Clean Power Alliance 2026 Board Retreat
September 18, 2026
USC Hotel
Ballroom, 2nd Floor
3540 S. Figueroa Street
Los Angeles, CA 90007
8:30am to 2:00pm
8:15AM: Registration Opens / Breakfast Available
8:30AM: Welcome/Roll Call/Intro Remarks/Ice Breaker
9:00AM: Future CPA Expansion
• Overview
• Breakout Groups with CPA Staff Facilitators
• Report Outs
10:15AM: Break
10:30AM: Programs + Transmission Update – Where are we?/Where are we going? • Transmission Update
• Programs: Goals and Marketing Process
11:00AM: Programs and Transmission Breakout Groups
(Attend 4 Tables – Rotate Every 15 Minutes)
• Tables:
o Table 1: Equity Programs (Power Share, Instant AC Savings, Solar + Battery Access Program, Equitable Building Decarbonization Program) o Table 2: Member Agency Programs (Energized Communities) o Table 3: Residential Customer Offerings (Power Response Smart Home & Home, EV Smart Charge, Energy Team, Sun Storage Rebate) o Table 4: Programs for Multifamily and Commercial Property Owners/Managers (Multifamily EV Charging, Apartment Building Cooling Assistance Program, Power Response Commercial Leaders)
o Table 5: Community Resilience Programs (Power Ready, Innovation Fund Round 3)
o Table 6: Transmission Opportunity and Joint Powers Authority • Report Outs
12:15PM Break/Flex Time – Lunch Ready
12:30PM: Lunch Served
12:50PM: Lunchtime Conversation Begins
• Kate Gordon, CEO, California Forward
1:45 PM: Conversation/Lunch Ends
2:00PM: Depart Venue
Study Session 1
Future CPA Expansion
CPA Expansion Strategy
September 18, 2026
Expansion to Date
2018
2020
2024
2025
2027
CPA launches
31 founding member communities (2018–2019)
Westlake Village
1% load growth
3,702 new customers
Hermosa Beach, Monrovia & Santa Paula
2% load growth
HB: 9,840 customers; Monrovia: 16,503 customers; SP: 9,5473 customers La Canada Flintridge, Lynwood & Port Hueneme
4% load growth
LCF: 6,323 customers; PH: 8,002 customers; Lynwood 16,175 customers Fillmore & Cudahy
1% load growth
Fillmore: 4,707 customers; Cudahy: 5,499 customers
~8% customer growth | ~9% load growth | 29% growth in number of communities 2 Why Expand - Opportunities
More customer choice
More local control
Greater environmental impact
Access to CPA programs
Potential for cost benefits and risk
mitigation for all customers and
for CPA
Expansion Advances CPA’s
Mission
3 Challenges with Expansion
Maintaining local community
connections
Maintaining values alignment
Organizational efficiency
Potential for increases to costs
and risks for all customers and
impacts to CPA
Growth also introduces
potential challenges
4 Current Expansion Activities and Criteria
49 eligible cities remain, all in
Los Angeles County
Very little pro-active outreach
Some key population and load
centers: Long Beach, Santa Clarita,
Torrance, West Covina, El Monte,
Inglewood, Compton, South Gate
Current Candidate Criteria
o Fill geographic gaps
o Decarbonize unique customer
loads
o Maintain membership diversity
Recent expansion cities all met
at least two criteria
5 Where do some candidate cities rank?
6 Jurisidiction Load (GWh) % of Current
CPA Load* Rank By Size Jurisidiction Load (GWh) % of Current CPA Load* Rank By Size Los Angeles County 2.88 27.6% 1 Paramount 0.15 1.4% 21
Long Beach 1.78 17.1% Manhattan Beach 0.14 1.4% 22
Torrance 0.88 8.4% La Canada Flintridge 0.14 1.3% 23
Carson 0.52 5.0% 2 Calabasas 0.13 1.2% 24
Santa Monica 0.48 4.6% 3 Malibu 0.12 1.1% 25
Oxnard 0.47 4.5% 4 Claremont 0.12 1.1% 26
Thousand Oaks 0.42 4.1% 5 Moorpark 0.11 1.1% 27
Simi Valley 0.40 3.8% 6 Temple City 0.10 0.9% 28
Ventura County 0.36 3.5% 7 Agoura Hills 0.10 0.9% 29
Beverly Hills 0.36 3.4% 8 South Pasadena 0.08 0.8% 30
Downey 0.34 3.3% 9 Santa Paula 0.07 0.7% 31
Ventura (City of) 0.34 3.3% 10 Bell Gardens 0.07 0.7%
Whittier 0.29 2.8% 11 Westlake Village 0.07 0.7% 32
Camarillo 0.28 2.7% 12 San Fernando 0.07 0.7%
Arcadia 0.26 2.4% 13 Fillmore 0.07 0.6% 33
Alhambra 0.24 2.3% 14 Hermosa Beach 0.06 0.6% 34
Culver City 0.23 2.2% 15 Rolling Hills Estates 0.05 0.5% 35 South Gate 0.23 2.2% Port Hueneme 0.05 0.4% 36
El Monte 0.23 2.2% Cudahy 0.04 0.4% 37
West Hollywood 0.23 2.2% 16 Maywood 0.04 0.3%
Hawthorne 0.22 2.1% 17 Sierra Madre 0.04 0.3% 38
Redondo Beach 0.20 1.9% 18 Hawaiian Gardens 0.04 0.3% 39 Monrovia 0.16 1.6% 19 Ojai 0.03 0.3% 40
Lynwood 0.15 1.5% 20 Total Current CPA Load* 10.44
*FY 2025-2026 load, not including Cudahy and Fillmore.
