (CEJA)
has suggested the lowest fixed charge
of $0 for low-income households
*CPUC Public Advocates Office
Agenda Page 378
SCE’s Proposed Fixed Charge Structure
10 Agenda Page 379
Next Steps
AB 1999 (Irwin) would repeal the fixed charge provisions under AB 205 and replace with a $5 fixed charge for CARE customers and a $10 fixed charge for all other residential customers
The bill is unlikely to be signed by the Governor, and raises questions of politics vs policy
CPA is active in the regulatory proceeding on the IGFC through CalCCA, which expects to have a decision by March or April 2024.
Legislative & Regulatory Committee directed staff to watch bill and take no position at this time. The Committee may potentially revisit this issue after the CPUC releases a Proposed Decision
11 Agenda Page 380
Questions and Discussion
Agenda Page 381
Management Report
To: Board of Directors
From: Ted Bardacke, Chief Executive Officer
Subject: Management Report
Date: March 7, 2024
Invitation to the CalCCA Annual Meeting in San Jose, April 16-18 CPA’s trade association, the California Community Choice Association (CalCCA), will be holding its annual meeting in San Jose April 16 to 18. This gathering brings together CCA Board Members, Staff, Stakeholders, state Elected and Appointed Officials, and Commercial Partners to discuss and learn about the state of our industry. In addition to the educational opportunities, past conferences have provided ample time for networking.
See the draft agenda here.
As in the past, CPA will cover the transportation, lodging, registration, and meals/incidentals associated with the conference for one Board member per member agency. Invitations have been sent to Regular Directors and the deadline to register is March 24. Regular Directors are asked to pass on the invitation to one of their Alternate Directors if they are unable to attend. Raynette Tom ([email protected]) will be handing Board member hotel bookings and conference registration, while CPA will reimburse other expenses that should be self-arranged, including travel.
Earth Day Events
April is Earth Month and a busy time for CPA’s government/community affairs teams, who will participate in a number of events throughout CPA territory. Currently CPA staff are scheduled to table at events in Alhambra, Beverly Hills, Calabasas, Carson, Claremont, East Los Angeles (Unincorporated), Hawthorne, Manhattan Beach, Paramount, Sierra Madre, South Pasadena, Thousand Oaks, and Ventura. Please contact Gina Goodhill if your city is hosting an Earth Day themed event and would like a member of the CPA team to participate.
Agenda Page 382
Board of Directors Management Report
Battery Storage Incentive Program
Today CPA launched the Sun Storage Rebate Program to provide rebates for residential customers who install eligible battery storage systems paired with either existing or new solar PV installations. The goal of this program is to help CPA residential customers more widely adopt battery storage systems. While residential customers who install solar PV under CPA’s new Solar Billing Plan have a long-term economic incentive to install battery energy storage as well, up-front system costs can be a barrier for many customers.
Residential battery storage also helps reduce CPA’s energy and Resource Adequacy costs by shifting energy exports from homes to the grid during peak hours.
Residential customers will receive a $750 rebate for successfully installing a battery storage system larger than 5 kWh. CARE, FERA, or Medical Baseline rate customers will receive a $1,000 rebate. CPA has funding for approximately 1,000 applications for FY 2023-24 and 20% of the program rebate funds will be reserved for CARE, FERA, and Medical Baseline customers. CPA’s energy storage rebate can be paired with the state’s Self Generation Incentive Program’s rebate and federal tax credits; together these incentives should cover at least half of the costs of a typical residential battery system.
CPA has contracted with California-based Electric & Gas Industries Association (EGIA) to manage the rebate process. EGIA has over 40 years' experience managing Utility rebate programs, including the Metropolitan Water District’s SoCal Water$mart program.
Meanwhile, a marketing effort has coincided with the launch of the program, with a focus on residential customers with existing solar PV and solar and storage developers working in California. Applications will initially be submitted through email until EGIA’s online interface is fully integrated with CPA’s program webpage in late March. For more information after March 7, visit https://cleanpoweralliance.org/sunstoragerebate.
Compliance Submissions
All Regular Directors are now compliant with Energy Risk Management Policy annual acknowledgment forms.
April 2 is the due date for Form 700s to be submitted to the Fair Political Practices Commission (FPPC). Clerk of the Board Gabby Monzon is available to assist with filing or other technical questions.
