Desert Community Energy Board of Directors
November 20, 2025

DESERT COMMUNITY ENERGY

SPECIAL MEETING AGENDA
Thursday, November 20, 2025
3:00 p.m.

Palm Springs Police Department
Training Center - Classroom C
200 S. Civic Drive
Palm Springs, CA 92262
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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. Members of the public joining the meeting by Zoom can provide comment by using the “raise hand” feature or hitting *9 on the phone keypad.

As a convenience to the public, DCE provides a call-in and internet-based option for members of the public to virtually observe and provide public comments at its meetings. Please note that, in the event of a technical issue disrupting the call-in or internet-based options, the meeting will continue unless otherwise required by law.

THIS MEETING IS HANDICAPPED ACCESSIBLE.

ACTION MAY RESULT ON ANY ITEMS ON THIS AGENDA.

1. CALL TO ORDER – Chair Jeffrey Bernstein, City of Palm Springs

2. ROLL CALL
A. Member Roster P5

3. AGENDA MODIFICATIONS (IF ANY)

4. PUBLIC COMMENTS ON AGENDA ITEMS
This is the first of two opportunities to address the Board. 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. Adopt DCE Policy No. 25-01 for minor updates to DCE’s Wholesale Energy P6 Procurement Risk Management Policy
B. Adopt DCE Resolution 2025-07 approving revised Rate Stabilization Schedule’s P64 Exhibit A Rate Adjustment Guidelines effective November 17, 2025

6.1 ITEMS HELD OVER FROM CONSENT CALENDAR

7. DISCUSSION / ACTION
A. DCE’s Audited Financial Statements for Fiscal Year 2024-25 and Related Reports – P70 Claude Kilgore
Recommendation: Receive and file the Audited Financial Statements for the year ended June 30, 2025, Report on Internal Controls over Financial Reporting, and the Auditor’s Communication with Those Charged with Governance
B. Phase II of the ACCESS Indian Canyon Renewable Energy Assessment Services – P105 Alvaro Valcarcel Jervis
Recommendation: Authorize the Executive Director to execute a contract with Cierco Inc in partnership with Hot Purple Energy (C&H) for an amount not to exceed $87,520 through April 2026 to complete Phase II of the Renewable Energy Assessment of the Addressing Climate Change, Emergencies and Sand Storms (ACCESS) along Indian Canyon project C. Pre-Pay Bond Financing Overview and Selection of Advisory Initial Services – Lisa P207 McNeilly and Claude Kilgore
Recommendation: Authorize the Executive Director to take the necessary steps to establish pre-payment bond financing including 1.) executing, in partnership with Redwood Coast Energy Authority (RCEA), agreements with Municipal Capital Market Groups, Inc. managing directors John Norman and Tyler Noble to provide prepayment advisory and related services for a total, shared cost not to exceed $350,000 and 2.) select and negotiate agreements with Project Participant Legal Counsel at a total, shared cost not to exceed $300,000 and 3) work with RCEA to apportion costs of the pre-pay equitably
D. Update on Factors Impacting DCE’s Fiscal Year 2025-26 Budget – Lisa McNeilly and P210 Claude Kilgore
Recommendation: Information

8. INFORMATION
A) Attendance Record P213
B) 2024 Power Content Label P214

C) Update on Establishing DCE’s Energy Efficiency Program P217 D) Summary of October and November 2025 Rate Adjustments P218

9. PUBLIC COMMENTS ON NON-AGENDA ITEMS
This is the second of two opportunities to address the Board. 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 Board meeting will be held January 12, 2026, 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
City of Palm Springs Chair
Jeffrey Bernstein
Councilmember
DCE Staff
Tom Kirk, Executive Director
Claude Kilgore, Director of Finance
Lisa McNeilly, Director of Energy & Sustainability
ITEM 6A

STAFF REPORT
Subject: Minor Updates to the Wholesale Energy Procurement Risk Management Policy
Contact: Lisa McNeilly, Director of Energy & Sustainability ([email protected]) Recommendation: Adopt DCE Policy No. 25-01 for minor updates to DCE’s Wholesale Energy Procurement Risk Management Policy
Background: In May 2018, the Board adopted Policy No. 18-09, DCE’s Energy Risk Management Policy (ERMP). The ERMP allowed DCE to manage the risks associated with energy market prices, regulatory risks, counterparty credits, and power procurement activities, such as weather impacts on retail load or customer opt-outs/opt-downs. In June 2024, the Board adopted Policy No. 24-01, the Wholesale Energy Procurement Risk Management Policy (WEPRMP) updating the ERMP in response to changes in how DCE approached managing energy risk and how the regulatory landscape and energy sector has evolved.

The WEPRMP, 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. 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 manage DCE’s exposure to wholesale energy procurement risk.

The 2024 policy continues to serve its purpose but would benefit from minor updates. With this item, staff recommends adoption of Policy No. 25-01 to update Section 2.3 of the WEPRMP to:
(1) allow Risk Management Team (RMT) members to assign a proxy for their vote to another voting member and (2) to update the title of the staff person who will own the WEPRMP processes to the Director of Energy & Sustainability.

Fiscal Analysis: There is no additional cost to approving Policy No. 25-01.

Desert Community Energy Board
November 20, 2025
Attachments:

1. DCE Wholesale Energy Procurement Risk Management Policy, No. 25-01 (clean)

2. DCE Wholesale Energy Procurement Risk Management Policy, No. 25-01 (redline) Policy No. 25-01
Desert Community Energy Wholesale Energy
Procurement Risk Management Policy
November 2025
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.

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.

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
Risk Management Team
Wholesale
Energy
Provider
Representative
(non-voting)
Independent
Outside Third
Party
Director of
Finance &
Administration
Energy &
Sustainability
Program
Manager
Director of
Energy &
Sustainability
Executive
Director
Board of
Directors
• Director of Finance & Administration
• Independent outside third party
For individual issues, RMT members can assign a proxy for their vote. The proxy should be one of the other voting members of the RMT.

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 Director of Energy & Sustainability 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 hours1 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 portfolio2 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 node 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
Policy No. 245-01
Desert Community Energy Wholesale Energy
Procurement Risk Management Policy
June 2024November 2025
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.

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.

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
Risk Management Team
Wholesale
Energy
Provider
Representative
(non-voting)
Independent
Outside Third
Party
Director of
Finance &
Administration
Energy &
Sustainability
Program
Manager
Director of
Energy &
Sustainability
Executive
Director
Board of
Directors
• Director of Finance & Administration
• Independent outside third party
For individual issues, RMT members can assign a proxy for their vote. The proxy should be one of the other voting members of the RMT.

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 OfficerDirector of Energy & Sustainability 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 hours1 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 portfolio2 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 node 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 6B

STAFF REPORT
Subject: Revised Exhibit A Rate Adjustment Guidelines as part of DCE’s Rate Stabilization Schedule (RSS)
Contact: Don Dame, DCE Energy Consultant
Recommendation: Adopt DCE Resolution 2025-07 approving revised Rate Stabilization Schedule’s Exhibit A Rate Adjustment Guidelines effective November 17, 2025 Background: On March 17, 2025 the Board approved an amendment to DCE’s Rate Stabilization Schedule (RSS) with an effective date of April 1, 2025. The April 1, 2025 RSS amendment included Exhibit A Rate Adjustment Guidelines attached to and made a part of the RSS. The RSS provides that the Board may revise Exhibit A from time to time as warranted. Paragraph 1 of Exhibit A relates the Board’s current Desert Saver rate discount guidelines which indicate a 0.0 –

1.0 percent discount versus Southern California Edison’s (SCE) bundled base product average total monthly bill. The current Paragraph 1 language was unclear about whether the discount range should be applied to non-residential Desert Saver customers. Staff is now recommending Resolution 2025-07 and a clarification to Exhibit A in order to clarify that the discount range applies to all Desert Saver customers.

Existing RSS Exhibit A Paragraph 1:
1) Adjustments to Desert Saver Rates: Any RSS adjustments to Desert Saver rates are to be implemented in a manner to maintain an average 0.0 – 1.0 percent discount versus Southern California Edison’s current non-CARE residential base product average total monthly bill.

Proposed revised RSS Exhibit A Paragraph 1:
1) Adjustments to Desert Saver Rates: Any RSS adjustments to Desert Saver rates are to be implemented in a manner to maintain an average 0.0 – 1.0 percent discount versus Southern California Edison’s current bundled base product average total monthly bills.

The proposed revision to RSS Exhibit A simply clarifies that the Board’s current Desert Saver rate discount guidelines apply to all DCE Desert Saver customers, not just residential customers. It should be noted that DCE has been applying the current Board approved Desert Saver discount range to all Desert Saver customers and the Exhibit A revision is to clarify and avoid any potential ambiguity.

Desert Community Energy Board
November 17, 2025
Fiscal Analysis: Approval of the attached revised Exhibit A Rate Adjustment Guidelines Rate clarifies DCE’s current rate levels and practices. There may be a de minimus impact on revenues, since there have been instances in the past where a small number of non-residential Desert Saver rates exceeded those of SCE by nominal amounts, usually for only short periods of time.