Financial Impact Considerations
An important consideration for expansion is the expected impact of new customers on the rates paid by existing customers
CPA conducts feasibility studies to assess these impacts based on the proposed new communities’ historical load and forecasted energy prices and electricity rates If prices for long-term power purchase agreements (PPAs) are falling, the projected long-term cost to serve new customers can be less than the cost to serve existing customers
o In this environment, CPA can set rates for the new communities at competitive levels similar to those for existing customers with no upward impact on existing customer rates If prices for long-term PPAs are rising, the projected long-term cost to serve new customers can be greater than the cost to serve existing customers o The higher cost would reduce CPA margins and could put upward pressure on existing customer rates, unless the rates for new communities are set higher o Impacts would be proportional to the size of the new communities, and might be mitigated by a phasing of customer enrollments
The PCIA is always a wildcard – cities with different entrance years (“vintages”) can have very different PCIA levels from year-to-year
7 Questions to Address
What is the desired end/steady state? 40 communities, 89 communities, or somewhere in between? Over what time period?
What can CPA do to deepen its ties to our current communities while widening the customer base? How do we know if we are being successful?
Would CPA’s existing governance structure need to evolve with further expansion? And if so, when would it be and what could it look like? If we pursue expansion, should we revise the criteria for new cities? How?
8 Discussion Topic #1: End State
What is the desired steady state? 40 communities? 89
communities? Somewhere in between? Over what time period? Prompts
Is there an upper limit?
o Number of cities
o Number of customers
o Load
How long should it take to get there?
Cadence
o Of adding new cities (e.g., every year, every other year, when the moment is right)?
o Of checking in on the question with the Board?
9 Discussion Topic #2: Deep and Wide
What can CPA do to deepen its ties to our current communities while widening the customer base? How do we know if we are being successful?
Prompts
How do we measure local community connection?
o Participation Rate?
o Customer program enrollment?
o Brand recognition?
o What else?
Are there any thresholds to meet before further expansion? Do we need to intensify member agency support?
o Government Affairs/physical presence?
o Member Agency programs, like Energized Communities and Power Response 10 Discussion Topic #3: Governance
Would CPA’s existing governance structure need to evolve with further expansion? And if so, when would it be and what could it look like?
Prompts
Does CPA’s existing Board and Committee structure provide:
o Effective governance and oversight?
o Opportunities for input and meaningful policy engagement Is there a threshold (in terms of number of cities) where this structure would no longer be optimal?
o What are other models? Regional representation? More delegation of authority to ExCom and fewer full Board meetings? What else?
o How do you continue to foster and mentor new leadership and mission alignment? 11 Discussion Topic #4: New City Criteria?
If we pursue expansion, should we revise the criteria for new cities? How?
Prompts
Is the current criteria (geographic holes, diversity, strategic load) meaningful anymore?
Do other/additional criteria matter?
o Climate Action Plans?
o Specific loads, e.g., more definition that just “strategic”? o Political moments, opportunities, enthusiasm?
12 Study Session 2
Programs and Transmission Update
Customer Programs: Goals and
Marketing Process
September 18, 2026
Agenda
2 Overview of customer program portfolio
• Strategic goals, snapshot of local customer programs, and accomplishments to-date Program and Marketing collaboration approach
Overview of outreach and marketing channels and how CPA defines success Table overview and discussion prompts
Shared Objective: Expand awareness and increase participation in CPA Customer Programs Meeting Goal: Learn what outreach approaches have been successful in your communities CPA’s customer programs
strategic goals
3 The CPA Board of Directors approved the Local Programs for a Clean Energy Future Plan in 2020. It was updated with a more detailed “Action Plan” in 2023.
Together these lay out a strategic vision for CPA customer programs, including products, services, and financial incentives, to invest in its communities and to support its customers in co-managing their relationship with the energy system.
These programs can bring local benefits such as customer cost savings, economic and workforce development, improved air quality and public health, and more resilient communities. These programs will also reduce or avoid costs for CPA.
The Plan identified three major categories of programs types:
Resilience and Grid Management, Electrification, and Local Procurement. These three categories are also referred to as CPA’s “Program Pillars”.
Programs are prioritized and selected
based on following criteria:
• Program impacts measured in
kWh, kW, GHG, or customer cost
savings and the anticipated total
cost to administer.
