Agenda packet — Desert Community Energy Board of Directors, June 17, 2024 (part 1 of 2)

DESERT COMMUNITY ENERGY

SPECIAL MEETING AGENDA
Monday, June 17, 2024
1:00 p.m.

Palm Springs City Hall
Large Conference Room
3200 E. Tahquitz Canyon Way
Palm Springs CA 92262
Members of the public may use the following link for listening access and ability to address the Desert Community Energy Board when called upon:
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Members of the public are encouraged to submit comment in connection with the Desert Community Energy meeting by email to: [email protected] by 5:00 p.m. on the day prior to the Board meeting. Comments intended to be read aloud into the record should be no more than 300 characters in length.

THIS MEETING IS HANDICAPPED ACCESSIBLE.

ACTION MAY RESULT ON ANY ITEMS ON THIS AGENDA.

1. CALL TO ORDER – Chair Lisa Middleton, Councilmember, City of Palm Springs

2. ROLL CALL
A. Member Roster P4

3. AGENDA MODIFICATIONS (IF ANY)

4. PUBLIC COMMENTS ON AGENDA ITEMS
Any person wishing to address the Desert Community Energy Board on items appearing on this agenda may do so at this time. Please limit comments to 3 minutes. At the discretion of the chair, additional public comment time and/or opportunities during the meeting may be granted.

5. BOARD MEMBER / EXECUTIVE DIRECTOR COMMENTS

6. CONSENT CALENDAR
A. Authorize the Executive Director to execute the necessary documents, including P5 any agreements with College of the Desert, to apply for funding from the California Energy Commission’s Community Energy Reliability & Resilience Investment (CERRI) Program B. Adopt DCE Policy No. 24-01 for DCE’s Wholesale Energy Procurement Risk P6 Management Policy
C. Adopt Updated DCE Policy No. 22-01 Procurement Policy & Procedures P37

7. DISCUSSION / ACTION
A. DCE Fiscal Year 2024/25 Budget – Claude Kilgore P56
Recommendation: Adopt Resolution 2024-02 approving Desert Community Energy’s Fiscal Year 2024/25 Budget
B. Southern California Edison Billing Issues and General Rate Case Testimony P75 – Claude Kilgore
Recommendation: Information
C. Presentation: Summer power supply outlook – Jaclyn Harr, The Energy Authority

8. INFORMATION
A) Attendance Record P153
B) Unaudited Year-to-Year Financial Report as of March 31, 2024 P154 C) Summary of March 2024 and June 2024 Rate Adjustments P157 D) Coachella Valley Association of Governments’ meeting calendar P160 E) DCE’s 2024 Summer Readiness Outreach Strategy P161
F) Update on Distributed Energy Resources & Microgrids P165 G) 2023 Annual Supplier Diversity Report P167

9. PUBLIC COMMENTS ON NON-AGENDA ITEMS
Any person wishing to address the Board on items not appearing on this agenda may do so at this time. Please limit comments to 2 minutes. At the discretion of the chair, additional public comment time and/or opportunities during the meeting may be granted.

10. ANNOUNCEMENTS
The next DCE meeting will be held September 16, 2024 at 3:00 p.m. at the Large Conference Room at Palm Springs City Hall, 3200 E. Tahquitz Canyon Way, Palm Springs, 92262.

11. ADJOURNMENT

DESERT COMMUNITY ENERGY

BOARD MEMBER ROSTER
Voting Members Seat on Committee Representative
City of Palm Desert Vice Chair
Veronica Chavez
Finance Director
Alternate: Councilmember Kathleen Kelly
City of Palm Springs Chair
Lisa Middleton
Councilmember
Alternate: Mayor Jeffrey Bernstein
DCE Staff
Tom Kirk, Executive Director
Claude Kilgore, Director of Finance
David Freedman, Program Manager
Emily Langenbahn, Management Analyst
Janice Reitman, Accounting Manager
ITEM 6A
Desert Community Energy Board
June 17, 2024

STAFF REPORT
Subject: Opportunities to secure grant funding for community projects Contact: Erica Felci, Chief Operating Officer ([email protected]) and Emily Langenbahn, Management Analyst ([email protected]) Recommendation: Authorize the Executive Director to execute the necessary documents, including any agreements with College of the Desert, to apply for funding from the California Energy Commission’s Community Energy Reliability & Resilience Investment (CERRI) Program
Background: In an effort to increase the state’s electric reliability, the California Energy Commission (CEC) is offering funding through its Community Energy Reliability & Resilience Investment (CERRI) Program. Projects funded from this program are designed to help communities be more resilient from climate-related events such as increased wildfires, heat waves, and storms, or through public safety power shutoffs. Projects can also address aging infrastructure and improve grid reliability. Funding for this program was authorized under the federal Infrastructure Investment and Jobs Act.

DCE staff has been in conversations with College of the Desert staff, which is seeking a $4 million grant through the CERRI program to help fund its solar and battery storage project intended to operate at College of the Desert’s Palm Springs Development Campus. The program is intended to support grid reliability and community resiliency through the deployment of battery energy storage systems and a microgrid that provide locally-generated clean energy to the grid at times of need. DCE staff believes this will serve as a significant benefit to the Palm Springs community.

COD’s solar project fits within the State’s goals of improving community energy reliability and resilience, creating community benefits, addressing climate and energy policies and improving energy equity. But DCE staff has made it clear that, should the project be awarded, DCE would not be moving forward without additional Board authorization and a clear understanding that the project would be beneficial to its rate payers.

Applications are due July 12, with awards announced in the fall. If funded, the project would start in 2025 and be completed by 2028. The application requires declarations from the entity’s authorized representative. In advance of the grant deadline, DCE staff is recommending the Board authorize the Executive Director to execute the necessary documents, including any agreements with College of the Desert, to apply for funding.

Fiscal Analysis: There is no additional cost to this item. COD staff is still finalizing its application and anticipates seeking about $4 million from CERRI. The required 33% match would also be covered by COD.

ITEM 6B
Desert Community Energy Board
June 17, 2024

STAFF REPORT
Subject: Adoption of Wholesale Energy Procurement Risk Management Policy Contact: David Freedman, Program Manager ([email protected]) Recommendation: Adopt DCE Policy No. 24-01 for DCE’s Wholesale Energy Procurement Risk Management Policy
Background:, In May 2018, as DCE was in its earliest stages, the Board adopted Policy No. 18- 09, DCE’s Energy Risk Management Policy (ERMP). The ERMP has served DCE well since adoption by allowing DCE to manage the risks associated with power procurement activities, such as retail load uncertainty due to weather, customer opt-out and opt-down, and other factors; energy market prices; counterparty credit; competitiveness with Southern California Edison rates; and regulatory risks.

The energy sector has evolved during DCE’s first four years of operation and how DCE approaches managing energy risk has evolved as well. The regulatory landscape continues to change, DCE’s power portfolio is taking shape, and numerous other areas that impact DCE’s business are evolving. DCE staff is now recommending adoption of Policy No. 24-01 to make a major update of the ERMP as the Wholesale Energy Procurement Risk Management Policy.

The policy, which was developed with input from DCE’s procurement consultant The Energy Authority (TEA), provides a structured, disciplined, and consistent approach to wholesale energy procurement risk management that facilitates risk-informed decision making in wholesale energy activities, which makes up 96% of DCE’s annual budget. The policy supports DCE in aligning its strategy, processes, people, and technology for the purpose of evaluating and managing energy procurement uncertainties inherent to the energy industry and power procurement. By strategically managing risk associated with power procurement activities, DCE can proactively reduce the chance of loss, identify and take advantage of procurement opportunities, create greater financial stability, and protect its resources to support its mission and create value for its members.

The ultimate purpose of the policy is to support DCE’s achievement of its goals by specifying management responsibilities, organizational structures, risk management standards, and the operating controls and limits necessary to appropriately identify, evaluate, and mange DCE’s exposure to wholesale energy procurement risk.

Embedded within the above overarching objective of the policy are a number of risk management goals for DCE, including:
• Provide the Board with transparency and insight into power procurement risks that could impact the ability to execute DCE’s mission.
• Implement well-defined wholesale energy risk management process, tools, and techniques.
• Identify current and emerging electricity market risks, and prioritize and develop response plans when necessary.
• Increase the likelihood of success in achieving DCE’s power procurement objectives. • Build credibility and sustain confidence in DCE's governance by all stakeholders including private, federal, state, and local partners.
• Improve the understanding of interactions and relationships between wholesale energy procurement risks for DCE by the Board, DCE staff, and third-party service providers. • Establish clear accountability and ownership of wholesale energy procurement risk. • Develop the capacity for continuous monitoring and periodic reporting of power procurement risks.

Due to the substantial changes, staff is presenting a new policy in lieu of a redlined version.

The key updates in the policy compared with the ERMP include:
• Overall refinement to focus on DCE’s risk management strategy and practices directly associated with energy procurement, with examples and additional detail provided where appropriate to ensure a common understanding among DCE's Board, staff, consultants, and members of the public reviewing the policy.
• In Section 2, updating the titles of the members of the Risk Management Team, which is responsible for implementing, maintaining, and overseeing compliance of the policy. • Substantial increases in the limits in the delegation of procurement authority in Section

3.1, which are necessary given the very large increases in energy product prices that have occurred since 2018. In that time, TEA’s tracking of the Resource Adequacy (RA) market shows a ten-fold increase in the annual average unit price of RA. Prices for hydropower for DCE’s Carbon Free product have quadrupled in just the past year. In the near term, projections are for prices to continue increasing into 2025. The intent behind the limits is to provide Board oversight of major transactions, while allowing TEA and DCE staff to nimbly make needed transactions when products become available on the market. Staff will continue to monitor market conditions and may propose future downward or upward adjustments to transaction limits as appropriate.
• Addition of Section 6, Energy Risk Procurement Strategy, to account for strategy changes resulting from upheavals in California’s wholesale energy market landscape (including the restructuring of the CPUC’s RA Program) as well as DCE’s own power portfolio (specifically three operating power resource contracts with an additional two projects in development).
• Establishment of DCE’s Energy Hedging Targets, description of hedging program, and discussion of procurement strategy for other energy market products, such as RA and renewable and carbon free resources. The policy affirms DCE’s ability to transact nuclear resources and unbundled renewable energy credits to meet its desired power mix for a year when additional procurement of hydropower and renewable energy is not feasible or financially responsible, taking into account DCE’s program objectives, including financial targets for reserves and retail rates.

With this item, staff recommends adoption of Policy No. 24-01 to replace the ERMP to keep DCE’s procurement-related policies current with changing markets and regulatory landscape.

Fiscal Analysis: There is no additional cost to approving Policy No. 24-01. However, it should be noted that 96% of DCE’s budget is related to wholesale energy procurement and the related consulting contracts.

Attachment:

DCE Wholesale Energy Procurement Risk Management Policy, No. 24-01 Policy No. 24-01
Desert Community Energy Wholesale Energy
Procurement Risk Management Policy
June 2024
Table of Contents

1. Policy Overview ..................................................................................................................................... 4

1.1 Background and Purpose............................................................................................................... 4

1.2 Statement of Risk Appetite............................................................................................................. 5

2. Wholesale Energy Procurement Risk Management Roles and Responsibilities ........................ 6

2.2 Board of Directors............................................................................................................................ 6

2.3 Risk Management Team................................................................................................................. 6

2.4 Wholesale Energy Provider ........................................................................................................... 8

2.4.1 Wholesale Energy Provider – Front Office........................................................................... 8

2.4.2 Wholesale Energy Provider – Middle/Back Office .............................................................. 9

3. Delegation of Authority........................................................................................................................ 10

3.1 Delegation of Transaction Authority............................................................................................ 10

3.2 Monitoring, Reporting, and Instances of Exceeding Risk Limits ............................................ 10

4. Position Tracking and Management Reporting............................................................................... 11

5. Business Practices .............................................................................................................................. 11

5.1 Channels for Procurement and Trading Practices.................................................................... 11

5.2 Transaction Type, Region, and Markets..................................................................................... 13

5.3 Credit Policy and Counterparty Suitability ................................................................................. 13

5.4 System of Record .......................................................................................................................... 14

5.5 Transaction Valuation.................................................................................................................... 14

5.6 Stress Testing................................................................................................................................. 14

6. Energy Risk Procurement Strategy .................................................................................................. 14

6.1 Energy Risk Procurement Strategy Overview........................................................................... 14

6.2 Energy Hedging Strategy and Targets ....................................................................................... 15

6.2.1 Energy Hedging Overview.................................................................................................... 15

6.2.2 Energy Hedging Targets........................................................................................................ 16

6.2.3 Summer Assessment............................................................................................................. 18

6.2.4 Power Charge Indifference Adjustment (“PCIA”) Exit Fee and Hedging with Fixed Price Energy ..................................................................................................................................... 19

6.3 Congestion Revenue Rights ........................................................................................................ 19

6.4 Compliance and Goal-Driven Procurement............................................................................... 19

6.4.1 Renewable Procurement ...................................................................................................... 19

6.4.2 Carbon-Free Procurement.................................................................................................... 20

6.4.3 Carbon Allowances ................................................................................................................ 21

6.4.4 Resource Adequacy Capacity.............................................................................................. 21

6.4.5 Long-Term Mandated Procurement .................................................................................... 22

6.5 CAISO Market Energy .................................................................................................................. 22

6.6 Energy Risk Procurement Strategy Metrics .............................................................................. 22

7. Definitions ............................................................................................................................................. 23 Appendix A: AUTHORIZED TRANSACTION TYPES OR PRODUCTS.......................................... 27 Appendix B: NEW TRANSACTION APPROVAL FORM.................................................................... 28

1. Policy Overview

1.1 Background and Purpose
Desert Community Energy (“DCE”) is a California joint powers authority formed to offer a Community Choice Aggregation (“CCA”) program in the desert region of Riverside County. DCE was established in October 2017 to meet member agencies’ environmental and economic goals including competitive electric rates, greenhouse gas reductions, local control, and local economic benefits. DCE began serving load on April 1, 2020, for one of its member agencies, the City of Palm Springs. There is no current launch date for the other JPA member, the City of Palm Desert.

DCE is governed by a Board of Directors (“Board”), consisting of one director appointed by each of the members of the JPA. Directors are elected officials or senior staff of the appointing member.

Each JPA member may also appoint an alternate to serve in the absence of its Director. All Board meetings are conducted in accordance with the provisions of the Ralph M. Brown Act.

As noted above, DCE began serving load in April 2020 for one of its member agencies, the City of Palm Springs. DCE implements sustainable energy initiatives that reduce energy demand, increase energy efficiency, and advance the use of clean, efficient, and renewable resources available in the region. DCE’s primary objectives in implementing programs are to provide overall rates that are lower or competitive with those offered by Southern California Edison (“SCE”) for similar power supplies, to supply an energy portfolio that prioritizes the reduction of greenhouse gas emissions and the use of local renewable resources, including existing facilities, to the maximum extent technically and economically feasible, and to establish local control. The prospective benefits to local consumers include the ability to reduce energy costs; improve the local and regional economy; stabilize electric rates; increase local electric generation reliability; influence which technologies are used to meet local electricity needs (including a planned increased use of renewable energy); and to ensure effective planning and development of sufficient resources and energy infrastructure to serve DCE residents and businesses.

The California Public Utilities Code provides the relevant legal authority for DCE to serve as a CCA and invests the California Public Utilities Commission (“CPUC”) with regulatory oversight of DCE, as provided by statute. DCE’s Implementation Plan was certified by the CPUC in March 2018. DCE is also registered with SCE and works closely with SCE on CCA program implementation.

DCE’s Wholesale Energy Procurement Risk Management Policy (“Policy”) provides a structured, disciplined, and consistent approach to wholesale energy procurement risk management that facilitates risk-informed decision making in wholesale energy activities, which makes up 93% of DCE’s annual budget. The Policy supports DCE in aligning its strategy, processes, people, and technology for the purpose of evaluating and managing energy procurement uncertainties inherent to the energy industry and power procurement. By strategically managing risk associated with power procurement activities, DCE can proactively reduce the chance of loss, identify and take advantage of procurement opportunities, create greater financial stability, and protect its resources to support its mission and create value for its members.

The ultimate purpose of the Policy is to support DCE’s achievement of its goals by specifying management responsibilities, organizational structures, risk management standards, and the operating controls and limits necessary to appropriately identify, evaluate, and mange DCE’s exposure to wholesale energy procurement risk.

Embedded within the above overarching objective of the Policy are a number of risk management goals for DCE, including:
• Provide the Board with transparency and insight into power procurement risks that could impact the ability to execute DCE’s mission
• Implement well-defined wholesale energy risk management process, tools, and techniques
• Identify current and emerging electricity market risks, and prioritize and develop response plans when necessary
• Increase the likelihood of success in achieving DCE’s power procurement objectives • Build credibility and sustain confidence in DCE's governance by all stakeholders including private, federal, state, and local partners
• Improve the understanding of interactions and relationships between wholesale energy procurement risks for DCE by the Board, DCE Staff (“Staff”), and third-party service providers
• Establish clear accountability and ownership of wholesale energy procurement risk • Develop the capacity for continuous monitoring and periodic reporting of power procurement risks

1.2 Statement of Risk Appetite
DCE's approach to wholesale energy procurement risk is to conservatively manage its exposure to financial, legal, compliance and regulatory, operational, strategic, and reputational impacts while accepting and balancing risk-taking in pursuit of its mission and objectives. It recognizes that its appetite for risk varies according to the activity undertaken, that acceptance of risk is subject to ensuring that potential benefits and risks are fully understood before taking action, and that sensible measures to mitigate risk are established.

2. Wholesale Energy Procurement Risk Management Roles and Responsibilities

2.1 Wholesale Energy Procurement Risk Management Organizational Structure Below is a high-level organization chart describing DCE’s risk management governance.

2.2 Board of Directors
The DCE Board has the responsibility to review and approve the DCE Wholesale Energy Risk Management Policy. With this approval, the Board assumes responsibility for understanding the risks DCE is exposed to due to wholesale energy procurement activity and how the policies outlined in this document help DCE manage the associated risks. The Board is also responsible to:
• Determine DCE strategic direction in energy procurement • Understand the procurement strategy employed
• Approve risk exposures beyond the authority of the Risk Management Team (“RMT”)

2.3 Risk Management Team
The RMT is responsible for implementing, maintaining, and overseeing compliance of the Policy.

The voting members of the RMT shall be as set out below, or as otherwise determined by DCE’s Executive Director. Additionally, a representative of DCE’s Wholesale Power Manager will serve as a non-voting member of the RMT. The current voting members of the RMT are:
• Executive Director
• Director of Energy & Sustainability
• Program Manager – Energy & Sustainability
Director of
Finance &
Administration (non-voting)
Board of
Directors
Executive
Director
Director of
Energy &
Sustainability
Energy &
Sustainability
Program
Manager
Director of
Finance &
Administration
Independent
Outside Third
Party
Wholesale
Energy
Provider
Representative
(non-voting)
Risk Management Team
• Director of Finance & Administration
• Independent outside third party
The primary responsibility of the RMT is Risk Management: to ensure that risks, particularly those related to procurement activities, are managed to create value for DCE members in a manner consistent with the Policy and Board directives. In addition to this, the RMT is also responsible for Risk Monitoring: establishing DCE’s risk appetite and risk tolerance levels and overseeing the development and implementation of processes used to analyze, prioritize, and address risks across DCE, particularly those related to procurement activities. Risk Monitoring may include proposing recommendations to adjust the Wholesale Energy Risk Management Policy when conditions dictate.

The RMT maintains the Wholesale Energy Risk Management authority and responsibility to:
• Approve and ensure that all procurement strategies are consistent with the Policy • Determine if changes in procurement strategies are warranted • Approve new transaction types, regions, markets, and delivery points • Understand all financial and risk models used by DCE and any third-party service providers
• Understand counterparty credit review models and methods for setting and monitoring credit limits
• Meet to review actual and projected financial results and potential risks • Authorize individual transactions that exceed an individual staff member’s authority, as indicated in Section 3 below
• Escalate to the Board any risks beyond the RMT’s authority The Chief Operating Officer is the staff person that will own the Wholesale Energy Procurement Risk Management processes.

The RMT maintains the Wholesale Energy Procurement Risk Monitoring authority and responsibility to:
• Work with the Board to develop and establish a list of high priority wholesale energy procurement risks that will be monitored on an ongoing basis • Approve Policy processes and risk appetite and risk tolerance guidelines • Receive and review reports as described in the Policy • Conduct and coordinate any actions identified as risk mitigation for the management of specific wholesale energy procurement risks
• Review summaries of limit violations
• Review the effectiveness of DCE’s wholesale energy procurement risk measurement methods
• Maintain the Policy
• Monitor regulatory and legislative activities related to wholesale energy procurement • Perform any other activities consistent with the Policy and governing laws that DCE’s Board determines are necessary or appropriate.

2.4 Wholesale Energy Provider
DCE’s Wholesale Energy Provider (“WEP”), currently The Energy Authority, Inc., is responsible for maintaining a strong segregation of duties, also referred to as “separation of function”, that is fundamental to manage and control the risks outlined in the Policy as well as the WEP’s internal Energy Risk Management Policy. The WEP provides information to the RMT on the risk and credit models, methods, and processes that it uses to fulfil its obligations under its own Risk Policy as well as meet DCE’s Policy. Staff members at the WEP responsible for legally binding DCE to a transaction will not also perform confirmation or settlement functions. With this in mind, the WEP’s responsibilities are divided into front-, middle-, and back-office activities, as described below.

2.4.1 Wholesale Energy Provider – Front Office
The WEP’s Front Office has overall responsibility for:
• Managing all commodity and transmission activities related to procuring and delivering resources needed to serve DCE’s load
• Analyzing fundamentals affecting load and supply factors that determine DCE’s net position
• Transacting within the limits of the Policy, and associated policies, to balance loads and resources and maximize the value of DCE’s assets through the exercise of approved optimization strategies.

Other duties associated with the WEP’s Front Office include:
• Assisting in the development of risk management hedging products and strategies, and bringing recommendations to the RMT
• Preparing each month a monthly operating plan for the prompt months that gives direction to the day-ahead and real-time trading and scheduling staff regarding the bidding and scheduling of DCE’s resource portfolio in the California Independent System Operator (“CAISO”) market
• Forecast and monitor day-ahead and real-time loads
• Keep accurate records of all executed transactions

2.4.2 Wholesale Energy Provider – Middle/Back Office
The WEP’s Middle Office provides independent market and credit risk oversight. The Middle Office is functionally and organizationally separate from the Front Office. The WEP’s Back Office provides support with a wide range of administrative activities necessary to execute and settle transactions and support the risk control efforts (e.g. transaction entry and/or checking, data collection, billing, etc.) consistent with both the WEP’s Risk Policy as well as DCE’s Policy. The Back Office is also functionally and organizationally separate from the Front Office.

The WEP’s Middle and Back Offices have primary responsibility for trading control and for ensuring agreement with counterparties regarding the terms of all trades, including forward trading. The WEP’s Middle and Back Offices have overall responsibility for:
• Estimating and publishing daily forward monthly power and natural gas price curves for a minimum of the balance of the current year through the next calendar year • Calculating and maintaining the net forward power positions of DCE • Ensuring that DCE adheres to all risk policies and procedures of both DCE and the WEP’s in letter and intent
• Maintaining the overall financial security of transactions undertaken by the WEP on behalf of DCE
• Implementing and enforcing credit policies and limits • Handling confirmation of all transactions and reconciling differences with the trading counterparties
• Reviewing trade tickets for adherence to approved limits • Ensuring all trades have been entered into the appropriate system of record • Ensuring that both pre-schedule and actual delivery volumes and prices are entered into the physical databases
• Carrying out month-end checkout of all transactions each month • Reviewing models and methodologies and recommending RMT approval • Providing supporting documentation for power supply audits

3. Delegation of Authority

3.1 Delegation of Transaction Authority
By adopting the Policy, the Board is explicitly delegating operational control and oversight to the RMT and the WEP, as outlined through the Policy. Specifically, to facilitate daily operations of the CCA in its wholesale energy procurement function, the Board is delegating transaction execution authorities shown in the table below.

Position Maturity Limit Term Limit
Energy Transaction
Volume Limit (MWh)
Capacity
Transaction Value
Limit ($)
DCE Board Any transaction that exceeds the Risk Management Team’s limits* Risk Management
Team 60 Months 36 Months 1,250,000 $12,000,000
Executive Director 48 Months 36 Months 850,000 $6,000,000 WEP 36 months 24 Months 500,000 $3,000,000
* Transactions above the Risk Management Team’s Maturity Limit and/or Term Limit but of a notional value of less than $5,000,000 may be approved by a unanimous vote without being brought to the DCE Board for authorization.

These authorities will be applied to wholesale power activity executed outside of the CAISO markets. These limits provide both DCE and its WEP needed authorities to manage risks as they arise. Transactions falling outside the delegations above require Board approval prior to execution. Activity with CAISO is excluded from this table due to the nature of the market, where prices for activities may not be known until after transactions are committed.

All procurement executed under the delegation above must align with any subsequent procurement strategies or financial management policies authorized by the Board and the Energy Risk Procurement Strategy (see Section 6).

3.2 Monitoring, Reporting, and Instances of Exceeding Risk Limits The WEP Middle Office is responsible for monitoring, and reporting compliance with, all limits within the Policy. If a limit or control is violated, the WEP Middle Office will send notification to the trader responsible for the violation and the RMT. The RMT will discuss the cause and potential remediation of the exceedance to determine next steps for curing the exceedance. DCE Power Resources staff are also responsible for monitoring transactions reported by the WEP and bringing to the RMT’s attention any violations of limits within the Policy that have not been noted by the WEP.

4. Position Tracking and Management Reporting
The WEP will establish an appropriate reporting format and metrics to use in reporting wholesale energy procurement risks to the RMT and the Board. The reports will show metrics, status and additional mitigations where appropriate. Emerging risk evaluation and discussion will be integrated into the reporting and monitoring process. In addition to risk-specific reporting, consolidated summary reporting on the status of all high priority wholesale energy procurement risks will be reported out as follows:
• Daily Financial Model Forecast
Latest projected power costs and financial performance, marked to current market prices and shown relative to financial goals provided to Staff daily • Monthly Net Position Report
Forward net position report presented monthly to the RMT • Daily Credit Report
A report showing credit exposure for the transactions that the WEP executes on DCE’s behalf and passes through the WEP to DCE provided to Staff daily • Monthly Risk Analysis
Cash flow at risk (“CFaR”) and stress testing of the financial forecast relative to financial goals presented monthly to the RMT
• Quarterly Report to RMT
A qualitative and quantitative report on the status of power procurement risks provided quarterly to the RMT
• Semi-Annual Risk Report to the Board
WEP will report semi-annually to the Board on the status of wholesale energy procurement risks

5. Business Practices

5.1 Channels for Procurement and Trading Practices
The WEP will access power markets and transact on behalf of DCE using the following market channels:
• Direct Solicitation
The WEP will use its existing relationships to seek suitable bilateral agreements with counterparties directly, either through bilateral outreach or formal Requests For Offers (“RFOs”)
• Electronic Exchange Platforms
The WEP will use its access to platforms such as ICE (Intercontinental Exchange) to research markets and transact
• Electronic Auction Platforms
The WEP will use its access to platforms such as EnerNoc to create and enter auctions for desired products
• Brokers
The WEP will use its existing agreements with brokers to help locate trade partners for desired products
Considerations for the channel(s) used include:
• Type of product
• Market liquidity
• Credit quality and availability
• Timing
• Cost/fees
• Existing counterparties and transactions
• Resource and counterparty diversity
• Market conditions
The approved scope of market participation by DCE is limited to those activities required to capture reasonably expected value and cost stability from DCE’s resource portfolio without engaging in speculative or unauthorized trading activities. Staff and individuals at the WEP may exercise some discretion on trade timing and volumes subject to exigent conditions (such as unusual weather, periods of illiquidity, load/generation deviations, and/or power system circumstances). DCE procurement practices are intended to prohibit the acquisition of unwarranted or additional exposure to price and volume risk beyond that projected and associated within the efficient utilization and optimization of DCE’s resource portfolio. If any questions arise as to whether a particular transaction constitutes speculation, the RMT shall review the transaction(s) to determine whether the transaction would constitute speculation.

5.2 Transaction Type, Region, and Markets
Authorized transaction types, regions and markets are listed in Appendix A to the Policy. These transaction types, regions and markets are and shall continue to be focused on supporting DCE’s financial policies, including the approved procurement strategy in Appendix B. New or non-standard transaction types may provide DCE with additional flexibility and opportunity but may also introduce new risks. Therefore, transaction types, regions, and markets not included in Appendix A, or transactions within already approved transaction types that are substantially different from any prior transaction executed by DCE, must be approved by the RMT prior to execution.

The transaction types listed in Appendix A must be executed within the limits set forth in the Policy.

It is the responsibility of the WEP’s Front Office to ensure that relevant departments have reviewed the proposed transaction and that material issues are resolved prior to submittal to the RMT for approval. If approved, Appendix A to the Policy will be updated to reflect the new transaction type.

5.3 Credit Policy and Counterparty Suitability
All procurement activities executed by the WEP on behalf of DCE, using the WEP’s counterparty agreements, will be subject to the credit policies and procedures outlined in the WEP’s Energy Risk Management Policy. The WEP’s credit policy requires that all counterparties be evaluated for creditworthiness by the WEP Middle Office prior to execution of any transaction and no less than annually thereafter. Additionally, counterparties shall be reviewed if a change has occurred, or perceived to have occurred, in market conditions or in a company’s management or financial condition. This evaluation, including any recommended increase or decrease to a credit limit, shall be documented in writing and includes all information supporting such evaluation in a credit file for the counterparty. A credit limit for a counterparty will not be recommended or approved without first confirming the counterparty’s senior unsecured or corporate credit rating from one of the nationally recognized rating agencies and/or performing a credit review or analysis of the counterparty’s or guarantor’s financial statements. The WEP’s credit analysis shall include, at a minimum, current audited financial statements or other supplementary data that indicates financial strength commensurate with an investment grade rating. Trade and banking references, and any other pertinent information, may also be used in the review process.

Counterparties that do not qualify for a credit limit or wish to enter into a transaction exceeding their credit limit will generally be required to post an acceptable form of credit support or prepayment prior to the execution of any transaction. A counterparty to the WEP may choose to provide a guarantee from a third party, provided the third party satisfies the criteria for a credit limit as outlined in the WEP’s Energy Risk Management Policy.

The WEP Middle Office will establish continuous monitoring of the current credit exposure for each Counterparty with whom the WEP transacts on behalf of DCE and include such information in the Current Counterparty Credit Risk Report.

The WEP will provide a credit review and recommendation for any counterparty with whom DCE contracts directly.

5.4 System of Record
The WEP’s Middle Office will maintain a set of records for all transactions executed in association with DCE procurement activities. The records will be maintained in US dollars and transactions will be separately recorded and categorized by type of transaction. This system of record shall be auditable.

5.5 Transaction Valuation
Transaction valuation and reporting of positions shall be based on objective, market-observed prices. Open positions should be valued (marked-to-market) daily, based on consistent valuation methods, and data sources. Whenever possible, mark-to-market valuations should be based on independent, publicly available market information and data sources.

5.6 Stress Testing
In addition to limiting and measuring risk using the methods described herein, stress testing shall also be used to examine performance of the DCE portfolio under adverse conditions. Stress testing is used to understand the potential variability in DCE’s projected procurement costs, and resulting retail rate impacts and competitive positioning, associated with low probability events.

The WEP’s Front and Middle Offices will collaborate on performing stress-testing of the portfolio as needed and distribute results. The RMT will provide guidance to the WEP as needed regarding what parameters should be stress tested and to what degree.