Attachments:

1. Resolution No. 2025-07 revising Exhibit A Rate Adjustment Guidelines to Rate Stabilization Schedule

2. Revised RSS Exhibit A Rate Adjustment Guidelines.

3. Revised RSS Exhibit A Rate Adjustment Guidelines (redline) RESOLUTION NO. 2025-07

A RESOLUTION OF THE BOARD OF DIRECTORS OF

DESERT COMMUNITY ENERGY

REVISING EXHIBIT A RATE ADJUSTMENT GUIDELINES

TO RATE STABILIZATION SCHEDULE
WHEREAS, Desert Community Energy (DCE) is a joint powers authority established on October 30, 2017 for the purpose of implementing Community Choice Aggregation (CCA) programs under Public Utilities Code Section 366.2;
WHEREAS, under Section D of DCE’s Joint Powers Agreement (JPA), DCE’s mission includes building “… a Community Choice Aggregation program that is locally controlled and delivers cost-competitive clean electricity, product choice, price stability, energy efficiency and greenhouse gas emission reductions”;
WHEREAS, under Section 2.5.12 of the JPA, DCE has the authority to adopt Operating Rules and Regulations;
WHEREAS, under Section 3.11.9 of the JPA, the DCE Board of Directors (Board) has the authority to set rates for power sold by DCE and the setting of charges for any other category of service provided by DCE;
WHEREAS, the Board has established CCA program policies and goals that provide for meeting all operating costs and building operating and financial reserves; WHEREAS, on November 16, 2020 the Board authorized and approved a Rate Stabilization Schedule (RSS), as amended effective April 1, 2025, which allows DCE to adjust rates upward or downward in response to external cost and or revenue fluctuations not subject to DCE’s direct control;
WHEREAS, the RSS, as amended effective April 1, 2025, includes Exhibit A Rate Adjustment Guidelines which may be revised from time to time by the Board.

WHEREAS, the Board desires to revise the current RSS Exhibit A Rate Adjustment Guidelines to clarify that RSS adjustments to Desert Saver rates are intended to maintain an average 0.0 –

1.0 discount versus Southern California Edison’s bundled base product average total monthly bills, and this discount range applies to all Desert Saver customers, not just residential Desert Saver customers.

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

1. The Board of Directors hereby approves and adopts revised Exhibit A Rate Adjustment Guidelines attached to DCE’s RSS, with an effective date of November 17, 2025.

2. This resolution shall take effect immediately upon its adoption.

ADOPTED AND APPROVED by the Board of Directors of Desert Community Energy on this 17th day of November 2025.

AYES:

NOES:

ABSTAIN:

ABSENT:
__________________________________
Jeffrey Bernstein Chair, Desert Community
Energy
Attest:
_____________________________________
Tom Kirk
Secretary, Desert Community Energy
Desert Community Energy RSS
As Amended Effective November 17, 2025
4 Exbibit A
Rate Adjustment Guidelines
DCE sets rates in accordance with Board approved policies and procedures in order to assure revenue sufficiency to meet all financial responsibilities, build necessary reserves, to provide flexibility to respond to unplanned and or unexpected power supply and operating cost changes, and other factors that affect DCE’s revenues and costs. DCE’s Risk Management Team (RMT) must review and concur with any rate adjustments prior to implementation. The below Rate Adjustment Guidelines were approved by the Board on November 17, 2025. These Rate Adjustment Guidelines may be revised from time to time by the DCE Board. 1) Adjustments to Desert Saver Rates: Any RSS adjustments to Desert Saver rates are to be implemented in a manner to maintain an average 0.0 – 1.0 percent discount versus Southern California Edison’s current bundled base product average total monthly bills. 2) Adjustments to Carbon Free Rates: Any given RSS adjustments to Carbon Free rates are to be implement in a manner such that Carbon Free Customers’ average DCE generation rate does not increase or decrease by more than 5.0 percent.

Desert Community Energy RSS
As Amended Effective April 1,November 17, 2025
4 Exbibit A
Rate Adjustment Guidelines
DCE sets rates in accordance with Board approved policies and procedures in order to assure revenue sufficiency to meet all financial responsibilities, build necessary reserves, to provide flexibility to respond to unplanned and or unexpected power supply and operating cost changes, and other factors that affect DCE’s revenues and costs. DCE’s Risk Management Team (RMT) must review and concur with any rate adjustments prior to implementation. The below Rate Adjustment Guidelines were approved by the Board on March November 17, 2025. These Rate Adjustment Guidelines may be revised from time to time by the DCE Board. 1) Adjustments to Desert Saver Rates: Any RSS adjustments to Desert Saver rates are to be implemented in a manner to maintain an average 0.0 – 1.0 percent discount versus Southern California Edison’s current non-CARE residential bundled base product average total monthly bills.

2) Adjustments to Carbon Free Rates: Any given RSS adjustments to Carbon Free rates are to be implement in a manner such that Carbon Free Customers’ average DCE generation rate does not increase or decrease by more than 5.0 percent.

ITEM 7A

STAFF REPORT
Subject: DCE’s Audited Financial Statements for Fiscal Year 2024-25 and Related Reports
Contact: Claude T. Kilgore, Director of Finance ([email protected]) Recommendation: Receive and file the Audited Financial Statements for the year ended June 30, 2025, Report on Internal Controls over Financial Reporting, and the Auditor’s Communication with Those Charged with Governance
Background: Since its inception, DCE has engaged the Coachella Valley Association of Governments (CVAG) to provide staffing and other administrative tasks including financial oversight and accounting. CVAG’s Financial Statements Audit Procurement Policy, adopted on June 3, 2002, requires that CVAG obtain proposals from qualified auditing firms to perform CVAG’s annual financial audit every five years. In June 2021, CVAG hired the audit firm of Davis Farr LLP – a firm with an impressive history of professional work in the Coachella Valley – for engagement as the independent auditor for CVAG, DCE and the Coachella Valley Conservation Commission (CVCC). The selection was for five fiscal years starting with Fiscal Year 2020-21.

CVAG made a one-time extension to add a sixth year in the spring of 2025 in order to provide auditor continuity through CVAG’s Enterprise Resource Planning system implementation, which is also DCE’s financial system.

Presented with this staff report is the fifth year-end audit by Davis Farr LLP. Davis Farr LLP performed the annual audit over DCE’s Basic Financial Statements as of June 30, 2025, and for the fiscal year then ended which include the Statement of Net Position, Statement of Revenues, Expenses and Changes in Net Position, Statement of Cash Flows, and Notes to the Basic Financial Statements. Davis Farr issued an Unmodified Opinion, which means that DCE’s Basic Financial Statements present fairly, in all material respects, the respective financial position of DCE as of June 30, 2025, and the respective changes in financial position and cash flows thereof for the year then ended in accordance with US Generally Accepted Accounting Principles (GAAP).

In accordance with Government Auditing Standards, Davis Farr also issued a report on their consideration of DCE’s internal control over financial reporting and their tests of DCE’s compliance with certain provisions of laws, regulations, contracts, and grant agreements as well as other matters; Davis Farr was not engaged to provide an opinion on internal control over financial reporting or on compliance. During its testing, Davis Farr did not identify any material weaknesses or significant deficiencies in internal controls. Finally, Davis Farr has provided a letter to the DCE Board of Directors outlining Significant Audit Findings as promulgated by AU-C Section 260, “The Auditor’s Communication with Those Charged With Governance.” For Fiscal Year (FY) 2024-25, DCE’s net position increased by approximately $4.9 million, a 13.9 percent change from the prior year. Total revenues were approximately $71.9 million, a 2.5 percent increase. This increase was mainly attributable to elevated electricity usage among the customers served by DCE as load, leading to higher total energy sales alongside adjustments in applicable rates. For FY 2024-25, total expenses were approximately $67 million, representing Desert Community Energy Board
November 20, 2025
an increase of $12.7 million or 23.5 percent from the previous fiscal year. The substantial increase in expenses was largely attributed to elevated costs for capacity (Resource Adequacy (RA)) products and renewable energy, both of which were required to ensure compliance with CPUC regulations, uphold the reliability of DCE’s energy supply, and achieve board-approved carbon-free objectives.

S&P Global ratings, who issued DCE an investment grade credit rating in FY 2024-25 made, note in their ratings report that DCE is expected to maintain a fixed charge coverage ratio (FCC ratio) above 2.0x in the coming fiscal years. S&P also mentioned an upside scenario where DCE maintains a healthy track record of FCC and liquidity while continuing to secure additional power contracts that reduce open positions and provide for predictable costs. S&P calculates DCE’s FCC ratio as change in net position plus 50 percent of fixed power purchase agreement (PPA) costs divided by the same 50% of PPA costs. The FCC ratio achieved by DCE for Fiscal Year 2024-25 was 2.49x and is calculated by adding the change in net position of $4.855 million with half of DCE’s fixed PPA costs which is $3.267 million and then dividing by half of PPA costs, again $3.267 million ((4.855+3.267)/3.267 = 2.49). DCE staff will present additional highlights at the meeting.

Staff recommends receiving the audit and related reports. A member of the Davis Farr team will attend the November meeting and be available to address any Board questions or comments.

Fiscal Analysis: The professional fees associated with the audit were previously budgeted and there is no additional financial impact.