Agenda Page 383
Board of Directors Management Report
Each March, CPA is required to submit a report to the California Public Utilities Commission detailing its energy and non-energy spending with diverse suppliers1, particularly those registered with the CPUC Supplier Clearinghouse database under this designation. The report also outlines CPA’s ongoing and planned efforts to recruit a pool of diverse entities to bid on CPA contracts and other equity initiatives/commitments. A copy of the report and information for potential contractors may be accessed here.
Monthly Financial Performance
In December 2023 CPA recorded an operating gain of $9.4 million, $14.1 million less than the budgeted gain of $23.6 million. As in previous months, CPA’s results were negatively impacted by erratic weather; warmer and sunnier than normal conditions is December reduced electric heating use and increased customer-sited solar production. Both of these factors depress revenue, which came in at 11% below budget for the month. The monthly financial dashboard for December is included in Item 6 of the Board packet along with full financial results for the first six months of the fiscal year. Chief Financial Officer David McNeil presented Year-to-Date results to the Finance Committee on February 28; his briefing, associated presentation, and Q&A with the Finance Committee can be viewed on CPA’s YouTube page at www.youtube.com/watch?v=JIaZn4CYkLo. The item begins at minute 4:45 of the video.
Customer Participation Rate and Opt Actions
As of February 29, 2024, CPA’s overall participation rate was 93%, unchanged from the previous month. CPA had 1,008,023 active customers, up 545 customers since the end of January. Opt-out levels for the month – 523 accounts through the end of February – were less than typical opt-out rates for the first quarter of the year. New accounts (“move-ins”) were lower than closed accounts (“move-outs”) by 126 customers in February.
Participation rates and active accounts by jurisdiction are provided in Attachment 1 of this report.
1 The CPUC defines a business as “diverse” if it as least 51% owned by a minority, woman, disabled veteran, or LGBT person or persons, with management and daily business operations controlled by one or more of those persons. CPA also voluntarily tracks its non-energy spending with Small Businesses (those with less than 100 employees and domiciled in California) and businesses located in Los Angeles County, Ventura County, and Southern California (including Orange, San Bernardino, Riverside, and San Diego Counties).
Agenda Page 384
Board of Directors Management Report
In February, CPA sent the sent the second pre-enrollment mailers to new eligible customers and enhanced its marketing activities in Hermosa Beach, Monrovia, and Santa Paula, the three new communities that begin CPA service this month. All three cities are launching with 100% Green Power as their preferred energy option. Approximately 35,750 customers are eligible to be enrolled. As of February 26, 5.01% of eligible customers had opted-out, 1.26% had opted-down to Lean Power, and 0.18% had opted for Clean Power. These levels are customer actions are within historical norms. Customer actions are expected to drop during the month of March and then pick up again in April and May, coinciding with customers receiving their first bills with CPA charges and the 30-day and 60-day post enrollment notices.
Customer Service Center Performance
Incoming calls to CPA’s Customer Service Center during February continued to be elevated due to the impending enrollment of new customers described above. Through February 26, CPA received 2,981 calls compared to an average of 1,743 calls per month in the previous quarter. Despite the increase in calls, 95% of calls were answered within 45 seconds, two percentage points lower than the previous month, and the average wait time was 9 seconds, up from 6 seconds in the previous month.
Contracts Executed Under the Chief Executive Officer’s Authority A list of non-energy contracts executed under the CEO’s signing authority is provided in Attachment 2. The list includes all open contracts as well as all contracts, open or completed, executed in the past 12 months.