6. Energy Risk Procurement Strategy

6.1 Energy Risk Procurement Strategy Overview
This Energy Risk Procurement Strategy (“Strategy”) provides a roadmap of how DCE procures the power supply requirements of its customers during the current calendar year plus next two calendar years. This is not a resource plan, insofar as a resource plan deals with issues such as the long-term resource goals of DCE. Ultimately long-term resource goals will be incorporated into shorter term procurement activity. The Strategy details procurement schedules (or where appropriate justifies the decision not to set schedules) for attaining wholesale, market-based products required by the CCA. Specific focus is on procurement of the following products:
• Fixed Price Energy (also known as system power or energy hedges) • Portfolio Content Category 1 Renewable Energy
• Portfolio Content Category 2 Renewable Energy
• Portfolio Content Category 3 Renewable Energy
• Carbon Free Energy
• Resource Adequacy Capacity
• Congestion Revenue Rights
As discussed above, in addition to market-based transactions entered into pursuant to this Strategy, DCE will also procure assets, enter into long-term power purchase agreements (“PPAs”), and/or enter into other long-term contracts (e.g. stand-alone energy storage) pursuant to statutory and regulatory requirements and DCE program goals as established by the Board.

The overall goals of the Strategy are to identify exposure to commodity prices, quantify the financial impact that variability in commodity prices, load requirements, and generation output may have on the ability of the DCE to meet its financial program goals, and then manage the associated risk.

To help ensure long-term viability for the CCA, DCE has outlined the following goals in developing its power portfolio to establish metrics used for modeling and measuring risk exposures of DCE:
• DCE will target meeting all applicable Federal, regional, and local standards and regulatory requirements, including:
o Meet CPUC Resource Adequacy requirements
o Meet CAISO Tariff and Business Practice Manual requirements o Meet RPS Compliance Period energy content standards
• DCE will consider its overarching fiscal goals and concerns, such as maintaining competitive retail rates and funding financial reserves in balance with procurement decisions
• DCE will target procurement of the power portfolio product mix of renewables and non-RPS clean energy as directed by Board goals • DCE will adhere to risk mitigating directives and delegations of the RMT All procurement activities will be conducted to achieve results consistent with the above goals, regulatory compliance obligations, and to meet the power supply requirements of DCE’s customers. Any transaction that cannot be directly linked to a requirement of serving DCE’s customers, or that does not serve to reduce risk as measured by the Cash Flow at Risk Metric described below, is prohibited.

6.2 Energy Hedging Strategy and Targets

6.2.1 Energy Hedging Overview
The time horizon for the energy hedging approach for DCE will be the prompt five (5) years. The energy hedging schedules described below provide a disciplined approach to procurement by mandating targeted hedge levels to be achieved by definite dates. This commonly utilized approach is intended to mitigate speculation of future wholesale market prices while also spreading procurement over a multiyear period.

The purpose of these hedging transactions is to reduce variability of power supply costs by gradually increasing the amount of energy hedged as the date of consumption approaches. Time driven strategies avoid the inherent impossibility of trying to consistently and accurately “time the market” when making hedging decisions. Additionally, DCE needs to spread its procurement efforts over time to effectively manage the potential negative price impacts of procuring a large volume of energy over a short period of time in an illiquid market.

Fixed price energy products, including block energy and shaped energy are used to manage the electricity commodity price risk that DCE faces as a CCA. Fixed price energy provides for the supplier to deliver a predetermined volume of energy, at a constant delivery rate, for a fixed price.

Specific to DCE’s customers, fixed price energy hedges are used to provide cost certainty and rate stability. A key goal of the CCA program is to reduce energy price uncertainty for the upcoming operating year(s) by procuring at least 70 percent and up to 100 percent of its energy needs with fixed price contracts thereby mitigating exposure to unexpected price movement.

6.2.2 Energy Hedging Targets
When assessing its requirements for fixed price energy, DCE will forecast the monthly energy requirements of its customers during heavy and light load hours0F 1 each month as well as the
forecasted output from resources in its portfolio. Changes in regulatory, load, supply, and market dynamics may warrant occasional under- or over-hedging and subsequent remarketing of over-procured products.

The targets below describe minimum and maximum percent hedge targets for identified future time periods. The definition of “Hedge %” in this context is the total fixed price megawatt hours (MWh) procured in the period divided by the total forecast load in MWh inclusive, as applicable, of the energy forecast to be provided by PPAs and other long-term resources within DCE’s portfolio during respective time periods.

DCE will observe the following schedule when hedging its Fixed Price Energy requirements:

Time Period
Minimum
Hedge %
Maximum
Hedge %
Prompt Month (Jan -
March/Q1)
75% 125%
Prompt Month (April-June/Q2) 75% 125%
Prompt Month (July-Sep/Q3) 100% 150%
Prompt Month (Oct-Dec/Q4) 75% 125%
1 Heavy Load (On-Peak) Hours in current wholesale energy markets are 6am to 10pm, Monday through Saturday, excluding New Years, Memorial Day, 4th of July, Labor Day, Thanksgiving and Christmas. All other hours during the year are considered Light Load (Off-Peak) Hours.

Prompt Calendar Year (PCY) 70% 100%
PCY +1 50% 100%
PCY +2 40% 100%
PCY+3 30% 100%
PCY+4 20% 100%
The hedge schedule for the Prompt Month will be measured five calendar days prior to the first day of the particular month (e.g. on January 27, 2024, DCE will have hedged 80 to 115 percent of its projected energy requirements during February 2024, which is in Q1). The hedge schedule for the Prompt Calendar Year (PCY), as well as subsequent four calendar years, will be measured ten calendar days prior to each new calendar year (e.g. on December 21, 2024, DCE will have hedged at least 70 percent of its forecast energy requirements for CY 2025, 50 percent of its forecast energy requirements for CY 2026, and 30 percent of its forecast energy requirements for CY 2027, CY2028, and CY2029).

The targets described above represent total fixed-price MWh procured compared to total MWh load forecasts. They are intentionally not prescriptive regarding diurnal periods (HLH/LLH or Peak/Off Peak) which allows flexibility in procurement strategy given rapidly evolving market dynamics.

Hedging decisions to reach targets between the minimum and maximum hedge levels are based on price-driven or opportunistic strategies. The purpose of these strategies is to capitalize on market opportunities when conditions are favorable. DCE bases its decision to execute opportunistic hedges on the impact to projected power supply costs and the resulting reduction in CFaR. Opportunistic hedges may be executed when energy price levels are favorable to lowering the cost of power relative to established program goals and financial projections. Alternatively, opportunistic hedges can be executed in adverse market conditions relative to financial goals in order to reduce the potential negative impact of continued upward trending commodity prices relative to established goals.

Overall, the hedging targets described above are meant to provide DCE with an appropriate balance of firm procurement requirements while providing flexibility to staff to intelligently meet DCE’s energy needs in a volatile industry. Flexibility is valuable in an energy hedging policy for multiple reasons:
• Operating with flexibility allows DCE to proactively manage risk while still leaving opportunity to benefit from changes in market fundamentals that are favorable to its underlying structural position.
• Flexibility in procurement timelines allows DCE to have several opportunities before a given energy flow period to transact hedges under varying market contexts. This allows for DCE to “dollar cost average” more effectively and minimize potential risk premiums. • Forward energy position modeling relies on several forecast factors, which can change as information sets improve. Allowing for flexibility to respond to changes in assumptions is ideal and helps minimize the occurrence of unnecessary transactions.

Too much flexibility is detrimental to a hedging policy and can create undue risk, so DCE has chosen targets it believes balances the need to reduce risk with the goal of minimizing transaction costs with allowing DCE to take advantage of market opportunities as they arise and retain optionality with regards to how it faces the market.

While not proscribed within this Policy, DCE reviews its energy positions rigorously on a regular cadence in accordance with best market practices - beyond a simple compliance with the above hedging targets. In particular, DCE reviews hourly positions with a granularity surpassing diurnal position views and may make transactions aimed at further refining and shaping its energy position to better manage market risk. Furthermore, DCE evaluates positions not only on a deterministic basis, but a stochastic basis, to understand potential correlative effects between its structural position and market price risk. For example, DCE may seek to hedge more aggressively for summer Peak periods if stochastic risk analysis shows that DCE has risks that are correlated heavily with price movement (e.g. DCE has greater open positions and therefore more risk when fundamentals that raise prices take shape). More broadly, DCE seeks to do holistic management of portfolio risk that can be acted upon, utilizing the flexibility in its hedging targets discussed above with the primary goal of reducing risk and cost to its customers.

In executing this strategy, fixed price energy hedges may be purchased, sold, or moved from one month to another for the purpose of maintaining hedge coverage that matches changes in forecasted electric load. This includes the ability of the DCE to purchase standard products to hedge average loads over a defined time period and then later modify its portfolio by purchasing or selling more granular products to more precisely match load.

DCE does not set programmatic procedures assigned to Renewable Portfolio Standard, Carbon Free Energy, or Resource Adequacy products. Procurement of these products is primarily driven by DCE Board-adopted goals and regulatory compliance requirements, which in many cases apply prescribed hedging schedules, as further described in the respective sections below.

6.2.3 Summer Assessment
DCE will complete a Summer Assessment of market risk and hedging plan by June 15 of each year. This work product will be shared in draft form with the RMT in May of each year and will include:
• Analysis of summer exposure
• Fundamental analysis of market conditions
• Hourly load/resource balance forecast for June-September • Recommendations on products and target hedge levels designed to mitigate peak hour and daily HLH exposure
Although compliance with the Fixed Price Energy schedule above will be measured monthly, DCE shall endeavor to complete all Q3 hedging prior to June 15 of each year, subject to and allowing for true-ups as load and generation profiles fluctuate throughout the summer season.

6.2.4 Power Charge Indifference Adjustment (“PCIA”) Exit Fee and Hedging with Fixed Price Energy
Under the current PCIA construct, departing load is responsible for costs associated with procurement that the incumbent utility has already done on behalf of that load. At the time of departure, the applicable vintage portfolio1F
2 then serves as a hedge for the departing load in that as market prices increase, the departing load charges decrease, thereby reducing costs to CCA customers relative to bundled customers. Similarly, if market prices decrease, the departing load charges increase, due to more of the vintage portfolio being above market costs.

One impact of the PCIA on DCE is, therefore, the way it serves as a “lagging hedge” against energy price volatility. Increased market prices in one year will result in an all-else-equal lower PCIA in subsequent years, and vice versa, although the exact impact will depend on market-sensitive SCE data that DCE does not have access to. In lieu of better quantitative data, hedging decisions will be made with the qualitative understanding that the PCIA may serve from a 5% to 20% “lagging hedge” on DCE’s portfolio, dependent on market conditions and seasonality.

6.3 Congestion Revenue Rights
RTO markets such as the CAISO expose entities to financial basis risks between the point a seller supplies power (a “source” node) and the location where the buyer has load (a “sink” node). To manage this risk CAISO offers a financial product known as congestion revenue rights (“CRRs”) which can be allocated to an entity or purchased via the CAISO CRR Auction. DCE will use both mechanisms to acquire necessary congestion hedges in on and off-peak periods to reduce risk between generation or fixed price energy purchase locations and DCE’s load point. CRRs are limited in that they are designed to cover energy flows that are blocked into on-peak and off-peak periods and are not shapeable. As DCE’s CRRs are generally used to manage a source-sink relationship consistent with utility hedging, exposure created by the CRR is usually expected to have an offsetting effect on cashflow associated with the positions that necessitated the CRR in the first place across the period. It is acknowledged however that due to discrepancies in granularity, these cashflows will never be fully symmetric.

The WEP will calculate a Total Dollar Stop-Loss designed to limit the amount of capital that could be consumed taking into consideration both realized and unrealized gains. For CRRs, the WEP monitors a five percent outcome for CFaR to value downside associated with the CRR positions.

6.4 Compliance and Goal-Driven Procurement
This section covers procurement undertaken primarily to meet compliance requirements set by regulatory authorities and/or to meet Board-adopted goals.

6.4.1 Renewable Procurement
DCE has a compliance mandate to procure sufficient renewable energy to meet the state of California’s RPS requirements, based on multi-year compliance periods, as well as Board-adopted goals regarding the sourcing of its portfolio from renewable and/or carbon-free sources. 2 The vintage portfolio is generally all contracts and utility-owned generation that was procured while the departing load was still receiving bundled service.

DCE will meet all current Board adopted goals and state compliance mandates in its renewable energy procurement.

A large portion of DCE’s renewable energy supply will consist of Portfolio Content Category 1 (“PCC1”) renewable energy. PCC1 renewable energy is sourced from a renewable generator either located inside of California or from a generator that is directly interconnected to the CAISO or other California Balancing Authority. 75% of the renewable energy used to meet DCE’s RPS compliance requirement must be sourced from PCC1 renewable energy.

Additional renewable procurement can come from Portfolio Content Category 2 (“PCC2”) renewable energy. PCC2 energy is sourced from renewable generators located outside the state of California and is “firmed and shaped” for reliable delivery into California. PCC2 purchases have historically been less expensive and shorter in term than PCC1, so they can provide a cost-effective and flexible method of augmenting DCE’s renewable energy purchases to meet renewable portfolio content compliance requirements and goals. However, under the greenhouse gas emissions accounting methodology of the California Energy Commission’s Power Source Disclosure Program PCC2 renewable energy is ascribed the same carbon-intensity as “unspecified” system power unless matched one-to-one with carbon-free energy. The procurement strategy of this product is thus dependent on the combined price of PCC2 and carbon-free energy to meet DCE’s total carbon-free goals, compared to the direct procurement of PCC1 energy, which receives a lower or zero carbon-intensity rating, dependent on fuel type.

PCC2 purchases also require increased oversight of deliveries and compliance reporting, which further reduces the attractiveness of this product over PCC1 energy.

DCE does not intend to prioritize any procurement of Portfolio Content Category 3 (“PCC3”) renewable energy, which takes the form of a credit “unbundled” from the energy production of a renewable asset, and can be procured from both in-state and out-of-state renewables. However, DCE reserves the right to use PCC3 procurement to optimize its compliance portfolio for the benefit of DCE ratepayers. PCC3 is largely reserved for use to manage risks around renewable energy content in a given year stemming from volumetric changes in forecast versus actual load or volumetric changes in delivery of renewables. For example, this could occur if DCE’s load in a given year is greater than forecast, or if a long-term renewable project under power purchase agreement with DCE underdelivers. Furthermore, DCE may use PCC3 as an alternative means for DCE to meet its desired power mix for a year when additional procurement of PCC1 and PCC2 is not feasible or financially responsible. No more than 10% of the renewable energy used to meet DCE’s RPS compliance requirement can be sourced from PCC3 renewable energy, consistent with California state law.

As part of DCE’s Renewable Procurement Plan, filed annually with the CPUC, DCE staff and consultants undertake an annual assessment of the entirety of DCE’s renewable energy procurement activities with respect to both state compliance goals and Board-adopted goals. This analysis, which includes qualitative and stochastic risk assessment, feeds into DCE’s renewable procurement timelines as well as its annual RPS compliance filing. The analysis is updated on an ad hoc basis throughout the year as a function of changing market dynamics or new procurement mandates. This assessment provides guidance and guardrails to DCE’s renewable procurement strategy, similar to the energy hedging targets described above.

6.4.2 Carbon-Free Procurement
In pursuit of its goal to develop a clean and renewable energy portfolio, DCE shall procure incremental carbon-free energy in addition to the renewable procurement described above.

Carbon-free energy generating facilities are hydroelectric or nuclear resources located in California or a state with physical power delivery capability into California, that do not qualify as Eligible Renewable Resources due to size restrictions on renewable resources, or preferred technology type restrictions in the state’s Renewable Portfolio Standard program. These resources are considered to have an emission factor of zero metric tons of CO2 equivalent per megawatt-hour, per California state law, namely California Air Resources Board Mandatory Reporting of Greenhouse Gas Emissions regulations. As such, these resources have an emission impact of zero in DCE’s annual Power Source Disclosure and resulting Power Content Label.

The majority of DCE’s renewable energy is also carbon-free, which means that the analysis that drives DCE’s renewable procurement decisions also underlie DCE’s supplemental carbon free energy procurement. For this reason, DCE staff and consultants will utilize the annual renewable procurement planning and analysis process to also plan for carbon-free energy procurement rather than utilizing programmatic hedging targets. Similar to incremental renewable energy contracts, carbon-free energy purchases are typically short-term, most frequently one to three years in length. The purchase of carbon-free energy is a voluntary goal set by the Board, who may elect to reduce the total quantity of carbon free energy included in DCE’s portfolio as it seeks to balance multiple program objectives, including financial targets for reserves and retail rates.

DCE staff and consultants shall procure supplemental carbon-free energy from facilities described in the preceding paragraph as needed to meet the Board’s directive.

6.4.3 Carbon Allowances
Procurement of out-of-state power can be structured in a way that creates a Carbon Cap and Trade compliance obligation which must be covered by carbon allowances. DCE expects to avoid this obligation by structuring any out-of-state power transactions (e.g. Pacific Northwest Large Hydro) such that it is not the First Importer of power into the state. Therefore, it is not anticipated that carbon allowances will need to be procured by DCE. Should it be potentially commercially advantageous to structure a transaction such that DCE is the First Importer of energy into California, DCE will factor in the expected cost of procuring carbon allowances and increased compliance burden in its procurement decision.

6.4.4 Resource Adequacy Capacity
DCE will use best reasonable efforts to comply with the filing requirements of the CAISO- and CPUC administered Resource Adequacy (RA) program, currently:
• 90% of System and Flexible RA requirements procured prior to the year-ahead RA showing on October 31st of the year prior to the showing year • 100% of System and Flexible RA requirements procured prior to the month-ahead RA showings, due 45 calendar days prior to the first day of the showing month Starting in the 2023 RA compliance year, procurement of local RA is solely the responsibility of the Central Procurement Entity (“CPE”) in SCE’s service territory, the only territory in which DCE serves load. Therefore, DCE no longer has a regulatory obligation to procure or show local RA to the state agencies. Instead, DCE has the option to self-show or sell its local RA capacity to the CPE to obtain some value for it, which also has a downside of reduction in DCE’s RA portfolio flexibility to sell potential long RA positions.

RA is typically transacted via contracts that vary in length from one month to three years, and it is currently bought and sold via a bilateral market, which can result in cost-effective contracting opportunities but is also sometimes fragmented and volatile. Due to the nature of RA markets, monthly products are often bundled with other products or “strips” of multiple months of RA, which may result in over-procurement for one or more months as a necessary condition to satisfy compliance requirements in one or more other months. Execution of long-term PPAs or other contracts can also lead to over-procurement of RA products for future years, and inclusion of a defined hedging matrix for RA might require selling excess long-term RA to bring DCE into hedging compliance, even though such action may not be in DCE’s best business and operational interest. Given these factors, as well as the fact that compliance guardrails already exist for the RA program, DCE does not have programmatic hedging targets for RA capacity.

The RA program’s potential restructuring, which could significantly impact DCE’s RA compliance requirements, is currently part of an open proceeding at the CPUC for test implementation in the 2024 compliance year and full implementation in the 2025 compliance year.

6.4.5 Long-Term Mandated Procurement
CPUC-jurisdictional entities participate in regular Integrated Resource Planning cycles led by the CPUC, which can result in mandates to procure a share of the capacity needed to help ensure the long-term reliability of the California power grid. DCE will continue to target meeting all mandated capacity procurement requirements while attempting to procure low-cost resources that potentially provide additional energy products aligned with DCE’s procurement goals.

6.5 CAISO Market Energy
Because DCE customers reside in the CAISO balancing authority, their load will be served physically by energy from the CAISO market. DCE is therefore subject to paying the price at the SCE Default Load Aggregation Point (DLap), where it is assumed to take energy.

The WEP’s CAISO Desk will create and analyze daily short-term load forecast profiles that take into account weather and other variables. Forecasted hourly loads for DCE will bid into the CAISO Day Ahead market by 10am the prior day. All awarded from the Day Ahead market will carry over to the Real Time market. Any deviations in DCE’s actual load in Real Time from what is scheduled int the Day Ahead market will pay or be paid at the Real Time market prices.

6.6 Energy Risk Procurement Strategy Metrics
The success of the Energy Risk Procurement Strategy will be measured by realizing power supply costs in line with the budgeted power supply costs used to set customer rates, as well as by reducing DCE’s exposure to commodity price risk. The following two metrics will be utilized to manage the Energy Risk Procurement Strategy:
• Current projected power supply costs will be compared to budgeted power supply costs where budgeted costs will be based on the assumptions used at the time customer generation rates are set. Current power supply costs shall use all fixed price contracts executed as of the date of the report. All open positions will be marked to market and compared to the budgeted power supply costs.
• CFaR represents a statistical view of what could happen to DCE’s power supply costs and CRR portfolio assuming that no action is taken to manage its portfolio from the date of the analysis through the end of the period of time being analyzed. The potential CFaR will be calculated using a historical sampling methodology that considers on- and off-peak periods separately over the remaining life of the transactions. The CFaR calculation will consider potential variability in load and generation supply. The CFaR will be calculated by rank ordering the portfolio cost and measuring the difference between the 95th percentile and the expected power cost outcome.

These metrics will be reviewed when making price-driven or opportunistic hedging decisions to ensure that the transactions are consistent with the goals of the Energy Risk Procurement Strategy. These metrics will be updated and reported by the WEP to the RMT on a monthly basis.

7. Definitions
The following are definitions of commonly used energy procurement terms utilized in this document and in discussing energy procurement strategy and processes. • Back Office: That part of a trading organization which handles transaction accounting, confirmations, management reporting, and working capital management. • Bilateral Transaction: Any physical or financial transaction between two counterparties, neither of whom is an Exchange or market entity (e.g. CAISO). • Cash Flow at Risk: A probability-based measure of the extent to which future cash flows may deviate from expectations due to changes in load, generation and/or market prices of energy. (For DCE, the most relevant Cash Flow at Risk metric is a measure of the potential for net revenues to deviate from the current forecast.) • CAISO: California Independent System Operator. CAISO operates a California bulk power transmission grid, administers the State’s wholesale electricity markets, and provides reliability planning and generation dispatch.
• CCA: Community Choice Aggregator. CCAs allow local government agencies such as cities and/or counties to purchase and/or develop generation supplies on behalf of their residents, businesses, and municipal accounts.
• Commodity: A basic good used in commerce that is interchangeable with other goods of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade. • Commodity Price or Market Price: The price at which electricity, gas, capacity, and renewable attributes are bought and sold.
• Confirmation Letter: A letter agreement between two counterparties that details the specific commercial terms (e.g., price, quantity and point of delivery) of a transaction. • Congestion Revenue Rights: Congestion Revenue Rights (CRR) are financial instruments used in the Day Ahead market to hedge the difference in price between two locations caused by congestion.
• Counterparty Credit Risk: The risk of financial loss resulting from a counterparty to a transaction failing to fulfill its obligations.
• Customer Load: A single customer's power usage that receives power from the electric system.
• Day-Ahead: Refers to the day before actual power flow begins. For example, in the CAISO, the Day-Ahead market for Tuesday's flow date closes on Monday at 10am. • Default Load Aggregation Point (DLap): A set pricing nodes used in the CAISO market for the submission of demand bids and for settlement of demand. The purpose of a DLap is to collapse into a single pricing node, the various locations of a load serving entity’s load that are distributed throughout the system.
• Delivery Point: The point at which a commodity will be delivered and received. • Energy Products: All commodities and commodity related products, both physical delivery and financial instruments, related to meeting the wholesale energy, regulatory, hedging, and/or risk management needs of DCE. The types of products include, but are not limited to: Energy;
Capacity; Resource Adequacy; Local Capacity; System Capacity; Ancillary Services; Environmental Attributes (including but not limited to RECs, Carbon Allowances, and other required environmental attributes); Forwards; Futures; Swaps; Options; Congestion Revenue Rights; and other energy and commodity related products as needed. • Financial Product: contract in which the value is derived from an underlying physical commodity but which does not require physical delivery or receipt of the commodity. • Front Office: That part of a trading organization which solicits customer business, services existing customers, executes trades, and ensures the physical delivery of commodities.
• Hedging Transaction: transaction designed to reduce the exposure of a specific outstanding position or portfolio; “fully hedged” equates to complete elimination of the targeted risk and “partially hedged” implies a risk reduction of less than 100%. • Illiquidity: Occurs when an asset cannot easily and quickly be sold or exchanged for cash without a substantial loss in value.
• Limit Structure: A set of constraints that are intended to limit procurement activities. • Limit Violation: Any time a defined limit is violated. • Liquidity: Efficiency or ease with which an asset can be transacted without affecting its market price.
• Long Position: A long position means there is not an open or short position, and that excess supply exists. In addition, as load forecasts are updated, if an excess exists, that excess is also considered a long position. For the renewable power purchase example (see Open Position), if 60,000 MWh have been procured for a 50,000 MWh need, a long position of 10,000 MWh will exist.
• Middle Office: That part of a trading organization that measures and reports on market risks, develops risk management policies and monitors compliance with those policies, manages contract administration and credit, and keeps management and the Board informed on risk management issues.
• Non-Standard: Any product that is not commonly transacted among market participants in forward markets. The nonstandard attribute of the product could be a function of a number of factors such as volume, delivery period and/or term. • Open Position: For any given timeframe, any commodity requirement that is unfilled is considered to be an open position. For instance, if there is a requirement to procure 50,000 MWh of renewable power in a calendar year, until 50,000MWh of renewable power purchases have been secured, there will be an open position equal to the remaining MWh value needed to reach 50,000 MWh.
• PCIA: Power Cost Indifference Adjustment. The PCIA is intended to compensate Investor-Owned Utilities for their stranded costs when a bundled customer departs and begins taking generation services from a CCA.
• Physical Product: A contract which requires the seller to physically deliver, and the buyer to physically receive a given commodity.
• Price Risk (also known as Market Price Risk): Price Risk is the risk that prices for power are different than have been assumed for financial planning and budgeting. Price Risk is hedged by procuring fixed-price forward contracts for power. • Portfolio: The aggregation of commodity-related products (both physical and financial) procured to serve load and meet other policy goals.
• Prompt: The period immediately following the current period, e.g. in February the prompt month is March.
• Real Time: Refers to the actual day in which power flows. In the CAISO, the Real-time market opens at 1pm the day before flow date and closes for each hour 75 minutes prior to the start of scheduled flow.
• Renewable Energy Certificate (REC): Evidence of the production equal to one megawatt-hour of generation from a certified renewable energy resource. • Retail Load: The summation of all customers' loads that receive power from the electric system.
• Scheduling: The actions of the counterparts to a transaction, and/or their designated representatives, of notifying, requesting and confirming to each other the quantity and type of product to be delivered on a given day.
• Separation of Function: Also referred to as “segregation of duties,” part of a complete risk control framework. Individuals responsible for legally binding the organization to a transaction should not also perform confirmation, clearance, or accounting functions. • Settlement: The process by which counterparties agree on the dollar value and quantity of a commodity exchanged between them during a particular time interval. • Short Position: A short position is an open position. The volumetric value of a short position is determined by the shortfall in volume compared to the requirement. For the renewable power purchase example, if 30,000 MWh of the 50,000 MWh requirement has been procured, a short position of 20,000 MWh remains.
• Specified Source: An out-of-state generator that meets the requirements of the California Air Resources Board such that the carbon intensity of that resource’s emissions (typically zero, or lower than that of unspecified imports) can be declared by the California entity importing the power.
• Stress Testing: The process of simulating different financial outcomes to assess potential impacts on projected financial results. Stress testing typically evaluates the effect of negative events to help inform what actions may be taken to lessen the negative consequences should such an event occur.
• System Load: The summation of all customers' loads that receive power from the electric system. System Load includes applicable transmission and/or distribution losses. • Volumetric Risk: The effect of fluctuations in demand for load or for production of generation from a generator.
• Western Renewable Energy Generation Information System (WREGIS): The Western Renewable Energy Generation Information System (WREGIS) is an independent, renewable energy tracking system for the region covered by the Western Electricity Coordinating Council (WECC).
• Wholesale Energy Provider: An entity broadly responsible for managing the purchase and sale of energy commodity-related products in the commodity portfolio in an effort to serve load and meet other policy goals.

Appendix A: AUTHORIZED TRANSACTION TYPES OR

PRODUCTS
All transaction types listed below must be executed within the limits set forth in this Policy. (The following transaction types can be ‘nonstandard’ at DCE subject to RMT approval) • CAISO Market Products
o Day-ahead and Real-time Energy
o Congestion Revenue Rights
o Convergence Bidding
o Inter-Scheduling Coordinator Transactions
o Tagging into and out of CAISO
o Ancillary Services
• Physical Power Products
o Short- and Long-Term Power
o Physical OTC Options
• Resource Adequacy
o System, Local, and Flexible Resource Adequacy
o Existing Contract Import Capability
• Physical Environmental Products
o Renewable Energy Credits
o Specified Source Power
o Carbon Allowances and Obligations
• Transmission Access Charges
• Energy Generation
o Energy Storage, including time-based arbitrage
o Demand Response
The point of delivery for all products must be at a location within the CAISO service area.

Appendix B: NEW TRANSACTION APPROVAL FORM
New or Non-Standard Transaction Approval Form
Prepared By:

Date:

New or Non-Standard Transaction Name:

Business Rationale and Risk Assessment:
• Product description – including the purpose, function, expected impact on net revenues (i.e. increase, manage volatility, control variances, etc.) and/or benefit to DCE • Identification of the in-house or external expertise that will be relied upon to manage and support the new or non-standard transaction
• Assessment of the transaction’s risks, including any material legal, tax or regulatory issues • How the exposures to the risks above will be managed by the limit structure • Proposed valuation methodology (including pricing model, where appropriate) • Proposed reporting requirements, including any changes to existing procedures and system requirements necessary to support the new product • Proposed accounting methodology
• Proposed Middle Office workflows/methodology, including systems • Brief description of the responsibilities of various departments within DCE who will have any manner of contact with the new or non-standard transaction Reviewed by:

Director of Energy & Sustainability or
Director of Finance & Administration
Date
WEP Representative Date
Executive Director Date
ITEM 6C
a

STAFF REPORT
Subject: Revisions to DCE’s Procurement Policy & Procedures Contact: Allen McMillen, Contracts Analyst II ([email protected]) Recommendation: Adopt Updated DCE Policy No. 22-01 Procurement Policy & Procedures Background: In July 2022, the DCE Board adopted Policy No. 22-01 and established its Procurement Policy and Procedures. Prior to that, DCE relied on the procurement policies at the Coachella Valley Association of Governments (CVAG), which is contracted to provide administrative support. In addition, given the primary activity of DCE’s business is the procurement of electricity supplies and subsequent retail generation services to customers through its Community Choice Aggregation (CCA) program, DCE has also established an Energy Risk Management Policy to address the procurement of energy supplies and the associated risks which is incorporated into the policy.

The suggestion to carve-out DCE’s policy into a separate stand-alone document came after a recommendation by DCE’s auditors, Davis Farr, and the policy was modeled after CVAG’s established and vetted policy and consistent with procurement practices for the DCE. However, in two specific areas the DCE procurement policies are distinct from CVAG’s policy. First, DCE is covered under the Supplier Diversity Program Compliance rules of the California Public Utilities Commission. Second, since promotion of local job creation is one of the core benefits of DCE, the policy includes a local preference based substantially on the Local Business Preference Program in effect in both Palm Desert and Palm Springs.