Attachments:

1. DCE’s Audited Financial Statements for the year ended June 30, 2025

2. Report on Internal Controls over Financial Reporting

3. Auditor’s Communication with Those Charged with Governance

DESERT COMMUNITY ENERGY

FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025

DESERT COMMUNITY ENERGY
Financial Statements
Year ended June 30, 2025
(With Independent Auditor’s Report Thereon)

DESERT COMMUNITY ENERGY
Financial Statements
Year ended June 30, 2025

TABLE OF CONTENTS
Page
Independent Auditor’s Report 1
Management’s Discussion and Analysis 4
Financial Statements:

Statement of Net Position 11
Statement of Revenues, Expenses and Changes in Net Position 12 Statement of Cash Flows 13
Notes to the Basic Financial Statements 14
Independent Auditor’s Report
To the Board of Directors
Desert Community Energy
Palm Desert, California
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Desert Community Energy (“DCE”), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise DCE’s basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements present fairly, in all material respects, the respective financial position of DCE as of June 30, 2025, and the respective changes in financial position and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of DCE and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements DCE’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about DCE’s ability to continue as a going concern for one year after the date that the financial statements are issued.
1 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:
 Exercise professional judgment and maintain professional skepticism throughout the audit.
 Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of DCE’s internal control. Accordingly, no such opinion is expressed.
 Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
 Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about DCE’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
2 Report on Summarized Comparative Information
We have previously audited DCE’s 2024 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated October 31, 2024. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2024 is consistent, in all material respects, with the audited financial statements from which it has been derived.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 31, 2025 on our consideration of DCE’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering DCE’s internal control over financial reporting and compliance.

Irvine, California
October 31, 2025
3 DESERT COMMUNITY ENERGY

MANAGEMENT DISCUSSION & ANALYSIS
YEAR ENDED JUNE 30, 2025
The following is a discussion and analysis of Desert Community Energy’s (DCE’s) financial performance and includes a summary of DCE’s financial statements coupled with a detailed analysis of DCE’s financial position and results of operations for the fiscal year ended June 30, 2025, with comparative information from the fiscal year ended June 30, 2024. The purpose of management’s discussion and analysis (MD&A) is to help DCE customers and other stakeholders understand what the financial statements and notes in this financial report say about DCE’s financial health and why it has changed since last year. It contains information drawn from those other parts of the report, accompanied by explanations informed by DCE staff’s knowledge of DCE’s finances. Please read this discussion and analysis in conjunction with the financial statements, including the notes to the financial statements identified in the accompanying tables.

If you have any questions about this report or require further information, contact DCE staff at 760.346.1127 and ask for the Director of Finance.

OVERVIEW OF THE FINANCIAL STATEMENTS
Following the MD&A (this section), DCE’s financial report contains basic financial statements.

Those financial statements represent DCE’s work procuring power resources on behalf of electricity customers in its jurisdiction to achieve its objective of offering cleaner, competitively priced electricity while retaining local control, reinvesting revenues, encouraging local job creation, offering more renewable energy options, and reducing greenhouse gas (GHG) emissions. The Statement of Net Position includes all of DCE’s assets, liabilities, and net position and provides information about the nature and amount of resources and obligations at a specific point in time, the fiscal year-end date. The Statement of Revenues, Expenses, and Changes in Net Position reports all of DCE’s revenue and expenses for the year shown.

The Statement of Cash Flows reports the cash provided and used by operating activities, as well as other sources and uses, such as cash flow from investing activities.

The financial statements also include notes to the financial statements, which delve deeper into DCE’s finances as reported in the basic financial statements. The information in the notes is as important to understanding DCE’s finances as the information in the financial statements themselves. DCE uses notes to (1) present information in greater details than is possible within the financial statements, (2) explain the nature of amounts reported in the financial statements and how those amounts were determined, and (3) report certain information that does not meet the requirements for inclusion in the financial statements (such as certain contractual commitments).

All of DCE’s financial activities are captured in an enterprise fund and use the economic resources measurement focus and accrual basis of accounting in accordance with Generally Accepted Accounting Principles (GAAP), as prescribed by the Governmental Accounting Standards Board (GASB). In other words, they comprehensively report all types of financial statement elements:
 Assets – resources that DCE controls, which are mostly in the form of short-term assets like cash and investments as well as accounts receivable and also includes long-term assets like collateral deposits for power purchase agreements with counterparties. 4 DESERT COMMUNITY ENERGY

MANAGEMENT DISCUSSION & ANALYSIS
YEAR ENDED JUNE 30, 2025
 Liabilities - amounts DCE owes to others, from short-term liabilities such as amounts due to bilateral counter parties under energy contracts and Utility User Taxes collected from customers and owed to other governments to long-term liabilities like performance security from developers held by DCE until the commercial operation date for power purchase agreements.
 Revenues and Expenses – inflows and outflows of resources, respectively, related to the current year.

More details about the measurement focus and basis of accounting can be found in Note 1 of the notes to the financial statements, the summary of significant accounting policies.

FINANCIAL SUMMARY AND ANALYSIS OF DCE’S FINANCES
The following tables provide condensed financial information (financial summary) derived from the basic financial statements, excluding the statement of cash flows, and compare current year balances to the prior year. Adding context to the financial summary information is a detailed analysis and discussion of DCE’s financial position and results of operations.

Statement of Net Position
(amounts expressed in thousands)
June 30, 2025 June 30, 2024 Dollar Change
Percentage
Change
Current and Other Assets 50,771 $ 46,940 $ 3,831 $ 8.2% Total Assets 50,771 46,940 3,831 8.2%
Current Liabilities 10,324 11,349 (1,025) (9.0%)
Non-Current Liabilities 405 405 - 0.0%
Total Liabilities 10,729 11,754 (1,025) (8.7%)
Net Position:

Restricted Net Position 147 147 - 0.0%
Unrestricted Net Position 39,895 35,040 4,856 13.9%
Total Net Position 40,042 $ 35,187 $ 4,856 $ 13.8%
Note: Totals may not sum precisely due to rounding differences.

As of June 30, 2025, DCE’s net position (assets minus liabilities) was $40.0 million, an increase of $4.9 million compared with June 30, 2024. The increase is primarily due to the increase in unrestricted net position due to growth in cash on hand and accounts receivable; while prepaid energy costs decreased. Most of this increase in the unrestricted net position was the result of revenue growth which was offset by a notable increase in the cost of energy and capacity. The major contributing revenues and expenses that affected the change in net position for DCE are summarized and analyzed next.
5 DESERT COMMUNITY ENERGY

MANAGEMENT DISCUSSION & ANALYSIS
YEAR ENDED JUNE 30, 2025
Revenues, Expenses and Changes in Net Position
Statement of Revenues, Expenses, and Changes in Net Position (amounts expressed in thousands)
June 30, 2025 June 30, 2024 Dollar Change
Percentage
Change
Operating Revenues:

Electricity Sales 70,782 $ 69,670 $ 1,112 $ 1.6%
Miscellaneous 17 31 (14) (45.8%)
Non-Operating Revenues:

Interest Revenue 1,117 489 628 128.5%
Total Revenues 71,916 70,189 1,727 2.5%
Operating Expenses:

Electricity 64,153 51,451 12,702 24.7%
Other 2,908 2,865 43 1.5%
Non-Operating Expenses:

Interest Expenses - 1 (1) (100.0%)
Total Expenses 67,061 54,317 12,744 23.5%
Changes in Net Position 4,856 15,872 (11,017) (69.4%)
Net Position - Beginning of Period 35,187 19,314 15,872 82.2% Net Position - End of Period 40,042 $ 35,187 $ 4,856 $ 13.8% Note: Totals may not sum precisely due to rounding differences.

Growth in Revenues
Approximately 98% of DCE’s revenue is derived from electricity sales which includes sales to customers and can also include the sale of energy and capacity portfolio resources via bilateral contracts as well as energy market settlements through DCE's participation in the California Independent System Operator's (CAISO's) centralized market and also includes other smaller revenues. In FY 2024-2025, total revenues amounted to approximately $71.9 million, representing an increase of $1.7 million (2.5%) compared to FY 2023-2024. This increase was principally attributable to elevated electricity usage among the customers served by DCE as load, leading to higher total energy sales alongside adjustments in applicable rates.

Investment earnings increased by $0.6 million (129%) during the fiscal year, attributed to higher average cash balances and new investment opportunities with higher yields. This increase was part of total revenues and contributed to the overall net revenue growth for the fiscal year. 6 DESERT COMMUNITY ENERGY

MANAGEMENT DISCUSSION & ANALYSIS
YEAR ENDED JUNE 30, 2025
Increase in Expenses
Approximately 96% of DCE’s expenses are the cost of electricity which include the cost of energy and capacity arising from contracts with bilateral energy/capacity suppliers as well as load and other charges for DCE’s participation in the CAISO in addition to block hedges and other settlement fees. For FY 2024-2025, total expenses were approximately $67.0 million, representing an increase of $12.7 million or 23.5% from the previous fiscal year. The substantial increase in expenses was largely attributed to elevated costs for capacity (Resource Adequacy (RA)) products and renewable energy, both of which were required to ensure compliance with CPUC regulations, uphold the reliability of DCE’s energy supply, and achieve board-approved carbon-free objectives.

Other expenses during FY 2024-2025 remained relatively stable from the prior year and included payments to consultants and various professional service vendors like the Coachella Valley Association of Governments who provides administrative staffing for DCE.

Significant Capital Asset and Long-Term Financing Activity In FY 2024-2025, DCE had no significant capital asset or long-term financing activity.