• Goal alignment with the CPA
mission and Local Programs for a
Clean Energy Future, and
associated Action Plan.
• Differentiated value, i.e. whether
it brings unique value versus what
others are offering in the region.
• Whether the offer expands access
and engagement throughout our
very diverse customer base
Residential
Multifamily
Commercial
Partner Communities
Local Resiliency and Grid
Management
Instant AC Savings: $300 coupon at
participating retailers
EV SmartCharge: App to help
customers save money by shifting
when they charge
Power Response: incentives for
reducing energy use at times of grid
stress
Apartment Building Cooling
Assistance: Rebates for property
owners to install efficient cooling
Peak Management Pricing: Summer
bill discounts for reduced usage
during peak days
Power Ready: Clean energy backup
systems for critical facilities
Building & Transportation
Electrification
Local Clean Energy
Procurement
CPA’s Local Customer Programs
Energy Team: Unbiased information on
energy upgrades for homes or small
businesses from a team of experts
Multifamily EV Charging: Incentives and
technical assistance for property owners
to install EV chargers
Multifamily Efficient Cooling
Partnerships: Additional incentives
available to CPA customers through the
Regional Energy Networks.
Energized Communities: Accelerates
community sustainability goals
• Building Electrification Assistance
• Electric Fleet Transition Services
• Community Electric Vehicle Charging
• Innovation Fund
Power Share: local renewable
energy at 20% bill discount for low- income customers
Sun Storage Rebates: $750 - $2,250
rebates for homeowners who install
a solar battery storage system
Solar & Battery Access Program: No
upfront cost solar and storage
systems for income qualified
customers
New Programs Launching Q1 2027
Program accomplishments to-date
5 29.4k+
Customers
Participated
In CPA programs
20+
Contracts and
Partnerships
With vendors and non-profits
Since launching Customer Programs, CPA has had a significant and positive impact on the customer and communities it serves.
$6.8M+
Electricity Bill
Savings
For CPA customers
$1.9M+
Rebates &
Incentives
For CPA customers
$1.7Gwh+
Shifted EV
Charging
To off-peak times
4.7MW+
Virtual Power
Plant
Load shifting capacity
570+
Individuals
Trained
Through workforce
programs
135+
Clean Energy
Jobs Created
Through local solar
projects
Data shows impact through April 2026
Collaboration approach
6 Program and Marketing teams collaborate throughout a program’s lifecycle Once program design is finalized, teams work together to identify the best approach to engage the target audience
1 Identify
problem
or need
2 Program
development
3 Vendor
requirements
and scope
4 Understand
target market
and audience
5 Select most
effective
outreach
channels
6 Deploy, test,
and optimize
Program outreach channels
7 MEDIA MIX
01 Owned media
• CPA monthly newsletter
• Organic social media
• Email campaigns
• Postcards and letters
02 Paid media
• Radio + Podcast
• Commercials
• Billboards
• Meta
03 Earned media
• News coverage
• Social sharing
• Word-of-mouth
PARTNERS AND COMMUNITY
Partnerships and trade allies
• Board and Community Advisory
Committee extend reach through
portal content
• In-community permitting desk
• Targeted contractor and industry
organizations
Local events and CBOs
• Participate in community events
• Coordinate with chambers and
associations
• CBO partnerships and grants
What marketing success looks like
8 AWARENESS
Moving customers from
“I don’t recognize this”
↓
“I know what that is”
92%
CPA Brand familiarity in 2025, up
from 35% in 2023
ENGAGEMENT
Moving customers from
“I know what that is”
↓
“I’m interested enough to
interact with it”
48%
Of CPA customers know about
our CPA programs, up from 16%
in 2023
LEADS
Moving customers from
“I’m interested, I understand it”
↓
“I’m doing something”
40%
of Instant AC Savings webpage
visitors became leads in August
Table overview and discussion prompts
9 Breakout table overview:
World Café Format: Four 15-minute stops, then table report out At the tables you will:
Learn about the program goals and objectives
Ask questions about the programs or outreach efforts
Provide input to the CPA Program, Marketing and
Communications, and Government Affairs teams
Discussion prompt for tables 1-5:
What has worked in your community that may be applicable to raising awareness and participation in these programs?