On April 29, 2024, the CVAG Executive Committee approved CVAG’s updated Policy No. 21-04 Procurement Policy & Procedures. The updated policy came after staff reviewed comparable procurement policies and procedures of 10 CVAG member jurisdictions as well as regional agencies such as Riverside County Transportation Commission (RCTC), Southern California Association of Governments (SCAG) and Western Riverside Council Of Governments (WRCOG). Staff also prepared a benchmark analysis of the agency policies (see attached).

Staff has prepared similar revisions to the DCE Policy No. 22-01 Procurement Policy & Procedures and recommends the following changes be made:
• Update definitions to clear up technical ambiguities; • Incorporate the Qualified Vendor List authorized by the CVAG Executive Committee in February 2024;
• Update limits of expenditure authority and procurement thresholds to be comparable to regional agencies and consistent with the recent updates to the CVAG policy; and • Remove repetitive language to streamline the document.

Desert Community Energy Board
June 17, 2024
Staff is recommending an update to Policy 22-01 be adopted with changes to current procurement practices, thereby increasing transparency and continuing to ensure ethical standards are followed.

The recommended changes are shown in the attachment “DCE Policy 22-01 – Tracked Changes.” With the DCE Board’s adoption, the changes will be incorporated, and a clean copy will be available on DCE’s website.

Fiscal Analysis: There is no additional cost to updating DCE Policy No. 22-01. The updated policy does provide increases to the Executive Director’s expenditure signing authorities in line with CVAG and other agencies.

Attachments:

1. Agency Benchmark Analysis

2. Updated DCE Policy No. 22-01 Tracked Changes
Agency Last Updated Single Quote Informal Formal Single Quote Informal Formal Single Quote Informal Formal Public Works Prof. Services MS&E CVAG EXISTING 2021 Up to $5,000 $5,001 - $25,000 Over $25,000 Up to $5,001 $5,001 - $25,000 Over $25,000 Up to $5,001 $5,001 - $25,000 Over $25,000 $50,000 $25,000 / $50,000 $25,000 CVAG PROPOSED Up to $10,000 $10,001 - $100,000 Over $100,000 Up to $10,000 $10,001 - $100,000 Over $100,000 Up to $10,000 $10,001 - $100,000 Over $100,000 $100,000 $100,000 $100,000 Cathedral City 2018 No threshold Under $250,000 Over $250,000 No threshold Under $75,000 Over $75,000 No threshold Under $75,000 Over $75,000 $75,000 $75,000 Coachella 2021
County 2020 Under $1,000 $1,001 - $25,000 Over $25,000 Under $1,000 $1,001 - $25,000 Over $25,000 Under $1,000 $1,001 - $25,000 Over $25,000 $100,000 Desert Hot Springs 2019 Under $60,000 $60,001 - $200,000 Over $200,000 No threshold No threshold No threshold No threshold Under $50,000 Over $50,000 $50,000 $50,000 $50,000 Indian Wells 2021 Under $50,000 $5,001 - $200,000 Over $200,000 Under $5,000 $5,001 - $25,000 Over $25,000 Under $5,000 $5,001 - $25,000 Over $25,000 Budgeted Amounts Indio 2012 Under $5,000 Under $125,000 Over $125,000 Under $5,000 $5,001 - $75,000 Over $75,000 Under $5,000 $5,001 - $75,000 Over $75,000 $75,000 $75,000 $75,000 La Quinta 2023 Under $5,000 $5,001 - $50,000 Over $50,000 Under $5,000 $5,001 - $50,000 Over $50,000 Under $5,000 $5,001 - $50,000 Over $50,000 $50,000 $50,000 $50,000 Palm Desert 2023 Under $2,000 $2,001 - $250,000 Over $250,000 Under $10,000 $10,001 - $75,000 Over $75,000 Under $2,000 $2,001 - $75,000 Over $75,000 $250,000 $250,000 $250,000 Palm Springs 2021 Under $60,000 $60,001 - $200,000 Over $200,000 Under $10,000 $10,001 - $75,000 Over $75,000 Under $10,000 $10,001 - $75,000 Over $75,000 $200,000 $75,000 $75,000 Rancho Mirage 2023 Under $6,000 $6,001 - $50,000 Over $50,000 Under $6,000 $6,001 - $50,000 Over $50,000 Under $6,000 $6,001 - $50,000 Over $50,000 $50,000 $50,000 $50,000 RCTC 2021 Under $1,000 $1,001 - $25,000 Over $25,000 Under $10,000 $10,001 - $250,000 Over $250,000 Under $1,000 $1,000 - $25,000 Over $25,000 $50,000 $250,000 $50,000 RCTC (WRC RCA) 2021 Under $1,000 $1,000 - $5,000 Over $5,000 Under $10,000 $10,001 - $250,000 Over $250,000 Under $10,000 $10,001 - $250,000 Over $250,000 $100,000 $100,000 $100,000 SCAG 2021 Under $10,000 $10,001 - $50,000 Over $50,000 Under $10,000 $10,001 - $50,000 Over $50,000 Under $10,000 $10,001 - $50,000 Over $50,000 Up to $200,000 WRCOG 2021 Under $100,000 Over $100,000 Over $100,000 Under $5,000 $5,000 - $10,000 Over $10,000 $100,000 * Public Works Project Procurement Thresholds Professional Services Procurement Thresholds MS&E Procurement Thresholds Top Executive Expenditure Authority DCE Procurement Policy & Procedures | Policy No. 22-01 (Updated June 17, 2024) UPDATED JUNE 17, 2024

DCE Procurement Policy & Procedures | Policy No. 22-01 (Updated June 17, 2024)

1. Purpose and Scope ................................................................................. 1

2. Definitions ................................................................................................ 1

3. Standards of Conduct .............................................................................. 4

4. Delegation of Authority ........................................................................... 54

5. Competitive Procurement Thresholds and MethodsThresholds ............. 65

5.1. Procurement Thresholds ........................................................................ 56

5.2. Procurement Methods ............................................................................ 76

5.3. Purchase of Materials, Supplies, Material, and Equipment .................... 76

5.4. ContractualNonprofessional Services .................................................... 76

5.5. Professional Services – Government Code 4526 ..................................... 7

5.6. Recycle, Energy Efficient or Environmentally Friendly Supply Products Specification .......................................................................................... 87

5.7. Supplier Diversity Program Compliance Local Preference ………………..……………………………….…… 87

5.8. Local Preference ………………………………………………………………. 8

5.9. Public Works Projects .............................................................................. 8

5.8.5.10. Qualified Vendor List (QVL)……………………………………………………8

6. Exceptions to Competitive Procurement ................................................ 98

6.1. Procedures for Emergency Expenditures ............................................. 108

6.2. Special Expertise Services ................................................................... 109

6.3. Matters with Time Constraints .............................................................. 109

6.4. Cooperative Purchasing with Other Agencies ...................................... 119

6.5. Single Source or/ Sole Source Justification ........................................ 1110

7. Grant Funds .................................................................................................. 1110

8. Federal Funds ............................................................................................... 1110

9. DCE Energy Procurement ………………………………………………….……..
1110

10. Contracts (or Agreements) and Purchase Orders……………………....…1210

11. Subsequent Contract Awards, Amendments, Extensions or Renewals1210

12. Insurance ....................................................................................................... 1211

13. Performance and Payment Bonds............................................................. 1211

14. Protests for Formal Solicitations ................................................................ 1211

15. Pre-Bid/Pre-Proposal Meetings ................................................................. 1312 1 DCE Procurement Policy & Procedures | Policy No. 22-01 (Updated June 17, 2024)

1. Purpose and Scope
Desert Community Energy (DCE) is committed to fair, open, and transparent procurement of goods and services. DCE will conduct procurement processes in a professional and ethical manner, without any conflict of interest, to obtain maximum value for every public dollar spent.

Except for contracts entered prior to the effective date of this Policy, all purchases of materials, equipment, supplies, and services must adhere to the procedures, authority, and dollar limits set forth in this Policy – including subsequent versions of any cross-referenced policies and documents.

The primary activity of DCE’s business is the procurement of electricity supplies and subsequent retail generation services to customers through its Community Choice Aggregation (CCA) program for cities in the Coachella Valley that elect to become participants. DCE has established an Energy Risk Management Policy to address the procurement of energy supplies and the associated risks. This Energy Risk Management Policy is referenced in section 109. DCE Energy Procurement and applies to all related procurement items.

DCE’s Joint Powers Agreement provides that DCE may contract with the Coachella Valley Association of Governments (CVAG) for staff services and that CVAG staff time, as well as office expenses, direct and indirect overhead, shall all be charged to DCE. CVAG provides such staffing and administration via an executed Implementation and Management Services Agreement effective October 30, 2017 and subsequently amended on September 28, 2022 for an additional five years through October 30, 2027. As such, DCE has no employees or staff of its own; therefore, all references in this document to staff, departments, titles or other administrative references pertain to CVAG. Procurement by CVAG for goods and services that are shared with DCE pursuant to the Implementation and Management Services Agreement shall be carried out by CVAG pursuant to CVAG Policy No. 21-04.

2. Definitions
Addendum (sing.)/Addenda (pl.) – A written change, addition, alteration, correction, or revision to a solicitation or contract document. Commonly, the name given to the document used to revise a solicitation.

Amendment – An agreed addition to, deletion from, correction, or modification of a document or contract.

Architect or Engineer (A/E) Professional Services - Services that require performance by a registered architect or engineer. Professional services of an architectural or engineering nature that are associated with research, planning, development, and design for construction, alteration, or repair.

Awardee – A person or firm who is awarded a contract.

Coachella Valley Association of Governments (CVAG) – A public agency formed by a Joint Powers Agreement that contracts with DCE for staff services and administration. CVAG staff time, as well as office expenses, direct and indirect overhead, shall all be charged to DCE. CVAG provides such staffing and administration via an executed Implementation and Management Services Agreement effective October 30, 2017 and subsequently amended on September 28, 2022 for an additional five years through October 30, 2027. 2 DCE Procurement Policy & Procedures | Policy No. 22-01 (Updated June 17, 2024) Contractual Services – means all services, other than professional services, including, but not limited to, janitorial, repairs, maintenance work, software subscriptions, catering, security, and rental equipment.

Cooperative Procurement – The action taken when two or more entities combine their requirements to obtain advantages of volume purchases, including administrative savings and other benefits. A variety of arrangements, whereby two or more public procurement entities purchase from the same supplier or multiple suppliers using a single Invitation for Bids (IFB) or Request for Proposals (RFP). Cooperative procurement efforts may result in contracts that other entities may “piggyback.”
Desert Community Energy (DCE) – A public agency formed by a Joint Powers Agreement that contracts with CVAG for staff services via an executed Implementation and Management Services Agreement effective October 30, 2017 and subsequently amended on September 28, 2022 for an additional five years through October 30, 2027.

Designee – A duly authorized representative.

Electronic Procurement (eProcurement) – Conducting all or some of the procurement function over the Internet.

Energy Risk Management Policy - DCE has established an Energy Risk Management Policy to address the procurement of energy supplies and the associated risks under Policy 18-09. DCE has established a Wholesale Energy Procurement Risk Management Policy to address the wholesale procurement of energy supplies and the associated risks under Policy No. 24-01.

Ethical Procurement – Prohibits the breach of the public’s trust by discouraging a public employee from attempting to realize personal gain through conduct inconsistent with the proper discharge of the employee’s duties.

Executive Director – DCE retains CVAG, acting through its Executive Director to serve as the Executive Officer for DCE, and to serve as Secretary for DCE’s Board of Directors, and to provide staff for DCE, to fill the needs and requirements of DCE.

Formal Solicitation – A bid that must be submitted in a sealed envelope (or through an eProcurement site) and in conformance with a prescribed format to be opened in public or received electronically at a specified date and time.

Informal Solicitation – A competitive bid, price quotation, or proposal for supplies or services that is conveyed by a letter, fax, e-mail, or other manner that does not require a formal sealed bid or proposal, public opening, or other formalities. Generally relegated to requirements that may be considered low value or fall under a stipulated price/cost threshold.

Invitation for Bids (IFB) – A procurement method used to solicit competitive sealed bid responses, sometimes called a formal bid, when price is the basis for award.

Local Business – A person or business who has a valid physical business address located within the Coachella Valley, Palo Verde or Imperial Valleys, at least six months prior to bid or RFP opening date, from which the person or business operates or performs business on a day-to-day basis and holds a valid business license by a city located in the Coachella, ValleyPalo Verde or Imperial Valleys or by the County Counties of Riverside and Imperial. Post office boxes are not verifiable and shall not be used for the purpose of establishing such physical address. A business 3 DCE Procurement Policy & Procedures | Policy No. 22-01 (Updated June 17, 2024) that has at least 25% of its total workforce who reside within the Coachella, Palo Verde or Imperial Valleys shall also be considered a Local Business.

Nonprofessional Services – A contract for services where the service provided is not a solution to a problem and does not involve professionals. Examples include, but are not limited to, janitorial work, equipment rental, catering, and security.

Offeror – A generic term that refers to a person or business who submits an offer in response to a solicitation.

Piggyback – A form of intergovernmental cooperative purchasing in which an entity will be extended the pricing and terms of a contract entered into by another entity. Generally, an entity will competitively award a contract that will include language allowing for other entities to utilize the contract which may be to their advantage in terms of pricing, thereby gaining economies of scale that they normally would not receive if they competed on their own.

Procurement – Purchasing, renting, leasing, or otherwise acquiring any supplies, services, or construction; includes all functions that pertain to the acquisition, including description of requirements, selection, and solicitation of sources, preparation and award of contract, and all phases of contract administration. The combined functions of purchasing, inventory control, traffic and transportation, receiving, inspection, storekeeping, salvage, and disposal operations.

Procurement Representative – A person responsible for sourcing and buying products and services for the entity as designated by the Executive Director.

Professional Services – Services rendered by members of a recognized profession or possessing a special skill. Such services are generally acquired to obtain information, advice, training, or direct assistance (e.g., financial, legal, economic, accounting, engineering, information services, technical, architectural, or other administrative professional matters).

Project ManagerLead (PM) – Designated individual to administer a specific task or contract.

Public Works Project - Construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds, except work done directly by a public utility company pursuant to order of the Public Utilities Commission or other public authority.

For purposes of this paragraph, “construction” includes work performed during the design, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether any further construction work is conducted, and work performed during the postconstruction phases of construction, including, but not limited to, all cleanup work at the jobsite. For purposes of this paragraph, “installation” includes, but is not limited to, the assembly and disassembly of freestanding and affixed modular office systems.

Qualified Vendor List (QVL) – A list of qualified vendors maintained to enable informal and formal bidding opportunities and provide a ready pool of vendors for recurring and routine goods and services.

Recycled-Content Paper Products and Recycled-Content Printing and Writing Paper – Such products that consist of at least thirty percent (30%), by fiber weight, postconsumer fiber, consistent with the requirements of Sections 22150 to 22154 and Sections 12200 and 12209 of the Public Contract Code, and as amended.
4 DCE Procurement Policy & Procedures | Policy No. 22-01 (Updated June 17, 2024) Request for Information (RFI) – A document used to obtain information necessary to complete a purchase or fulfill a contract. An RFI surveys the marketplace to understand what products or services may be available and to approximate the dollars that may be needed for procurement(s).

A RFI may be used to validate information, project objectives, and functions for possible future solicitations.

Request for Proposals (RFP) – The document used to solicit proposals from potential providers (proposers) for goods and services. Price is usually not a primary evaluation factor. Provides for the negotiation of all terms, including price, prior to contract award. May include a provision for the negotiation of best and final offers. May be a single-step or multi-step process.

Request for Qualifications (RFQ) – A document, which is issued by a procurement entity to obtain statements of the qualifications of potential responders (development teams or consultants) to gauge potential competition in the marketplace, prior to issuing the solicitation.

Request for Quotation (RFQ) – A document which is issued to obtain from vendors price quotes typically, but not exclusively, for materials, supplies, equipment.

Responsible Bidder – A bidder that possesses the minimum qualifications, licensure, experience, financial stability, expertise and workforce to perform the work.

Responsive Bid/Proposer – A bid or proposal that fully conforms in all material respects to the Invitation for Bids (IFB)/Request for Proposals (RFP) and all of its requirements, including all form and substance.

Scope of Work (SOW) – A scope of work is developed at the beginning of the procurement cycle and is a written description of the entity’s needs and desired outcomes for the procurement and becomes the basis for any resulting solicitation. The scope of work helps to ensure that the product or service meets the stated outcome and establishes the parameters of the resulting contract.

Single Source Procurement – A non-competitive method of procurement used when, although two or more vendors supply the commodities or service(s), the department selects one for substantial reasons, eliminating the competitive bidding process. A written justification shall be required from staff explaining why only this supplier vendor fulfils the requirement.

Sole Source Procurement – A non-competitive method of procurement used when only one supplier vendor provides the needed public works project, contractual service, professional service or materials, supplies, and equipment or a product to ensure compatibility with other DCE products and equipment, DCE shall work to procure these items in the best interest of DCE, or possesses the unique ability or capability to meet the requirements of DCEthe entity or because only one supplier vendor is practicably available. A written justification shall be required from staff explaining why only this supplier vendor can fulfil the requirement.

Staff – The individual or department contracted by the Coachella Valley Association of Governments who procures or uses a procured good or service.

Standard Specification - A specification that is to be used for all or most purchases of an item; describes all required physical and functional characteristics of goods, services, or construction. 5 DCE Procurement Policy & Procedures | Policy No. 22-01 (Updated June 17, 2024) Task Order – Task order contract means a contract for services that does not procure or specify a firm quantity of services (other than a minimum or maximum quantity) and that provides for the issuance of orders for the performance of tasks during the period of the contract.

3. Standards of Conduct
Transactions relating to the expenditure of public funds require the highest degree of public trust and impeccable standards of conduct. DCE’s contracting activity shall be conducted in a manner above reproach, with the highest of ethical standards and, except as authorized by law, with complete impartiality and without preferential treatment. It is DCE’s policy to strictly avoid any conflict of interest or even the appearance of a conflict of interest in all its procurement and contracting practices.

All staff shall comply with all applicable laws regarding conflicts of interest, including, but not limited to, the California Political Reform Act, and the provisions of the California Government Code regarding Prohibited Interests in Contracts, as these laws may be amended from time to time.

The Coachella Valley Association of Government (CVAG) provides administrative support staffing through a contract with DCE. All staff are required to comply with CVAG’s Personnel Rules and Benefits Manual, including the policies addressing conflicts of interest and ethical standards.

Contracts/Procurement shall have adequate internal controls to ensure all contracts and purchases processed are in accordance with the policies specified in that:

All internal requests contain proper approvals before being converted into a contract or purchase order;
Staff have a mechanism to report unauthorized activities as well as any suspicions of fraud, waste, or abuse; and
Any violation of these standards may be cause for disciplinary action, including dismissal, if appropriate.

4. Delegation of Authority
The Executive Director has authority to approve expenditures up to the dollar amounts shown in the following table:

Table 1
TABLE 1

PUBLIC WORKS

PROJECTS

CONTRACTUAL
AND

PROFESSIONAL

SERVICES

MATERIALS,

SUPPLIES &

EQUIPMENT
$100,000 $100,000 $100,000
6 DCE Procurement Policy & Procedures | Policy No. 22-01 (Updated June 17, 2024)

AGENCY CAPITAL

EXPENDITURES

NON-CAPITAL

EXPENDITURES

PROJECT-SPECIFIC

EXPENDITURES
DCE $100,000 $100,000 n/a
Consistent with Policy No. 18-02, the Executive Director is authorized to execute agreements up to the limits in Table 1 without prior Board approval when certain conditions are met. This authority may be exercised by the Executive Director provided that: 1) the expenditures authorized by these agreements are consistent with the Agency’s approved budget; (2) the agreements are approved as to form by DCE’s general counsel; and (3) agreements are reported at the next Board meeting.

Limits established in Table 1 may be modified by the DCE Board. The Executive Director may issue a contract up to $100,000 under his or her authority, which does not require approval by the DCE Board. All contracts greater than $100,000 require the approval of the DCE Board.Expenditures above the limits in Table 1 must be approved by the DCE Board.

Only the Executive Director (or designee) is authorized to sign contracts and agreements binding upon DCE. Contracts or agreements in excess of the thresholds established in Table 1 above shall require approval of the DCE governing board and the signature of the Chair, unless express authority is granted to the Executive Director by the DCE Board. The intent of this delegation of authority shall not be circumvented by breaking up an expenditure into smaller contract amounts or breaking up expenditures across more than one fiscal year. Expenditures shall be considered on an individual project basis in the aggregate for each fiscal year as well as across more than one fiscal year. For example, three four non-capital expenditures for contractual or professional services; or materials, supplies & equipment for DCE in the amount of greater than $35,000$25,000 each to a single vendor for the same project during the same fiscal year shall not be provided without governing body approval. Likewise, three four non-capital expenditures for DCE in the amount of greater than $35,000$25,000 each to a single vendor for the same project spanning three fiscal years shall not be provided without governing body approval. The intent of this delegation of authority shall apply similarly to public works project expenditures. The Agency’s fiscal year is from July 1 to June 30. In the event the Executive Director or Chair is absent or unavailable to sign the contract, the designee shall sign on that person’s behalf.

5. Competitive Procurement Thresholds and Methods
To establish uniform thresholds and procedures for the acquisition of goods or services, subject to the exceptions set forth in Section 6.

5.1. Procurement Thresholds
Guidelines for competitive purchases for goods and services are provided in Table 2. Table 2 below provides thresholds for competitive purchasing for public works projects; contractual and professional services; and materials, supplies & equipment. These thresholds shall supersede and replace thresholds for the Qualified Vendor List established prior to the adoption of this policy as updated.

TABLE 2
7 DCE Procurement Policy & Procedures | Policy No. 22-01 (Updated June 17, 2024)

PROCUREMENT
METHOD

PUBLIC WORKS

PROJECTS

CONTRACTUAL
OR

PROFESSIONAL

SERVICES

MATERIALS,

SUPPLIES &

EQUIPMENT
Informal, one (1)
written quote $0 - $10,000 $0 - $10,000 $0 - $10,000
Informal, three (3)
written quotes $10,001 - $100,000 $10,001 - $100,000 $10,001 - $100,000 Formal Solicitation Over $100,000 Over $100,000 Over $100,000 Table 2

DOLLAR THRESHOLD PROCUREMENT METHOD
$0 - $5,000 Informal, one (1) written quote
$5,001 - $25,000 Informal, three (3) written quotes
$25,001 and above Formal Solicitation
Splitting of purchases (“fragmenting”) in order to avoid competitive procurement requirements is prohibited.

The Executive Director (or designee) at his/her/their discretion shall have the authority to authorize a formal procurement method less than the limits established if it is deemed to be in the best interest of DCE.

5.2. Procurement Methods
Informal Procurement ($0 - $10,000)($0 - $5,000): Staff shall make and document a reasonable effort to solicit and obtain the lowest quote/proposal for the goods or services desired that offer the best value to DCE, in DCE’s sole and absolute discretion. Contracts for the acquisition of professional services shall be awarded to the best qualified vendor on the basis of demonstrated competence, professional qualifications, and at fair and reasonable prices to DCE. An informal procurement within the dollar threshold up to $10,000 and receipt of one written quote would not require a Single Source or Sole Source Justification.

Informal Procurement ($10,001 - $100,000) ($5001 - $25,000): Staff shall make a reasonable effort to solicit and obtain three (3) competitive quotes/proposals via email, mail, fax or any other reasonable solicitation method. When three (3) quotes/proposals are unable to be obtained, Staff must provide documentation as to how the quotes were requested and document its findings prior to the approval of any purchase.
8 DCE Procurement Policy & Procedures | Policy No. 22-01 (Updated June 17, 2024) Formal Procurement (over $100,000) ($25,001 and above): Staff in consultation with the Director of Finance/Administration (or designee) will determine the best method of solicitation (i.e., RFP, IFB, of RFQ) depending on the nature of the desired goods or services. The Director of Finance/Administration (or designee) shall be the main point of contact for any formal solicitation to avoid any unethical practices. All formal procurement methods shall be posted on DCE’s website for a minimum of fourteen (14) days and opened or received electronically and reviewed as described in the bid documents. Purchases of supplies and equipment of an estimated value of greater than one hundredtwenty-five thousand dollars ($25,000100,000) shall be by written contract. DCE is not required to formally publish its competitive solicitations in a newspaper or similar publication.

5.3. Purchases of Materials, Supplies, Material, and Equipment Staff shall use the procurement methods informal request for quote method per Section 5.2. for goods and/or supplies in an amount under twenty-five thousand dollars ($25,000) and award to the lowest bidder. For goods and/or supplies in an amount greater than twenty-five thousand dollars ($25,000), staff shall procure the goods and/or supplies through a formal procurement method per Section 5.2 and award to the lowest bidder. Bids shall be publicly opened at a date and time set forth in the bid documents.

5.4. Nonprofessional Services Contractual Services
Staff shall use the procurement methodssolicit a request for quote or request for proposal through an informal process per Section 5.2. for nonprofessional services in an amount under twenty-five thousand dollars ($25,000) and a formal process per Section 5.2 for nonprofessional services in an amount greater than twenty-five thousand dollars ($25,000). If an informal process is used, Staff shall award based on lowest bid. If a formal process is used, proposals received shall be evaluated based on qualifications and competence, where price is a criterion but not the determinative factor. Staff, in consultation with the Director of Finance/Administration (or designee), shall determine the best method of evaluating proposals received based on the nonprofessional services needed.

5.5. Professional Services – Government Code 4526
Contracts for professional services such as private architectural, landscape architectural, professional engineering, environmental, land surveying, and construction project management services shall be engaged based on demonstrated competence and qualifications for the types of services to be performed and at fair and reasonable prices to DCE, pursuant to California Government Code Section 4526.

Staff shall use the procurement methods solicit a request for proposal for professional services through an informal process for services under twenty-five thousand dollars ($25,000) and a formal process for services greater than twenty-five thousand dollars ($25,000) per Section 5.2 and shall evaluate proposals received based on competence and qualifications. Cost shall be submitted and evaluated as described in the bid documents. The cost proposal shall be submitted separately from the balance of the proposal (in a sealed envelope) and opened for comparison only after evaluation and ranking of the proposals is complete. DCE shall have the option to negotiate the cost with the top-ranked firm. Should DCE and the top-rank firm fail to agree on a 9 DCE Procurement Policy & Procedures | Policy No. 22-01 (Updated June 17, 2024) cost, DCE shall have the option to reject the top-rank firm’s proposal and start negotiations with the next highest ranked firm and so on until an agreement is made. The awarding authority shall have the right to reject any quote, bid, or proposal if doing so is determined to be in the best interest of DCE and to re-advertise for bids, and to waive any irregularity in any bid so long as doing so does not create an unfair advantage.

The above process may be utilized at the discretion of the Executive Director for the solicitation of professional services other than those enumerated above.

5.6. Recycle, Energy Efficient or Environmentally Friendly Supply Products Specification
It is the policy of DCE to require purchase of products and services that minimize environmental and health impacts, toxics, pollution, and hazards to worker and community safety and to the larger global community to the greatest extent practicable. If fitness, quality, and price of Recycled-Content Paper Products and Recycled-Content Printing and Writing Paper are equal to that of non-recycled items, DCE shall purchase Recycled-Content Paper Products and Recycled-Content Printing and Writing Paper that consist of at least thirty percent (30%), by fiber weight, postconsumer fiber. If the Executive Director (or designee) determines that: (1) a recycled, energy efficient or environmentally friendly product lacks performance capabilities or needed quality levels; or (2) a sufficient amount of said product is not currently available in the market, then a reduced percentage can be required, or the supply specification can be limited to non-recycled, non-energy efficient or non-environmentally friendly materials.

5.7. Supplier Diversity Program Compliance
As may be appropriate and consistent with applicable laws, regulations, and California Public Utilities Commission (CPUC) Orders and Decisions, for procurements that are solely for DCE, DCE will engage with the diverse business community in its service area and statewide, to inform businesses of the benefits of certification as a diverse business enterprise, as well as upcoming Requests for Proposals and other solicitations. While DCE cannot give any preference in the selection process to any business on the basis of race, sex, color, ethnicity, or national origin, DCE will strive to ensure that diverse business enterprises are aware of upcoming contract opportunities.

5.8. Local Preference
For procurements that are solely for DCE, it is the policy of DCE to promote employment and business opportunities for local residents and Local Businesses on all contracts and give preference to local residents, workers, businesses, contractors, and consultants to the extent consistent with the law and the interests of DCE and its customers.

5.9. Public Works Projects
The procurement thresholds and methods governing DCE public works projects are as follows:

One hundred thousand dollars or less. For public works projects in an amount less than one hundred thousand dollars ($100,000), staff shall solicit three price quotes and award to the lowest 10 DCE Procurement Policy & Procedures | Policy No. 22-01 (Updated June 17, 2024) responsible and responsive bidder. If unable to obtain a minimum of three price quotes, staff shall document that reasonable efforts were made to obtain price quotes including, that a notice was posted for not less than seven business days; that there were no other vendors to solicit quotes from; or that they solicited other vendors and one or more declined to provide a quote. In lieu of soliciting three price quotes, staff may elect to procure by formal bidding procedures per Section

5.2. Over one hundred thousand dollars. Public projects in an amount more than one hundred thousand dollars ($100,000) shall be solicited pursuant to the formal bidding procedure (Section

5.2) and awarded to the lowest responsive and responsible bidder. The DCE Board may reject any or all bids received and may waive any irregularities in each bid received.

5.9.5.10. Qualified Vendor List (QVL)
As project delivery increases, establishing a bench of prequalified and vetted professional service vendors will reduce procurement and contracting time. Many public agencies, including some member jurisdictions, use this procurement method to streamline contracting for routine and project-related professional service needs.

A RFQ process was utilized to receive Statements of Qualifications (“SOQs”) from professional service vendors interested in providing a variety of professional services. The CVAG Executive Committee approved establishing a Qualified Professional Services Vendor List (“QVL”) on February 26, 2024. DCE can use the QVL for contracting recurring and routine professional services for capital project and non-capital needs. While establishing and using a vendor list certainly reduces the time for procurement and contracting, it will not be limited to only those listed vendors. DCE will remain able to conduct formal and informal procurements outside the vendor list as unique needs arise.

The QVL will remain in effect until June 30, 2027, and then be re-procured. The CVAG Executive Director is authorized to accept and approve SOQs on an ongoing basis with the CVAG Executive Committee ratifying updates on an annual basis.

6. Exceptions to Competitive Procurement
 Utility Expenses  Government Permits & Fees,
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 Cooperative Purchases  Conferences & Seminars
 Piggyback Purchases  Office and Routine Program
Supplies
 Emergency Expenditure (further
defined below)
 Environmental Permits & Fees
 Association Fees  Travel Expenses, Lodging, &
Meals
11 DCE Procurement Policy & Procedures | Policy No. 22-01 (Updated June 17, 2024) This Section 6 sets forth exceptions to competitive procurement. The following is a list of services and expenditures that fall outside the requirements of the competitive process:

6.1. Procedures for Emergency Expenditures
An emergency exists when life or property is in immediate danger due to an Act of God or other catastrophic circumstance and prevention of loss requires a deviation from normal competitive procurement procedures.

The staff making the purchase must document (e-mail or memo) the specific reasons for the purchase.

The staff making the purchase must obtain approval from the Executive Director (or designee).

The use of the emergency purchase policy must not be considered a substitute for regular purchasing procedures, or a method of circumventing established purchasing controls.

Staff may request expenditure reimbursements by submitting a Payment Request Form. Original receipts are required as proof of purchase and must be attached to the payment request form, approved by the Department Director, and submitted to the Accounting Department.