CURRENTLY KNOWN FACTS, DECISIONS OR CONDITIONS
DCE is aware of several developments that will have a significant effect on its finances in the future and were either included into the FY 2025-2026 budget or will be incorporated through a future budget amendment at an upcoming DCE Board meeting:
(1) Revised policies from the Board of Directors to improve rate-setting flexibility and meet revenue requirements
(2) Changes in the Power Charge Indifference Adjustment (PCIA) calculation (3) Downward trends in energy and capacity markets
(4) New requirements from the California Public Utilities Commission (CPUC) for Mid Term Reliability (MTR)
Board Policy Updates
In March 2025, the DCE Board of Directors (Board) revised DCE’s Rate Stabilization Schedule (RSS) and now treats DCE’s Carbon Free product rate and its revenue requirements separately from SCE's bundled base product. Under the revised approach, the rates for DCE’s Carbon Free product— including any RSS adjustments—will be determined by DCE’s total revenue needs. These revenue requirements are identified through the budgeting process and take into account the Board’s decisions on financial reserves, compliance with fixed charge ratios, and adjustments for power market and regulatory developments. The policy continues to offer Desert Saver rates at a lower cost compared to SCE’s bundled base average bill, giving budget-conscious customers a more affordable option.
7 DESERT COMMUNITY ENERGY

MANAGEMENT DISCUSSION & ANALYSIS
YEAR ENDED JUNE 30, 2025
This updated policy will affect subsequent fiscal years by ensuring that DCE’s Carbon Free rates are more closely aligned with its actual financial requirements and market realities. This alignment supports the accumulation of financial reserves and the maintenance of key financial ratios, enhancing DCE’s ability to respond to market and regulatory changes. As a result, DCE will be better positioned to maintain financial stability, provide reliable service, and offer competitive pricing for both its Carbon Free and Desert Saver products in subsequent years. It also provides for better budgetary practices to align budgets and budget adjustments to ensure DCE meets its annual revenue requirements, which is measured in the form of DCE’s Fixed Charge Coverage (FCC) ratio currently calculated as net revenue plus 50% of fixed power purchase agreement (PPA) expenses divided by 50% of PPA expenses. DCE aims to maintain an FCC as close as possible to 2.0x in the coming fiscal years while also remaining competitive.

Finally, the Board revised DCE’s Financial Reserve Policy which will allow DCE to build new special reserve categories, including customer programs, procurement, market stabilization, and a fixed charge coverage special reserve.

PCIA Changes
In June 2025, the CPUC issued a decision (D.25-06-049) that revises the methodology for the Resource Adequacy Market Price Benchmark (RA MBP) that is used to calculate the Power Charge Indifference Adjustment. The PCIA is intended to ensure that there is not a cost increase for bundled utility customers (those that remain with Southern California Edison service) as a result of the implementation of DCE and other CCAs. The impact of this decision on DCE’s future fiscal years is multifaceted, as the RA MPB not only impacts DCE’s retail revenues via the PCIA but also DCE’s costs via certain bi-lateral contracts. The RA MPB calculation revision resulted in an approximate 70% decrease in the RA MPB year-over-year, which produced an approximate 300% increase in DCE’s vintage year PCIA for calendar year 2026 in comparison to DCE’s vintage year PCIA for 2025 and an approximate 70% decrease in certain DCE’s current and projected contract costs for RA.

Trends in Energy and Capacity Prices
The energy market for fiscal year 2025-2026 is on the decline with the calendar year 2026 price forecast also displaying an overall declining trend driving lower projected wholesale energy costs for DCE in relation to the fiscal year under audit and previous fiscal years.

The Resource Adequacy (RA or capacity) market has also displayed a declining trend throughout calendar year 2025 and into 2026, retreating from a high point in 2024, which was in part due to market uncertainty spurred by the transition to Slice of Day (SOD). In addition, the calculation methodology change to the RA MPB mentioned above significantly contributed to DCE’s RA cost savings in calendar year 2025 and has contributed to a material decrease in capacity cost projections in subsequent fiscal years.

The renewable energy market has also experienced a price decline in part due to the beginning of a new compliance period in 2025. The lower market prices realized in calendar year 2025 contributed to the reduction in the Final calendar year 2025 Renewable Portfolio Standard Market Price Benchmark (RPS MPB) and the Forecast calendar year 2026 RPS MPB, which reduces DCE’s current and projected contractual costs for renewable energy. Given current market conditions and trends, it is expected the Final ’26 RPS MPB, to be released in October 2026, will be at a decrease to the Forecast ’26 RPS MPB, further reducing these costs to DCE. 8 DESERT COMMUNITY ENERGY

MANAGEMENT DISCUSSION & ANALYSIS
YEAR ENDED JUNE 30, 2025
CPUC Mid Term Reliability Requirements
The CPUC ordered load serving entities to procure new, incremental clean energy resources beginning with decision D.21-06-035 (MTR decision), colloquially known as mid-term reliability (MTR). The CPUC describes MTR as “an unprecedented, but necessary, quantity of clean energy procure that will ensure reliability in the mid-decade, help California achieve its climate goals, spur the development of the clean firm resources needed for deep decarbonization, and create thousands of green energy jobs in California,” highlighting the broad nature of the MTR decision. The MTR decision assigned DCE procurement requirements that included target volumes and resources that meet a checklist of characteristics. As of October 23, 2025, DCE is under contract with several resources to meet its current MTR obligations. More specifically, DCE procured a 43 MW slice of a 4-hour battery energy storage system, a 21 MW slice of an 8-hour battery energy storage system, and a 3 MW piece of a geothermal project. While these projects do help DCE meet its CPUC compliance requirements, they also complement DCE’s resource portfolio. The battery energy storage projects will allow DCE to purchase energy from the wholesale market during low-priced periods to store in the batteries and discharge them during higher-priced periods. The projects will also provide DCE with critical long-term resource adequacy at a fixed price. The geothermal project will provide DCE with around-the-clock carbon-free energy in addition to generating RECs to help DCE meet its statutory renewable energy requirements and provide resource adequacy to DCE, also at a fixed cost.

While DCE expects to be in compliance with its current MTR obligations, the CPUC may order more procurement in the future, which may require DCE to acquire additional resources.

CONTACTING DCE’S FINANCIAL MANAGEMENT
This financial report is designed to provide customers, business counterparties, resource providers and other interested entities with a general overview of DCE’s business finances and accountability.

If you have questions about this report or need additional financial information, contact DCE’s office administered by the Coachella Valley Association of Governments (CVAG), attention Director of Finance located at 74-199 El Paseo Suite 100, Palm Desert, CA 92260 and open 8AM until 5PM Monday through Friday, excluding CVAG holidays.
9 BASIC FINANCIAL STATEMENTS
10 2025 2024
Assets:

Current Assets:

Cash and investments (note 2) $ 31,068,167 $ 25,858,814 Restricted cash (note 2) 147,000 147,000
Accounts receivable, net (note 3) 17,294,391 16,074,558 Interest receivable 71,467 2,410
Prepaids 1,179,264 4,146,988
Total Current Assets 49,760,289 46,229,770
Non-current Assets:

Deposits 1,010,584 710,584
Total Non-current Assets 1,010,584 710,584
Total Assets 50,770,873 46,940,354
Liabilities:

Current Liabilities:

Accounts payable (note 4) 9,538,414 10,379,697
Due to other governments (note 5) 785,146 968,878
Total Current Liabilities 10,323,560 11,348,575
Non-current Liabilities:

Deposits payable 405,000 405,000
Total Non-current Liabilities 405,000 405,000
Total Liabilities 10,728,560 11,753,575
Net Position:

Restricted 147,000 147,000
Unrestricted 39,895,313 35,039,779
Total Net Position $ 40,042,313 $ 35,186,779
(With prior year comparative totals)
Desert Community Energy
Statement of Net Position
June 30, 2025
See accompanying notes to financial statements.
11 2025 2024
Operating Revenues:

Electricity sales $ 70,781,913 $ 69,669,505
Miscellaneous 16,683 30,768
Total operating revenues 70,798,596 69,700,273
Operating Expenses:

Electricity cost 64,152,607 51,450,582
Consultants charges 2,457,846 2,266,240
Administration and general 181,282 243,013
Professional services 268,792 355,898
Total operating expenses 67,060,527 54,315,733
Operating income (loss) 3,738,069 15,384,540
Nonoperating Revenues (Expenses):

Interest revenue 1,117,465 489,079
Interest expense - (1,214)
Total nonoperating revenues (expenses) 1,117,465 487,865 Change in net position 4,855,534 15,872,405
Net Position - beginning 35,186,779 19,314,374
Net Position - ending $ 40,042,313 $ 35,186,779
Desert Community Energy
Statement of Revenues, Expenses, and Changes in Net Position Year ended June 30, 2025
(With prior year comparative totals)
See accompanying notes to financial statements.
12 2025 2024
Cash Flows from Operating Activities:

Cash received from customers and others $ 69,578,763 $ 70,031,214 Cash paid to suppliers for goods and services (65,417,818) (53,463,710) Net cash provided by (used for) operating activities 4,160,945 16,567,504 Cash Flows from Noncapital Financing Activities:

Interest paid - (1,214)
Net cash provided by (used for) noncapital financing activities - (1,214) Cash Flows from Investing Activities:

Investment income 1,048,408 486,669
Net cash provided by investing activities 1,048,408 486,669 Net increase in cash and cash equivalents 5,209,353 17,052,959 Cash and Cash Equivalents, beginning of year 26,005,814 8,952,855 Cash and Cash Equivalents, end of year $ 31,215,167 $ 26,005,814 Reconciliation of Operating Income to Net Cash
Provided by (Used for) Operating Activities:

Operating income (loss) $ 3,738,069 $ 15,384,540
Adjustments to reconcile operating income (loss) to
net cash provided by (used for) operating activities
Decrease (increase) in accounts receivable (1,219,833) 330,941 Decrease (increase) in deposits (300,000) (400,000)
Decrease (increase) in prepaids 2,967,724 (4,036,396)
Increase (decrease) in accounts payable (841,283) 4,932,967 Increase (decrease) in due to other governments (183,732) 355,452 Total adjustments 422,876 1,182,964
Net cash provided by (used for) operating activities $ 4,160,945 $ 16,567,504 Desert Community Energy
Statement of Cash Flows
Year ended June 30, 2025
(With prior year comparative totals)
There were no significant noncash financing, capital, or investing activities for the years ended June 30, 2025 and 2024.