Tables:
1) Member Agency &
Community Programs
2) Residential Customer &
Tenant Offerings
3) Equity Programs
4) Programs for Multifamily &
Commercial Property
Owners / Managers
5) Community Resilience
Programs
6) Transmission
Appendix / Pre-read
Overview of the program marketing process
11 STEP 1 Identify the Opportunity and Challenges
• Translate complexity into clarity – benefits + barriers • Size the eligible audience
Define the value proposition
STEP 2 Research the Audience
• Leverage psychographics and demographics
• Primary: CPA brand customer survey and segmentation study • Secondary: university studies, peer CCAs
Insights shape who we speak to and how
STEP 3 Name the Program
• Clear, approachable naming
• Everyone deserves a place in the energy conversation
The name invites people in
How we create our marketing plan
12 STEP 4 Build the Marketing Plan
• Designing the outreach plan around the customer
• Channel mix set by the audience data – we meet customers where they are • Messaging transcreated
• One message, every language we serve
STEP 5 Execute the Funnel
• Awareness
• Engagement
• Conversion
• Advocacy
Reach the hard-to-reach audiences
MARKETING STRATEGY TOUCHPOINTS
AWARENESS
Television commercials · targeted radio · local newspapers · billboards ENGAGEMENT and EDUCATION
· Events· social media · interactive tools · prospecting emails
CONVERSION
Business reply mailers, emails, SEO
ADVOCACY
Word of mouth · content sharing
MEASUREMENT
Key Performing Indicators
13 AWARENESS
Moving customers from:
“I don’t recognize this” to
“I know what that is”
WHAT WE MEASURE
• Awareness – unaided and aided
• Reach – did we get in front of the right people
• Attention – did people notice
• Action – did awareness create a pathway to
behavior
ENGAGEMENT & EDUCATION
Moving customers from:
“I know what that is”
to
“I’m interested enough to interact with it.”
WHAT WE MEASURE
• Website visits from campaigns
• Video views and completion
• Social media interactions
• Search lift
• Event engagements
LLEADS & CONVERSION
WHAT WE MEASURE
• Leads – moving customers to implementor
experience
• Conversions - enrollments
Moving customers from:
“I’m interested, I understand it.”
to
“I’m doing something.”
Board of Directors Retreat Study Session 2: Programs + Transmission Update Memorandum
To: Board of Directors
From: David McNeil, Chief Financial Officer
Ted Bardacke, Chief Executive Officer
Subject: Transmission - Opportunity Assessment
Date: September 18, 2026
SUMMARY
At the September 2026 Board Retreat, Staff will summarize the opportunities, risks, and considerations for CPA to own or lease transmission assets in partnership with the private sector, summarize CPA’s efforts over the past year to effect legislative changes that would authorize CCAs to own transmission assets, and provide an opportunity to discuss the creation of a CPA-affiliated Transmission JPA. The Board’s input and break-out group discussion will help guide Staff as it evaluates the Transmission JPA opportunity.
INTRODUCTION
At its June 2024 retreat, CPA’s Board expressed interest in exploring asset ownership.
At its September 2025 retreat, the Board advised Staff to pursue the transmission ownership opportunity along two principal paths: (1) support new California legislation that would authorize CPA to own transmission; and (2) separately, research the creation of a Transmission JPA operated by CPA.1
Based on that interest, Staff researched expanding the legislative authority of counties to own transmission. After discussion with LA County, legislators, and advisors, CPA determined that creating new authorities for counties – either generally or for LA 1 A third pathway, joining Southern California Public Power Authority, was investigated but did not prove feasible.
Board of Directors Retreat Study Session 2: Programs + Transmission Update County specifically - was not a viable alternative. CPA ultimately sponsored AB 2396, authored by Assembly Member Irwin, which would have expanded the authority of CCAs to own transmission. AB 2396 was approved by the Assembly Energy Committee by a 14-0 vote despite opposition from the Investor Owned Utilities (IOUs).
AB 2396 did not, however, pass out of Assembly Appropriation Committee and cannot advance until the 2027 legislative session at the earliest. CPA also contributed to efforts to amend AB 254 which contemplates the creation of an “Accelerator” to support public financing of transmission. However, the amendments did not address the need for a viable public transmission owner. The political will in Sacramento to create such an entity remains both uncertain and unlikely in the near-term.
Transmission Opportunity Overview
Public ownership of transmission would offer CPA an opportunity to:
1. Improve electric bill affordability
• Transmission bill charges are expected to nearly triple in today’s dollars over the next twenty years. CPA could help to reduce transmission/delivery costs for customers
• By accelerating and deepening transmission investments, CPA could reduce generation charges on customer bills by reducing congestion costs and providing greater access to lower cost renewable energy
2. Advance the clean energy transition
• Affordability and a lack of transmission infrastructure represent major threats to advancing the clean energy transition
Board of Directors Retreat Study Session 2: Programs + Transmission Update • Transmission investments can expand the buildout of renewable generating assets and reduce reliance on greenhouse gas emitting generation resources
3. Earn a fair and reasonable rate of return for CPA
• Regulation incentivizes public transmission owners to participate in transmission development by offering reasonable and equitable returns • These returns could be used to reduce generation rates, fund programs, and/or subsidize operating costs
4. Build capacity to support our members’ needs
• Better inform transmission planning at the community level through improved understanding of the transmission planning and transmission alternatives
Transmission ownership also entails new risks for CPA. These risk and mitigation measures available are discussed in the Managing Risk section of this report.
BACKGROUND
Transmission System Overview
California operates in a regional transmission system which spans the entire western United States with connections into British Columbia, Canada and the northern parts of Baja California.
In the CAISO’s area of operation, the transmission system connects generators with the distribution systems of IOUs like SCE.