6.2. Special Expertise Services
A contract for professional services agreement may be awarded without competition when it is determined that an unusual or unique situation exists, in that due to experience and expertise demonstrated in prior contracts for professional services with DCE is uniquely qualified for a particular task, that makes the application of all requirements of competitive sealed bidding or competitive sealed proposals contrary to the public interest. Any special procurement under this section shall be made with such competition as is practicable under the circumstances.

6.3. Matters with Time Constraints
Due to DCE Board meeting schedules, there could be instances where a good or service is needed in an exigent manner, and where a formal procurement method would not be in the best interest of DCE. The Executive Director, in consultation with the Chair, may authorize an informal bid process for matters that fall within his authorized expenditure in such instances. Staff shall make every effort to obtain proposals/quotes from a minimum of three (3) firms. The term of the contract shall not exceed one (1) year or the Executive Director’s expenditure authority. If it is determined the service or good will be recurring, exceed the maximum one (1) year, or exceed  Insurance Premiums & Fees  Application Fees
 Subscriptions  Medical Services
 Membership Dues  Taxes, such as property or
payroll taxes
 Leases or Purchase of Real
Property
 Memoranda of Understanding
(MOUs)
12 DCE Procurement Policy & Procedures | Policy No. 22-01 (Updated June 17, 2024) the Executive Director’s expenditure authority, DCE shall solicit with a formal procurement for said goods or service. Staff shall notify the Board of such an award at DCE’s next meeting.

6.4. Cooperative Purchasing with Other Agencies
The bidding requirements of Section 5.2 shall not apply to the purchasing of any equipment or supplies which the end user decides to obtain through a cooperative competitive bidding procedure, being prepared by and processed through another local, tribal, state, or federal governmental agency. If staff determines it to be in the best interest of DCE, staff is authorized to “piggy-back” onto or join into an existing written purchase contract, which contract was obtained within the last 12 months through a competitive bidding process prepared by and awarded by another local, state or federal government agency. Approval of a “piggy-back” or cooperative purchase shall be obtained from the DCE Board for an award exceeding the Executive Director’s signing authority.

Multiple Awarded Bids. It is not uncommon to have multiple awarded bids. A competitive bidding process is conducted for a specified product. Several vendors whose product meets the specification are awarded the contract. Maximum item price and contract terms are established.

If staff determine it to be in DCE’s best interest, the staff is authorized to use federal, state or other government agency multiple awarded contracts. Staff must obtain quotes from at least three vendors on the list and award the bid to the lowest responsible bidder. Approval shall be obtained from the DCE Board for purchases exceeding the Executive Director’s signing authority.

6.5. Single Source or /Sole Source Justification
Procurement by single source or/ sole source for goods or services requires submission, vetting, and approval of a Single Source or /Sole Source Justification form. Final approval of a single source or /sole source procurement requires the signature of the Executive Director (or designee).

A single source or /sole source shall not be used to limit competition in any way. A letter or /memo from the vendor explaining the product or service, or statement of geographic territory on a formal letter, shall be attached to the single/sole source justification form when applicable. An informal procurement within the dollar threshold up to $10,000 and receipt of one written quote would not require a Single Source or Sole Source Justification.

7. Grant Funds
Procurement of services or goods paid for with grant funds will be subject to the guidelines specified in the funding agreement(s) which supersedes this policy in such instances.

8. Federal Funds
When money has first been secured from a federal source, DCE’s Project Leadproject manager for the project shall determine whether expenditures of said money are subject to any federal purchasing policies or procedures, which shall thereafter be adopted as restrictions on the administration of those funds.

9. DCE Energy Procurement
13 DCE Procurement Policy & Procedures | Policy No. 22-01 (Updated June 17, 2024) DCE has established an Energy Risk Management Policy No. 18-09 to address the procurement of energy supplies and the associated risks.

DCE’s Energy Risk Management Policy can be found on the DCE website at www.desertcommunityenergy.com currently under Key Documents.

DCE has established an Energy Risk Management Policy to address the wholesale procurement of energy supplies and the associated risks under Policy No. 24-01. DCE’s Energy Risk Management Policy can be found on the DCE website at www.desertcommunityenergy.com currently under Key Documents.

10. Contracts (or Agreements) and Purchase Orders
Contracts (or Agreements) shall be used when an initial expenditure exceeds $25,000 for goods and/or services. Prior to the issuance of any Contract (or Agreement), the Director of Finance/Administration (or designee) shall ensure the proper procurement methods established in this policy were followed.

When negotiating terms, it may be determined by the Director of Finance/Administration (or designee) that it is in the best interest of the agency to issue Purchase Orders for goods and services requested. Prior to the issuance of any Purchase Order, the department director shall ensure the proper procurement methods established in this policy are followed.

11. Subsequent Contract Awards, Amendments, Extensions or Renewals Notwithstanding any extension clauses in a contract or anything herein to the contrary, the Executive Director (or designee) shall not award a subsequent contract to the same individual or entity for the same or similar services on the same project, or amend, extend or renew such a contract, without obtaining the next highest approval authority (i.e., the governing body), when the award, amendment, extension or renewal will result in DCE paying an aggregate amount in excess of the approval authority of the Executive Director to the individual or entity in any given fiscal year or the cumulative total of the project. For purposes of this section, the phrase “same project” shall include an on-call or as-needed contract.

12. Insurance
Prior to the execution of a contract, evidence of proper insurance coverage is required for any procurement involving services that puts DCE at risk. If a consultant request DCE to waive or alter any of its insurance requirements, the Executive Director may elect to waive certain insurance requirements, depending upon his/her/their assessment of the risks and liabilities posed to DCE.

13. Performance and Payment Bonds
Payment Bond. Per Civil Code §9550, a direct contractor that is awarded a public works contract involving an expenditure in excess of twenty-five thousand dollars ($25,000) shall, before commencement of work, give a payment bond to and approved by the DCE by whom the contract was awarded.

Performance Bond. The Executive Director (or designee) shall have the authority to require, at his/her/their sole discretion, a performance bond for a direct contractor that is awarded a service contract involving in expenditure in excess of twenty-five thousand ($25,000) before 14 DCE Procurement Policy & Procedures | Policy No. 22-01 (Updated June 17, 2024) commencement of work. The performance bond shall be provided to and approved by the officer or public entity to whom the contract was awarded when applicable. A performance bond in an amount equal to 100 percent of the contract amount shall be required for all public works contracts.

14. Protests for Formal Solicitations
This protest process applies only to contracts awarded through a formal bidding process (e.g., RFP or IFB). This does not apply to DCE purchase orders.

Written protests must be filed with DCE’s Executive Director within five (5) workdays after posting the Notice of Intent to Award on DCE’s website. No verbal protest will be accepted. The protest must be detailed, referencing the solicitation number, project name, and the name of the administrator or procurement representative listed on the bid documents. The protest must be submitted to DCE’s Executive Director via certified mail using the following address:

Executive Director
Desert Community Energy
73-710 Fred Waring Dr., Suite 20074-199 El Paseo, Suite 100 Palm Desert, CA 92260
Any entity that submits a bid or proposal may protest a DCE contract award.

There is no basis for protest if DCE rejects all proposals/bids based on the best interest of DCE.

The Executive Director shall respond to the offeror protesting the solicitation in writing and acknowledge receipt of the offeror's protest. The Executive Director shall notify Contracts/Procurement and the Project Lead Manager of the protest received. The Executive Director, in consultation with Contracts/Procurement, the Project Lead Manager, and legal counsel, if necessary, shall determine whether the basis of the protest has merit and is permissible. If so, the Executive Director shall notify all offerors, including the awardee, that the protest will be decided by reviewing submissions of written material to support each party’s position and setting the date of submission thereof. If the protest is deemed to be insufficient and without merit, the awarding authority shall notify the offeror protesting the solicitation the protest is denied.

15. Pre-Bid/Pre-Proposal Meetings
The project managerProject Lead in consultation with the Director of Finance/Administration (or designee) shall determine if a pre-bid/proposal meeting is necessary. A pre-bid/pre-proposal meeting shall not be mandatory, unless stated in the bid documents. The meeting is held after the RFP or IFB is released and before bids/proposals are due. The meeting will allow the project manager to further elaborate on the Scope of Work in more detail and to answer questions from prospective bidders/proposers. Except for questions raised during a pre-bid/pre-proposal meeting, prospective proposers shall submit all questions pertaining to the bid documents in writing.

ITEM 7A

STAFF REPORT
Subject: DCE Fiscal Year 2024/25 Budget
Contact: Claude T. Kilgore, Director of Finance/Administration ([email protected]); and Jiajing Cheng, Accountant ([email protected])
Recommendation: Adopt Resolution 2024-02 approving Desert Community Energy’s Fiscal Year 2024/25 Budget
Background: By the end of June of each year, DCE staff prepares a detailed fiscal year budget for the Board’s review and approval. DCE's Fiscal Year 2024/25 Budget, covering the period from July 1, 2024 through June 30, 2025, pertains to DCE’s fourth full year of operation for its electricity customers in the City of Palm Springs. At the June 2024 Board meeting, DCE staff will present key assumptions, facts, and figures used to develop the budget and ask the Board to consider budget approval as prescribed by the DCE Joint Powers Agreement.

The draft budget includes the current expected business outcome for Fiscal Year 2023/24 using 10 months of actuals through April 2024, and estimates for May and June 2024. The FY 2024/25 budget includes projected loads, resources, revenues, and costs as based on The Energy Authority's (TEA) adjusted May 15, 2024, financial model (FiMo) while DCE staff supplemented this with DCE non-energy operating cost forecasts. The FiMo revenue projections for informational fiscal years 2025–26 and 2026–27 were adjusted to maintain accrued margin levels near Board-approved target maximums. Non-energy 2024–25 operating costs were estimated with escalation between 3–10% on a budget-line level to reflect budgetary conservatism in an inflation-prone market. For fiscal years 2025–26 and 2026–27 notional estimates, a 3.5% annual escalation rate was applied.

It should be noted, that future business uncertainties remain, including western United States' fluctuating hydro conditions, climate change impacts, load variability, power market price volatility, scarcity of resource adequacy products at commercially reasonable prices, and integration/performance of power purchase agreements. In addition to these factors, Southern California Edison's (SCE) retail rates and the Power Charge Indifference Adjustment (PCIA, or exit fee) are being monitored as new information is released in SCE filings to the CPUC. All future rate adjustments will be evaluated for potential impact to DCE’s 2024–25 budget and any mid-year budget adjustment will be presented as necessary to reflect any material changes to the originally budgeted figures.

The proposed budget is a planning document and staff will continue to coordinate with TEA to update power supply costs, retail sales receipts, climate impacts, regulatory mandates and other factors throughout the year as actual revenues/expenses occur and keep the Board informed of any materials changes.

Fiscal Analysis: The projected costs and revenues for DCE are outlined in the budget itself.

Desert Community Energy Board
June 17, 2024
The proposed budget incorporates many assumptions and inputs regarding CCA program participation, rate setting, retail loads, and wholesale supply cost. DCE also has cost exposure related to potential Resource Adequacy (RA) regulatory actions which could increase costs during fiscal year 2024/25 and beyond. Additionally, SCE will likely submit additional rate changes over the period covered by this budget. DCE staff will actively monitor and report to the Board events that may materially alter expected budget results and, as warranted, bring back to the Board any proposed budget revisions deemed prudent and necessary to maintain the policies and objectives set by the DCE Board.

Attachments:

1. Resolution No. 2024-02

2. DCE’s Fiscal Year 2024/25 budget
RESOLUTION NO. 2024-02

A RESOLUTION OF THE BOARD OF DIRECTORS OF

DESERT COMMUNITY ENERGY
APPROVING FISCAL YEAR 2024/25 ANNUAL BUDGET

THE BOARD OF DIRECTORS OF DESERT COMMUNITY ENERGY DOES HEREBY FIND, RESOLVE, AND ORDER AS FOLLOWS:

A. Desert Community Energy ("DCE") is a joint powers authority established on October 30, 2017 for the purpose of implementing community choice aggregation programs under Public Utilities Code Section 366.2.0;
B. Under Section 5.3.1 of the DCE Joint Powers Agreement the Board of Directors is to approve an annual budget by June 30th of each year for the next following fiscal year; C. This budget pertains to Fiscal Year July 1, 2024, through June 30, 2025; D. The DCE Fiscal Year 2024/25 Budget was presented to the Board of Directors at a duly noticed public meeting for its consideration, approval and adoption.

NOW THEREFORE BE IT RESOLVED BY THE BOARD OF DIRECTORS OF DESERT COMMUNITY ENERGY, AS FOLLOWS:

Section 1. Approval of Fiscal Year 2024/25 Annual Budget. The Board of Directors hereby approves the DCE Fiscal Year 2024/25 Budget.

PASSED AND ADOPTED at a meeting of the Board of Directors of Desert Community Energy held on this June 17, 2024.

ATTEST:
___________________________________ _____________________________________ Lisa Middleton, Chair Tom Kirk, Secretary
Desert Community Energy Desert Community Energy
AYES: NAYS: ABSENT: ABSTAIN:

From the Executive Director

TO THE HONORABLE MEMBERS OF DESERT COMMUNITY ENERGY
The City of Palm Springs and the City of Palm Desert
JUNE 17, 2024
S WE CREATE A MORE RESILIENT COACHELLA VALLEY, it could be argued that few programs have had as great an impact as Desert Community Energy has in our community.

Now entering its fifth year of serving the City of Palm Springs, we are addressing, and exceeding, the State’s climate action goals by providing carbon-free energy, supporting the economy by procuring local clean energy resources, and providing an affordable alternative to Southern California Edison (SCE).

DCE has made significant progress on these goals since it was launched in April 2020 amid a global pandemic. We now serve nearly 85 percent of the City’s electric customers. Thanks to DCE ‘s Carbon Free energy product, in which all DCE customers are enrolled by default by decision of the Palm Springs City Council, Palm Springs has substantially reduced its greenhouse gas (GHG) emissions.

This is equivalent to DCE annually reducing GHG emissions in Palm Springs by more than 85,000 metric tons. That’s analogous to replacing more than 20,000 gas-powered vehicles with bikes.

DCE has also supported the local green economy by procuring more than 33 MW of operating wind resources located in the Whitewater Wash and the Desert Sands 25 MW battery storage project in North Palm Springs now in development as part of DCE’s Mid-term Reliability procurement. This project will optimize power provision in an amount to power approximately 10,700 Palm Springs households, while creating approximately 100 jobs during construction and two to three full-time jobs at its scheduled 2027 in-service date.

Based on Board direction, DCE continues to offer its customers a Desert Saver option, which is priced below SCE’s comparative product and remains the lowest-cost electricity option for Palm Springs residents.

The Fiscal Year 2024–25 Budget, presented here for your review and approval, reflects our many accomplishments and sets the stage for DCE’s continued growth. The target set in DCE’s Financial Reserve Policy, approved by the Board at the June 2023 meeting, requires us to have 180 days of operating capital based on our current Board approved DCE operating budget by the end of DCE’s sixth year of operation. Instead, we now anticipate achieving that goal by the end of 2024 – more than a year ahead of schedule.

The budget also demonstrates DCE’s cost-conscious approach. DCE customers will save more than $400,000 annually in energy costs following the Palm Springs City Council’s approval of a guaranty of DCE’s payment obligations to The Energy Authority, DCE’s power procurement consultant and service provider. The savings can be used for rate stabilization, energy-related programs and A
incentives for customers and other uses in accordance with DCE’s Financial Reserve Policy and Board direction.

In the coming fiscal year, DCE is looking to procure additional renewable and battery storage projects to meet State regulatory requirements and to provide the energy that Palm Springs needs to achieve its climate action and economic growth goals. As DCE builds its reserves, we will begin expanding community benefit programs, modelled after successful programs at other Community Choice Aggregators and community owned utilities.

As always, I thank DCE’s conscientious and professional staff for their efforts to achieve DCE’s accomplishments to date and the objectives outlined in the budget. I’m honored to work with a dedicated team singularly focused on DCE’s continued success and key role in creating a more sustainable Coachella Valley.

I look forward to working with you over the next year to further DCE’s positive impact on the communities it serves.

Tom Kirk
Executive Director
Desert Community Energy
About Desert Community Energy
ESERT COMMUNITY ENERGY (DCE) is a California joint powers authority (JPA) formed to offer a Community Choice Aggregation (CCA) program in the desert region of Riverside County. DCE was established in October 2017 to meet member agencies’ environmental and economic goals including competitive electric rates, greenhouse gas reductions, local control, and local economic benefits. The original JPA was formed among the cities of Palm Springs, Cathedral City, and Palm Desert. However, the City of Cathedral City withdrew from DCE effective July 1, 2021. While DCE formed in 2017, it only began serving load on April 1, 2020, for one of its member agencies, the City of Palm Springs. The next possible launch date for the City of Palm Desert is 2028.

DCE is governed by a Board of Directors (Board), consisting of one director appointed by each of the members of the JPA. Directors are elected officials or senior staff of the appointing member.

Each JPA member may also appoint an alternate to serve in the absence of its Director. All Board meetings are conducted in accordance with the provisions of the Ralph M. Brown Act.

The Board has established policies that promote the financial health of the agency including an Energy Risk Management Policy and Financial Reserve Policy. The Board follows a fiscally conservative course with a near-term emphasis on building financial reserves. DCE targets, during the initial years of operation, to fund financial reserves with the following objectives:
• Establish long-term business sustainability.
• Build collateral for power procurement activities.
• Establish an investment grade credit rating.
• Develop a source of funds for investment in generation and other local programs. • Stabilize rates and dampen year-to-year variability in procurement costs.

Pursuant to an Implementation and Management Services Agreement first approved in 2017 and extended for a further five years in 2022, DCE has contracted with Coachella Valley Association of Governments (CVAG) to provide administrative and staffing services. Staff support includes meeting coordination, support to the Board, oversight of consultants, and coordination of CCA implementation. Additionally, CVAG staff provide administrative support and accounting services including preparation of the budget, oversight of the annual audit, and management of the various DCE funds. Of the CVAG employees providing support for the CCA program, each only spend part of their time on the CCA program. DCE reimburses CVAG for all staff time incurred as well as non-employee costs incurred by CVAG while performing the services, such as supplies, legal services, consultant services and equipment.

As noted above, DCE began serving load in April 2020 for one of its member agencies, the City of Palm Springs. Through DCE, customers within the service area can take advantage of opportunities granted by Assembly Bill 117, the Community Choice Aggregation Law. DCE implements sustainable energy initiatives that reduce energy demand, increase energy efficiency, and advance the use of clean, efficient, and renewable resources available in the region. DCE’s primary objectives in implementing programs are to provide overall rates that are lower or competitive with those offered by Southern California Edison (SCE) for similar power supplies, to supply an energy portfolio that prioritizes the reduction of greenhouse gas emissions and the use of local renewable resources, including existing facilities, to the maximum extent technically and economically D
feasible, and to establish local control. The prospective benefits to local consumers include the ability to reduce energy costs; improve the local and regional economy; stabilize electric rates; increase local electric generation reliability; influence which technologies are used to meet local electricity needs (including a planned increased use of renewable energy); and to ensure effective planning and development of sufficient resources and energy infrastructure to serve DCE residents and businesses.

The California Public Utilities Code provides the relevant legal authority for DCE to serve as a CCA and invests the California Public Utilities Commission (CPUC) with regulatory oversight of DCE, as provided by statute. DCE’s Implementation Plan was certified by the CPUC in March 2018. DCE is also registered with SCE and works closely with SCE on CCA program implementation.

In addition to staffing provided by CVAG as discussed above, DCE is supported by a solid team of contractors with expertise in the energy industry and CCA operations. This team helps DCE navigate the volatile energy markets and increasingly complicated regulatory environment that have marked the period since DCE’s 2020 launch and are expected to continue.

Budget Overview
Y THE END OF JUNE OF EACH YEAR, DCE staff prepares a detailed forthcoming fiscal year budget for Board review and approval. DCE's fiscal year 2024–25 budget, covering the period from July 1, 2024, through June 30, 2025, pertains to DCE's fifth full year of operation for its electricity customers in the City of Palm Springs. DCE staff have been preparing the forthcoming budget over the previous three months. The June 2024 Board meeting provides an opportunity for budget questions, comments and adjustments, and for the Board to consider budget approval as prescribed by the DCE Joint Powers Agreement.

The proposed budget includes the current expected business outcome for fiscal year 2023–24 using ten months of actuals through April 2024 and financial modeling estimates provided by The Energy Authority (TEA) for May and June 2024. Future business uncertainties remain, however, including the western United States' fluctuating hydro conditions, climate change impacts, load variability, power market price volatility, scarcity of resource adequacy products at commercially reasonable prices, and integration/performance of power purchase agreements. In addition to these factors, Southern California Edison's (SCE) retail rates and the Power Charge Indifference Adjustment (PCIA, or exit fee) were adjusted effective October 1, 2023, January 1, 2024, March 1, 2024, and June 1, 2024, and further SCE rate revisions and regulatory actions will inevitably occur. In response to these recent SCE changes, DCE adjusted its retail rates effective October 1, 2023, January 1, 2024, and March 7, 2024, and a subsequent adjustment is scheduled to be effective June 1, 2024, although not included in the budgeted figures due to timing. These DCE rate adjustments were developed and implemented pursuant to DCE's Rate Stabilization Schedule (RSS) and conform to Board policies and guidelines; all future rate adjustments will be evaluated for potential impact to DCE’s 2024–25 budget.

It is important to note the proposed budget is a planning document, and staff will continue to coordinate with TEA to update power supply costs, retail sales receipts, climate impacts, regulatory mandates, rate adjustments and other factors throughout the year as actual revenues/expenses occur and any necessary budget adjustments will be brought to the Board as necessary.

BUDGET ASSUMPTIONS
DCE’s 2024–25 budget assumptions include:

1. Full accrual accounting practices are implemented in line with US GAAP for enterprise-type funds, and net position will differ from cash on hand.

2. Palm Springs is the only city where DCE is actively serving CCA customers.

3. Projected loads, resources, revenues, and costs are based on adjusted TEA's May 15, 2024, financial model (FiMo) while DCE staff supplemented this with DCE non-energy operating cost forecasts.

4. The FiMo revenue projections for informational fiscal years 2025–26 and 2026–27 were adjusted to maintain accrued margin levels near Board-approved target maximums.

5. An opt-out rate of about 17 percent (those customers remaining with SCE bundled service) and an opt-down rate of about 10 percent (those DCE customers that choose Desert Saver as opposed to the 100% Carbon Free default product).

6. Board-approved rate-setting objectives are met. The residential Desert Saver customer bill, on average, is to be about 0–1.0% less than SCE's bundled base customer average bill and meets full B
California Renewables Portfolio Standard compliance. DCE's 100% Carbon Free residential product is priced, on average, not to exceed a 14% total bill premium when compared with SCE's bundled base product for customers enrolled in DCE's largest residential rate class, "Domestic."

7. Continued Carbon Free rate subsidy suspension to customers enrolled in low-income assistance programs; these customers, representing about 18% of DCE's total customer base, are enrolled in the Desert Saver product.

8. Rates are sufficient to recover wholesale supply costs, yield a positive net margin, build cash reserves, and meet applicable loan terms, conditions, and financial covenants.

9. 2024–25 rates are utilizing assumptions provided in SCE’s 2025 General Rate Case which will not be finalized until the fall of 2024.

10. Non-energy 2024–25 operating costs will be estimated with escalation between 3–10% on a budget-line level to reflect budgetary conservatism in an inflation-prone market. For fiscal years 2025–26 and 2026–27 notional estimates, a 3.5% annual escalation rate was applied.

11. Cost allocation and rate setting is based on cost recovery, fairness, and equity.

12. DCE meets regulatory, legislative, and operating requirements.

13. DCE continues collaborating with CalCCA, other CCAs, and public power groups.

14. DCE maintains necessary and adequate internal staffing and continues the contract support relationship with the Coachella Valley Association of Governments (CVAG).

15. DCE follows adopted Board policies and objectives.

PRIOR YEAR BUDGET TO ACTUALS AND NEW PROPOSED BUDGET
The tables that follow summarize DCE’s expenses and revenues for the current fiscal year ending June 30, 2024, and provide DCE's budget projections for fiscal year 2024–25. Additional forecast outcomes for fiscal years 2025–26 and 2026–27 are based on current market and business expectations.

Table 1 presents a comparison between the estimated actual results for the end of fiscal year 2023– 24 compared to DCE’s originally adopted fiscal year 2023–24 budget. This comparison is based on 10 months of actual 2023–24 energy data, plus a projection of the last two months. DCE/CVAG Staff and Operations Support includes ten months of actual expenditures with estimated amounts for the remaining two months of the fiscal year. These estimated amounts may therefore differ somewhat from year-end actual results.
2023–24 actual estimated revenues are in line with budgeted amounts even though DCE's actual retail loads were about 5.0% below budgeted forecast. This is partly because Other Revenues were higher than budgeted due to items such as increased interest income and the sale of certain energy portfolio positions during the year. Even with the reduced loads, power supply costs were 2.6% above forecast costs demonstrating an increase in the cost of power procurement during 2023–24; however, as discussed below, power supply costs are budgeted to decrease in 2024–25.

Budgeted 2024–25 revenues are expected to increase approximately 8.3% versus fiscal year 2023– 24 estimated actuals. This reflects projected rate adjustments in line with SCE to recover wholesale energy supply costs and other operational costs. Also attributed to the budgeted increase in revenues is investment income accounted in Other Revenues which is scheduled to grow along with DCE’s cash reserves and investments. The overall increase in revenue will allow DCE to continue building reserves to meet financial covenants and loan agreements as well as meet the objectives of DCE's Board-approved Financial Reserves Policy.

Projected 2024–25 Total Power and Operating Costs are expected to decrease approximately 5.8% versus 2023–24 estimated actuals, reflecting a more stable power market augmented by DCE's wholesale supply hedging activities.

Regarding 2024–25 Non Power Operating Costs, they are projected to be similar to the 2023–24 Budget yet roughly 21.0% higher than 2023–24 estimated actuals. This is partly a result of conservate budgeting practices as expenditures typically actualize less than budgeted amounts.

However, there are also other factors anticipated to increase these costs in 2024–25 including continued inflationary increases to base costs, an increased amount of expenditures budgeted for DCE programs to promote energy efficiency and increased consultant and staff costs to run these programs, one-time and recurring investments in a new Enterprise Resource Planning (ERP) system as procured by CVAG and discussed further below, increased legal costs to assist DCE in navigating through statewide Resource Adequacy requirements as well as ensuring DCE customers are fairly represented in dealings with SCE and increased membership dues as DCE anticipates joining other CCAs to jointly procure long term power purchase agreements.

Table 1: DCE Prior Year Budget to Actuals and fiscal year 2024–25 Proposed Budget DCE is staffed by CVAG under an existing staffing agreement. Effective during fiscal year 2024–25, budgeted salaries and merit increases are projected between 1.25% and 7% with an average of

4.5% along with a 2.9% Cost of Living Adjustment. In addition, CVAG is acquiring a new Enterprise Resource Planning (ERP) system which will enable DCE to fully integrate its contracting, accounts payable/receivable, chart of accounts, and financial reporting systems which will result in streamlined processes and new efficiencies. The initial investment in the ERP system includes several one-time costs, such as ERP selection and implementation consultants, as well as backfill for certain staff overseeing the project. DCE’s unique relationship with CVAG allows DCE cost savings as opposed to procuring such a system on its own.

Column1
2023–24 Budget2023–24 Projected Actuals2023–24 Actuals
as % of Budget
2024–25 Budget
2024–25 Budget
v. 23–24 Actuals
2024–25 Budget
as % of 23–24
Revenues
Net Retail Sales $ 71,203,715 $ 70,917,312 99.6% $ 76,265,451 $ 5,348,139 107.5% Other Revenues $ 258,661 $ 533,412 206.2% $ 1,096,850 $ 563,438 205.6% Revenues $ 71,462,376 $ 71,450,724 100.0% $ 77,362,301 $ 5,911,577 108.3% Interest Expense $ (5,000) $ - 0.0% $ - $ - 0.0%
Total Revenues $ 71,457,376 $ 71,450,724 100.0% $ 77,362,301 $ 5,911,577 108.3% Power Supply Costs $ 47,822,596 $ 49,054,146 102.6% $ 45,413,664 $ (3,640,482) 92.6% Wholesale Power Supply $ 47,822,596 $ 49,054,146 102.6% $ 45,413,664 $ (3,640,482) 92.6% Non Power Operating Costs
DCE/CVAG Staff, Operations Support $ 893,966 $ 676,232 75.6% $ 985,603 $ 309,371 145.7% Contract and Other Labor $ 256,800 $ 324,559 126.4% $ 469,216 $ 144,657 144.6% Wholesale Support Services $ 1,854,011 $ 1,702,292 91.8% $ 1,458,792 $ (243,500) 85.7% Retail Business Support Activities $ 35,850 $ 14,583 40.7% $ 29,080 $ 14,498 199.4% Other Customer Programs $ 150,000 $ - 0.0% $ 150,000 $ 150,000 N/A Other Operating Costs $ 193,350 $ 160,708 83.1% $ 390,645 $ 229,937 243.1% Total Non Power Operating Costs $ 3,383,977 $ 2,878,374 85.1% $ 3,483,336 $ 604,962 121.0% Total Power and Operating Costs $ 51,206,573 $ 51,932,520 101.4% $ 48,897,000 $ (3,035,520) 94.2% Retail Load (MWh, net of losses) 395,488 375,747 95.0% 401,815 26,068 106.9% Since its inception, DCE has depended on several external consultants and will continue to rely on the expertise of TEA, Don Dame Consulting, Calpine, and other consultants. Furthermore, in line with original organizational strategies, as more internal expertise is acquired, DCE staff will continue to assimilate more of the direct work effort and reduce the use of consultants where possible and when practical. Additional staff effort is required to address increasing operating and regulatory complexities engendered by climate change and the transition from carbon-based electricity production. Thus, DCE's regulatory, customer service, business policy, and programming needs continue to grow, and responding to those needs, at least in part with internal staff, will provide organizational benefits. Ongoing synergies are also expected to be achieved via the utilization of CVAG's expertise and capabilities.

When DCE was established, there were plans for three active members. This led prior budgets to reference cost allocations meant to accommodate the three active members compared with DCE general operations. As the City of Palm Springs remains the only active member, with no planned launch date for Palm Desert, no between-member cost allocations are being utilized.

HIGH-LEVEL BUDGET OVERVIEW
Chart 1 provides a high-level budget overview for fiscal year 2024–25:

Chart 1: Fiscal year 2024–25 Accrual Budget
The blue area represents total physical power supply costs of approximately $45.4 million, which comprise about 93% of DCE’s total operating costs. The red area represents DCE’s wholesale vendor services charges from TEA, Calpine and SCE attributable to CCA. The yellow slice shows the budget portion of DCE’s non power operating costs attributable to CCA operations (including CVAG services and facilities utilization) of approximately $2.0 million. The green slice shows projected accrual net margins that may be available for reserves (see Chart 2). $45,413,664
$1,458,792
$28,465,301
$2,024,544 Physical Power Supply Cost
TEA, Credit, Calpine, SCE
Svc Charges
Residual Margin
DCE Internal Costs
Total Revenue
$77,362,301

BUDGET SUMMARY DETAIL
Table 2 shows the fiscal year 2024–25 budget summary:

Table 2: Fiscal year 2024–25 Budget Summary Detail
Table 2, Line 3 shows Total DCE Revenue projected at nearly $77.4 million. DCE Wholesale Power Supply costs on line 6 are projected at about $45.4 million while Total Non Power Operating Costs on Line 16 are roughly $3.5 million. Line 18 shows 2024–25 Total Power and Operating Costs of $48.9 million. By taking the Total DCE Revenue of $77.4 million and subtracting from it the Total Power and Operating Costs of $48.9 million, Line 20 demonstrates an increase of approximately $28.5 million to DCE’s net position in 2024–25.