See accompanying notes to financial statements.
13 NOTES TO THE BASIC FINANCIAL STATEMENTS
14 Desert Community Energy
Notes to the Basic Financial Statements
Year ended June 30, 2025
(1) Summary of Significant Accounting Policies
(a) Description of Reporting Entity
Desert Community Energy (DCE) is a public joint powers agency located within the geographic boundaries of Riverside County, California formed via a Joint Powers Agreement (JPA) in October 2017 for the purpose of implementing and administering a Community Choice Aggregation (CCA) program. DCE is comprised of the cities of Palm Springs and Palm Desert and is certified by the California Public Utilities Commission (CPUC). Community Choice Aggregation is a local energy program established by state law that allows cities and counties to pool (or aggregate) the electricity demand of participating communities. DCE buys and/or develops power resources on behalf of the electricity customers in its jurisdiction to offer cleaner, competitively priced electricity while retaining local control, reinvesting revenues, encouraging local job creation, offering more renewable energy options, and reducing greenhouse gas (GHG) emissions. DCE offers ratepayers a choice in electricity providers and in the type of electricity they use. DCE began serving customers in Palm Springs in April 2020 while the next possible launch date per Palm Desert is 2028. DCE is governed by a Board of Directors composed of one locally elected representative or senior staff from each of the participating city councils. The Board schedules regular meetings that are open to the public, ensuring transparency and encouraging community involvement. Formation of a CCA through a JPA does not require contributions from participating member agencies. The assets and liabilities of the CCA program remain separate from those of the participating agencies’ general fund. (b) Basic Financial Statements
The basic financial statements (i.e., Statement of Net Position, Statement of Revenues, Expenses and Changes in Net Position, and Statement of Cash Flows) report information on all the enterprise activities of the entity. (c) Measurement Focus, Basis of Accounting and Financial Statement Presentation The financial statements are presented using the full accrual basis of accounting.

Revenues are recognized when earned and expenses are recorded when the liability is incurred.

Enterprise funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing goods and services. The principal operating revenues of the entity are sales of electricity.

Operating expenses include the cost of electricity purchases, consultants’ costs and administrative expenses. Operating revenues can also include the sale of energy and capacity portfolio resources via bilateral contracts as well as energy market settlements through DCE's participation in the California Independent System Operator's (CAISO's) centralized market and also includes other revenues such as sale of congestion revenue rights and import allocation rights. The revenue for these sources is recognized as "Electricity sales" in the Statement of Revenues, Expenses, and Changes in Net Position.
15 Desert Community Energy
Notes to the Basic Financial Statements
Year ended June 30, 2025
(1) Summary of Significant Accounting Policies (Continued) Nonoperating revenues and expenses are defined as subsidies received and provided, contributions to permanent and term endowments, revenues and expenses related to financing, resources from the disposal of capital assets and inventory, and investment income and expenses.

Insert: "Electricity cost" includes the cost of energy and capacity arising from bilateral contracts with energy suppliers as well as load and other charges arising from DCE's participation in the CAISO in addition to block financial hedges and other charges. (d) Assets, Liabilities and Net Position
Cash and Investments
For purposes of the statement of cash flows, all highly liquid investments with a maturity of three months or less when purchased are considered cash equivalents. The entity maintains a checking account and money market account which is considered a cash equivalent.

Fair Value Measurements
Certain assets and liabilities are required to be reported at fair value. The fair value framework provides a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are described as follows:

Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, and fair value is determined through the use of models or other valuation methodologies including:
 Quoted prices for similar assets or liabilities in active markets;  Quoted prices for identical or similar assets or liabilities in markets that are inactive;
 Inputs other than quoted prices that are observable for the asset or liability;  Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. These unobservable inputs reflect DCE’s own assumptions about the inputs market participants would use in pricing the asset or liability (including assumptions about risk). These unobservable inputs are developed based on the best information available in the circumstances and may include DCE’s own data.
16 Desert Community Energy
Notes to the Basic Financial Statements
Year ended June 30, 2025
(1) Summary of Significant Accounting Policies (Continued) Prepaid Expenses
Payments made for services that will benefit periods beyond June 30, 2025, are recorded as prepaid items in the financial statements. The cost of prepaid items is recorded as expenses when consumed rather than when purchased.

Net Position
For the year ended June 30, 2025, DCE reported net position as classified in the following categories:
 Investment in capital assets – This component of net position consists of capital assets reduced by accumulated depreciation and by any outstanding debt incurred to acquire, construct, or improve those assets.  Restricted – This component of net position consists of resources with external constraints imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation.
 Unrestricted net position – This component of net position consists of net position that do not meet the definition of “restricted” or “investment in capital assets.” When both restricted and unrestricted resources are available for use, it is DCE’s policy to use restricted resources first. (e) Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. (f) Revenue Recognition
DCE recognizes revenue on the accrual basis. This includes invoices issued to customers during the reporting period and electricity estimated to have been delivered but not yet billed. Management estimates that a portion of the billed amounts will be uncollectible. Accordingly, an allowance for uncollectible accounts has been recorded. (g) Income Taxes
DCE is a joint powers authority under the provision of the California Government Code and is not subject to federal or state income or franchise taxes. 17 Desert Community Energy
Notes to the Basic Financial Statements
Year ended June 30, 2025
(1) Summary of Significant Accounting Policies (Continued) (h) Utility Users Taxes and Electric Energy Surcharges Due to Other Governments DCE is required by governmental authorities (state and local) to collect and remit user taxes on certain customer sales. These taxes do not represent revenues or expenses to DCE.
(i) Prior Year Comparative Information
Selected information regarding the prior year has been included in the accompanying financial statements. This information has been included for comparison purposes only and does not represent a complete presentation in accordance with generally accepted accounting principles. Accordingly, such information should be read in conjunction with DCE’s prior year financial statements, from which this selected financial data was derived. In addition, certain minor reclassifications of prior year data may have been made to enhance their comparability to the current year. (2) Cash and Investments
Cash and investments of the entity consisted of demand deposits with financial institutions and investments with two investment pools. At June 30, 2025, the carrying amount of DCE’s cash accounts was $31,215,167 of which $147,000 was restricted.

Custodial credit risk – Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party.

The California Government Code does not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure public deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

Cash and cash equivalents:

Deposits with financial institutions 8,684,894 $
Investments:

California Asset Management Program 15,999,412 State of California Local Agency Investment Fund 6,530,861 Total investments 22,530,273 Total cash and investments 31,215,167 $
18 Desert Community Energy
Notes to the Basic Financial Statements
Year ended June 30, 2025
(2) Cash and Investments (Continued)
DCE maintains an investment policy that establishes thresholds for holdings of individual investments. DCE did not have any investments meeting or exceeding the allowable threshold levels as of June 30, 2025.

Authorized Investment Type
% of Portfolio
Authorized Maximum Maturity
United States Treasury 0-100% Maximum maturity: 5 Years Federal Agency 0-100% Maximum maturity: 5 years
No more than 30% of the portfolio may be invested
in any single issuer.

Local Government
Investment Pools
0-75% N/A
State of California Local
Agency Investment Fund
Up to LAIF
Maximum
($75,000,000
per account)
N/A
California State and Local
Agency Bonds
0-25% Maximum maturity: 5 Years Rated "A" or higher by
S&P or by Moody's.

Commercial Paper 0-25% Maximum maturity: 270 days Rated "A-1" by S&P or"P-1" by Moody's. No more than 10% of the
portfolio may be invested in the CP and MTNs of a
single issuer. Asset-backed CP is ineligible for
purchase.

Negotiable/Time Certificates
of Deposit
0-25% Maximum maturity: 5 Years
Medium-Term Notes 0-25% Maximum maturity: 5 years Rated "A" or higher by S&P or by Moody's. No more than 10% of the
portfolio may be invested in the CP and MTNs of any
single issuer.

Money Market Mutual Funds
("MMF")
0-20% Either rated "AAA" by S&P, "Aaa” by Moody's, or
"AAA-V-1+" by Fitch (2 of 3), or retains an
investment advisor registered or exempt from
registration with SEC, with at least 5 years of
experience managing a MMF with $500 million or
more in assets.