Board of Directors Retreat Study Session 2: Programs + Transmission Update The transmission system (2,3,4) connects electric Generating Stations (1) to the Distribution System (5,6) through Transmission (2) and Sub-transmission (4) lines that exceed 200 kilovolts and 65 kilovolts respectively. The distribution system in turn connects to CPA’s residential and commercial customers.
Customer electricity bills are composed of charges related to generation (CPA) and distribution of electricity (SCE), plus added charges on the SCE side of the bill for public purposes programs and other state authorized items. Charges for the transmission of electricity currently comprise 7% of residential bills and are a subset of charges on the SCE side of the bill. Transmission charges could increase to nearly 21% of bills over the next 20 years, assuming other bill charges remain flat and no action to address transmission affordability is taken.
CAISO’s 20 Year Transmission Outlook
To achieve its reliability and renewable goals and support continued electrification, California requires significant investments in transmission infrastructure over the next 20 years. The CAISO’s 20-Year Transmission Outlook published in July 2024 estimated the need for up to $63.2 billion in future transmission investments.
Figure ES-1 provides an illustrative diagram of the transmission development required to Board of Directors Retreat Study Session 2: Programs + Transmission Update integrate the resources of the 2045 portfolio and reliably serve the 2045 load forecast.2 This analysis focused on high-voltage bulk transmission, recognizing that local transmission needs and generation interconnections will ultimately need to be addressed as well. The grayed areas and associated blue arrows represent the locations and names of CAISO transmission zones, respectively. Fine gray lines and circles represent existing transmission infrastructure. Thick black and dotted red arrows represent areas of future transmission development.
2 Source: see the CAISO’s 20-Year Transmission Outlook published in July 2024 Board of Directors Retreat Study Session 2: Programs + Transmission Update Table ES-1: provides a high-level summary of the transmission development required for upgrades to the existing ISO footprint and the integration of offshore wind and out-of-state wind resources, along with estimated costs. The range of cost estimates is commensurate with estimates developed at this stage of planning, with the costs in constant dollars.
CAISO’s Transmission Planning Process
Transmission system upgrades and new development are authorized by the CAISO on an annual basis through its Transmission Planning Process (TPP). The TPP authorizes two types of transmission projects;
o New projects subject to competitive solicitation pursuant to Federal Energy Regulatory Commission (FERC) Order 1000
o Upgrades and improvements to existing transmission assets and some new projects which are awarded to the IOU owners of the underlying transmission assets without competitive bid
Transmission that is planned and authorized by the CAISO is owned and developed by Participating Transmission Owners comprised of:
Board of Directors Retreat Study Session 2: Programs + Transmission Update o IOUs: PG&E, SCE, and SDG&E
o Private transmission developers: These include LS Power, NextEra and subsidiaries of Blackstone and Berkshire Hathaway.
o Partnerships of IOUs and Private investors and developers While municipal electric utilities have owned, operated, and maintained transmission infrastructure for over 100 years in California, with few exceptions municipal utilities have not owned or developed transmission assets in the CAISO’s transmission network.
Unlike states such as New York and Texas, in California, public entities do not currently play a meaningful role in CAISO transmission ownership or financing.
Owners of both new-build and upgrade transmission projects typically turn operational control of their facilities over to the CAISO and collect Transmission Access Charges (TAC) from electric utility customers. Transmission owners are responsible for maintaining the transmission system, complying with federal regulations governing reliability standards, insuring transmission assets from damage, and acquiring third party liability insurance coverage for harm caused by the transmission asset. The IOUs participate in the California Wildfire Fund. Private transmission developers insure transmission-related risks privately.
Current State of Transmission Financing
The IOUs, Private Transmission Developers and Private Investors provide debt and equity capital to finance transmission projects. They earn a rate of return on shareholder equity which is “grossed up” to account for the payment of income taxes and are compensated for taxable interest charges on debt at cost. Table ES2 estimates the component costs to rate payers of the projected 20 year buildout of transmission using private sector capital:
Board of Directors Retreat Study Session 2: Programs + Transmission Update These project costs are included in the TAC along with maintenance costs. Rate payer contributions to the California Wildfire Fund are paid via separate charges on the customer bill.
The Coming Regional Energy Market and Regional Transmission Planning Implementation planning for the Western Regional Energy Market (named the “ROW”) was launched following the California legislature’s passage of AB825. The ROW is planned to improve regional integration of electricity spot markets across the West, easing the transition to clean electricity, bolstering grid reliability, and reducing grid costs.
Historically, coordinated transmission planning between the CAISO and other Western balancing authorities has been limited. Over time, the ROW may lead to improved regional coordination in transmission planning which would complement the CAISO’s TPP, reduce overall transmission costs, and more effectively facilitate the build-out of transmission lines from the best renewable resources in the West to the places with the highest electricity demand.
Improved regional transmission planning would represent a positive evolution in transmission planning and could present additional opportunities for CPA both to own and finance transmission and to facilitate the construction of renewable generation resources.