It is important to note the fiscal year 2024–25 budget results are accrual based, and actual revenues and available cash reserves fluctuate accordingly and differ from cash-on-hand. Actual revenue receipts can lag sales by as much as two months and are estimated to be in the $15 million range at the end of fiscal year 2023–24.

PROJECTED CUMULATIVE RESERVES
Chart 2 shows DCE's estimated accrued margins attained during fiscal year 2023–24 and projected for fiscal years 2024–25, 2025–26, and 2026–27.

During DCE's early operational history, it experienced negative margins, primarily due to increasing power supply costs and revenue lag, which were tempered by utilizing credit arrangements with River City Bank as guaranteed by the City of Palm Springs, and invoicing support from TEA. Looking at DCE’s current operating results, the situation has greatly improved.

DCE was able to maintain a positive accrued margin starting in fiscal year 2022–23 and continued to build on that reserve during the entirety of 2023–24, expecting to end the year with approximately $27 million. This trend continues into 2024–25 as DCE is projected to further accumulate and sustain positive cash reserves which may reach reserve policy target levels over Line MWh Load: 401,815
1 Revenues FY2024–25 Avg $/Month Avg $/MWh
2 Retail Sales + Other Revenue $ 77,362,301 $ 6,446,858 $ 192.53 3 Total DCE Revenue $ 77,362,301 $ 6,446,858 $ 192.53
4 5 Power Costs
6 DCE Wholesale Power Supply $ 45,413,664 $ 3,784,472 $ 113.02 7 8 DCE Operating Costs
9 DCE Position Support $ 800,316 $ 66,693 $ 1.99
10 Contract and Other Labor $ 469,216 $ 39,101 $ 1.17
11 CVAG Related Facilities Support $ 185,286 $ 15,441 $ 0.46 12 Wholesale Support Svcs (TEA, Calpine, SCE chgs) $ 1,458,792 $ 121,566 $ 3.63 13 Retail Business Support Activities $ 29,080 $ 2,423 $ 0.07 14 Other Customer Programs $ 150,000 $ 12,500 $ 0.37
15 Other Operating Costs $ 390,645 $ 32,554 $ 0.97
16 Total Non Power Operating Costs $ 3,483,336 $ 290,278 $ 8.67 17 18 Total Power and Operating Costs $ 48,897,000 $ 4,074,750 $ 121.69 19 Effective DCE / CCA Shares this FY
20 Estimated FY Net Rev Available for Reserves & Other $ 28,465,301 w/o beginning cash or Cr bal adjust the next twelve months with a projected accrued cash reserve balance of approximately $56 million currently identified at fiscal year-end. This will support DCE's financial health and stability and mark an important milestone on DCE’s journey to attaining and maintaining an investment-grade credit rating. In any given fiscal year projection, reserve targets may be demonstrated to exceed thresholds due to revenue seasonality peaking in the summer before tapering back down around winter. DCE staff will further refine these figures throughout the upcoming fiscal years and in future budgets or budget amendments to ensure that Board targeted maximum reserves are closely maintained as DCE enters this new phase in its financial maturity.

Chart 2: Residual Margin and Reserves
The projected costs and revenues for DCE are outlined in the above and attached budget tables. The proposed budget incorporates many assumptions and inputs regarding CCA program participation, rate setting, retail loads, and wholesale supply cost among others previously discussed.

Recent and prospective regulatory actions include the potential imposition of a substantial increase to DCE's (and other CCAs') Financial Security Requirement (FSR). DCE also has cost exposure related to potential Resource Adequacy (RA) regulatory actions. Both variables could increase costs during fiscal year 2024–25 and beyond and DCE staff will continue to monitor and take any necessary budget revisions to the Board.

Additionally, SCE will likely submit additional rate changes over the period covered by this budget.

DCE staff will actively monitor and report to the Board events that may materially alter expected budget results and, as warranted, bring back to the Board any proposed budget revisions deemed prudent and necessary to maintain DCE Board policies and objectives.

PROPOSED BUDGET
Table 3 includes DCE's internal costs and expenses, which are displayed in greater detail in Table

4. Also, note the budget is constructed using projected revenues and costs as accrued and that reserve accumulation and actual cash on hand may differ substantially given revenue receipts which can lag actual power sales by up to two months.
$-
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
Jul 2023
Sep 2023
Nov 2023
Jan 2024
Mar 2024
May 2024
Jul 2024
Sep 2024
Nov 2024
Jan 2025
Mar 2025
May 2025
Jul 2025
Sep 2025
Nov 2025
Jan 2026
Mar 2026
May 2026
Jul 2026
Sep 2026
Nov 2026
Jan 2027
Mar 2027
May 2027

Accrued Margin
FY2024/25 → FY2025/26 → FY2026/27 →
Target Reserve Level 6–9 Mos Revenues
Table 3: Fiscal year 2023–24 Total Budget and Projected Year-End Actuals; 2024–25 Proposed Budget; and Projected 2025–26 and 2026–27 Budget Totals.

FY23/24 Budget FY23/24 Proj. Actuals FY2024/25 Budget Projected FY25/26 Projected FY26/27 Load Particulars
DCE Retail Load (MWh, net of opt-outs + losses) 395,488 375,747 401,815 401,942 401,652 DCE Wholesale Load (MWh, retail load + losses) 417,785 396,931 424,469 424,602 424,297 Estimated Distribution Losses (%) 5.6% 5.6% 5.6% 5.6% 5.6% Losses (MWh) 22,297 21,184 22,654 22,661 22,644
Revenue Particulars
Gross Revenue $ 73,405,892 $ 73,110,630 $ 78,624,176 $ 60,058,310 $ 59,862,743 Less Uncollectable Accounts $ (2,202,177) $ (2,193,319) $ (2,358,725) $ (2,376,249) $ (2,464,882) Net DCE Total Retail Revenue $ 71,203,715 $ 70,917,312 $ 76,265,451 $ 57,682,061 $ 57,397,861 Average Monthly Revenue ($/MWh) $ 180.04 $ 188.74 $ 189.80 $ 143.51 $ 142.90 Other Revenue $ 258,661 $ 533,412 $ 1,096,850 $ 987,165 $ 937,806 Other Revenue $ - $ 30,768 $ - $ - $ -
Investment Income $ 258,661 $ 502,644 $ 1,096,850 $ 987,165 $ 937,806 Total Revenues $ 71,462,376 $ 71,450,724 $ 77,362,301 $ 58,669,225 $ 58,335,667 Total DCE Power Cost (w/o DCE Direct)
Wholesale Power Supply (Physical Components) $ 47,822,596 $ 49,054,146 $ 45,413,664 $ 55,060,761 $ 54,563,694 TEA Services $ 732,000 $ 747,570 $ 770,792 $ 797,769 $ 825,691 TEA Credit Support $ 465,011 $ 246,152 $ - $ - $ -
TEA / Other Inv. Adjustments $ 15,000 $ 96,119 $ 70,000 $ 72,450 $ 74,986 Calpine Data Management $ 540,000 $ 541,746 $ 546,000 $ 565,110 $ 584,889 SCE Billing Services $ 102,000 $ 70,704 $ 72,000 $ 74,520 $ 77,128 Total Wholesale Cost, Accrual (FiMo) $ 49,676,607 $ 50,756,439 $ 46,872,456 $ 56,570,610 $ 56,126,388 Average Wholesale Cost $/MWh $ 125.61 $ 135.08 $ 116.65 $ 140.74 $ 139.74 River City Bank Credit Facility
Interest Expense $ 5,000 $ - $ - $ - $ -
Net RCB Credit Accrual $ 5,000 $ - $ - $ - $ -
Estimated Operating Expenses
DCE Staff Costs from CVAG $ 742,328 $ 568,536 $ 800,316 $ 828,328 $ 857,319 Total Salaries $ 519,535 $ 411,897 $ 571,349 $ 591,347 $ 612,044 Total Benefits $ 222,793 $ 156,640 $ 228,967 $ 236,981 $ 245,275 Contracts / Contract Labor (not incl. elsewhere) $ 256,800 $ 324,559 $ 469,216 $ 485,638 $ 502,636 4425 · Legal Services $ 103,500 $ 171,210 $ 120,000 $ 124,200 $ 128,547 4431 · Professional Services1 $ 21,500 $ 123,513 $ 163,841 $ 169,575 $ 175,510 4432 · Consultants2 $ 131,800 $ 29,835 $ 185,375 $ 191,863 $ 198,578 CVAG Overhead Support $ 151,638 $ 107,696 $ 185,286 $ 191,772 $ 198,484 Office Operations $ 37,572 $ 26,705 $ 38,106 $ 39,440 $ 40,820 Meeting Attendance Stipends3 $ 2,216 $ - $ - $ - $ -
Employee Travel or Training $ 4,284 $ 5,515 $ 6,587 $ 6,818 $ 7,056 Facility Expenses $ 52,424 $ 33,613 $ 43,263 $ 44,778 $ 46,345 Professional Services $ 25,598 $ 5,277 $ 9,579 $ 9,914 $ 10,261 Project/Program $ 29,544 $ 29,712 $ 79,785 $ 82,577 $ 85,468 Interest Expense $ - $ 6,874 $ 7,966 $ 8,245 $ 8,533
Retail Business Support Activities $ 35,850 $ 14,583 $ 29,080 $ 30,098 $ 31,152 4200 · Accounting / Bank Services $ 5,550 $ 1,755 $ 1,800 $ 1,863 $ 1,928 4353 · Insurance $ 9,300 $ 8,589 $ 8,880 $ 9,191 $ 9,513 4452 · Marketing $ 21,000 $ 4,239 $ 18,400 $ 19,044 $ 19,711 DCE Programs $ 150,000 $ - $ 150,000 $ 155,250 $ 160,684 4455 · Customer Programs $ 150,000 $ - $ 150,000 $ 155,250 $ 160,684 Office Supplies and Other Expenses $ 193,350 $ 160,708 $ 390,645 $ 404,318 $ 418,469 4423 · Office Supplies $ - $ 2,925 $ 3,200 $ 3,312 $ 3,428 4433 · Outreach Services $ 48,000 $ 30,259 $ 46,270 $ 47,889 $ 49,566 4435 · Technology Costs (IT) $ 4,200 $ 5,726 $ 6,300 $ 6,521 $ 6,749 4440 · Postage $ 12,000 $ 14,846 $ 16,000 $ 16,560 $ 17,140 4441 · Printing $ 18,000 $ 10,893 $ 13,750 $ 14,231 $ 14,729 4500 · Registrations/Memberships $ 111,150 $ 95,069 $ 305,125 $ 315,804 $ 326,858 4610 · Interest Expense $ - $ 990 $ - $ - $ -
Total DCE Internal Operations Charges $ 1,529,966 $ 1,176,081 $ 2,024,544 $ 2,095,403 $ 2,168,742 DCE Internal $/MWh $ 3.87 $ 3.13 $ 5.04 $ 5.21 $ 5.40
Total Non Power Opr Exp (DCE + All Services) $ 3,383,977 $ 2,878,374 $ 3,483,336 $ 3,605,253 $ 3,731,436 Operating Expenses $/MWh $ 8.56 $ 7.66 $ 8.67 $ 8.97 $ 9.29 Expected Accrual Results
Revenues $ 71,457,376 $ 71,450,724 $ 77,362,301 $ 58,669,225 $ 58,335,667 Power and Operations Costs $ 51,206,573 $ 51,932,520 $ 48,897,000 $ 58,666,014 $ 58,295,130 Net Margin Avail After Expenses - Accrual $ 20,250,803 $ 19,518,204 $ 28,465,301 $ 3,212 $ 40,537 Annual Cumulative Accrual Revenues $ 252,411,667 $ 253,224,393 $ 330,586,693 $ 389,255,919 $ 447,591,586 Annual Cumulative Accrual Power/Ops Cost $ 216,181,044 $ 214,943,188 $ 263,840,188 $ 322,506,201 $ 380,801,332 Cumulative Net Position - Accrual $ 36,230,623 $ 38,281,205 $ 66,746,505 $ 66,749,717 $ 66,790,254

1. Does not include the professional services expenses of SCE which are listed individually in Total DCE Power Cost (w/o DCE Direct) section.

2. Does not include the consultant expenses of TEA, Calpine and CVAG which are listed individually in Total DCE Power Cost (w/o DCE Direct) section.

3. Represents overhead allocaiton of CVAG Executive Committee meeting attendance stipends as DCE receieves a proportional share of CVAG overhead.

Table 4: DCE Internal Budget Costs: 2024–25 Proposed Budget by Month FY2024/25 Jul 2024 Aug 2024 Sep 2024 Oct 2024 Nov 2024 Dec 2024 Jan 2025 Feb 2025 Mar 2025 Apr 2025 May 2025 Jun 2025 Load Particulars
DCE Retail Load (MWh, net of opt-outs + losses) 401,815 55,999 56,430 43,418 32,041 21,682 23,431 23,806 20,240 22,490 25,369 31,754 45,155 DCE Wholesale Load (MWh, retail load + losses) 424,469 59,156 59,611 45,866 33,848 22,904 24,752 25,148 21,381 23,758 26,800 33,545 47,700 Estimated Distribution Losses (%) 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% 5.6% Losses (MWh) 22,654 3,157 3,181 2,448 1,806 1,222 1,321 1,342 1,141 1,268 1,430 1,790 2,546 Revenue Particulars
Gross Revenue $ 78,624,176 $ 12,143,656 $ 12,364,542 $ 9,605,141 $ 5,689,651 $ 3,822,482 $ 4,158,757 $ 4,114,442 $ 3,442,305 $ 3,784,402 $ 4,320,496 $ 5,500,085 $ 9,678,217 Less Uncollectable Accounts $ (2,358,725) $ (364,310) $ (370,936) $ (288,154) $ (170,690) $ (114,674) $ (124,763) $ (123,433) $ (103,269) $ (113,532) $ (129,615) $ (165,003) $ (290,347) Net DCE Total Retail Revenue $ 76,265,451 $ 11,779,346 $ 11,993,606 $ 9,316,987 $ 5,518,961 $ 3,707,807 $ 4,033,994 $ 3,991,009 $ 3,339,036 $ 3,670,870 $ 4,190,881 $ 5,335,083 $ 9,387,871 Average Monthly Revenue ($/MWh) $ 189.80 $ 210.35 $ 212.54 $ 214.59 $ 172.25 $ 171.01 $ 172.16 $ 167.65 $ 164.97 $ 163.22 $ 165.19 $ 168.01 $ 207.91 Other Revenue $ 1,096,850 $ 69,250 $ 78,199 $ 84,574 $ 88,460 $ 92,120 $ 86,366 $ 89,874 $ 92,943 $ 96,678 $ 100,950 $ 105,324 $ 112,112 Investment Income $ 1,096,850 $ 69,250 $ 78,199 $ 84,574 $ 88,460 $ 92,120 $ 86,366 $ 89,874 $ 92,943 $ 96,678 $ 100,950 $ 105,324 $ 112,112 Accrual Monthly Revenues $ 77,362,301 $ 11,848,596 $ 12,071,805 $ 9,401,561 $ 5,607,422 $ 3,799,927 $ 4,120,361 $ 4,080,882 $ 3,431,979 $ 3,767,548 $ 4,291,831 $ 5,440,406 $ 9,499,983 Total DCE Power Cost (w/o DCE Direct)
Wholesale Power Supply (Physical Components) $ 45,413,664 $ 5,956,164 $ 7,344,716 $ 5,921,765 $ 3,370,003 $ 1,697,809 $ 5,398,994 $ 2,021,095 $ 1,612,824 $ 1,585,935 $ 1,839,441 $ 2,970,198 $ 5,694,720 TEA Services $ 770,792 $ 63,399 $ 63,399 $ 63,399 $ 63,399 $ 63,399 $ 68,399 $ 63,399 $ 63,399 $ 63,399 $ 63,399 $ 63,399 $ 68,399 TEA / Other Inv. Adjustments $ 70,000 $ - $ - $ - $ - $ - $ 35,000 $ - $ - $ - $ - $ - $ 35,000 Calpine Data Management $ 546,000 $ 45,500 $ 45,500 $ 45,500 $ 45,500 $ 45,500 $ 45,500 $ 45,500 $ 45,500 $ 45,500 $ 45,500 $ 45,500 $ 45,500 SCE Billing Services $ 72,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000 Total Wholesale Cost, Accrual (FiMo) $ 46,872,456 $ 6,071,064 $ 7,459,615 $ 6,036,664 $ 3,484,902 $ 1,812,708 $ 5,553,893 $ 2,135,994 $ 1,727,723 $ 1,700,834 $ 1,954,341 $ 3,085,097 $ 5,849,620 Average Wholesale Cost $/MWh $ 116.65 $ 108.41 $ 132.19 $ 139.04 $ 108.76 $ 83.60 $ 237.03 $ 89.72 $ 85.36 $ 75.63 $ 77.04 $ 97.15 $ 129.55 0 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Estimated Operating Expenses
DCE Staff Costs from CVAG $ 800,316 $ 66,693 $ 66,693 $ 66,693 $ 66,693 $ 66,693 $ 66,693 $ 66,693 $ 66,693 $ 66,693 $ 66,693 $ 66,693 $ 66,693 Total Salaries $ 571,349 $ 47,612 $ 47,612 $ 47,612 $ 47,612 $ 47,612 $ 47,612 $ 47,612 $ 47,612 $ 47,612 $ 47,612 $ 47,612 $ 47,612 Total Benefits $ 228,967 $ 19,081 $ 19,081 $ 19,081 $ 19,081 $ 19,081 $ 19,081 $ 19,081 $ 19,081 $ 19,081 $ 19,081 $ 19,081 $ 19,081 Contracts / Contract Labor (not incl. elsewhere) $ 469,216 $ 20,871 $ 19,250 $ 50,963 $ 21,320 $ 20,818 $ 81,998 $ 31,750 $ 31,750 $ 58,498 $ 31,750 $ 19,250 $ 80,998 4425 · Legal Services $ 120,000 $ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 10,000 4431 · Professional Services1 $ 163,841 $ 7,662 $ 6,417 $ 13,130 $ 8,487 $ 7,985 $ 43,165 $ 6,417 $ 6,417 $ 8,165 $ 6,417 $ 6,417 $ 43,165 4432 · Consultants2 $ 185,375 $ 3,208 $ 2,833 $ 27,833 $ 2,833 $ 2,833 $ 28,833 $ 15,333 $ 15,333 $ 40,333 $ 15,333 $ 2,833 $ 27,833 CVAG Overhead Support $ 185,286 $ 15,441 $ 15,441 $ 15,441 $ 15,441 $ 15,441 $ 15,441 $ 15,441 $ 15,441 $ 15,441 $ 15,441 $ 15,441 $ 15,441 Office Operations $ 38,106 $ 3,176 $ 3,176 $ 3,176 $ 3,176 $ 3,176 $ 3,176 $ 3,176 $ 3,176 $ 3,176 $ 3,176 $ 3,176 $ 3,176 Employee Travel or Training $ 6,587 $ 549 $ 549 $ 549 $ 549 $ 549 $ 549 $ 549 $ 549 $ 549 $ 549 $ 549 $ 549 Facility Expenses $ 43,263 $ 3,605 $ 3,605 $ 3,605 $ 3,605 $ 3,605 $ 3,605 $ 3,605 $ 3,605 $ 3,605 $ 3,605 $ 3,605 $ 3,605 Professional Services $ 9,579 $ 798 $ 798 $ 798 $ 798 $ 798 $ 798 $ 798 $ 798 $ 798 $ 798 $ 798 $ 798 Project/Program $ 79,785 $ 6,649 $ 6,649 $ 6,649 $ 6,649 $ 6,649 $ 6,649 $ 6,649 $ 6,649 $ 6,649 $ 6,649 $ 6,649 $ 6,649 Interest Expense $ 7,966 $ 664 $ 664 $ 664 $ 664 $ 664 $ 664 $ 664 $ 664 $ 664 $ 664 $ 664 $ 664 Retail Business Support Activities $ 29,080 $ 990 $ 1,240 $ 990 $ 990 $ 990 $ 10,290 $ 1,140 $ 990 $ 990 $ 990 $ 990 $ 8,490 4200 · Accounting / Bank Services $ 1,800 $ - $ - $ - $ - $ - $ 1,800 $ - $ - $ - $ - $ - $ - 4353 · Insurance $ 8,880 $ 740 $ 740 $ 740 $ 740 $ 740 $ 740 $ 740 $ 740 $ 740 $ 740 $ 740 $ 740 4452 · Marketing $ 18,400 $ 250 $ 500 $ 250 $ 250 $ 250 $ 7,750 $ 400 $ 250 $ 250 $ 250 $ 250 $ 7,750 DCE Programs $ 150,000 $ 12,500 $ 12,500 $ 12,500 $ 12,500 $ 12,500 $ 12,500 $ 12,500 $ 12,500 $ 12,500 $ 12,500 $ 12,500 $ 12,500 4455 · Customer Programs $ 150,000 $ 12,500 $ 12,500 $ 12,500 $ 12,500 $ 12,500 $ 12,500 $ 12,500 $ 12,500 $ 12,500 $ 12,500 $ 12,500 $ 12,500 Office Supplies and Other Expenses $ 390,645 $ 46,606 $ 21,731 $ 21,606 $ 47,156 $ 21,606 $ 38,206 $ 46,606 $ 21,606 $ 21,606 $ 46,606 $ 21,606 $ 35,706 4423 · Office Supplies $ 3,200 $ - $ - $ - $ - $ - $ 1,600 $ - $ - $ - $ - $ - $ 1,600 4433 · Outreach Services $ 46,270 $ 3,810 $ 3,810 $ 3,810 $ 4,360 $ 3,810 $ 3,810 $ 3,810 $ 3,810 $ 3,810 $ 3,810 $ 3,810 $ 3,810 4435 · Technology Costs (IT) $ 6,300 $ 525 $ 525 $ 525 $ 525 $ 525 $ 525 $ 525 $ 525 $ 525 $ 525 $ 525 $ 525 4440 · Postage $ 16,000 $ 1,250 $ 1,250 $ 1,250 $ 1,250 $ 1,250 $ 2,250 $ 1,250 $ 1,250 $ 1,250 $ 1,250 $ 1,250 $ 1,250 4441 · Printing $ 13,750 $ 1,021 $ 1,021 $ 1,021 $ 1,021 $ 1,021 $ 2,521 $ 1,021 $ 1,021 $ 1,021 $ 1,021 $ 1,021 $ 1,021 4500 · Registrations/Memberships $ 305,125 $ 40,000 $ 15,125 $ 15,000 $ 40,000 $ 15,000 $ 27,500 $ 40,000 $ 15,000 $ 15,000 $ 40,000 $ 15,000 $ 27,500 Total DCE Internal Operations Charges $ 2,024,544 $ 163,100 $ 136,854 $ 168,192 $ 164,099 $ 138,047 $ 225,127 $ 174,129 $ 148,979 $ 175,727 $ 173,979 $ 136,479 $ 219,827 DCE Internal $/MWh $ 5.04 $ 2.91 $ 2.43 $ 3.87 $ 5.12 $ 6.37 $ 9.61 $ 7.31 $ 7.36 $ 7.81 $ 6.86 $ 4.30 $ 4.87 Total Non Power Opr Exp (DCE + All Services) $ 3,483,336 $ 278,000 $ 251,754 $ 283,092 $ 278,999 $ 252,947 $ 380,027 $ 289,029 $ 263,879 $ 290,627 $ 288,879 $ 251,379 $ 374,727 Operating Expenses $/MWh $ 8.67 $ 4.96 $ 4.46 $ 6.52 $ 8.71 $ 11.67 $ 16.22 $ 12.14 $ 13.04 $ 12.92 $ 11.39 $ 7.92 $ 8.30 Expected Accrual Results
Revenues $ 77,362,301 $ 11,848,596 $ 12,071,805 $ 9,401,561 $ 5,607,422 $ 3,799,927 $ 4,120,361 $ 4,080,882 $ 3,431,979 $ 3,767,548 $ 4,291,831 $ 5,440,406 $ 9,499,983 Power and Operations Costs $ 48,897,000 $ 6,234,164 $ 7,596,470 $ 6,204,857 $ 3,649,002 $ 1,950,756 $ 5,779,021 $ 2,310,123 $ 1,876,702 $ 1,876,562 $ 2,128,320 $ 3,221,577 $ 6,069,447 Net Margin Avail After Expenses - Accrual $ 28,465,301 $ 5,614,432 $ 4,475,335 $ 3,196,704 $ 1,958,420 $ 1,849,172 $ (1,658,660) $ 1,770,759 $ 1,555,276 $ 1,890,986 $ 2,163,511 $ 2,218,829 $ 3,430,536 Annual Cumulative Accrual Revenues $ 330,586,693 $ 265,072,988 $ 277,144,793 $ 286,546,354 $ 292,153,776 $ 295,953,704 $ 300,074,064 $ 304,154,947 $ 307,586,926 $ 311,354,473 $ 315,646,304 $ 321,086,710 $ 330,586,693 Annual Cumulative Accrual Power/Ops Cost $ 263,840,188 $ 221,177,352 $ 228,773,821 $ 234,978,678 $ 238,627,680 $ 240,578,436 $ 246,357,456 $ 248,667,579 $ 250,544,282 $ 252,420,844 $ 254,549,164 $ 257,770,741 $ 263,840,188 Cumulative Net Position - Accrual $ 66,746,505 $ 43,895,637 $ 48,370,972 $ 51,567,676 $ 53,526,096 $ 55,375,268 $ 53,716,608 $ 55,487,367 $ 57,042,644 $ 58,933,630 $ 61,097,140 $ 63,315,970 $ 66,746,505

1. Does not include the professional services expenses of SCE which are listed individually in Total DCE Power Cost (w/o DCE Direct) section.

2. Does not include the consultant expenses of TEA, Calpine and CVAG which are listed individually in Total DCE Power Cost (w/o DCE Direct) section.

ITEM 7B
a

STAFF REPORT
Subject: Southern California Edison Billing Issues and General Rate Case Testimony Contact: Claude T. Kilgore, Finance Director ([email protected]); and Emily Langenbahn, Management Analyst ([email protected]) Recommendation: Information
Background: DCE is currently addressing several issues related to Southern California Edison (SCE)’s metering, billing practices and customer service to DCE/SCE joint customers. Some of these practices are resulting in customers being retroactively billed for months of usage, even after they paid their regular bill – which is surprising them with unanticipated extra costs. This staff report provides the Board with a recap of DCE staff’s efforts to address these issues.

On February 29, 2024, DCE Finance Director Claude Kilgore supplied testimony to the California Public Utilities Commission (CPUC) on behalf of the California Community Choice Association (CalCCA) as part of SCE’s 2025 General Rate Case outlining how errors created by SCE are negatively impacting DCE customers. These errors were previously flagged in July 2023, when DCE was contacted by Sjoberg Evashenk Consulting, Inc. as it conducted a Code of Conduct Audit of SCE on behalf of the CPUC. This Code of Conduct Audit is performed every two years pursuant to Decision 12-12-036, and the Audit reviewed many of the metering and billing issues DCE has previously identified to SCE. DCE provided specific examples of these metering and billing issues to Sjoberg Evashenk Consulting, Inc. as direct evidence for their findings in the report, which has been released to the CPUC and is currently under review by Energy Division staff. This report has not yet made been public, even after requests by DCE staff.

DCE staff is also is requesting to perform a contractual audit of SCE’s data where DCE has reasonable belief of metering and billing errors occurring. SCE staff has taken a mostly adversarial stance and provided very limited data to DCE. Still, DCE staff has been able to identify two key areas to demand further requests for data as it relates to legacy system missing usage and meter changes/errors. DCE staff is hopeful that these contractual issues will, at least in part, be resolved as part of SCE’s 2025 General Rate Case.

Many of these issues began surfacing in December 2022 as DCE staff was made aware of several billing errors from SCE affecting some of its customers. As a result of delayed meter reading, customers are often “back-billed,” or retroactively billed based on an error in SCE’s metering or miscalculated usage. SCE’s back-billing caused by missing usage occurs when SCE fails to provide a customer’s consumption data to CCAs within five business days of a customer’s meter read date.

These back-bills are not only confusing for customers, but also often arrive with no warning to either DCE or the customer.

Back-billing has significant financial implications. One example is a December 2022 electricity bill for the City of Palm Springs, DCE’s largest customer. On December 15, 16, and 19, 2022, the daily deposits from SCE to DCE were used to remove approximately $250,000 of previously deposited Desert Community Energy Board
June 17, 2024
DCE funds for an account for the City of Palm Springs. The same DCE funds designated to the same account were then returned to DCE on December 29, 2022, for $255,000, which is a $5,000 increase.

The City of Palm Springs then received a 1,490-page electricity bill prepared on December 27, 2022, with adjustments dated back to when SCE implemented its new billing system.

It is not just large customers; individuals are also seeing these retroactive bills. DCE staff was also made aware of the delayed Net Energy Metering (NEM) true-up data for the low-income community of Rosa Gardens. In DCE’s testimony to the CPUC, a September 2023 staff report to the DCE Board was included, detailing the resolution of a massive billing error that impacted Rosa Gardens. As previously reported to the Board, the complex was connected to a solar PV system under the California Multifamily Solar Housing Program; however, SCE’s billing error resulted in two years of delayed annual true-ups for the residents. This one example of delayed true-ups at the Rosa Gardens complex resulted in over $36,000 of written-off charges for DCE, which SCE only partially reimbursed.

Despite DCE’s repeated efforts to make SCE aware of its systemic missing usage, delayed billing, and back-billing issues that are impacting large volumes of its customer accounts, DCE customers continue to be affected. Because SCE handles billing, DCE staff cannot determine how widespread the issue may be. In March 2024, DCE’s Chief Operating Officer, a resident of Palm Springs, received a bill for $901.99 – an increase of approximately $750 from her previous bills. The customer immediately reached out to DCE, and upon further investigation as well as evidence supplied by SCE, SCE determined that the customer’s meter was nonfunctional for six months, allowing them to “back-bill” for the meter adjustment. Though SCE is only permitted by CPUC Rule 17 to charge customers for up to three months of delayed billing, this customer was subject to a “rebill” relating specifically to SCE’s meter read issues. As explained on a call with SCE to DCE staff, a rebill is essentially the adjusted “would-be” rates had the customer’s meter been properly functioning. When the customer initially inquired with SCE about her bill, she was told her account actually had a credit of -$1, then later, the SCE customer service call center relayed that her account was actually credited -$1,131.24, though her online customer account still reflected a credit of -$1. After working with SCE staff over several days, DCE determined that the customer was indeed required to pay the $901.99 reflected on the original bill. DCE’s practice has been to write off the previous three months of this customer’s generation charges, which total $86.06; however, SCE has stated it will still be enforcing the “rebill” amount. DCE’s concern with not only incorrect billing resulting in disproportionately high customer bills, but also increasingly complex customer service practices, is the primary reason for its participation in the CPUC’s Code of Conduct Audit.

Additionally, DCE staff raised its concern over SCE’s practice of clawing back funds already sent to DCE when it is processing an account correction. Specifically, when correcting an account on which DCE has previously received payment, SCE’s new billing system retrieves all funds previously sent to DCE for that transaction and will withhold the DCE customer funds until the reconciliation is finalized by SCE. DCE is not notified of the pending cash flow impact and customers are left confused by the reversal and replacement of the funds to their account. This is considered common practice for SCE across other CCAs in its service territory as well.