ATTACHMENTS
1. Participation Rates by Jurisdiction
2. Non-Energy Contracts Executed under CEO’s Authority
Agenda Page 385
Preferred Energy Option Participation %
100% Green 93.4%
Clean 94.4%
Lean 92.0%
Total 93.4%
OVERALL CUSTOMER STATUS REPORT
PARTICIPATION BY CITY AND COUNTY
February 29, 2024
Preferred Energy Option Active Accounts Participation % Lean % Clean % 100% Green % Agoura Hills 100% Green 8,064 89.7% 2.8% 0.4% 96.8%
Alhambra 100% Green 34,115 95.4% 1.8% 0.7% 97.5%
Arcadia Lean 22,705 95.5% 99.8% 0.1% 0.1%
Beverly Hills 100% Green 18,678 97.6% 2.0% 0.1% 97.9%
Calabasas 100% Green 9,774 92.5% 2.7% 0.4% 97.0%
Camarillo 100% Green 28,472 90.0% 1.6% 0.1% 98.3%
Carson Clean 29,612 96.2% 1.5% 98.3% 0.2%
Claremont 100% Green 12,701 91.5% 3.1% 0.2% 96.7%
Culver City 100% Green 19,240 95.2% 4.1% 1.2% 94.7%
Downey Clean 36,836 95.1% 1.6% 98.3% 0.1%
Hawaiian Gardens Clean 3,644 95.4% 1.2% 98.5% 0.3%
Hawthorne 100% Green 28,508 97.3% 0.6% 1.4% 98.0%
Los Angeles County 100% Green 299,324 95.1% 2.1% 30.6% 67.3% Malibu 100% Green 7,044 95.2% 3.0% 0.4% 96.5%
Manhattan Beach 100% Green 15,416 95.8% 2.9% 0.2% 96.9% Moorpark Clean 11,410 85.7% 3.1% 96.3% 0.6%
Ojai 100% Green 3,519 89.1% 6.2% 1.2% 92.6%
Oxnard 100% Green 55,724 92.9% 4.0% 0.9% 95.1%
Paramount Clean 15,774 96.9% 0.2% 99.2% 0.6%
Redondo Beach 100% Green 33,290 96.2% 2.2% 0.1% 97.7%
Rolling Hills Estates 100% Green 3,511 92.0% 7.5% 1.7% 90.8% Santa Monica 100% Green 55,045 95.6% 3.5% 0.8% 95.7%
Sierra Madre 100% Green 4,957 92.2% 5.8% 1.6% 92.7%
Simi Valley Lean 43,360 89.5% 99.6% 0.1% 0.2%
South Pasadena 100% Green 11,613 95.0% 4.0% 0.7% 95.3%
Temple City Lean 12,677 95.8% 99.8% 0.1% 0.2%
Thousand Oaks 100% Green 44,490 83.7% 8.1% 1.5% 90.5%
Ventura 100% Green 44,156 89.0% 4.9% 1.5% 93.6%
Ventura County 100% Green 32,720 85.8% 6.6% 1.2% 92.2%
West Hollywood 100% Green 26,526 97.1% 2.6% 0.4% 97.1%
Westlake Village Lean 3,720 88.2% 99.4% 0.1% 0.5%
Whittier Clean 31,398 94.1% 1.9% 97.9% 0.2%
Total 1,008,023 93.4%
Energy Option Active Accounts Participation %
100% Green 676,714 67.1%
Clean 222,027 22.0%
Lean 109,282 10.8%
Total 1,008,023 100.0%
OVERALL PARTICIPATION BY ENERGY OPTION
Agenda Page 386
Vendor Purpose Month NTE Amount Status Notes
Viridis Consulting Customer Programs support services February 2024 $0 Active PSA end date extension only to contract
approved by the Board of Directors on
9/7/23
First Principle Advisory IRP consulting services February 2024 $50,000 Active Sagon Phior Social media creative services February 2024 $50,000 Active Posit Software Resource adequacy software January 2024 $15,745 Active Salesforce Tableau subscription January 2024 $6,499 Active Ironclad Contract management platform updates January 2024 $11,886 Active Jackson Lewis PC Legal services (employment law) January 2024 $65,000 Active Verve Cloud Internet service January 2024 $20,988 Active Wrike Project management software January 2024 $9,024 Active Ironclad Contract management platform January 2024 $41,750 Active Practising Law Institute Legal Continuing Education January 2024 $13,940 Active Pinnacle Advocacy
Renewal and amendment to lobbying
services agreement January 2024 $76,652 Active
Omni Government Relations
Renewal and amendment to lobbying
services agreement January 2024 $102,492 Active
SAESHE, Inc. Outreach support services January 2024 $25,500 Active Wellable Employee wellness platform January 2024 $10,975 Active Electric & Gas Industries Association
Battery storage incentive rebate
processing and program management January 2024 $110,000 Active
San Gabriel Valley COG Outreach & engagement services December 2023 $15,000 Active Spirit Media Video production services December 2023 $20,000 Active Intelligence Press Natural gas data subscription December 2023 $6,500 Active S&P Global
Economic & demographic data
subscription December 2023 $15,000 Active