Repurchase Agreement 0-10% Maximum maturity: 30 Days Collateral must be United States Treasury, Federal, Agency, or GSE
obligations. Zero coupon and stripped coupon
instruments are not acceptable as collateral.

Collateral must be valued at 102% of cost and
adjusted weekly. DCE must have first lien and
security interest in all collateral. DCE's custodian must hold collateral. An authorized broker must file a Public Securities Association ("PSA") Master Repurchase
Agreement with DCE, and DCE’s attorney must
review the agreement, prior to the transaction of RP
business with that broker. Reverse Repurchase
Agreements are specifically not authorized under this
investment policy.

Structured Notes 0-20% Maximum maturity: 5 Years
19 Desert Community Energy
Notes to the Basic Financial Statements
Year ended June 30, 2025
(2) Cash and Investments (Continued)
DCE is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of DCE’s investment in this pool is reported in the accompanying financial statements at amounts based on DCE’s pro rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on accounting records maintained by LAIF, which are recorded on an amortized cost basis. The entire balance of DCE’s share of the investment pool is available for withdrawal at any time. LAIF is not registered with the Securities and Exchange Commission and is not rated. Deposits and withdrawals in LAIF are made on the basis of $1 and not fair value. Accordingly, DCE’s investment in this pool is measured on uncategorized inputs not defined as Level 1, 2, or 3.

DCE is a voluntary participant in the CAMP, which is an investment pool offered by the California Asset Management Trust. The trust is a joint powers authority and public agency created by the Declaration of Trust and established under the provisions of the California Joint Exercise of Powers Act (California Government Code Sections 6500, et seq.) for the purpose of exercising the common power of its participants to invest certain proceeds of debt issues and surplus funds. In accordance with Section 53601(p) of the California Government Code, CAMP’s investments are limited to investments permitted by subdivisions (a) to (n), inclusive, of Section 53601. Deposits in the CAMP are presented as cash and cash equivalents as they are available for immediate withdrawal or deposit at any time without prior notice or penalty and there is no significant risk of principal loss. DCE reports its investments in CAMP at amortized cost provided by CAMP, which is the same as the value of the pool share. CAMP is rated AAA. Accordingly, DCE’s investment in this pool is measured on uncategorized inputs not defined as Level 1, 2, or 3.
(3) Accounts Receivable, Net
At June 30, 2025, DCE reported $17,294,391 in accounts receivable, net of the allowance for uncollectible accounts. The details of this balance are as follows:
(4) Accounts Payable
At June 30, 2025, DCE reported $9,538,414 in accounts payable. The details of this balance are as follows:

Accounts receivable 18,789,679 $
Less: allowance for uncollectable accounts (1,495,288)
Total Accounts Receivable, Net 17,294,391 $
Accounts payable - electricity cost 9,366,823 $
Accounts payable - other 171,591
Total Payables 9,538,414 $
20 Desert Community Energy
Notes to the Basic Financial Statements
Year ended June 30, 2025
(5) Due to Other Governments
At June 30, 2025, DCE reported $785,146 in Due to Other Governments. The details of this balance are as follows:
(6) Line of Credit
On February 11, 2022, DCE entered into a revolving line of credit agreement for the amount of $8,000,000 with River City Bank. The revolving line of credit was amended in July 2022 to increase the amount to $13,000,000. In June 2025, under the fourth amendment, the commitment was increased to $20,000,000 with no cash sublimit and the termination date was extended to June 20, 2028.

Subject to satisfaction of the terms, DCE may exercise a one-time option to convert all outstanding Working Capital Advances to a Term Loan. If the Term Loan Conditions are satisfied, the Term Loan will be payable over a term of thirty-six (36) months, with equal fully amortizing monthly payments of principal and interest at the Applicable Rate as determined by Lender as of the date of conversion and will be governed by the terms and conditions of this Agreement and evidenced by a separate promissory note.

Additionally, as security for the prompt payment and performance of all obligations, DCE has granted River City Bank a continuing security interest as collateral per the terms on the agreement. On June 30, 2025, there was no outstanding balance. (7) Related Party Transactions
DCE entered into a contract with Coachella Valley Association of Governments (CVAG), whereby CVAG, under the direction of the DCE, will coordinate and implement the DCE activities. The contract calls for DCE to pay CVAG based upon actual staff time spent at rates not to exceed the rates paid by CVAG. During the period from July 1, 2024 through June 30, 2025, CVAG incurred on behalf of DCE $600,995 of staff time and allocated administrative expenses that were billed. As DCE recognizes expenses on the accrual basis, an additional $287,281 has been recorded as accrued costs. As of June 30, 2025, $287,281 of the total amount billed was payable to CVAG.
(8) Risk Management
On June 17, 2024, DCE's Board adopted the Wholesale Energy Procurement Risk Management Policy (WEPRMP), updating and replacing the Energy Risk Management Policy adopted on May 21, 2018. The WEPRMP applies to all power procurement and related business activities that may impact the risk profile of DCE.

Utility Users Taxes & Electric Energy Surcharges 497,865 $ Related party payables (note 7) 287,281
Total Due to Other Governments 785,146 $
21 Desert Community Energy
Notes to the Basic Financial Statements
Year ended June 30, 2025
(8) Risk Management (Continued)
The WEPRMP 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 WEPRMP 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 WEPRMP 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 manage DCE’s exposure to wholesale energy procurement risk. DCE’s WEPRMP can be found on its website.

To ensure successful operation of the CCA program, DCE has partnered with experienced consultants to provide energy-related services. Specific to power procurement, DCE has partnered with The Energy Authority (TEA) which executes the preponderance of front (transacting), middle-(monitoring) and back-office (settlement) related activities on DCE’s behalf. In providing these services for DCE, TEA adheres to and is governed by the WEPRMP.

In addition, TEA maintains its own risk management policies and procedures, following industry best practices of segregation of duties, which also govern activities executed on DCE’s behalf. Credit guidelines include a preference for transacting with investment-grade counterparties, evaluating counterparties' financial condition and assigning credit limits as applicable. These credit limits are established based on risk and return considerations under terms customarily available in the industry. In addition, DCE enters into netting arrangements whenever possible and where appropriate obtains collateral and other performance assurances from counterparties.
(9) Long-Term Energy Agreements
During the normal course of business, DCE enters 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 are described below.

Terra-Gen, LLC
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 development, construction and operation of utility-scale wind, solar, energy storage as well as geothermal generation facilities.

Under the pricing terms in the agreement, DCE pays for the electricity generated by the projects at a fixed-price rate per MWh (megawatt hour), with no escalation for the full 15- year term of the contract. All attributes from the facility, including energy, Renewable Energy Credits (RECs) and Resource Adequacy (RA) will be available to DCE. The contracts reflect 22 Desert Community Energy
Notes to the Basic Financial Statements
Year ended June 30, 2025
(9) Long-Term Energy Agreements (Continued)
pricing that is typical in the current market for new and existing wind resources. The completion of long-term contracts for DCE’s renewable portfolio represents an expected reduction in overall program costs. This cost reduction is over both the short-term and long-term due to the relatively low cost of the expected PPAs for the projects compared to purchasing the same energy, capacity, and RECs on the open market. 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 December 9, 2024, DCE's board approved a new PPA for the 11.2 MW Phoenix wind project. The project began delivering renewable energy on February 1, 2025 with a term of 13 years.

OhmConnect
On June 29, 2022, the DCE Board approved a Western Systems Power Pool Resource Adequacy Confirmation with Resi Station LLC (Resi Station), a subsidiary of OhmConnect, for system RA benefits from an aggregated demand response project. DCE’s pro rata share of the project is 4.5 MW of the 15 MW peak volume over a 10-year period that began January 1, 2023.

Southern California Edison (SCE) – Voluntary Allocation Agreement In accordance with California Public Utilities Commission (CPUC) Decision 21-05-030, on June 29, 2022, the DCE Board approved staff’s recommendation to request from SCE a 100 percent allocation of SCE’s long-term renewable load share resources - 10 years or longer remaining on the contracts with allocations for the remainder of the term of the contract. DCE entered into a Voluntary Allocation Agreement with SCE as of July 26, 2022. Deliveries of this allocation began in January 2023 and will run through May 2040. DCE pays the annual Market Price Benchmark (MPB) for resources allocated through this process. The CPUC resets the MPB by October 1 each year.

SCE – RA Confirmation
On September 29, 2022, DCE executed a Master Agreement and RA Confirmation with SCE in accordance with CPUC Decision 22-05-015. This Decision allows DCE to purchase from SCE a share of the system or flexible RA capacity for loads that have migrated from SCE at the annual MPB. The RA delivery period began on January 1, 2023, and continues until September 30, 2041.

Fervo Energy
On September 28, 2022, DCE executed a contract with Cape Generating Station 1 LLC, a subsidiary of Fervo Energy (Fervo), for a geothermal project in Beaver County, Utah. Under the original agreement, DCE’s contract capacity was 3 MW of the 20 MW average net capacity over a 15-year period, with an expected commercial operation date (COD) of June 1, 2026.