Lastly, DCE staff remains concerned that SCE’s account correction practices delay the return of funds back to customers. This occurs because, in many cases, SCE does not provide sufficient information when remitting customer funds to DCE to be returned to DCE’s customers. Because SCE does not clearly indicate the customer accounts to which the funds should be applied, DCE is not able to efficiently apply customer account credits in a timely manner, placing customers at risk for collection errors and increasing overall customer dissatisfaction.

DCE staff has frequently shared these concerns over usage and billing issues with SCE staff. It is contributing to worsening customer complaints about DCE to the CPUC. SCE’s own call center messaging scripts, which have been provided by SCE to DCE staff, encourage customers to wait until receiving a bill before contacting SCE, as SCE’s Energy Advisors will not be able to provide an estimated date for the customer’s bill.

Fiscal Analysis: The financial impacts of these metering and billing issues are impossible to calculate with the current information as customer usage is a key input into the calculation; however, that is often the information that is missing from SCE. DCE staff are continually monitoring the situation and have worked with legal counsel to assist in the communications with SCE when necessary. These contract monitoring costs of the SCE data have become increasingly burdensome to DCE and is resulting in additional staff time and legal expenses.

Attachments: Prepared Direct Testimony of Claude T. Kilgore on behalf of CalCCA Example DCE customer bill – City of Palm Springs
Example DCE customer bill – Erica Felci
Docket No.: A.23-05-010

Exhibit No.:

Date: February 29, 2024
Witness: Claude Kilgore
Prepared Direct Testimony of
Claude Kilgore
on behalf of the
California Community Choice Association
February 29, 2024
i
1 EXECUTIVE SUMMARY OF RECOMMENDATIONS
2 Q: Please provide a summary of the issues you discuss in your testimony. 3 A: The purpose of my testimony is to provide documentation of the persistent and pervasive 4 problems with Southern California Edison Company’s (SCE) metering usage and billing 5 practices, as well as related customer service issues. My testimony supplements the 6 California Community Choice Association’s (CalCCA) concurrently submitted testimony 7 on SCE’s CCA service fees and billing practices with additional evidence that further 8 illustrates these issues. Specifically, my testimony includes the following sources:
9 1. A January 29, 2024 email I wrote to Energy Division representatives summarizing 10 several key SCE billing practices that are harming Desert Community Energy 11 (DCE) customers;
12 2. DCE’s September 26, 2023 Staff Report titled “Bill Protection for Rosa Gardens 13 Apartments Residents;”
14 3. An October 7, 2023 email written by a community choice aggregator (CCA) 15 Provider Relations Advisor at SCE to DCE representatives regarding delayed bill 16 volumes and customer communications; and
17 4. A December 27, 2022 bill assessed on the City of Palm Springs, which serves as 18 an example of SCE’s failure to deliver bills in a timely manner and its flawed 19 reconciliation process.
20 Q: Please summarize your recommendations.
21 A: In this case, the Commission will consider the scope of services SCE provides to CCA 22 customers and the associated costs it proposes to recover from these customers via its 23 CCA service fees. I recommend that my testimony inform the Commission’s 24 consideration of this issue. Specifically, I recommend the Commission address the 25 significant issues with the level and quality of SCE’s billing services identified in this 26 testimony by adopting the recommendations provided in the testimony of CalCCA 27 witnesses Mr. Fulmer and Dr. Edwards-Greer.
ii

TABLE OF CONTENTS
EXECUTIVE SUMMARY OF RECOMMENDATIONS ......................................................... i I. INTRODUCTION AND SUMMARY ..................................................................................1 II. DESCRIPTION OF DOCUMENTARY EVIDENCE OF SCE’S BILLING ISSUES ....................................................................................................................................5 Attachment CTK-1 – CV of Claude T. Kilgore
Attachment CTK-2 – January 29, 2024 Email From Claude Kilgore to Energy Division Representatives Regarding SCE Billing Issues
Attachment CTK-3 – Desert Community Energy Board, Staff Report: Bill Protection for Rosa Gardens Apartments Residents (September 26, 2023)
Attachment CTK-4 – October 7, 2023 Email From SCE CCA Provider Relations Advisor to DCE Representatives Regarding Delayed Bill Volumes and Customer Communications Attachment CTK-5 – Example of SCE’s Bill Reconciliation Process: Excerpt of Bill of City of Palm Springs
1 1 I. INTRODUCTION AND SUMMARY
2 Q: Please state for the record your name, position, and business address. 3 A: My name is Claude T. Kilgore. I am the Director of Finance at the Coachella Valley 4 Association of Governments, which contracts with Desert Community Energy (DCE), a 5 Community Choice Aggregator (CCA) in Southern California Edison Company’s (SCE) 6 service territory, to provide administrative and staffing services. My business address is 7 74-199 El Paseo Drive, Suite 100, Palm Desert, California 92260. 8 Q: Please describe your experience and qualifications. 9 A: I am a Certified Public Accountant (CPA) with nearly fifteen years of accounting 10 experience. My career started at Ernst & Young’s New York office where I provided 11 audit services over the financial statements of several large registrants of the Securities 12 and Exchange Commission under the Public Company Accounting Oversight Board. In 13 this role, I assisted with Sarbanes-Oxley audits, including by performing thorough 14 assessments of companies’ internal controls over financial reporting, among other duties. 15 I have been in my current role with DCE since 2020 and have direct, first-hand 16 knowledge of utility billing processes because I oversee all financial aspects of DCE and 17 its customer billing activities.
18 The integrity of DCE’s financial data is dependent upon accurate usage and 19 billing practices at SCE; however, there are systemic issues at SCE which continue to 20 negatively impact all CCA customers. I take very seriously my role as a public servant 21 and believe this testimony will help the CCA customers I took an oath to serve. A full 2 1 summary of my experience is provided in my CV, which is included as Attachment CTK-2 1 to this testimony. 3 Q: On whose behalf are you testifying today?
4 A: I am testifying on behalf of the California Community Choice Association (CalCCA). As 5 noted above, I provide administrative and staffing services to DCE, which is a member of 6 CalCCA.
7 Q: What is the purpose of your testimony?
8 A: The purpose of my testimony is to provide documentation of the persistent and pervasive 9 problems with SCE’s metering usage and billing practices, as well as related customer 10 service issues. My testimony supplements CalCCA’s concurrently submitted testimony on SCE’s CCA service fees and billing practices1 11 with additional evidence that further 12 illustrates the problems with SCE’s level of service. Specifically, my testimony includes 13 the following sources:
14 1. A January 29, 2024 email I wrote to Energy Division representatives summarizing 15 several key SCE billing practices that are harming DCE customers; 16 2. DCE’s September 26, 2023 Staff Report titled “Bill Protection for Rosa Gardens 17 Apartments Residents;”
18 3. An October 7, 2023 email written by a CCA Provider Relations Advisor at SCE 19 to DCE representatives regarding delayed bill volumes and customer 20 communications; and
1 See concurrently filed testimony of CalCCA witnesses Mark Fulmer and Dr. Monique Edwards-Greer. 3 1 4. A December 27, 2022 bill assessed on the City of Palm Springs, which serves as 2 an example of SCE’s failure to deliver bills in a timely manner and its flawed 3 reconciliation process.
4 Q: Do you have direct experience dealing with SCE’s billing practices? 5 A: Yes. My role encompasses overseeing all financial aspects of the CCA, including 6 customer billing and dunning processes in collaboration with SCE, treasury management, 7 and assuring the integrity of DCE’s internal controls and financial records. In my current 8 role, I have direct, daily, and increasingly concerning experiences with SCE billing 9 practices.
10 Q: In your experience, what are some of the most concerning issues with SCE’s billing 11 practices?
12 A: As the person ultimately responsible for the accuracy of DCE’s financial records, I have 13 many concerns regarding SCE’s billing practices and its pattern of billing errors. 14 However, three primary problems stand out.
15 First, I am concerned by the increasing number of customer complaints due to 16 SCE’s excessive backbilling of CCA customers. To a large degree, SCE’s backbilling is 17 caused by missing usage (i.e., when SCE fails to provide a customer’s consumption data 18 to CCAs within five business days of a customer’s meter read date). These backbills 19 come with confusing and often extreme financial implications, as demonstrated by the 20 1,490-page backbill received by a DCE customer in Attachment CTK-5. 21 Second, I am concerned about SCE’s practice of clawing back funds already sent 22 to CCAs when it is processing an account correction. Specifically, when correcting an 23 account on which the CCA has previously received payment, SCE’s new billing system 4 1 retrieves all funds previously sent to the CCA for that transaction and will withhold the 2 CCA customer funds until the reconciliation is finalized by SCE. The CCA is not notified 3 of the pending cash flow impact and customers are left confused by the reversal and 4 replacement of the funds to their account.
5 Finally, I am concerned that SCE’s account correction practices delay the return 6 of funds back to customers in many instances. This occurs because, in many cases, SCE 7 does not provide sufficient information when it remits customer funds to CCAs to be 8 returned to CCA customers. Because SCE does not clearly indicate the customer 9 accounts to which the funds should be applied, DCE is not able to efficiently apply 10 customer account credits in a timely manner, placing customers at risk for collection 11 errors.
12 Q: Have you previously shared your concerns over these usage and billing issues with 13 SCE and the CPUC and/or its representatives?
14 A: Yes. DCE has shared these concerns over usage and billing issues with SCE early and 15 often. Customer complaints to the CPUC have been worsened by SCE call center 16 messaging as well as the general lack of urgency in SCE’s approach to resolving these 17 errors. In fact, SCE call center messaging scripts provided by SCE to DCE in Attachment 18 CTK-4 encourage customers to “...wait until you receive your bill before contacting us as 19 our Energy Advisors will not be able to provide an estimated date for your bill.” 20 Moreover, in July 2023, DCE was initially contacted by Sjoberg Evashenk 21 Consulting, Inc., which is currently conducting a Code of Conduct Audit of SCE on 22 behalf of the CPUC. This Code of Conduct Audit is performed every two years pursuant 5 1 to Decision 12-12-036, and the Audit currently in process is reviewing many of the 2 metering and billing issues identified in this testimony. DCE provided specific examples 3 of these issues to the CPUC auditor as direct evidence for their findings in the report, 4 which has been released to the CPUC and which is currently under review by Energy 5 Division staff. In January 2024, Energy Division staff also requested DCE’s feedback for 6 purposes of this Audit of SCE; DCE’s response is provided in Attachment CTK-2. 7 Q: Please provide a summary of your recommendations.
8 A: In this case, the Commission will consider the scope of services SCE provides to CCA 9 customers and the associated costs it proposes to recover from these customers via its CCA service fees.2 10 I recommend that my testimony inform the Commission’s 11 consideration of this issue. Specifically, I recommend the Commission address the 12 significant issues with the level and quality of SCE’s billing services identified in this 13 testimony by adopting the recommendations provided in the testimony of CalCCA 14 witnesses Mr. Fulmer and Dr. Edwards-Greer. I do not set forth additional 15 recommendations in this testimony; rather, my testimony provides further support for the 16 recommendations in these other concurrently submitted pieces of testimony. 17 II. DESCRIPTION OF DOCUMENTARY EVIDENCE OF SCE’S BILLING ISSUES 18 19 Q: Please describe Attachment CTK-2 to this testimony. 20 A: This attachment includes an email correspondence sent by me to Energy Division staff 21 regarding SCE metering and billing issues identified by DCE as part of the CPUC’s Code 2 A.23-05-010, Assigned Commissioner’s Scoping Memo and Ruling, p. 4 (September 5, 2023).

See also Exh. SCE-03 Vol. 1 at 145-157.
6 1 of Conduct Audit of SCE. It details SCE’s systemic metering and billing issues that are 2 causing harm to all CCAs and their customers in SCE’s territory. 3 Q: Please explain what this Attachment demonstrates about SCE’s billing practices 4 and policies.
5 A: This email explains in detail many of SCE’s systemic metering and billing issues, 6 including issues with improper backbilling, SCE’s failure to provide clear and accurate 7 customer account data, and SCE’s pattern of payment reversals. As DCE provided the 8 information highlighted in this email (along with supporting documentation) to both the 9 CPUC and the CPUC Code of Conduct auditor, this attachment also provides insight into 10 the issues currently under review as part of the Code of Conduct Audit. 11 Q: Please describe Attachment CTK-3 to this testimony. 12 A: This attachment is a September 2023 staff report to the DCE Board detailing the 13 resolution of a massive billing error that impacted the low-income community of Rosa 14 Gardens. The complex was connected to a solar PV system under the California 15 Multifamily Solar Housing Program; however, SCE’s billing error resulted in delayed 16 annual true-ups for the low-income residents. This one example of delayed true-ups at the 17 Rosa Gardens complex resulted in over $36,000 of written-off charges for DCE, which 18 SCE only partially reimbursed.
19 Q: Please explain what this Attachment demonstrates about SCE’s billing practices 20 and policies.
21 A: This attachment provides an example of the magnitude and severity of the billing errors 22 impacting DCE customers. In this case, SCE failed to generate invoices to customers of 7 1 the Rosa Gardens complex for up to 18 months. During this period, these customers— 2 and their CCA—had no visibility into the potential magnitude of this error or the 3 resulting financial impact.
4 Q: Please describe Attachment CTK-4 to this testimony. 5 A: This attachment is an email correspondence from an SCE CCA Provider Relations 6 representative that provides information regarding SCE’s pattern of delayed bills and its 7 customer communications concerning such bills.
8 Q: Please explain what this Attachment demonstrates about SCE’s billing practices 9 and policies.
10 A: This attachment shows SCE’s awareness of its systemic missing usage, delayed billing, 11 and backbilling issues that are impacting large volumes of its customer accounts. SCE’s 12 FAQ form confirms that, as a regular practice, SCE (1) claims that “billing production 13 timing varies[,]”, (2) does not provide customers with estimated dates for when their bill 14 will be ready, and (3) advises its customers not to contact SCE regarding their delayed 15 bills, but rather “to wait until you receive your bill before contacting us as our Energy 16 Advisors will not be able to provide an estimated date for your bill.” 17 Q: Please describe Attachment CTK-5 to this testimony. 18 A: This attachment is an excerpt from a December 2022 electricity bill for the City of Palm 19 Springs, DCE’s largest customer. It provides just one example of the flaws in SCE’s bill 20 reconciliation processes. On December 15, 16, and 19, 2022, the daily deposits from SCE 21 to the CCA were used to remove approximately $250,000 of previously deposited CCA 22 funds for an account for the City of Palm Springs. The same CCA funds designated to the 23 same account were then returned to the CCA on December 29, 2022, for $255,000 (a 8 1 $5,000 increase). The customer then received the attached 1,490-page electricity bill 2 prepared on December 27, 2022, with adjustments dated back to when SCE’s new CSRP 3 system implementation commenced operations.
4 Q: Please explain what this Attachment demonstrates about SCE’s billing practices 5 and policies.
6 A: This attachment demonstrates a deficiency in SCE’s new CSRP billing system that 7 negatively impacts all CCAs and their customers. The CSRP is configured to clawback 8 funds already remitted to a CCA when those funds are linked to a bill for which SCE is 9 handling a billing error. This deprivation of CCA funds continues without notice until 10 SCE can complete the customer account reconciliations—which, again, are often the 11 result of SCE’s own metering or billing errors. In addition, subsequent customer deposits 12 are also withheld from the CCA by SCE until the account is reconciled to SCE’s 13 standards (with no satisfactory review of the final reconciliation and supporting 14 documents by the CCA).
15 On the customer side, the customer’s account statement will reflect the reversal 16 and replacement of the funds. This complexity often causes customer confusion and 17 heightens customer concerns that their funds are not being applied correctly upon 18 payment—which has the potential to lead to collection errors. 19 Q: What can the Commission do to rectify these issues you have identified with SCE’s 20 billing practices?
21 A: The Commission can take an important first step toward rectifying these issues by 22 adopting the recommendations provided in the testimony of CalCCA witnesses Mr. 23 Fulmer and Dr. Edwards-Greer.
9 1 Q: Does this conclude your testimony?
2 A: Yes.

Attachment CTK-1
CV of Claude T. Kilgore
Claude T. Kilgore, CPA
[email protected] 310.999.8125

EDUCATION
Texas A&M University, Mays Business School, College Station, TX May 2010 Bachelor of Business Administration – Accounting: Magna Cum Laude, 100% of Education Financed through Scholarships Masters of Science – Finance: Overall GPA – 3.91 out of 4.00

CERTIFICATION
California Board of Accountancy: Certified Public Accountant California Department of Real Estate: Licensed Real Estate Salesperson

EMPLOYMENT
Coachella Valley Association of Governments (CVAG), Palm Desert, CA Desert Community Energy (DCE), Palm Desert, CA
Coachella Valley Conservation Commission (CVCC), Palm Desert, CA Director of Finance and Administration Dec 2020 – Present • Provides administrative direction, plans, manages, oversees, and directs the operations and services of the Finance Department of 3 separate Joint Powers Authorities (JPAs) working with dozens of team members • Responsible for all Finance Department activities and services, including agencywide budgeting, treasury, general accounting, auditing, payroll processing, utility billing and collections, fee and grant administration; managing the coordination and preparation of three separate budgets; managing the three investment portfolios; oversee procurement and contracting functions on behalf of the Executive Director • Oversee all financial aspects of the DCE, including customer billing and dunning processes in collaboration with SCE, treasury management, as well as assuring the integrity of DCE’s internal controls and financial records
• Provide direction on energy hedging and portfolio transactions as a member of DCE’s Risk Management Team in addition to negotiating financial covenants as part of Power Purchase Agreement negotiations • Navigated DCE through liquidity considerations by negotiation of a $13 million revolving credit facility and sound Treasury management procedures to build substantial agency reserves • Initiated a “Path to Paperless” process for all department documentation ahead of ERP implementation, moving from an initially 0% paperless environment to now over 80% paperless • Selected and implemented a new budgeting software which replaced 90% of antiquated spreadsheets while improving department efficiencies such as position forecasting and allocations for operating budgets that surpassed $97 million for CVAG, $6 million for CVCC, and $71 million for DCE • Successfully created a GASB audit preparation system for the annual US GAAP financial statements which resulted in audit issuance date improving by more than 30% from the prior year • Strategically manages the CalPERS Unfunded Accrued Liability and pre-funding activities • Effectively translated financial data into easy-to-understand information via power point presentations and written staff reports while representing the JPAs to elected officials at Finance, Personnel, Executive Committee and Board of Director meetings as well as at other external membership meetings • Developed procedures to pilot a contracts management program which created automated reminders for agencywide project leads, tracked upcoming and past due items, and held responsible parties accountable for their contractual items which manifested into a permanent system and now centralized across the agency and realizes 100% of new contracts processing through the new system • Successfully directed and implemented a Classification and Total Compensation study during the great recession, resulting in a comprehensive and equitable compensation program that involved generating buy-in from all employees as well as elected officials while aligning the agencies’ competitive position • Spearheaded innovate usage of Artificial Intelligence (AI) and encouraged and trained staff to adopt these new methods, resulting in more streamlined workflows with over 75 percent of all new Standard Operating Procedures developed with the assistance of AI • Developed agencywide plans for a variety of HR matters such as compensation, benefits, health and safety during Covid-19 pandemic and supported the human factor by devising strategies for performance evaluation, staffing, training and development while overseeing all HR initiatives, systems and tactics and serving as the point of contact for employment relations and communication with labor attorneys while monitoring adherence to internal policies and relevant legal standards.

Ernst & Young, LLP, Los Angeles, CA
Assurance Manager II, Financial Services Office Sept 2019 – Sept 2020 • Managed the US GAAP financial statement audits of over 30 private equity funds while coordinating and coaching onshore and offshore teams on a global client with over $140bil. Assets Under Management • Oversaw audit archive compliance on a multi-national, 100+ member team via creation of a replicable reporting system which actively engaged team members and increased archive efficiency times by 20% • Mastered Broker-Dealer audit and review procedures inline with FINRA, PCAOB, and SEC compliance • Reviewed valuation analysis of corporate private equity, credit, IFRS and CLO investments • Directed and updated Business Development programs; successfully closed campus recruits for local hire Small Business Owner - Real Estate Sales, LA, California & NYC, New York Licensed Real Estate Salesperson March 2013 – Sept 2019 • Achieved top 20% of 400 agents, by sold volume, at California’s largest Keller Williams office • Negotiated, led, and closed multi-million dollar real estate transactions in Los Angeles and New York City in order to achieve clients an average of over 17% savings per transaction • Implemented economic, lead generation, budget, and operating systems to assist over 75 customers Ernst & Young, LLP, Los Angeles, CA and New York, NY
Assurance Associate - Client Serving Contractor Feb to May: 2019, 2015, 2014 • Successfully developed, reviewed and performed financial statement audits while leading large teams Ernst & Young, LLP, New York, New York
Assurance Professional, Financial Services Office 2009 (Intern), Sept 2010 – March 2013 • Challenged and increased team efficiency by inventing and implementing a user-friendly onboarding guidebook on an EY Global Account made priority by the Chairman and CEO • Enhanced, reviewed, and strengthened the work of 6 associates on the financial statement audits Texas A&M University, Mays Business School, College Station, TX Teaching/Graduate Assistant Sept 2007 – May 2010
• Chosen by Dean of Mays Business School to teach over 500 students in the basic concepts of accounting

SERVICE
California Society of Municipal Finance Officers, Coachella Valley Chapter 2024 Vice Chair • Recognized as a leader in government finance in the Coachella Valley and selected as Chapter Vice Char Captain DoRight, Stockdale Elementary School Aug 2004 – May 2005 • Conceptualized and acted as a fictional superhero character who visited elementary schools and performed skits and interactions to foster creativity, individualism, and responsibility to over 300 students Attachment CTK-2
January 29, 2024 Email From Claude Kilgore to Energy Division Representatives Regarding SCE Billing Issues
2/28/24, 2:15 PM
From: Claude T. Kilgore <[email protected]>
Sent: Monday, January 29, 2024 9:03 AM
To: Taylor, Mary <[email protected]>; Janice Reitman <[email protected]>; David Freedman <[email protected]>
Cc: Mackin, Dina S. <[email protected]>
Subject: Re: [EXTERNAL] CPUC Code of Conduct | SCE Audit | Report Request Mary, Dina,
Thank you for arranging the meeting between Desert Community Energy (DCE) and the Energy Division to discuss the CPUC Code of Conduct audit of SCE. Your team's outreach and dedication to this matter have not gone unnoticed by the CCAs and are truly commendable. We appreciate the opportunity to engage in this discussion and look forward to it. To be mindful of your time, I would like to bring attention to a few key areas of contemporaneous misconduct by SCE. While I have not had the privilege of reviewing the draft audit report, I hope these points will offer additional context to DCE's feedback regarding the Code of Conduct audit.

First, DCE has seen an increasing amount of CPUC customer complaints and customer opt-outs to SCE largely because of SCE back-billing in violation of Rule 9A’s requirement to issue bills at regular intervals based on actual metering data. Aside from this being a violation of basic consumer rights, it is also an indication that SCE does not currently maintain accurate metering and billing systems. In the 2/28/24, 2:15 PM
last week alone, DCE has received two separate customer complaints caused by SCE back-billing, with one customer choosing to opt-out and another filing a complaint with the CPUC against DCE because SCE’s missing usage data prevents DCE from truing up the customer’s NEM balance for the past two years. SCE commonly exacerbates errors by failing to addressproblems promptly or referencing unresolved complications from the failing and overdue implementation of its new billing system. These problems have been identified to SCE by DCE early and often. Customer complaints to the CPUC have been worsened by SCE call center messaging provided by SCE to DCE which encourage customers to “...wait until you receive your bill before contacting us as our Energy Advisors will not be able to provide an estimated date for your bill.” Additionally, sometimes even after SCE can accurately capture customer usage and provide timely bills, DCE still receives an exceptionally large amount of mismatching customer account data from SCE. When this happens, SCE often cannot identify to which accounts customer payments should be applied. This results in unapplied customer credits lingering in DCE’s past due accounts receivable and negatively impacting its financial ratios. This also causes a compounding effect for the customer since DCE is not able to confidently apply customer account credits in a timely manner.

Furthermore, in a recent all-SCE-area-CCA meeting, SCE staff acknowledged a design flaw in their new billing system concerning customer account corrections. Essentially, when correcting an account that has previously received payment, SCE retrieves all funds previously sent to the CCA for that transaction. This process, initiated by SCE even if the error is on their end, continues until the reconciliation of payments between the IOU and the CCA is completed. Unfortunately, this can take many business days and is always done without prior notice. It is worth noting that DCE has never received interest from SCE for the days it was underpaid due to SCE's actions. A notable instance of this occurred in December 2022 when SCE withheld over a quarter million dollars of DCE's funds for an extended period while addressing a 1490 back-bill for the City of Palm Springs, DCE's largest customer.

Finally, SCE's non-compliance with the approved Voluntary Allocation (VA) Agreement, as mandated by the Commission's Decision 21-05-030, is causing significant issues for DCE. Despite the agreement stipulating an annual Meet and Confer Process to determine Load Share Percentages, SCE failed to conduct this process for DCE's 2024 percentages, revealing a 60% reduction on December 12, 2023. In a subsequent discussion on January 9, 2024, SCE refused to disclose the forecast used for this reduction, deviating from the VA process experienced by other SCE-area CCAs.

DCE estimates a potential $7.5 million financial loss if SCE does not adhere to the correct 2024 percentages. SCE had scheduled a meeting for January 26 to resolve the issue but cancelled it with 30 minutes’ notice and has not yet proposed a new meeting date. DCE is alerting the Energy Division, connecting it to the Code of Conduct Audit discussion, in case an agreement cannot be reached and noting the significant challenges presented by SCE.

In conclusion, the issues outlined underscore the pressing need for rectification of SCE's practices.

From customer complaints and opt-outs stemming from back-billing violations to unresolved complications with the new billing system, SCE's shortcomings have far-reaching consequences for both consumers and DCE's financial health. The recent revelation of non-compliance with the approved Voluntary Allocation Agreement only adds to the urgency of addressing these matters.

As we eagerly await the upcoming discussions and reports, we appreciate your time and assistance in navigating these challenges. DCE remains committed to finding resolutions, and the gravity of the 2/28/24, 2:15 PM
issues demands swift and decisive action. We stand ready for any necessary follow-up and hope for a collaborative effort to rectify the issues raised during our discussion on the Code of Conduct Audit.

Attachment CTK-3
Desert Community Energy Board, Staff Report: Bill Protection for Rosa Gardens Apartments Residents (September 26, 2023)
ITEM 8C
a

STAFF REPORT
Subject: Bill Protection for Rosa Gardens Apartments Residents Contact: Emily Langenbahn, Management Analyst ([email protected]) Recommendation: Information
Background: In December 2022, DCE staff learned of a Southern California Edison (SCE) billing issue affecting most residents and the common areas of the Rosa Gardens Apartments, a complex managed by Coachella Valley Housing Coalition in the Desert Highlands Gateway Estates neighborhood of Palm Springs. The billing error, resulting from SCE’s conversion to a new invoicing system, prevented SCE from generating invoices for these customers for up to 18 months following the connection of the solar PV system for the complex installed under the California Multifamily Affordable Solar Housing Program. That meant DCE was unable to issue annual true-up bills for the periods ending May 2021 and May 2022 to these customers. DCE began an investigation and raised the issue with SCE immediately.

SCE’s Rule 17 on Adjustment of Bills and Meter Tests sets rules on correcting billing errors for undercharges, slow meters and non-registering meters and provides that SCE may only recover or refund residential and small business customers for billing errors within a three-month time limit.

SCA applied Rule 17 for its distribution charges to the affected customers. However, Rule 17’s provisions only apply to SCE charges and do not apply to generation charges by a Community Choice Aggregator, such as DCE.

Although not required to do so, DCE credited the 52 accounts affected by the delayed 2021 and 2022 true-ups in the Rosa Gardens Apartments complex – saving them thousands of dollars. DCE made the residents of Rosa Gardens aware that the issue had been resolved before receiving the 2021 and 2022 annual true-ups by sending a postcard (attached). The May 2023 annual true-ups were issued on time for the correct amounts.

DCE is actively engaging with SCE to resolve this issue and investigating any other impacted accounts. DCE staff will continue to provide updates on this matter.

Fiscal Analysis: The delayed true-ups at the Rosa Gardens complex resulted in a total of $36,514.27 in written off charges for DCE. Staff has engaged in ongoing negotiations with SCE over this matter and has requested reimbursement of the credited charges. As of August 21, 2023, SCE has initiated the process for potential reimbursement of $30,768.47 to DCE for the delayed 2021 and 2022 residential annual true-ups in the Rosa Gardens neighborhood.

However, the remaining $5,745.80 applies to non-residential community charges, such as common area lighting. Under Rule 17, these remaining charges fall under the large-scale customer category, allowing for delayed billing of up to three years.

DCE is continuing to investigate the delayed billing issue for any other potential financial impacts as well.

Attachment: DCE postcard sent to Rosa Gardens residents in June 2023.

IMPORTANT UPDATE FOR RESIDENTS
We are pleased to inform you that Desert
Community Energy (DCE) has stepped up
on your behalf regarding your upcoming
bill. SoCal Edison was going to charge
you for unbilled amounts from previous
years, but DCE worked to prevent that.

You will still be receiving a True-Up bill
for the last 12 months, but no other prior
charges will be included.

If you have further questions, please contact DCE at DesertCommunityEnergy.org or (855) 357-9240.

Thank you for being a DCE customer!
Si tiene más preguntas, póngase en contacto con DCE en DesertCommunityEnergy.org o (855) 357-9240.

Nos complace informarle que Desert
Community Energy (DCE) ha intervenido
en su nombre con respecto a su próxima
factura. SoCal Edison iba a cobrarle las
cantidades no facturadas de años anteriores,
pero DCE trabajó para evitarlo. Usted todavía
recibirá una factura True-Up por los últimos
12 meses, pero no se incluirán otros cargos
anteriores.

IMPORTANTE ACTUALIZACIÓN PARA

LOS RESIDENTES
¡Gracias por ser un cliente de DCE!
Attachment CTK-4
October 7, 2023 Email From SCE CCA Provider Relations Advisor to DCE Representatives Regarding Delayed Bill Volumes and Customer Communications From: Tiffani Tubbs [email protected]
Subject: Delayed Bill Customer Communication/Timeline for DCE Date: October 7, 2023 at 3:41 PM
To: Claude Kilgore [email protected], David Freedman [email protected], Janice Reitman [email protected], Emily Langenbahn [email protected], Savannah Gil [email protected] Cc: Dwight Phelps [email protected], Samantha Nicely [email protected] Greetings, DCE!
Per our conversation, please note we have provided the following via this email:

Delayed Bill Customer Letters (Unassigned Business & Residential Accounts) Delayed Bill Frequently Asked Questions (also available on sce.com) Delayed Bill Letter Drop Schedule & Volumes
Note the following regarding the information provided:

Our next scheduled drop is most likely slated to occur at the end of this month.

Volumes depicted are inclusive of both bundled and unbundled accounts.

Letters are sent at the customer number level and list out all impacted accounts (for a given customer) which means the letter volume is not representative of how many accounts are delayed.

If the same customer number shows up again after we have already sent them a letter in prior months’ campaigns, we remove them in order to prevent the customer from receiving a letter every single month. "" We appreciate the continued partnership that enables our respective entities to support our shared customers in an efficient and positive manner. Thank you.