Joanalyn Moyle Minute writing services December 2023 $15,000 Active Chapman and Cutler Legal services for prepay transaction November 2023 $40,000 Active Place and Page Graphic design services November 2023 $12,000 Active Jorgensen HR HR consulting services November 2023 $1,500 Active Language Line Translation services November 2023 $24,000 Active Energy Exemplar Additional license for forecasting software November 2023 $9,720 Active Cathleen Murillo Minute writing services November 2023 $15,000 Active Meltwater Media intelligence services November 2023 $22,000 Active Crown Castle Fiber LLC Office Dedicated Internet Access Service November 2023 $18,600 Active SAESHE, Inc. Event support for Street Teams October 2023 $7,800 Active Langan GIS services (end date extension only) October 2023 $0 Active Grand Tower LLC Storage space lease September 2023 $6,000 Active Windstream Services, LLC Office Telephone Service September 2023 $12,924 Active Sigma Computing Analytics platform September 2023 $35,612 Active Clean Power Alliance
Non-energy contracts executed under Chief Executive Officer authority Rolling 12 months -- Open contracts shown in Bold
Agenda Page 387
Vendor Purpose Month NTE Amount Status Notes
Clean Power Alliance
Non-energy contracts executed under Chief Executive Officer authority Rolling 12 months -- Open contracts shown in Bold
AiQueous, LLC Salesforce implementation August 2023 $7,375 Active Salesforce Stakeholder Relationship Management
application subscription August 2023 $15,300 Active Renewal Bloom Ads Media Buying July 2023 $50,000 Active
Nextgrid Strategies Staff Augmentation for 2023 Clean Energy RFO Evaluation and Contract Negotiations July 2023 $100,000 Completed Advance Dev. LLC Website Maintenance Services July 2023 $75,000 Active Workable Job applicant tracking system July 2023 $13,308 Active Lexis Nexis Legal Research Online Platform July 2023 $2,492 Active Hall Energy Law PC Energy Procurement Counsel July 2023 $125,000 Active Renewal Burke, Williams, Sorenson, LLP
Legal Services Agreement (Brown Act,
public entity governance issues and other
legal services)
July 2023 $100,000 Active Renewal
Elite Edge Financial reporting services July 2023 $93,600 Active Salesforce
Additional licenses for Stakeholder
Relationship Management application
subscription
July 2023 $714 Active
MBI Green Leader PR Campaign July 2023 $24,853 Active
Snowflake Inc.
Cloud-Native Elastic Data Warehouse
Service June 2023 $25,000 Active
Adobe Inc. AdobeSign Secure Electronic Signature
Service June 2023 $3,200 Active
Baker Tilly Financial audit services June 2023 $50,000 Active Renewal IHS Market Subscription for CAISO forecasts June 2023 $17,000 Active Renewal Fraser Marketing contract (final renewal) June 2023 ($83,297) Active 14% decrease to Board approved NTE upon renewal
Swanson Martin Bell Legal Services Agreement (general liability) May 2023 $75,000 Active LinkedIn Subscription for recruiting platform April 2023 $20,250 Active Lattice
Renewal for Performance management
software April 2023 $9,000 Active
AN Catering Fifth anniversary lunch venue April 2023 $17,444 Completed Polsinelli, LLP
Legal Service Agreement (Employment,
Compliance, General Legal Support related
to Commercial Liability, Risk, and
Mitigation issues)
April 2023 $75,000 Active Renewal
Chapman & Cutler, LLP Legal Services (CPA's Credit Agreement) April 2023 $55,000 Active Renewal Salesforce
Additional licenses for Stakeholder
Relationship Management application
subscription
April 2023 $723 Active
Accuweather Weather forecasting March 2023 $10,176 Active goodpr. Event planning services March 2023 $16,000 Completed
Agenda Page 388
Vendor Purpose Month NTE Amount Status Notes
Clean Power Alliance
Non-energy contracts executed under Chief Executive Officer authority Rolling 12 months -- Open contracts shown in Bold
Shute, Mihaly & Weinberger, LLP
Legal Service Agreement (Regulatory,
Administrative, Environmental, Energy
Procurement, Public Contracting, Public
Entity Governance Laws, Issues and/or
Proceedings)
March 2023 $65,000 Active Renewal
Davis Wright Tremaine Legal services (regulatory) March 2023 $125,000 Active Renewal Ntooitive Website development March 2023 $20,000 Active SBCCOG Satellite Board meeting venue January 2023 $50/hr Active OpenPath New Office Keycard Access Control
System January 2021 $1,500 Active
Agenda Page 389