NEW OPPORTUNITIES FOR TRANSMISSION OWNERSHIP
California policymakers have recognized that public agencies, in partnership with the private sector, could play an important role in developing and financing transmission.
Public agencies such as the New York Power Authority in New York and the Lower Colorado River Authority in Texas are leading transmission owners and developers in their respective states. However, California lacks a public partner in the transmission space.
Public agencies, including CPA, have the following important advantages in delivering low-cost financing for transmission projects:
• A cost of “equity” that is at least 28% lower than the private sector reflecting exemption from state and federal income taxes Board of Directors Retreat Study Session 2: Programs + Transmission Update • Authority to issue tax-exempt debt which currently costs 20-25% less per annum than taxable debt
CPA could bring additional competitive advantages, notably:
• Significant capital market experience
• CPA has issued $6.9 billion of electricity prepay bonds in the past four years
• Sophisticated procurement expertise and experience
• CPA has procured over $16 billion of renewable energy and storage
• Credibility and influence at the state and local level • Flexible return on investment requirements that consider the public good • Deep and active lines of communication with its member agencies and the constituents it serves
Transmission and Local Development
As the tragic events across California over the past several years have demonstrated, wildfires caused by failures in the electricity system can have devastating impact on our communities. Transmission planning can play a significant role ensuring community safety and resiliency in which transmission siting, alternatives to transmission, and undergrounding of transmission lines are all important considerations. By developing CPA’s knowledge and experience with the planning and procurement of transmission, CPA could become a trusted partner to our communities as they evaluate transmission in their area – both as it relates to the operation and upgrading of existing transmission assets and to new-build transmission assets planned for their areas.
Managing Risk
Transmission development and ownership involves a number of risks including permitting, construction cost overruns and delays, operating risks, property damage and third-party wildfire liability risks. Risks can be mitigated and managed through project selection, partner and subcontractor selection, and by using established tools and Board of Directors Retreat Study Session 2: Programs + Transmission Update strategies to manage and mitigate risks. These include avoiding projects with elevated wildfire risks, developing and implementing best-practice wildfire mitigation plans, hiring experienced maintenance contractors, acquiring commercially-available property damage and wildfire insurance, and creating contracting vehicles that shift development and construction risks to project partners who are well equipped to control and mitigate those risks. The allocation of risk between a public transmission owner and its IOU or private developer partner would be negotiated bilaterally.
CPA can further manage risk to itself by creating and using bankruptcy-remote transmission and project specific JPAs as discussed in the following sections.
Bankruptcy-remote entities have recently been used by the New York Power Authority to finance over $2 billion of transmission projects and are well-established “tools” in the public agency toolbox. By using bankruptcy remote entities, CPA’s financial risk would be limited to its investment in that entity. Exhibit B provides an example of a partnership arrangement with an IOU in which a transmission Project JPA is used to assume manage transmission project risks. In this example the Project JPA, and not CPA, would enter into a Transmission Capacity Lease with the IOU and would issue the tax-exempt bonds.
Bondholders would be secured by future payments from ratepayers and would have no claim against CPA. By using a bankruptcy-remote JPA, CPA can help insulate itself from project risks.
Legal Authority to Own Transmission
Public sector entities that develop and own transmission generally only do so under explicit legislative authority. AB 117, the CCA enabling legislation, does not explicitly authorize CCAs to own transmission. Under California law, a JPA’s exercise of power is restricted to the power of one of its contracting parties as designated in the Joint Powers Agreement (JPA). Per CPA’s JPA (Sec. 3.4), CPA’s exercise of power is restricted to the powers possessed by the County of Los Angeles. Los Angeles County’s authority to develop and own transmission is limited to the generation of hydroelectric or wind power and related transmission.
Board of Directors Retreat Study Session 2: Programs + Transmission Update A New Transmission JPA
Cities have constitutional authority to own and operate transmission3 and can accomplish this either individually or through the creation of a JPA. The Transmission Agency of Northern California (TANC) is an example of a JPA formed by municipal members to own and operate transmission.
CPA could support public ownership and financing of transmission by creating a new Transmission JPA composed of non-County CPA members (e.g. cities) exercising their authority to own and develop transmission.
An amendment to CPA’s JPA may be required in order for CPA to perform activities that would support the new Transmission JPA.
The new Transmission JPA could have some of the following characteristics
1. Transmission JPA member agencies would have no financial or operational obligations to the Transmission JPA aside from general oversight through participation on its Board. Options for Board composition are described below.
2. CPA and the new Transmission JPA would enter into an Operating and Loan agreements pursuant to which:
a. CPA staff would operate the JPA and contract with third-party service providers as needed
b. Services provided to the new Transmission JPA would be funded by CPA via separate loan agreements between CPA and the Transmission JPA.