Respectfully,s
Tiffani C. Tubbs-Martin
Advisor, CCA Provider Relations
Customer Service | Customer Choice Services
Cell: 626.314.0167, PAX: 42202 | Email: [email protected] WARNING: External email. Please verify sender before opening attachments or clicking on links. !"#$*(+##&'(") ,% -./ <;2 3456#78 .:$0<$0;
!"#$*(+##&'(") ,% -./ <12 3456#78 ;.$.=$0;
!"#$%##&'(")$*(+##&'(") ,% -./ ;>2 3456#78 ;;$.0$0;
!"#$%##&'(")$*(+##&'(") ?@(78 0$0$00 -.$;0./ 1;81>- ?@(78 0$0A$00 !"#$%##&'(")$*(+##&'(") ?@(78 <$0A$00 -.$;0./ <A8::; B")78 >$0.$00 !"#$%##&'(")$*(+##&'(") ?@(78 1$0$00 -.$;0./ ;>8>0< 3456#78 -$0$00 !"#$%##&'(")$*(+##&'(") 35"#78 =$1$00 -.$;0./ ;08.<- 3456#78 =$0A$00 !"#$%##&'(")$*(+##&'(") 35"#78 A$;-$00 -.$;0./ A8A1< 3456#78 :$;1$00 !"#$%##&'(")$*(+##&'(") 35"#78 ;.$;>$00 -.$;0./ ;.8<<. 3456#78 ;;$;.$00 !"#$%##&'(")$*(+##&'(") 35"#78 ;;$0:$00 -.$;0./ A8A-= 3456#78 ;0$0;$00 !"#$%##&'(")$*(+##&'(") ?@(78 <$0.$0< ;0./ ;<8;1.9 35"#78 >$>$0< ;-81.. !"#$%##&'(")$*(+##&'(") ?@(78 1$;1$0< -./ ;-8;.1 35"#78 1$<.$0< 0.8=119 !"#$%##&'(")$*(+##&'(") C6&78 -$<.$0< -./ A8;.-9 3456#78 =$0.$0< ;.8<=19 !"#$%##&'(")$*(+##&'(") C6&A$0:$0< -./ A0A= ?@(:$;A$0< ;.-1< P.O. Box 800
Rosemead, CA 91770

IMPORTANT INFORMATION

ABOUT YOUR

DELAYED BILLING STATEMENT
© 2021 Southern California Edison.
«Customer_Name»
«Mailing_Address»
«Mailing_City, State, Zip»
«BAR CODE»
«Date»
Dear «Customer_Name»,
One of Southern California Edison’s core obligations is to ensure your bills are accurate and delivered on time. Unfortunately, we have experienced a technical issue that is delaying our ability to deliver it on time. We are fixing the problem and diligently working to clear the backlog of delayed bills.

While we don’t have an estimated date for when your bill will be ready, the next bill you receive (if you haven’t already) may include charges from multiple past billing periods that were not included in your prior bills.

If you need assistance with paying your bill after you receive it, please give us a call so we can help setup a payment arrangement for you. For your reference, we have included a list of account(s) currently impacted by the delay.

To be respectful of your time, we encourage you to wait until you receive your bill before contacting us, as our call center Energy Advisors will not be able to provide an estimated date for your bill. You can call us to setup a payment arrangement once you have received your bill.

If you have any questions, please visit sce.com/delayedbills for answers to frequently asked questions.

Sincerely,
Marc Ulrich
Vice President, Customer Service Operations
Southern California Edison
CSRP Delayed Billing Letter — Unassigned Business & Residential P.O. Box 800
Rosemead, CA 91770

IMPORTANT INFORMATION

ABOUT YOUR

DELAYED BILLING STATEMENT
© 2021 Southern California Edison.
«BP_Name»
«Contact_Name»
«Mailing_Address»
«Mailing_City, State, Zip»
«BAR CODE»
«Date»
Dear «Contact_Name»,
One of Southern California Edison’s core obligations is to ensure your bills are accurate and delivered on time. We recently fell short on our commitment, and we apologize.

We are currently resolving this issue. We don’t have an estimated date for when your bill will be ready, and the next bill you receive may include charges for multiple billing periods. At this time, you do not need to do anything with your account(s). For your reference, we have included a list of account(s) currently impacted by the delay.

If you have any questions or need additional assistance, please contact me by email at [email protected], or call me at 1-626-633-9940. You may also reach out to your SCE Account Manager, «Account_Manager_Email».

Sincerely,
Mike Marelli
Vice President, Business Customer Division
Southern California Edison
CSRP Delayed Billing Letter — Assigned Business

SERVICE ACCOUNT LIST
Customer Service
Account Number Account Number Service Account Address and City «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» «Contract_Account_No» «Contract» «Service_Address», «Service_City» Customer Name: «Business_Partner» Customer Number: «Cust_Number» The following is a list of your account(s) identified as experiencing a billing delay:

CSRP Delayed Billing — Multi SA List
Delayed Bills
Some customers may not have received a bill for the past few months or received a bill with only partial charges. Below are some common Q&As about what’s going on and what to expect.

1. Why haven’t I received a bill?
a. We experienced a technical issue. and this hasresulted in some customers not receiving their bills on time. We are now diligently working to clear the backlog of delayed bills.

We encourage you to wait until you receive your bill before contacting us as our Energy Advisors will not be able to provide an estimated date for your bill. You can call us to set-up a payment arrangement once you have received your bill.

2. When will I be receiving my bill?
a. Unfortunately, we don’t have an estimated date when your bill statement will be ready.

Since individual customer accounts vary, billing production timing varies as well.

However, when you do receive your bill, charges from past billing cycles will also be included in addition to charges from your current billing cycle. Once you receive your bill and need further assistance please contact us at 1-800-247-3123.

3. Why is my bill so high?
a. If you haven’t received a bill for a few months, one reason your bill may be higher than usual is because charges from past billing periods are included, in addition to charges from your current billing period. Also, usage tends to go up for most customers during the summer months when the A/C and cooling appliances (e.g. whole house fans, evaporative coolers) are running.

Note: In accordance with Southern California Edison’s Rule 17. D, if for any reason the duration of the delayed billing period exceeds three months for residential and eligible small business customers, the customer will only be responsible for SCE charges that are incurred within the most recent three months from the date the bill was generated. All other customers are responsible for SCE charges that are incurred within the most recent three years. Please see Rule 17. D for more details.

4. Will I be required to pay my bill all at once when I receive it? a. We understand this is a serious inconvenience for you and we’ll do what we can to make sure the impacts to you are minimal. If you’re unable to pay your bill in full once you receive it, call us at 1-800-247-3123 to set up a payment arrangement, which allows you to spread your payments over time.

You also have the option of making estimated payments until you receive your bill. This will offset any amount due when your bill is generated.

If you are a business customer with an assigned Account Manager, please reach out to her/him to discuss your payment options.

5. What if I’m enrolled in Auto Pay?
a. The total amount you owe will be deducted approximately 10 days after your bill is generated. If you’re unable to pay the full amount, please call us at 1-800-247-3123 to discuss payment options.

If you are a business customer with an assigned Account Manager, please reach out to her/him.

6. If I qualify for a bill adjustment pursuant to Rule 17, will I see this on my bill when it arrives? a. Yes, any bill adjustments that you’re eligible to receive will be listed in the “Summary of your billing details” section of your bill. A reminder: residential and small business customers are eligible for a bill adjustment for SCE charges beyond the most recent three months from the date the delayed bill is generated.

Read about our bill adjustment rule here, which applies to both residential and business customers.

Delayed Billing Letter Drop Schedule and Volumes
Type Report DATE Days Letter Volume Mail Date Accounts
Impacted
Res/Assigned/Unassigned NA 60+ 25K Thurs., 09/16/21
Res/Unassigned NA 60+ 31K Thurs., 09/23/21
Res/Unassigned NA 60+ 35K Thurs., 10/07/21
Res/Assigned/Unassigned NA 60+ 14K Thurs., 11/02/21
Res/Assigned/Unassigned Mon., 2/2/22 60/120+ 51,546 Mon., 2/28/22 Res/Assigned/Unassigned Mon., 3/28/22 60/120+ 38,991 Wed., 4/20/22 Res/Assigned/Unassigned Mon., 5/2/22 60/120+ 14,423 Thurs., 6/2/22 Res/Assigned/Unassigned Tues., 7/5/22 60/120+ 12,036 Thurs., 7/28/22 Res/Assigned/Unassigned Tues., 8/16/22 60/120+ 8,853 Thurs., 9/15/22 Res/Assigned/Unassigned Tues., 10/14/22 60/120+ 10,330 Thurs., 11/10/22 Res/Assigned/Unassigned Tues., 11/29/22 60/120+ 8,867 Thurs., 12/21/22 Res/Assigned/Unassigned Mon., 3/20/23 120+ 13,150 Tues., 4/4/23 16,500 Res/Assigned/Unassigned Mon., 5/15/23 60+ 16,105 Tues., 5/30/23 20,755 Res/Assigned/Unassigned Fri., 6/30/23 60+ 8,106 Thurs., 7/20/23 10,375 Res/Assigned/Unassigned Fri., 8/29/23 60+ 8,287 Mon., 9/18/23 10,653 1 Recent Activities Note that the volume for 2023 represents the number of letters that went out not impacted accounts (e.g., one account could have multiple impacted accounts but will only receive one letter) Attachment CTK-5
Example of SCE’s Bill Reconciliation Process: Excerpt of Bill of City of Palm Springs

FELCI, ERICA / Page 1 of 26
Your electricity bill
Customer Account

PALM SPRINGS, CA
92264-1349
Date bill prepared
03/08/24 Amount due $901.99
Due by 03/28/24
For billing and service inquiries
1-800-684-8123
www.sce.com
Your account summary
Previous Balance $158.40
Payment Received 02/15/24 -$158.40
Balance forward $0.00
Your new charges $901.99
Total amount you owe by 03/28/24 $901.99
You Received a California Climate Credit
California is fighting climate change and so can you! Your bill includes a Climate Credit from the California Cap-and-Trade Program, which is designed to cut carbon pollution while helping utility customers during the transition to a low-carbon future. Find out more at cpuc.ca.gov/climatecredit/.

Get a discount on your bill every month
Your income may qualify you for discounted bills through the CARE or FERA program. To enroll or learn more, visit sce.com/careandfera or call 1-800-798-5723.

Recibe un descuento en tu factura cada mes
Si cumples los requisitos de ingresos, podrias recibir descuentos en tus facturas gracias a los programas CARE o FERA. Para inscribirte o obtener mas infomacion, visita sce.com/carefera o llama al 1-800-798-5723.

P.O. BOX 600
ROSEMEAD, CA 91771-0002
Customer account 700621684057
Please write this number on the memo line
of your check. Make your check payable to
Southern California Edison.

Please return the payment stub below with your payment and make your check payable to Southern California Edison.

If you want to pay in person, call 1-800-747-8908 for locations, or you can pay online at www.sce.com. (14-574) Tear here Tear here STMT 03082024 P1

FELCI, ERICA
PALM SPRINGS CA 92264-1349
Amount due by 03/28/24 $901.99
Amount enclosed $
FELCI, ERICA / Page 2 of 26
Important information
What are my options for paying my bill?
On-line Pay one-time or recurring on www.sce.com/bill
Mail-in Check or Money order
In Person Authorized payment locations 1-800-747-8908
Phone QuickCheck 1-800-950-2356
Debit & credit card 1-833-425-1440
Other PayPal, Venmo, Apple Pay and Google Pay
Electronic check processing
Your check payment will be processed as a one-time Electronic Fund Transfer (EFT). With EFTs, funds may be withdrawn from your account the day we receive your payment. Your check will not be returned, but will appear on your financial statement.

Rates and applicable rules: Available at www.sce.com or upon request.

Past due bills
When is my bill past due? It is past due 20 days after the preparation date, which was 03/08/24.
• Reconnecting service that has been disconnected requires a Service Connection payment (non-residential only).
• Unable to pay: If payment arrangements were not extended to you by SCE pursuant to SCE’s filed tariffs, you may contact the California Public Utilities Commission.
• For safety reasons, if service is disconnected, please ensure any sensitive or potentially hazardous equipment is unplugged on the day of reconnection. For additional home safety tips, visit www.sce.com/safety or call SCE at 1-800-655-4555.

What is the Late Payment Charge (LPC)?

0.6% will be applied to the total unpaid balance if payment is not received by the due date on this bill (except for CARE and state agency accounts).

What is a rotating outage?
Rotating outages are controlled electrical outages used to avoid widespread or uncontrolled blackouts. Your Rotating Outage Group number is located on page 1, upper left, of your SCE bill. Your rotating outage group number may change at any time. For more information, visit www.sce.com/rotating outage.

What is the Power Charge Indifference Adjustment (PCIA)? The PCIA is a charge to ensure that both SCE customers and those who have left SCE service to purchase electricity from other providers pay for the above market costs for electric generation resources that were procured by SCE on their behalf. 'Above market' refers to the difference between what the utility pays for electric generation and current market prices for the sale of those resources.

Disputed bills
If you believe there is an error on your bill or have a question about your service, please call Southern California Edison (SCE) customer support at 1-800-655-4555. If you are not satisfied with SCE’s response, submit a complaint to the California Public Utilities Commission (CPUC) at www.cpuc.ca.gov/ complaints/. The CPUC’s Consumer Affairs Branch (CAB) handles billing and service complaints and can be reached by:

Telephone 1-800-649-7570 (8:30 AM - 4:30 PM, Monday - Friday) Mail CPUC, Consumer Affairs Branch, 505 Van Ness Ave., Room 2003, San Francisco, CA 94102
If you have limitations hearing or speaking, contact the California Relay Service, which is for those needing assistance relaying telephone conversations. Dial 711 or one of the numbers below to be routed to a California Relay Service provider in your preferred mode of communication.

Type of Call English Spanish
TTY/VCO/HCO to Voice 1-800-735-2929 1-800-855-3000
Voice to TTY/VCO/HCO 1-800-735-2922 1-800-855-3000
Speech-to-Speech Relay 1-800-854-7784 1-800-854-7784
To avoid having service turned off while waiting for the outcome of a complaint to the CPUC regarding the accuracy of your bill, contact CAB for assistance. If your case meets the eligibility criteria, CAB will instruct you on how to mail a check or money order to be impounded pending resolution of your case. You must continue to pay your current charges while your complaint is reviewed to keep your service turned on.

Definitions
• Baseline Credit: The baseline credit provides reduced electricity rates on electricity used up to the baseline allocation for the region that you live in. • CA Climate Credit: Credit from state effort to fight climate change. Applied monthly to eligible businesses and semi-annually to residents. • Wildfire Fund Charge: Supports the California Wildfire Fund which covers costs associated with catastrophic wildfires, including payment of bonds issued by the California Department of Water Resources (DWR)
• Public Purpose Programs Charge: Funds state-mandated programs for low income discounts, energy efficiency, renewable energy and R&D. • SCE Generation: For recovering energy procurement and generation costs for that portion of your energy provided by SCE.

Change of mailing address: 700621684057
STREET# STREET NAME APARTMENT #

CITY STATE ZIP CODE
TELEPHONE # E-MAIL ADDRESS
To change your contact information or enroll in SCE's payment option, complete the form below and return it in the enclosed envelope.

Direct Payment (Automatic Debit) Enrollment: 700621684057 I hereby authorize SCE and my financial institution to automatically deduct my monthly payment from the checking account as shown on my enclosed check, ten calendar days after my bill is mailed.

Signature _____________________________________ Date ____________ To change your checking account information or to be removed from the Direct Payment program please call SCE at 1-800-655-4555.

Energy Assistance Fund (EAF): I want to help people pay their energy bill through EAF. For info visit www.sce.com/eaf or call (800) 205-8596.

Add this amount for EAF $ __________________ Select one box only and sign below for EAF:

Every
Month
One Month
only ________________________________________________________________

FELCI, ERICA / Page 4 of 26
Things you should know
Fixed Recovery Charge
SCE has been permitted to issue bonds that enable it to recover more quickly certain costs related to preventing and mitigating catastrophic wildfires. Your bill for electric service includes a Fixed Recovery Charge that has been approved by the CPUC to repay those bonds. The right to recover the Fixed Recovery Charge has been transferred to a separate entity (called the Special Purpose Entity) that issued the bonds and does not belong to SCE. SCE is collecting the Fixed Recovery Charge on behalf of the Special Purpose Entity.

You may notice a change in your billing statement
Effective 3/1/2024, the billing rates used to calculate your bill have been modified. For more information, please visit www.sce.com/bill_change.

FELCI, ERICA / Page 6 of 26
Your Total Usage: 880 kWh Tier 1 Tier 2 High Usage Charge Understanding Your Bill...

Your usage for the billing period falls
into Tier 2. For most customers, the
price you pay increases as you use
more energy. The average cost per
kilowatt (kWh) in the chart to the right
is based on averages. Actual prices
may vary.
670 kWh 210 kWh 0 kWh
$0.16/kWh $0.25/kWh $0.25/kWh
Your Total Usage
880 kWh

FELCI, ERICA / Page 8 of 26
Your Total Usage: 907 kWh Tier 1 Tier 2 High Usage Charge Understanding Your Bill...

Your usage for the billing period falls
into Tier 2. For most customers, the
price you pay increases as you use
more energy. The average cost per
kilowatt (kWh) in the chart to the right
is based on averages. Actual prices
may vary.
310 kWh 597 kWh 0 kWh
$0.16/kWh $0.25/kWh $0.25/kWh
Your Total Usage
907 kWh

FELCI, ERICA / Page 10 of 26
Your Total Usage: 945 kWh Tier 1 Tier 2 High Usage Charge Understanding Your Bill...

Your usage for the billing period falls
into Tier 2. For most customers, the
price you pay increases as you use
more energy. The average cost per
kilowatt (kWh) in the chart to the right
is based on averages. Actual prices
may vary.
291 kWh 654 kWh 0 kWh
$0.16/kWh $0.25/kWh $0.25/kWh
Your Total Usage
945 kWh

FELCI, ERICA / Page 12 of 26
Your Total Usage: 1,100 kWh Tier 1 Tier 2 High Usage Charge Understanding Your Bill...

Your usage for the billing period falls
into Tier 2. For most customers, the
price you pay increases as you use
more energy. The average cost per
kilowatt (kWh) in the chart to the right
is based on averages. Actual prices
may vary.
320 kWh 780 kWh 0 kWh
$0.17/kWh $0.27/kWh $0.26/kWh
Your Total Usage
1,100 kWh

FELCI, ERICA / Page 14 of 26
Your Total Usage: 866 kWh Tier 1 Tier 2 High Usage Charge Understanding Your Bill...

Your usage for the billing period falls
into Tier 2. For most customers, the
price you pay increases as you use
more energy. The average cost per
kilowatt (kWh) in the chart to the right
is based on averages. Actual prices
may vary.
291 kWh 575 kWh 0 kWh
$0.18/kWh $0.28/kWh $0.28/kWh
Your Total Usage
866 kWh

FELCI, ERICA / Page 24 of 26
Stay Safe Around Electricity: Metallic Balloon Safety
Keep metallic balloons indoors. They should always be tied to a weight. Never release them outside. They can cause electrical outages if they touch wires. Never remove the weight. Puncture balloons before disposing of them. Stay away and call 911. Do not attempt to retrieve a balloon or kite tangled in wires.

Get Help If You
Use Medical Equipment
February 2024

Page 25 of 26 ends

Visit us at www.sce.com/staysafe for more safety tips. Stay aware. Stay safe.

Be Aware of Potential Payment Scams
All SCE customers are advised to be aware of potential payment scams.

We do not have a disconnection department and an SCE agent will not call you to demand payment over the phone.

We do not request or accept prepaid cards (like money-pack), cryptocurrency (like Bitcoin) or payment apps (like Cash-App, Zelle or Venmo).

To learn more go to www.sce.com/scamalert
Be Prepared for
Outage Emergencies
If your home or business is located in an area designated as a Tier 2 or Tier 3 high fire risk zone, you may want to consider adding a power station or a portable generator to your emergency preparedness plans. These devices may
provide backup power for your personal electronics such as a cell phone, computer, or other important household appliances such as refrigerators, lighting, garage door opener and medical devices which helps you to be more
prepared for an outage or other emergency. Rebates are
available for the purchase of qualifying products.

Watch our backup power educational videos, learn more
about available solutions and apply for rebates in the SCE Marketplace at www.sce.com/rebates.

To learn more about the process and method the
California Public Utilities Commission used to determine High Fire Threat District maps, visit:

If you or someone in your household requires the regular use of electrically-powered medical equipment or other qualifying medical devices, you may be eligible for our Medical Baseline Allowance program which:
1) Provides an additional allotment of 16.5-kilowatt
hours (kWh) of electricity per day on your monthly bill which can help offset the cost of operating the medical equipment, and
2) Prioritizes your household to get critical alerts and notifications if outages occur, including Public Safety Power Shutoffs.

To apply, you will need the signature of a medical professional.* If you apply online, you can enter your medical professional’s email address and we will contact them for an electronic signature approval. Please let them know they will receive an email from SCE.

To learn more about eligibility requirements or if you have questions about medical equipment or criteria, visit
www.sce.com/mbl or call 1-800-655-4555. Application forms are available in several languages online and alternative formats (such as large print and braille) upon request.

NOTE: We will evaluate the eligibility of the device on your application if it is not listed on www.sce.com/mbl . Medical devices used for therapy but not medically required for sustaining life do not qualify for this program.
*Includes Medical Doctor (MD), Doctor of Osteopathy (DO), Physician Assistant (PA) or Nurse Practitioner (NP) .

Support for Customers
Affected by a Major Disaster
If you or someone you know has been affected by a
disaster for which a state of emergency has been
declared, please visit www.sce.com/disastersupport for
information about consumer protections, programs and
services SCE has available.
www.cpuc.ca.gov/industries-and-topics/wildfires/fire-threat-maps-and-fire-safety-rulemaking Electronic version available at www.sce.com/inserts-onserts February 2024
Not Seeing Eye-to-Eye
With Your Bill?
If you believe the amount you have been billed is
incorrect, call our customer service phone number at the top of your bill to request an explanation. We will be
happy to look into your concerns.

Page 26 of 26 ends

Proposition 65 Warnings
WARNING: The Safe Drinking Water and Toxic
Enforcement Act of 1986, commonly referred to as Proposition 65, requires the governor to publish a list of chemicals known to the State of California to cause cancer and birth defects or other reproductive harm. It also requires California businesses to warn the public of potential exposures to these chemicals that result from their operations.

Providing safe and reliable service to all of our customers is a top priority for Southern California Edison and we want you to be aware of these chemicals so that you can reduce exposure to chemicals associated with electricity generation and distribution. We handle all equipment and materials at our sites carefully for your good health as well as ours. However, if you are at or near our facilities and work sites, you can be exposed to the following chemicals on the state’s Proposition 65 list.

Reduce, limit, or avoid activities at and near the sources of exposure described below. For more information go to:
www.P65Warnings.ca.gov

1. Diesel Generation: Diesel Exhaust: SCE uses
diesel-fueled emergency generators during emergencies and other times to help minimize the interruption of our customers’ supply of electricity. The generators are used at some SCE facilities like substations and service centers, and at locations where repairs are made to the electrical system. SCE also uses diesel as the primary fuel for electricity generation on Catalina Island and in many service vehicles used throughout our service territory. Diesel engines produce exhaust as a by-product of the combustion of diesel fuel. Breathing diesel engine exhaust exposes you to chemicals known to the State of California to cause cancer and birth defects or other reproductive harm. You should avoid breathing diesel fumes whenever possible.

2. Wooden Utility Poles: SCE uses wooden poles that have been treated with chemical preservatives. These chemicals include pentachlorophenol, which is known to the State of California to cause cancer, and petroleum products such as diesel fuel, which contains chemicals including toluene and benzene that are known to the State of California to cause cancer and birth defects or other reproductive harm. If you come into contact with a wooden utility pole or the dust, debris, soil surrounding the pole, or water runoff that may contain dust, debris, and soil previously in contact with the pole, you could be exposed to these chemicals. Avoid contact with wooden utility poles and the dust, debris, soil surrounding the poles, or water runoff that may contain dust, debris, soil surrounding the poles, or water runoff that may contain dust, debris, and soil previously in contact with the poles.

3. Painted Structures: SCE utilizes metal and wood
structures and equipment that may have been coated with paints containing chemicals, such as lead-based paint, that are known to the State of California to cause cancer and birth defects or other reproductive harm. When the paint on these structures deteriorates, flakes of paint can impact the soil adjacent to the structure. To avoid exposure, you should avoid contact with any paint flakes or soil near any structure with deteriorating paint.

Los usarios con acceso al Internet podran leer y descargar esta notificacion en espanol en el sitio Web de SCE:
www.sce.com/avisos
Connect With Us
Get energy-saving tips, safety and outage updates,
and much more.
www.facebook.com/sce
www.twitter.com/sce
www.instagram.com/sce
Thinking of Installing Solar?
SCE’s Marketplace* makes the shopping process easier.

Simply enter your address, type of residential dwelling and average monthly bill to find out if going solar makes
sense.

If it does, you will get a rooftop solar and storage system tailored to your home, bids from a network of vetted solar installers, financing options, and a dedicated energy
advisor to assist you through the entire process. Plus, you will also receive a $500 Marketplace discount from SCE.

For more information visit:
www.marketplace.sce.com/solar
*SCE’s solar and storage marketplace is run by Electrum, a third-party company not affiliated with SCE. SCE does not endorse, or accept any liability for, the content of, services or products sold on any third-party websites.

ITEM 8A DESERT COMMUNITY ENERGY BOARD
FY2023-2024 ATTENDANCE RECORD

FEB MAR APR MAY JUNE
City of Palm Desert * *  *  *  * * * *
City of Palm Springs * *  *  *  * * * *
Absent
No Meeting *
Voting Members JUL AUG SEP OCT NOV DEC JAN
Desert Community Energy
Unaudited Statement of Net Position Prev Year Comparison As of March 31, 2024
Mar 31, 2024 Mar 31, 2023 $ Change % Change
ASSETS
Current Assets
Checking/Savings
1100 · Unrestricted Funds
1103 · CAMP Account 10,500,000 1 - 10,500,000 100%
1105 · Operating Account -8099 199,749 200,000 (251) 0% 1109 · DDM Marketplace Sweep - 0991 10,863,094 1,696,779 9,166,315 540% 1115 · Lockbox -4446 109,888 878,903 (769,015) -87%
Total 1100 · Unrestricted Funds 21,672,731 2,775,682 18,897,049 681% 1199 · Restricted Funds
1110 · Money Market -5470 405,773 405,430 343 0%
1120 · FSR Letter of Credit Collateral 147,000 147,000 - 0% Total 1199 · Restricted Funds 552,773 552,430 343 0%
Total Checking/Savings 22,225,504 3,328,112 18,897,392 568% Accounts Receivable
1221 · Accounts Receivable 15,549,976 12,869,376 2,680,600 21% 1223 · Accrued Accounts Receivable 1,684,434 2,034,120 (349,686) -17% Total Accounts Receivable 17,234,410 14,903,496 2,330,914 16% Other Current Assets
1225 · Allowance for Doubtful Accounts (4,689,171) (2,715,800) (1,973,371) -73% 1240 · Prepaid Expenses 447,189 2,210 444,979 20135%
Total Other Current Assets (4,241,982) (2,713,590) (1,528,392) -56% Total Current Assets 35,217,932 15,518,018 19,699,914 127% Other Assets
1170 · Deposits/Bonds 710,584 310,584 400,000 129%
Total Other Assets 710,584 310,584 400,000 129%
TOTAL ASSETS 35,928,516 15,828,602 20,099,914 127%

LIABILITIES & NET POSITION
Liabilities
Current Liabilities
Accounts Payable
2110 · Accounts Payable 1,968,838 2,354,825 (385,987) -16% 2112 · Accrued Accounts Payable 1,971,551 2 - 1,971,551 100% 2120 · Due to Other Governments 1,009,901 390,808 619,093 158% Total Accounts Payable 4,950,290 2,745,633 2,204,657 80% Other Current Liabilities
2230 · Taxes payable 82,933 99,026 (16,093) -16%
Total Other Current Liabilities 82,933 99,026 (16,093) -16% Total Current Liabilities 5,033,223 2,844,659 2,188,564 77% Long Term Liabilities
2260 · Vendor Security Deposits 405,000 405,000 - 0%
Total Long Term Liabilities 405,000 405,000 - 0%
Total Liabilities 5,438,223 3,249,659 2,188,564 67%
Net Position
31000 · Restricted Net Position 147,000 147,000 - 0%
32000 · Unrestricted Net Position 19,167,378 4,724,389 14,442,989 306% Net Income 11,175,914 7,707,554 3,468,360 45%
Total Net Position 30,490,292 12,578,943 17,911,349 142% TOTAL LIABILITIES & NET POSITION 35,928,515 15,828,602 20,099,913 127% 1 2
An investment account with the California Asset Management Program (CAMP) was opened in line with DCE Policy 23-03 Investment Policy.

Vendor has not been able to invoice for Renewable Energy Certificates (RECs) due to WREGIS system outage.