On October 21, 2024, the DCE Board approved Amendment No. 1 to the Renewable Power Purchase Agreement (PPA) with Cape Generating Station 1 LLC. The amendment updates pricing, increases DCE’s contract capacity from 3 MW to 4 MW, and revises the COD to January 1, 2031, nearly five years later than the original COD. The amendment also adjusts the 23 Desert Community Energy
Notes to the Basic Financial Statements
Year ended June 30, 2025
(9) Long-Term Energy Agreements (Continued)
project’s guaranteed capacity from 20 MW to 26 MW, representing the minimum capacity the project will deliver.

Fervo’s geothermal systems make use of horizontal drilling techniques coupled with Organic Rankine Cycle (ORC) generator systems to deliver zero-carbon, zero-emission electricity. ORC power plants are zero-carbon, zero-emission generators. Thermal energy is supplied at high temperature to the ORC by a heat transfer fluid consisting of geothermal brine. The ORC turbo generator then converts thermal energy from geothermal fluid into electric energy using a turbine coupled with an electric generator. ORC plants are fully dispatchable and flexible, with extremely fast ramping rates of up to 30 percent of nominal capacity per minute. The project will be eligible for certification under the California Renewables Portfolio Standard and inclusion in DCE’s Carbon Free product generation portfolio.

Under the pricing terms in the PPA, DCE will pay for the energy generated by the project at a fixed-price rate per MWh (megawatt hour), with a two percent annual escalator after the first contract year. All attributes from the project, including energy, RECs, and RA, will be available to DCE.

NextEra Energy Resources Power Purchase Agreement
On September 27, 2023, DCE executed an ESA with Desert Sands Energy Storage II, LLC, a subsidiary of NextEra Energy Resources. The project is a 25 MW/ 200 MWh lithium ion battery storage facility that is part of a larger 700 MW energy complex located largely within the Palm Springs City limits.

The project is located on a parcel zoned for energy-industrial uses with existing wind turbines and related energy infrastructure on it. The project is being developed in two phases: Desert Peak (Phase 1) and Desert Sands (Phase 2), which includes DCE's facility. The expected COD for DCE's portion of the project is April 1, 2027.

Under the pricing terms in the ESA, DCE will pay for the use of its portion of the Desert Sands project at a fixed-price rate per kW-month, with no escalation, for the full 15- year term of the ESA. DCE is entitled to all product attributes from the facility, including energy, ancillary services, and RA.
(10) Contract Commitments
At June 30, 2025, DCE had potential undiscounted, contractual commitments for energy storage and power purchases through 2041 totaling approximately $94,020,095. In addition, DCE had expected contractual commitments to contract and professional service providers for services yet to be performed in the amount of $2,867,655 through June 30, 2025. Many of the fees associated with these contracts are based on volumetric or other variable activity and actual results may differ.
(11) Subsequent Events
DCE evaluated subsequent events through October 31, 2025, the date the financial statements were available to be issued, and determined that there were no events requiring recognition or disclosure in the financial statements.

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards
Board of Directors
Desert Community Energy
Palm Desert, California
Independent Auditor’s Report
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Desert Community Energy (DCE), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise DCE’s basic financial statements, and have issued our report thereon dated October 31, 2025.

Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered DCE’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of DCE’s internal control. Accordingly, we do not express an opinion on the effectiveness of DCE’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that have not been identified.

Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether DCE’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Irvine, California
October 31, 2025
Board of Directors
Desert Community Energy
Palm Desert, California
We have audited the financial statements of Desert Community Energy (DCE) as of and for the year ended June 30, 2025, and have issued our report thereon dated October 31, 2025.

Professional standards require that we advise you of the following matters relating to our audit.

Our Responsibility in Relation to the Financial Statement Audit As communicated in our engagement letter dated June 27, 2025, our responsibility, as described by professional standards, is to form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities.

Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting.

Accordingly, as part of our audit, we considered the internal control of Desert Community Energy solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control.

We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.

Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously communicated to you.

Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate and our firm, have complied with all relevant ethical requirements regarding independence under the American Institute of Certified Public Accountants (“AICPA”) independence standards, contained in the Code of Professional Conduct.

We identified self-review threats to independence as a result of non-attest services provided. Those non-attest services included the preparation of the financial statements and adjusting journal entries. To mitigate the risk, management has compared the draft financial statements and footnotes to the underlying accounting records to verify accuracy and has reviewed a disclosure checklist to ensure footnotes are complete and accurate.

Significant Risks Identified
During the planning phase of the audit, we identified revenues and receivables as a significant risk, as a result of the materiality of the account balances. As a result, we documented the internal controls over revenue and receivables. In addition, we reviewed the System of Controls I (SOC I) Type II audit report for Calpine Community Energy (see bridge letter) and noted there were no modifications to the opinion for the described assertions. Additionally, we recalculated the amount of revenues received during the year using the underlying system reports.

Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by DCE is included in Note 1 to the financial statements. There have been no initial selection of accounting policies and no changes in significant accounting policies or their application during 2025. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus.

Significant Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments.

The most sensitive accounting estimates affecting the financial statements is:

Management’s estimate of the allowance for doubtful accounts is based on management’s knowledge of the likelihood of revenue collection from customers. We evaluated the key factors and assumptions used to develop the allowance for uncollectable accounts and determined that it is reasonable in relation to the basic financial statements taken as a whole and in relation to the applicable opinion units.

Financial Statement Disclosures
Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting DCE’s financial statements relate to:
 The disclosure of allowance for uncollectable accounts in note 3 of the financial statements.

Significant Unusual Transactions
For the purposes of this communication, professional standards require us to communicate to you significant unusual transactions identified during our audit. There were no significant unusual transactions identified as a result of our audit procedures.

Identified or Suspected Fraud
We have not identified or have obtained information that indicates fraud may have occurred.

Significant Difficulties Encountered during the Audit
We encountered no significant difficulties in dealing with management relating to the performance of the audit.

Uncorrected and Corrected Misstatements
For purposes of this communication, professional standards also require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole and each applicable opinion unit. We did not identify any uncorrected financial statement misstatements.

In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures. We did not identify any material misstatements as a result of our audit procedures.

Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to DCE’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit.

Circumstances that Affect the Form and Content of the Auditor’s Report For the purposes of this letter, professional standards require that we communicate any circumstances that affect the form and content of our auditor’s report. There were none.

Representations Requested from Management
We have requested certain written representations from management, which are included in the letter dated October 31, 2025.

Management’s Consultations with Other Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters.

Other Significant Matters, Findings, or Issues
In the normal course of our professional association with DCE, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, significant events or transactions that occurred during the year, operating and regulatory conditions affecting the entity, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as DCE’s auditors.

This report is intended solely for the information and use of the Board of Directors and management of DCE and is not intended to be and should not be used by anyone other than these specified parties.

Irvine, California
October 31, 2025
ITEM 7B
Desert Community Energy Board
November 20, 2025

STAFF REPORT
Subject: Phase II of the ACCESS Indian Canyon Renewable Energy Assessment Services
Contact: Alvaro Valcarcel Jervis, Management Analyst ([email protected]) Recommendation: Authorize the Executive Director to execute a contract with Cierco Inc in partnership with Hot Purple Energy (C&H) for an amount not to exceed $87,520 through April 2026 to complete Phase II of the Renewable Energy Assessment of the Addressing Climate Change, Emergencies and Sand Storms (ACCESS) along Indian Canyon project Background: The Addressing Climate Change, Emergencies and Sand Storms (ACCESS) project along Indian Canyon Drive in Palm Springs aims to enhance the resilience of at-risk transportation infrastructure, improving mobility, protecting the environment, and bolstering public health and safety for residents and visitors of the Coachella Valley. The project is led by the Coachella Valley Association of Governments (CVAG), which DCE contracts with to provide staffing.

On December 7, 2023, the California Transportation Commission (CTC) awarded the CVAG $50 million to support the project. This was followed by an additional $7.5 million awarded in June by the Southern California Association of Governments (SCAG) through funding from the Congestion Management Air Quality (CMAQ) , and Surface Transportation Block Grant (STBG) and the Carbon Reduction Program. The ACCESS – Indian Canyon project includes improvements that protect at-risk transportation infrastructure, increase the community’s climate resiliency, enhance mobility, preserve the environment, and improve public health and safety for residents and visitors. The project includes two bridges at low-water crossings along the Whitewater River; an active transportation pathway that connects to CV Link, a 40-mile bike, pedestrian and low-speed electric vehicle pathway; as well as a wildlife undercrossing that protects the ecosystem for threatened and endangered species in alignment with the Coachella Valley Multiple Species Habitat Conservation Plan. Notably the project also identified the opportunity for renewable energy along Indian Canyon, which is why DCE supported the application.

After CVAG received funding for the project and started the early design, DCE began leading how best to incorporate a renewable energy component into the ACCESS project to further enhance its sustainability. Potential opportunities include solar, wind, and energy storage solutions that complement transportation improvements and advance regional clean energy goals.

In August 2024, DCE issued a Request for Proposals (RFP) for Phase I – Feasibility Study of the ACCESS Renewable Energy Assessment. Three proposals were submitted and the list was narrowed to two firms based on the recommendation of the evaluation panel. The responses initially had wide-ranging differences in both project scope and cost, as the original RFP was not specific on how to approach the analysis. To better understand the approaches, DCE staff then reached out to both proposers and asked for a refined and narrowed scope that only focused on Phase I of the analysis. the DCE Board awarded the contract to muGrid Analytics LLC in December 2024 for a not-to-exceed amount of $53,110. The Phase I study completed in 2025 evaluated renewable technology options, and the cost-effectiveness of solar, wind, and storage at the project site.