Loans would be interest-bearing and repayable from the proceeds of transmission project revenues, if any. All loan agreements would be subject to approval by CPA’s Board of Directors.
c. Through these Operating and Loan agreements, CPA’s Board could help guide the activities of the Transmission JPA
CPA plans to contract with a transmission consultant to assist with the development of an 3 Under Article XI, Section 9(a) of the California Constitution “A municipal corporation may establish, purchase, and operate public works to furnish its inhabitants with light, water, power, heat, transportation, or means of communication.” Cities are routinely referred to as municipalities.
Board of Directors Retreat Study Session 2: Programs + Transmission Update operating risk assessment and plan for the new Transmission JPA and will have more information on this topic by early 2027
3. CPA and the new Transmission JPA would facilitate the creation of other project-specific JPAs (each a “Project JPA”) to own, develop, and finance individual transmission projects.
a. Each Project JPA would own and finance its own specific transmission projects. Project JPAs would be financed through i) public bond offerings and ii) loans by the Transmission JPA to the Project JPA. Project JPAs can protect bondholders and reduce interest costs by avoiding risk transfer between projects.
b. CPA would provide back-to-back loans to the Transmission JPA and from the Transmission JPA to the Project JPA supported by related loan agreements
i. Loans from the Transmission JPA to the Project JPA would be subordinate to bonds issued by the Project JPA and would function as equity (from bondholders’ perspective) in the Project JPA ii. Loan amounts would vary by project and would be subject to CPA Board approval
c. Transmission revenues would be paid by the CAISO via charges on customer bills as described in Appendix A. These revenues would be used to pay the project’s operating and maintenance expenses and to repay bondholders and the Transmission JPA.
d. CPA would recoup its return on investment through loan agreements with the Transmission JPA
Board of Directors Retreat Study Session 2: Programs + Transmission Update New Transmission JPA Governance Options
Staff welcome feedback and discussion at the breakout session including on the following topics related to governance of a new Transmission JPA.
1. JPA Board Composition and Meeting Frequency
Option 1: Appointment of Directors
i. Appointed/elected by member agencies
ii. Eligible Board members could include one or more of the following:
1. Independent experts
2. Member cities’ staff
3. CPA staff
4. Elected officials
Example: California Asset Management Program (a California JPA and financing authority)
Option 2: Appointment of elected representatives from Member agencies Example: CPA
Discussion: The Transmission JPA Board could be composed of CPA Board Board of Directors Retreat Study Session 2: Programs + Transmission Update members whose cities elect to join the JPA. However, JPA Member cities may prefer board representation by independent experts with transmission or financing expertise who may be available among CPA, city staff, or with third parties. An annual board meeting may be sufficient until such time as the Transmission JPA considers individual projects. Quarterly, monthly or special board meetings may be scheduled thereafter pursuant to the JPA Agreement.
2. JPA Membership Options
Option 1: Open to all CPA members
Option 2: Set maximum number of members
Discussion: To avoid a dissolution of the JPA were one member to exit, it is recommended that the JPA have no fewer than three members. However, a smaller number of members may offer efficiency advantages in the startup phase.
3. Incentives for Transmission JPA Members
Option 1: No additional incentives
Option 2: Incentives
i. Monetary
ii. Non-monetary programs or services
Discussion: As discussed above, the new Transmission JPA offers a means of reducing electricity bills and expanding renewable development. Offering additional incentives exclusively to members of the new Transmission JPA may be necessary to attract JPA members. Not offering additional and exclusive incentives has the advantage of simplicity. It may also help avoid potential misalignment and conflict between CPA and the Transmission JPA and recognizes that CPA, and not the new Transmission JPA members, would capitalize the agency and assume related financial risks of loan repayment.
At the retreat, Board members will have the opportunity to join a break-out group to discuss transmission in California and provide initial guidance on the creation of a new Transmission JPA, including the options outlined above.
Board of Directors Retreat Study Session 2: Programs + Transmission Update Appendix A: CAISO Transmission Project Cost Recovery
1. In California, regional transmission projects selected under FERC Order 1000 competitive solicitation rules are initially built using capital from private developers or investor-owned utilities (IOUs)
2. The loans, equity, and operational costs associated with these projects are repaid through regulated cost-recovery mechanisms ultimately funded by California utility rate payers
3. The step-by-step mechanism of how these project costs are structured and paid back involves several regulator steps:
a. Determination of the Transmission Revenue Requirement (TRR) i. After a project proposal is approved by the California Independent System Operator (CAISO), the Project Sponsor constructs the project, files its Transmission Owner (TO) tariff with the Federal Energy Regulatory Commission (FERC) that includes the formula for their proposed TRR. Once FERC approves the tariff and the project is placed in service, the TO receives cost recovery through the Transmission Access Charge (TAC). The rate case includes project costs and associated costs of debt and project equity.
ii. The TRR calculates the total money needed each year to repay the project’s debt (i.e., bondholders) pay a return to equity investors, and cover ongoing operations and maintenance (O&M) expenses.