Desert Community Energy
Unaudited YTD Changes to Net Position Prev Year Comparison July 2023 through March 2024
Jul 2023 - Mar 2024 Jul 2022 - Mar 2023 $ Change % Change Ordinary Revenue/Expense
Revenue
5010 · Electricity Sales
5011 · Carbon Free 42,930,035 37,985,726 4,944,309 13%
5013 · Desert Saver 10,509,059 8,070,566 2,438,493 30%
Total 5010 · Electricity Sales 53,439,094 46,056,292 7,382,802 16% 5100 · Other Revenue
5120 · Energy Market Settlements 606,794 963,179 (356,385) -37% 5125 · Resouce Adequacy 425 172 253 147%
5150 · Other Revenue 30,768 460,346 (429,578) -93%
Total 5100 · Other Revenue 637,987 1,423,697 (785,710) -55% Total Revenue 54,077,081 47,479,989 6,597,092 14%
Expense
4100 · Cost of Electricity
4105 · Electricity Purchase 28,211,894 23,696,960 4,514,934 19% 4110 · Resource Adequacy Settlement 6,365,809 7,398,713 (1,032,904) -14% 4115 · Low Carbon Settlement 674,250 - 674,250 100%
4120 · Renewable Energy Cr. Settlement - 134,106 (134,106) -100% 4125 · Market Charges 3,494,854 4,928,211 (1,433,357) -29% 4175 · CPUC YARA Penalty 650,105 - 650,105 100%
Total 4100 · Cost of Electricity 39,396,912 36,157,990 3,238,922 9% 4200 · Accounting / Bank Services 1,755 24,776 (23,021) -93% 4353 · Insurance 6,442 6,630 (188) -3%
4423 · Office Supplies 1,375 1,200 175 15%
4425 · Legal Services 131,272 70,563 60,709 86%
4431 · Professional Services 110,544 155,293 (44,749) -29% 4432 · Consultants 1,764,890 1,799,656 (34,766) -2%
4433 · Outreach Services 23,448 41,530 (18,082) -44%
4435 · Technology Costs (IT) 4,209 3,127 1,082 35%
4440 · Postage 12,355 12,400 (45) 0%
4441 · Printing 9,072 15,740 (6,668) -42%
4450 · Sponsorships - 1,603 (1,603) -100%
4452 · Marketing 4,004 7,930 (3,926) -50%
4500 · Registrations/Memberships 71,333 63,497 7,836 12% 4750 · Bad Debt Expense 1,603,152 1,375,298 227,854 17% Total Expense 43,140,763 39,737,233 3,403,530 9%
Net Ordinary Revenue 10,936,318 7,742,756 3,193,562 41% Other Revenue/Expense
Other Revenue
5900 · Investment Revenue 240,583 11,451 229,132 2001%
Total Other Revenue 240,583 11,451 229,132 2001%
Other Expense
4610 · Interest Expense 990 46,655 (45,665) -98%
Total Other Expense 990 46,655 (45,665) -98%
Net Other Revenue 239,593 (35,204) 274,797 781%
Net Revenue 11,175,911 7,707,552 3,468,359 45%
Desert Community Energy
Unaudited YTD Changes to Net Position Budget vs. Actual July 2023 through March 2024
Jul 2023 - Mar 2024 Budget $ Over Budget % of Budget
Ordinary Revenue/Expense
Revenue
5010 · Electricity Sales
5011 · Carbon Free 42,930,035 45,749,866 (2,819,831) 94% 5013 · Desert Saver 10,509,059 9,853,568 655,491 107%
Total 5010 · Electricity Sales 53,439,094 55,603,434 (2,164,340) 96% 5100 · Other Revenue
5120 · Energy Market Settlements 606,794 1,257,360 (650,566) 48% 5125 · Resouce Adequacy 425 307 118 138%
5150 · Other Revenue 30,768 - 30,768 100%
Total 5100 · Other Revenue 637,987 1,257,667 (619,680) 51% Total Revenue 54,077,081 56,861,101 (2,784,020) 95%
Expense
4100 · Cost of Electricity
4105 · Electricity Purchase 28,211,894 24,238,017 3,973,877 116% 4110 · Resource Adequacy Settlement 6,365,809 7,887,662 (1,521,853) 81% 4115 · Low Carbon Settlement 674,250 301,481 372,769 224% 4120 · Renewable Energy Cr. Settlement - 107,814 (107,814) 0% 4125 · Market Charges 3,494,854 4,417,095 (922,241) 79% 4175 · CPUC YARA Penalty 650,105 - 650,105 100%
Total 4100 · Cost of Electricity 39,396,912 36,952,069 2,444,843 107% 4200 · Accounting / Bank Services 1,755 5,475 (3,720) 32% 4353 · Insurance 6,442 6,975 (533) 92%
4423 · Office Supplies 1,375 - 1,375 100%
4425 · Legal Services 131,272 67,500 63,772 194%
4431 · Professional Services 110,544 18,500 92,044 598% 4432 · Consultants 1,764,890 2,061,033 (296,143) 86%
4433 · Outreach Services 23,448 33,000 (9,552) 71%
4435 · Technology Costs (IT) 4,209 3,150 1,059 134%
4440 · Postage 12,355 9,000 3,355 137%
4441 · Printing 9,072 13,500 (4,428) 67%
4452 · Marketing 4,004 6,000 (1,996) 67%
4455 · Customer Programs - 112,500 (112,500) 0%
4500 · Registrations/Memberships 71,333 64,650 6,683 110% 4750 · Bad Debt Expense 1,603,152 1,705,833 (102,681) 94% Total Expense 43,140,763 41,059,185 2,081,578 105%
Net Ordinary Revenue 10,936,318 15,801,916 (4,865,598) 69% Other Revenue/Expense
Other Revenue
5900 · Investment Revenue 240,583 181,961 58,622 132%
Total Other Revenue 240,583 181,961 58,622 132%
Other Expense
4610 · Interest Expense 990 5,000 (4,010) 20%
Total Other Expense 990 5,000 (4,010) 20%
Net Other Revenue 239,593 176,961 62,632 135%
Net Revenue1 11,175,911 15,978,877 (4,802,966) 70%
1 While subject to change, fiscal year-end estimates currently demonstrate Net Revenue % of Budget near 100%.

ITEM 8C

STAFF REPORT
Subject: Summary of March 2024 and June 2024 Rate Adjustments Contact: Don Dame, DCE Energy Consultant
Recommendation: Information
Background: On November 16, 2020, the DCE Board adopted a Rate Stabilization Schedule (RSS). The RSS became effective on December 1, 2020, and was amended by the Board on May 12, 2023, with a June 1, 2023 effective date. The RSS authorizes staff to adjust DCE retail rates in response to changes in Southern California Edison (SCE) rates and/or Power Charge Indifference Adjustment (PCIA, or exit fee), to maintain DCE Board-approved rate guidelines.

The Board’s currently approved rate policies include designing Desert Saver rates within a 0 – 1% average total bill discount versus SCE’s comparable bundled base product average total bill and designing DCE’s 100% Carbon Free rates such that DCE’s primary residential rate class, “Domestic,” does not exceed a 14% average total bill premium versus SCE’s comparable bundled base product average total bill.

The RSS requires DCE staff to prepare a summary report describing RSS-related rate adjustments and provide this information at the next scheduled Board meeting after such adjustments are implemented. This staff report provides summaries for DCE’s March and June 2024 rate adjustments.

March 2024 Rate Adjustment Summary
Effective March 1, 2024, SCE implemented a total system average rate increase of approximately

1.0% including an average residential customer rate increase of approximately 1.2%. SCE’s average bundled residential customer bill increased approximately $2.17 monthly, based on average monthly consumption of 520 kWh.0F
1 For customers enrolled in the California Alternate
Rates for Energy (CARE) and Family Electric Rate Assistance (FERA) plans, SCE’s average bundled residential customer bill increased about $1.19 monthly inclusive of ongoing CARE/FERA average billing discounts of approximately 30% and 18%, respectively. As approved by the California Public Utilities Commission (CPUC), SCE’s revised rates reflect changes to multiple components of its consolidated revenue requirement.

Working within DCE Board-approved financial policies and procedures, the provisions of DCE’s RSS, and the concurrence of DCE’s Risk Management Team (RMT), DCE implemented a corresponding DCE rate adjustment effective March 7, 2024. 1 March 2024 average monthly bill increases were derived from SCE’s/DCE’s Joint Rate Comparison tables for DCE’s service area effective January 2024 and March 2024.

Desert Community Energy Board
June 17, 2024
March 2024 DCE Rate Adjustment Details:
• Effective Date: March 7, 2024
• RMT review and agreement: February 29, 2024.
• Desert Saver average total bill discount compared to SCE’s bundled base power product average total bill estimated to be within 0 – 1%.
• 100% Carbon Free residential customer average total bill premium not to exceed approximately 14% compared to SCE's bundled base power product average total bill. • The rate forecast period utilized is March 1, 2024 – February 28, 2025. • Calculations and estimates are based on known and forecast costs and revenues throughout the rate forecast period.
• Any particular customer’s average bill impact may vary depending on enrolled rate schedule and monthly electricity usage.

June 2024 Rate Adjustment Summary
Effective June 1, 2024, SCE implemented a total system average rate decrease of approximately

1.7% primarily attributable to a decline in generation related costs. This change results in an average residential customer rate decrease of approximately 1.6%. SCE’s average bundled residential customer bill is estimated to decrease approximately $3.02 monthly, based on average monthly consumption of 520 kWh.1F
2 For customers enrolled in the CARE and FERA plans, SCE’s average bundled residential customer bill is estimated to decrease about $2.05 monthly inclusive of ongoing CARE/FERA average billing discounts of approximately 30% and 18%, respectively.

As approved by the CPUC, SCE’s revised rates reflect changes to its consolidated revenue requirement.

June 2024 DCE Rate Adjustment Details:
• Effective Date: June 4, 2024.
• RMT review and agreement: May 30, 2024.
• Desert Saver average total bill discount compared to SCE’s bundled base power product average total bill estimated to be within 0 – 1%.
• 100% Carbon Free residential customer average total bill premium not to exceed approximately 14% compared to SCE's bundled base power product average total bill. • The rate forecast period utilized is June 1, 2024 – May 31, 2025. • Calculations and estimates are based on known and forecast costs and revenues throughout the rate forecast period.
• Any particular customer’s average bill impact may vary depending on enrolled rate schedule and monthly electricity usage.

Fiscal Analysis:

DCE’s rate adjustments are designed to fully recover forecast power supply and operating costs, build financial reserves, address cash flow requirements, and exercise fiscal prudence. 2 Estimated June 1, 2024, average monthly bill increases were derived from SCE’s May 29, 2024, Advice Letter 5307- E, P. 9, Table 4, and adjusting monthly average residential energy usage from 500 kWh to 520 kWh, the average consumption level utilized in SCE’s/DCE’s Joint Rate Comparison table for DCE’s service area effective March 2024.

SCE customer retail rates increased March 1, 2024, and DCE customer retail rates were commensurately adjusted beginning March 7, 2024. The average monthly bill of SCE bundled residential customers increased about $2.17; DCE Desert Saver residential customer average monthly bill increased about $2.16; and DCE Carbon Free residential customer average monthly bill increased about $2.45.

SCE customer retail rates decreased June 1, 2024, and DCE customer retail rates were commensurately adjusted beginning June 4, 2024. The average monthly bill of SCE bundled residential customers will decrease about $3.02; DCE Desert Saver residential customer average monthly bill will decrease about $3.00; and DCE Carbon Free residential customer average monthly bill will decrease about $3.44.

Staff continues to work with the California Community Choice Association (CalCCA) and other Community Choice Aggregators (CCAs) to collectively address cost effectiveness, legislative matters and CPUC actions impacting CCAs. In addition, DCE will continue to highlight DCE’s retail product choices as part of its community engagement efforts. DCE’s Desert Saver product continues to be the least cost electric service in Palm Springs, and DCE’s Carbon Free product results in zero carbon emissions, maximizing electricity-related climate mitigation.

COACHELLA VALLEY ASSOCIATION OF GOVERNMENTS SCHEDULE OF MEETINGS FISCAL YEAR 2024/2025

CVAG STANDING

COMMITTEES

DAY TIME JULY
(Dark)
AUG
(Dark)

SEPT OCT
(Dark)

NOV DEC
(Dark)

JAN FEB MAR
(Dark)

APR MAY JUN
EXECUTIVE COMMITTEE Last Monday 4:30 p.m. - - 30 - H
Dec 2 - 27 24 - 28 HJune 2 30
TRANSPORTATION COMMITTEE 1st Monday 10:00 a.m. - H
Aug 26 - 4 - 6 3 - 7 5 2

COACHELLA VALLEY
CONSERVATION COMMISSION 2nd Thursday 10:30 a.m. - - 12 - 14 - 9 13 - 10 8 12 DESERT COMMUNITY ENERGY 3rd Monday 3:00 p.m. - - 16 21 18 - H Jan 13
H
Feb10 17 21 19 16

ENERGY AND SUSTAINABILITY

COMMITTEE
2nd Thursday 12:00 p.m. - - 12 - 14 - 9 13 - 10 8 12
PUBLIC SAFETY COMMITTEE 2nd Monday 9:00 a.m. - - 9 - H
Nov 18 - 13 10 - - 12 9
HOMELESSNESS COMMITTEE 3rd
Wednesday 10:00 a.m. - - 18 - 20 - 15 19 - 16 21 18
GENERAL ASSEMBLY Last Monday
in June 6:00 p.m. - - - - - - - - - - - 30
H = Holiday * = Special Meeting AGENDAS CAN BE FOUND AT: www.cvag.org. UPDATED: June 13, 2024 PLEASE NOTE: When it becomes necessary to have a special meeting or to change the date of a meeting, committee members will be alerted and the change will be noted on the CVAG website calendar.

ITEM 8E
a

STAFF REPORT
Subject: DCE’s 2024 Summer Readiness Outreach Strategy
Contact: Emily Langenbahn, Management Analyst ([email protected]) Recommendation: Information
Background: The Coachella Valley experienced more than its fair share of extreme weather in the summer of 2023, including Tropical Storm Hilary and 43 days of temperatures measuring over 110 degrees in Palm Springs. In the desert, summer demonstrates the need to conserve energy during the hottest months of June through September, which is crucial for grid stability. The California Independent System Operator (CAISO), California Public Utilities Commission (CPUC), and California Energy Commission (CEC) ask Community Choice Aggregation providers such as DCE to report on their existing efforts to address the increased need to reduce higher energy use that occurs in the summer and continue its summer readiness strategy.

DCE staff continues to work with CalCCA and other CCAs to address summer readiness planning and messaging to customers. Flex Alerts are issued by the CAISO to encourage the public to voluntarily conserve electricity in times of combined high demand and low energy supply. The CAISO has also advised that strategic reserves have been mobilized through State efforts to safeguard against these extremes events. To ensure public awareness, readiness, and participation, DCE staff is continuing its work with its outreach contractor, Burke Rix Communications, to distribute messaging in advance of forecasted heat waves and to ensure all Flex Alert messages are passed on to the public as soon as they are received. Given the immediacy and urgency of the CAISO Flex Alerts, DCE staff will rely heavily on social media to promote these messages.

DCE staff anticipates a summer outreach strategy similar to last year to encourage customers to reduce energy use, especially during peak hours, with a heavy emphasis on reducing energy use during peak operating hours, which are typically between 4 p.m. to 9 p.m. DCE’s public outreach educates and encourages customers to avoid peak hours by letting them know what times are best for using energy intensive appliances like washing machines and dishwashers, as well as best times to charge electric vehicles. DCE will also continue to work with member agencies to encourage their residents and businesses to reduce consumption. The outreach team is broadcasting through various social media channels helpful tips to save money and energy this summer. In addition, the attached Ways to Save Energy flyer will once again be distributed at public locations throughout Palm Springs, on social media, and available on DCE’s website. DCE will aim to expand its audience by working with other social media accounts and will be coordinating with the Cities of Palm Springs and Palm Desert during the summer.

Additionally, DCE has been working with OhmConnect since November 2021 on outreach to encourage residential customers to avoid peak hours to save energy and money. DCE continues Desert Community Energy Board
June 17, 2024
to promote OhmConnect’s 2024 Spring/Summer outreach campaign to our customers via email, social media, and other outreach. Through the partnership with OhmConnect, customers are incentivized to switch out old thermostats with new ones and use smart plugs. The program lets customers know when they need to turn off electronic devices and rewards them with points when they meet OhmConnect hours. Customers who enroll in OhmConnect’s demand response program can receive prizes and rewards such as gift certificates and cash awards.

Fiscal Analysis: DCE has an existing contract with Burke Rix for outreach efforts. The cost for the summer readiness outreach strategy was incorporated under the marketing and outreach costs in the Fiscal Year 2023/2024 Budget approved last year. DCE staff estimates that the costs associated with this outreach strategy will be between $3,000 to $5,000 for a summer social media campaign, which is approximately the same as 2023.

Attachment: Ways to Save Energy flyer
DesertCommunityEnergy.org
(855) 357-9240 (toll free)
Help your HVAC run more efficiently by changing your filters regularly every few months and getting the unit professionally serviced. 1 Perform a HVAC Tune-Up
A programmable thermostat optimizes your HVAC unit and makes your whole house more energy-efficient, equating up to 10% in savings. Pre-cool your home in the morning and set your thermostat to 78°F (or higher) later in the day. Get a smart thermostat to save even more!
2 78
Get a Programmable, or even better, a Smart Thermostat
Replace 5 of your home’s most frequently used lights with ENERGY STAR qualified LED bulbs to save up to $65 a year. Don’t over-light your rooms and install a dimmer.
3 Don’t Overheat your Home with Lighting
This one may be obvious, but the best way to save on lighting is to make sure you turn off all the lights when you leave a room! The same goes for electronic devices and setup the hibernation feature on your TV and computer to make it easy.
4 78 Turn Off Lights & Electronic Devices
Many appliances use energy even when turned off! Stop the energy drain by plugging devices into a power strip and turning it off when not in use. Smart Plugs are also a great way to save energy by programming them and monitoring use.
5 Stop the Drain
Studies show that refrigerators are second only to air conditioner units in the amount of energy they use per year.

Keep it Cool by Closing the Fridge Door 6
12 Ways to Save Energy
at Home
DesertCommunityEnergy.org
(855) 357-9240 (toll free)
Using a ceiling fan is equivalent to reducing the air temperature by as much as 4°F and enables you to keep comfortable where you are without overcooling the house.
7 Install Ceiling Fans in Rooms You Use Regularly
Look for air seepage around windows and exterior doors. Install weather-stripping where needed to improve comfort and intrusion of unwanted air from the outside that adds to energy costs!
8 Seal Gaps & Cracks
Choose window treatments that allow you to use natural light while reducing heat loss and gain. Plant trees to create shade and cool your home. 9 Block the Sun
Run your pool pump for a maximum of 8 hours at night or split it between mornings and night to conserve energy and save money.
10 Make an Energy Savings Splash
The City of Palm Springs offers a $100 rebate for home energy assessments done by a qualified professional. Details are available on the Office of Sustainability Energy Efficiency page:
https://www.palm-springsca.gov/services/sustainability-and-recycling/energy-efficiency 11 Perform a Home Energy Audit
Turn-off and unplug devices between 4-9pm when energy demand and rates are the highest. Run your dishwasher, washing machine, and dryer in the morning, early afternoon before 4:00 p.m. or after 9:00 p.m. 12 Power Down Between 4-9pm
12 Ways to Save Energy
at Home
ITEM 8F
Desert Community Energy Board
June 17, 2024

STAFF REPORT
Subject: Update on Distributed Energy Resources & Microgrids Contact: David Freedman, Program Manager ([email protected]) Recommendation: Information
Background: At the January 2024 meeting of the DCE Board, staff was asked to provide an update on microgrids. DCE staff has, since early 2022, been evaluating opportunities for distributed energy resources (DER) such as microgrids. Microgrids are a specialized form of DER that offer the possibility of a critical facility or neighborhood having better resilience, as the microgrid serving the facility or neighborhood can be isolated from the grid and allows for power to be utilized off grid in the event of grid failure.

SB 1339, which was passed by the Legislature in 2018, requires the California Public Utilities Commission (CPUC), in consultation with the California Energy Commission and the California Independent System Operator, to take action to facilitate the commercialization of microgrids for distribution customers of large electrical corporations. The CPUC is currently implementing SB 1339 through its Microgrids proceeding.

Components of microgrid commercialization are set by SB 1339, and must include: (1) rates, tariffs, and rules, as necessary; that (2) remove barriers for deploying microgrids across the large investor-owned utility (IOU) service territories; (3) without shifting costs onto non-benefiting customers; and (4) prioritizing and ensuring worker, public, and the electric system’s safety and reliability.

Track 5 of the Microgrids proceeding is focused on developing a multi-property microgrid tariff.

Parties have been given an opportunity to submit proposals for multi-property microgrid tariffs that follow the guiding principles and requirements established by the CPUC. On March 26, 2024, the CPUC held a workshop to allow the IOUs and other parties to present their proposals for a multi-property microgrid tariff, previously filed into the record of the proceeding, and to allow for questions and public comments.

On March 27, the CPUC directed the parties to file comments discussing if and/or how their multi-property microgrid tariff proposal aligns with the nine goals in the CPUC’s Environmental and Social Justice (ESJ) Action Plan. ESJ communities as defined in the plan include disadvantaged communities, all Tribal lands, and low-income households and census tracts having 80% or less of the area or state median income. Final comments in response to the March 27 ruling were filed on May 17.

The CPUC will consider the stakeholder proposals and comments and is expected to issue a Decision adopting a multi-property microgrid tariff by year-end. DCE staff will continue monitoring the CPUC’s decisions and programs related to microgrids and will report back to the Board. Staff is also providing regular updates to the CVAG Energy & Sustainability Committee and to the Inland Regional Energy Network (I-REN) Executive Committee.

Fiscal Analysis: There is no cost to DCE for this informational update.

ITEM 8G

STAFF REPORT
Subject: 2023 Annual Supplier Diversity Report
Contact: Savannah Gil, Program Specialist ([email protected]) Recommendation: Information
Background: Community Choice Aggregators (CCAs) like DCE are required to submit an Annual Supplier Diversity Report to the California Public Utilities Commission (CPUC) that details a plan for increasing procurement from small, local, and diverse business enterprises and details procurement efforts related to Women, Minority, Disabled Veteran, or Lesbian Gay Bisexual Transgender Business Enterprises (WMDVLGBTBEs). The CPUC oversees the voluntary Supplier Diversity Program under General Order 156 (GO 156), which promotes efforts to increase the number of utility contract dollars spent on underserved or marginalized groups.

DCE submitted its 2023 Annual Supplier Diversity Report to the CPUC on March 1, 2024. The report highlights DCE’s commitment to promoting equal access to economic opportunities for WMDVLGBTBEs and increasing procurement from certified, local, small, and diverse businesses.

The 2023 report also outlines DCE's plan for 2024 and includes details of DCE's efforts to diversify its procurement.

Although DCE primarily purchases power contracts, DCE staff is committed to finding ways to source other goods and services, including subcontracting, to promote inclusivity. To support the local community, DCE aims to make local procurement a priority, benefiting both the residents and local businesses.

The CPUC's Supplier Diversity Program is a valuable initiative that includes a Supplier Clearinghouse that maintains a Certified Suppliers List. This list provides utilities and covered entities such as CCAs with access to a centralized database of certified suppliers, aiding them in meeting their procurement goals. By participating in this program, local companies can be identified as eligible, certified suppliers, opening up multiple opportunities for networking and visibility through marketing activities, events, and bid announcements advertised by the Clearinghouse.

The CPUC develops and distributes the annual Supplier Diversity Report template to CCAs and utility companies. Some of the report sections and tables do not apply to DCE specifically and thus are either identified as not applicable or intentionally left blank. An example of this can be seen in the table found in Section 9.1.2 of the report. Other tables, such as those found in Section 9.1.9, are automatically populated with zeros, as DCE is only responsible for filling in any applicable data.

The 2023 Report identifies that DCE currently has a contract with one local, diverse business enterprise that is certified through the CPUC Supplier Clearinghouse as an LGBT business enterprise. Moreover, the 2023 Report highlights DCE’s endeavors to recruit people from diverse backgrounds to join its Community Advisory Committee, particularly those who represent underserved members of the community. However, DCE staff acknowledges that more needs to be done to support small, local, and diverse businesses in the area. DCE staff is exploring ways to help Desert Community Energy Board
June 17, 2024
local diverse businesses get certified and listed on the State's Supplier Clearinghouse database. In the coming year, staff will also be looking to collaborate with local chambers of commerce, business networks and similar organizations. Additionally, Supplier Clearinghouse information was distributed in April 2024 by DCE’s sister agency, the Coachella Valley Association of Governments, during the Coachella Valley Local Government Vendor Fair.

The 2023 Annual Report also features DCE’s planned activities to expand supplier diversity and support local and small businesses, which include:
• Participating in diverse organizations and chambers of commerce to provide information on the Supplier Diversity Program and the State’s Supplier Clearinghouse; • Participating in local, state, and national Supplier Diversity events to engage with diverse supplier groups;
• Enhancing training and knowledge efforts on supplier diversity with current and new DCE Staff by attending quarterly CPUC Supplier Diversity Program trainings and Marin Clean Energy’s (MCE) Amplify and Certify virtual workshops; and • Developing a more efficient mechanism to track DCE’s business enterprise spending and report results to the Board.

DCE staff will continue to work toward achieving its supplier diversity goals planned for 2024 and will provide updates to the Board accordingly.

Fiscal Analysis: There is no additional cost to DCE for this information item. The cost of performing supplier diversity activities is covered in the DCE budget.

Attachment: 2023 GO 156 Supplier Diversity Report
Desert Community Energy
2023 Supplier
Diversity Annual
Report
To the California Public
Utilities Commission
March 1, 2024
Page ii
Desert Community Energy
74-199 El Paseo, Suite 100
Palm Desert, CA 92260
Telephone:
760.346.1127
Email:
[email protected]
Website:
www.desertcommunityenergy.org
Page iii

TABLE OF CONTENTS
Table of Contents
2023 Annual Report.......................................................................................................1

9.1.1 Diverse Program Activities ...............................................................................................................2 Hiring Practices..................................................................................................................................... 2 Community Advisory Committee ......................................................................................................... 3 Strategic Initiatives............................................................................................................................... 3

9.1.2 Summary of Purchases.....................................................................................................................5 Supplier Diversity Results of Goods and Services (non-power purchases).......................................... 5 Description of Diverse Suppliers with Majority Workforce in California ............................................. 7

9.1.3 Diverse Supplier Program Expenses.................................................................................................8

9.1.4 Description of Progress in Meeting or Exceeding Set Goals.............................................................9

9.1.5 Summary of Prime Contractors Utilization of Diverse Supplier Subcontractors..............................9

9.1.6 List of Diversity Complaints Received...............................................................................................9

9.1.7 Description of Efforts to Recruit Diverse Suppliers in Low Utilization Areas...................................9

9.1.8 Retention of All Documents/Data ....................................................................................................9

9.1.9 Description of Supplier Diversity Activities and Progress in Power (Energy) Procurement...........10 2024 Annual Plan.........................................................................................................13

10.1 Diverse Annual Short-, Mid- and Long-Term Goals by Product and Service Category....................13

10.2 Description of Diverse Internal and External Activities for 2024 ....................................................13 PLANNED EXTERNAL PROGRAM ACTIVITIES FOR 2024...................................................................... 13 PLANNED INTERNAL PROGRAM ACTIVITIES FOR 2024 ...................................................................... 13 Plans to Encourage Prime Contractors to Subcontract Small, Local, and Diverse Businesses........... 14 CONCLUSION ..............................................................................................................14 Page iv

PAGE INTENTIONALLY LEFT BLANK

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2023 Annual Report
Desert Community Energy (DCE) is a local government, not-for-profit Joint Powers Authority established in 2017 to provide member agencies with a Community Choice Aggregation (CCA) program. The cities of Palm Springs and Palm Desert are current members. DCE began serving load in the City of Palm Springs in April 2020, serving approximately 33,000 residential, commercial, industrial, and agricultural accounts.

DCE’s goals include: 1) reducing greenhouse gas emissions-related electricity use; 2) providing electric generation at competitive, stable rates; 3) offering programs to reduce energy consumption; 4) stimulating the local economy by developing local jobs in renewable energy; and 5) promoting long-term energy security, and reliability for customers through local control of electric generation resources.

The California Public Utilities Commission (CPUC) General Order 156 (GO 156) emphasizes preferential purchasing for diverse business enterprises. In compliance with Proposition 209, CCAs as local government entities do not explicitly give preferential treatment to bidders based on race, sex, color, ethnicity, or national origin. To comply with Proposition 209, CCAs may collect this information only after contracts are signed and responses are kept separate from procurement decision-makers so that this information does not influence any current or future solicitation or selection process.

Proposition 209 limits CCAs as public agencies from engaging in several of the activities associated with supplier diversity under GO 156. However, DCE acknowledges that more needs to be done to support small, local, and diverse businesses in our region. Consistent with the requirements of Senate Bill 255, this report describes DCE’s continued efforts to plan for and implement practices to increase procurement from small, local, and diverse businesses. It also reports to the Commission on its procurement from these sources.

In this fourth year of submitting the GO 156 report, DCE continues to improve our understanding of the evolving GO 156 requirements and opportunities to increase diversity in our procurement. DCE is committed to expanding equal access to economic opportunities for minority business enterprises (MBE), women-business enterprises (WBE), LGBT business enterprises (LGBTBE), persons with disability business enterprises (PDBE), disabled veteran business enterprises (DVBE), other underserved or marginalized groups. DCE also continues efforts to include local and small businesses in our procurement. The majority of DCE’s purchases are power contracts.

Because the Coachella Valley is a small region, participation by local and small businesses as prime contractors in grid-scale energy project development has challenges since securing capital for a project requires a demonstration of financial strength. Yet, there may be opportunities for subcontracting and consulting on these projects. As noted, one of the goals of DCE is to keep profits in our local communities to benefit businesses and residents, including those who have endured economic inequity marginalization.

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9.1.1 Diverse Program Activities
In 2023, DCE engaged in the following activities oriented toward increasing supplier diversity:
• Continued familiarizing staff with the history, requirements, and intent of Senate Bill 255 and General Order 156. This included educating employees on GO 156 and providing training to aid in conducting appropriate outreach.
• Continued working with other CCAs as members of CalCCA to learn best practices in maximizing supplier diversity in our communities, given the constraints of Proposition 209.
• Reviewed information provided by CPUC staff regarding updated compliance with GO 156 and additional opportunities available to CCAs to diversify procurement. • Continued developing an action plan to diversify our business enterprise (BE) opportunities.
• Conducted outreach to diverse businesses via a booth at four community events and provided information on supplier diversity and the Clearinghouse. • Increased efforts to expand on diversity and inclusion goals, including procurement, community relations, board representation, and hiring/contracting practices.

In 2024, DCE will continue to dedicate resources to working with our existing and future suppliers on opportunities to expand institutional diversity and inclusion. The Coachella Valley is a diverse region with many business owners who fall within the GO 156 parameters but may not know about the Clearinghouse or realize their eligibility for registration and inclusion. DCE plans to do outreach via social media, its website, and attendance at various community events where information will be shared, and opportunities to get registered will be offered. We will also encourage our current and future contractors to utilize locally diverse subcontractors to open more opportunities for them.

Hiring Practices
DCE staffing is provided by the Coachella Valley Association of Governments (CVAG) through a management services agreement approved by the DCE Board. Thus, DCE does not directly employ staff. However, CVAG is an equal opportunity employer, and recruiting and hiring practices are established to strive for diversity, consistent with the requirements of Proposition 209. Recruitment outreach opportunities to access a diverse pool of potential job applicants are utilized.

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Community Advisory Committee
DCE has a Community Advisory Committee (CAC) made up of representatives from the member cities. Recruiting efforts focused on reaching out to individuals from diverse backgrounds, particularly someone who could represent underserved members of the community. In 2024, DCE anticipates continuing its outreach efforts to recruit underserved members of the community to participate in the CAC.

Strategic Initiatives
Since its launch in April 2020, DCE has issued several requests for offers (RFOs) and requests for proposals (RFPs), which have led DCE to enter into various agreements, including renewable energy agreements, energy storage agreements (ESAs), and other power purchase agreements (PPAs) to purchase power and electric capacity. DCE’s long-term energy agreements with local providers include Terra-Gen and NextEra.

On December 21, 2020, the DCE Board approved three 15-year PPAs with Terra-Gen, LLC. Terra-Gen, LLC is a leading developer, owner, and operator of renewable energy projects that has been operating since 2008. Terra-Gen specializes in the development, construction, and operation of utility-scale wind, solar, and energy storage as well as geothermal generation facilities. The 10.8-megawatt (MW) Coachella Hills II project achieved its Commercial Operation Date (COD) and entered DCE’s portfolio on May 4, 2021. The existing 9.8 MW Altwind and 12.6 MW East Wind projects entered DCE’s portfolio on January 1, 2023.

On September 27, 2023, DCE executed an ESA with Desert Sands Energy Storage II, LLC, a subsidiary of NextEra Energy Resources (NextEra). The project is a 25 MW / 200 MWh lithium-ion battery storage facility that is part of a larger 700 MW energy complex located mainly within the Palm Springs City limits. The expected COD for DCE’s portion of the project is April 1, 2027.

As part of its forecasting and procurement processes, DCE considers the overall diversity and reliability of its renewable portfolio, including characteristics such as a resource’s dispatchable generation and available capacity. DCE also reviews the respective risks – including development and generation risk – associated with short and long-term purchases as part of its forecasting and procurement processes. These efforts will lead to a more diverse resource mix, address grid integration issues, and provide value to the local community.

DCE is currently focused on managing its existing portfolio of utility-scale renewable and storage resources to meet the clean and renewable energy targets for the City of Palm Springs and completing its procurement to meet all CPUC requirements.

Beyond the state’s minimum renewable procurement requirements, the DCE Board has established additional green and renewable energy goals. Specifically, the DCE Board has directed that DCE acquire a portfolio consisting of 100 percent carbon-free generation for its Carbon Free product. All current customers served by DCE in the City of Palm Springs were opted into this Carbon Free product as the default, and the vast

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Desert Community Energy Board of DirectorsJune 17, 2024

Desert Community Energy Board of Directors
June 17, 2024