4. Integration into the TAC
a. After FERC approves the developer’s TRR, the project is placed under the operational control of the CAISO
b. The CAISO pools the approved TRRs of various transmission owners across the state grid
c. The CAISO then calculates a per-megawatt-hour (MWh) volumetric fee known as the TAC, which it includes in its charges to Utility Distribution Companies, Small Utility Distribution Companies, and Metered Subsystem Board of Directors Retreat Study Session 2: Programs + Transmission Update (MSS) operators with Gross Load in a Participating Transmission Owner (PTO) Service Territory.
5. Collection via End-User Utility Bills
a. TAC fees are added directly into retail electric customers' monthly utility bills.
b. As rate payers pay their electric bills, the cash flows from the utilities back to the CAISO, which distributes the funds to the transmission developers to service their loans and obligations.
Board of Directors Retreat Study Session 2: Programs + Transmission Update Appendix B: Transmission Partnership Example
The following example illustrates a possible Transmission JPA/IOU partnership to finance a transmission project using a Transmission Capacity Lease framework. A similar partnership could be achieved with an independent transmission developer. • IOU and Transmission JPA voluntarily partner on a transmission project • IOU plans and constructs the project
• The IOU and Project JPA enter into a Transmission Capacity Lease Agreement under which the Project JPA agrees to lease 50% of the transmission line capacity for 30 years
• The Project JPA issues tax-exempt bonds. The bond proceeds are used to prepay 30 years of lease payments to the IOU. The IOU is effectively paid upfront for 50% of the transmission asset.
• Under the lease agreement, the IOU maintains the transmission asset in return for a maintenance fee paid by the Project JPA
• The IOU indemnifies the Project JPA from wildfire liability risks arising from the operation of the transmission asset, which is covered by the California Wildfire Fund
• The Project JPA enters into a Transmission Control Agreement with the CAISO in which it passes operational control of the leased transmission capacity to the CAISO
• The Project JPA receives FERC approval to recover debt service, maintenance fees, and a “proper and equitable return”4 through the TAC on the customer bill.
As described in the previous section, this framework could reduce transmission costs associated with the Transmission JPA’s new investment for all ratepayers by an estimated 20-30%. This framework has been attractive to institutional investors and is therefore scalable.
4 “Proper and equitable return” is an established FERC approach to determining appropriate “equity” returns for municipal utilities, and lower than the return on equity awarded to IOUs reflecting CPA’s exemption from state and federal income taxes.
Lunchtime Conversation with Kate Gordon
Kate Gordon, Chief Executive Officer, California Forward (CA FWD) Kate Gordon is the CEO of CA FWD, a statewide organization dedicated to a more sustainable, resilient, and inclusive economy across every region of the state. Gordon has spent the past two decades working at the intersection of climate change, energy policy, and equitable economic development. Most recently, she served within the Biden-Harris administration as Senior Advisor to U.S. Energy Secretary Jennifer Granholm.
During her time at the Department of Energy, Gordon led a variety of locally focused initiatives to help drive a more sustainable and resilient energy transition, including creating the Community Benefits Plan framework for DOE funding under the Bipartisan Infrastructure Law and Inflation Reduction Act; driving the agency’s efforts to site clean energy projects on DOE lands through the Cleanup to Clean Energy initiative; and collaborating with the White House to lead the Interagency Working Group on Coal and Power Plant Communities. Gordon served on the Secretary of Energy’s Advisory Board (SEAB) through the end of the Biden-Harris administration.
Prior to her time in the Biden-Harris administration, Gordon served for several years in California state government as the Director of the Governor’s Office of Planning and Research and Senior Climate Policy Advisor to Governor Gavin Newsom. In this role, Gordon launched or led several initiatives to better integrate climate and economic development strategy across the state, including the Commission on Catastrophic Wildfire Cost and Recovery, the Regions Rise Together initiative, and the Community Economic Resilience Fund (CERF), now known as California Jobs First. As founder and head of California’s interagency “climate cabinet,” she also led the creation of the first-ever integrated California climate budget as part of the Governor’s 2020 budget proposal.
Gordon’s policy work in California earned her CA FWD’s 2022 California Steward Leader Award.
Before entering public service, Gordon was the founding director of the Risky Business Project, co-chaired by Mike Bloomberg, Hank Paulson, and Tom Steyer and focused on quantifying and communicating the financial risks and economic impacts of climate change on key U.S. regions and sectors. Gordon has also served in senior leadership positions at several nonpartisan think tanks including the Henry M. Paulson Institute, the Center for the Next Generation, the Center for American Progress, and the Center on Global Energy Policy at Columbia University. Gordon got her start on energy and climate issues working at the national Apollo Alliance, where she ultimately served as co-Executive Director until the merger with the Blue-Green Alliance in 2011.
Gordon earned a J.D. and a Masters in City and Regional Planning from the University of California-Berkeley, and an undergraduate degree from Wesleyan University. Gordon serves on multiple boards, including for Brown Advisory and Element Resources. She teaches a regular course on “Climate: Politics, Finance, and Infrastructure” at the University of California-Berkeley and serves as a Non-resident Scholar at Carnegie California.