The Phase I findings are attached. In summary, the analysis found that a solar carport option along the active transportation pathway would be economically unfeasible. While solar feasibility is still reasonable, wind and battery storage are more economically favorable. Further analysis is now needed to determine site interconnection capacity, a refined economic and technical analysis, consideration of different ownership structures, and a roadmap for potential development.

On September 4, 2025, DCE staff followed up with the two firms that were shortlisted in Phase I and issued RFP 2024-03 for the Phase II Analysis to muGrid Analytics LLC and the joint team of CIERCO and Hot Purple Energy. The RFP requested updated proposals based on Phase I results. Phase II will build on the Phase I Feasibility Study and complete the preliminary benefits assessment to identify the most cost-effective project design that meets DCE’s affordability, renewable procurement goals, and community objectives. Key tasks for Phase II include:
• Confirming Southern California Edison (SCE) transmission availability and interconnection requirements at the nearby Garnet Substation;
• Conducting site-specific analyses for wind, solar, and battery storage technologies on the a parcel owned by the City of Palm Springs;
• Evaluating installed costs, energy production, and economic feasibility of each technology;
• Identifying optimal system size, ownership and financing structures, and applicable federal/state funding opportunities; and
• Preparing a refined financial analysis and implementation roadmap for a potential Phase III project development.

After reviewing and scoring the proposals, interviews were conducted with each applicant by the evaluation panel and scored. The evaluation panel, which included DCE staff and a Palm Springs consultant, recommended with Cierco-HPE be selected for Phase II based on local expertise; technical understanding of wind, solar, and battery integration; and cost-effective delivery. Staff now recommends the Executive Director be authorized to execute a contract to Cierco and Hot Purple Energy for Phase II. If approved,
the work is anticipated to begin in late 2025 and conclude by April 30, 2026.

Fiscal Analysis: The proposed contract with Cierco and Hot Purple Energy is for an amount not to exceed $87,520. This amount was included in DCE’s Fiscal Year 2025-26 budget.

CVAG’s ACCESS funding is covering costs related to the project’s transportation and construction components. CVAG anticipates the project will go out for construction bids in mid-2026.

Attachments:

1. Cierco, Inc. Services Agreement

2. Cierco-Hot Purple Energy Proposal

3. Phase I Feasibility Final Report
1 Desert Community Energy
Contract No. DCE-26-005
Project: ACCESS Indian Canyon – REA Phase II - Analysis

DESERT COMMUNITY ENERGY

PROFESSIONAL SERVICES AGREEMENT
This Professional Services Agreement (“Agreement”) is made and entered into on November 20, 2025, by and between DESERT COMMUNITY ENERGY, a California joint powers authority (“DCE”) and CIERCO US Corporation (“Consultant”). DCE and Consultant are sometimes individually referred to as “Party” and collectively as “Parties.”

RECITALS
A. Consultant desires to perform and assume responsibility for the provision of certain professional services required by DCE on the terms and conditions set forth in this Agreement.

Consultant represents that it is experienced in providing technical services for DCE’s community choice energy program, is licensed in the State of California, and is familiar with the plans of DCE.

B. DCE desires to engage Consultant to render such professional services for the implementation of DCE’s community choice energy program (“Project”) as set forth in this Agreement.

AGREEMENT

1. Scope of Services and Term.

1.1 General Scope of Services. Consultant promises and agrees to furnish to DCE all labor and services and incidental and customary work necessary to fully and adequately supply DCE the implementation services necessary for the Project (“Services”). The Services are more particularly described in Exhibit A attached hereto, and which are stated in the proposal to DCE.

All Services shall be subject to, and performed in accordance with, this Agreement, the exhibits attached hereto, and all applicable local, state and federal laws, rules and regulations.

1.2 Term. The term of this Agreement shall be from November 20, 2025 to April 30, 2026, unless earlier terminated as provided herein. Consultant shall complete the Services within the term of this Agreement and shall meet any other established schedules and deadlines.

2. Responsibilities of Consultant.

2.1 Control and Payment of Subordinates; Independent Contractor. The Services shall be performed by Consultant or under its supervision. DCE retains Consultant on an independent contractor basis and not as an employee. Consultant retains the right to perform similar or different services for others during the term of this Agreement. Any additional personnel performing the Services under this Agreement on behalf of Consultant shall also not be employees of DCE and shall at all times be under Consultant’s exclusive direction and control. Consultant shall pay all wages, salaries, and other amounts due such personnel in connection with their performance of Services under this Agreement and as required by law. Consultant shall be responsible for all reports and obligations respecting such additional personnel, including, but not limited to: social 2 Desert Community Energy
Contract No. DCE-26-005
Project: ACCESS Indian Canyon – REA Phase II - Analysis security taxes, income tax withholding, unemployment insurance, disability insurance, and workers’ compensation insurance.

2.2 Schedule of Services. Consultant shall perform the Services expeditiously, within the term of this Agreement, and in accordance with the Schedule of Services, which is stated in the proposal to DCE and set forth in Exhibit B attached hereto. Consultant represents that it has the professional and technical personnel required to perform the Services in conformance with such conditions. In order to facilitate Consultant’s conformance with the Schedule, DCE shall respond to Consultant’s submittals in a timely manner. Upon request of DCE, Consultant shall provide a more detailed schedule of anticipated performance to meet the Schedule of Services.

2.3 Conformance to Applicable Requirements. All work prepared by Consultant shall be subject to the approval of DCE.

2.4 Substitution of Key Personnel. Consultant has represented to DCE that certain key personnel will perform and coordinate the Services under this Agreement. Should one or more of such personnel become unavailable, Consultant may substitute other personnel of at least equal competence upon written approval of DCE. In the event that DCE and Consultant cannot agree as to the substitution of key personnel, DCE shall be entitled to terminate this Agreement for cause.

As discussed below, any personnel who fail or refuse to perform the Services in a manner acceptable to DCE, or who are determined by DCE to be uncooperative, incompetent, a threat to the adequate or timely completion of the Project, or a threat to the safety of persons or property, shall be promptly removed from the Project by the Consultant at the request of DCE. The key personnel for performance of this Agreement are as follows:

2.5 DCE’s Representative. DCE hereby designates the Executive Officer, or designee, to act as its representative for the performance of this Agreement (“DCE’s Representative”). 3 Desert Community Energy
Contract No. DCE-26-005
Project: ACCESS Indian Canyon – REA Phase II - Analysis DCE’s Representative shall have the authority to act on behalf of DCE for all purposes under this Agreement. Consultant shall not accept direction or orders from any person other than DCE’s Representative, or designee.

2.6 Consultant’s Representative. Consultant hereby designates Mikael Jakobsson, Prime Consultant Manager, or his or her designee, to act as its Representative for the performance of this Agreement (“Consultant’s Representative”). Consultant’s Representative shall have full authority to represent and act on behalf of the Consultant for all purposes under this Agreement. The Consultant’s Representative shall supervise and direct the Services, using his or her best skill and attention, and shall be responsible for all means, methods, techniques, sequences and procedures and for the satisfactory coordination of all portions of the Services under this Agreement.

2.7 Coordination of Services. Consultant agrees to work closely with DCE staff in the performance of Services and shall be available to DCE’s staff, consultants and other staff at all reasonable times.

2.8 Standard of Care; Performance of Employees. Consultant shall perform all Services under this Agreement in a skillful and competent manner, consistent with the standards generally recognized as being employed by professionals in the same discipline in the State of California.

Consultant represents and maintains that it is skilled in the professional calling necessary to perform the Services. Consultant warrants that all employees and subcontractors shall have sufficient skill and experience to perform the Services assigned to them. Finally, Consultant represents that it, its employees and subcontractors have all licenses, permits, qualifications and approvals of whatever nature that are legally required to perform the Services, and that such licenses and approvals shall be maintained throughout the term of this Agreement. As provided for in the indemnification provisions of this Agreement, Consultant shall perform, at its own cost and expense and without reimbursement from DCE, any services necessary to correct errors or omissions which are caused by the Consultant’s failure to comply with the standard of care provided for herein. Any employee of the Consultant or its subcontractors who is determined by DCE to be uncooperative, incompetent, a threat to the adequate or timely completion of the Project, a threat to the safety of persons or property, or any employee who fails or refuses to perform the Services in a manner acceptable to DCE, shall be promptly removed from the Project by the Consultant and shall not be re-employed to perform any of the Services or to work on the Project.

2.9 Laws and Regulations. Consultant shall keep itself fully informed of and in compliance with all local, state and federal laws, rules and regulations in any manner affecting the performance of the Project or the Services, including all Cal/OSHA requirements, and shall give all notices required by law. Consultant shall be liable for all violations of such laws and regulations in connection with Services. If the Consultant performs any work knowing it to be contrary to such laws, rules and regulations and without giving written notice to DCE, Consultant shall be solely responsible for all costs arising therefrom. Consultant shall defend, indemnify and hold DCE, its officials, directors, officers, employees and agents free and harmless, pursuant to the indemnification provisions of this Agreement, from any claim or liability arising out of any failure or alleged failure to comply with such laws, rules or regulations. 4 Desert Community Energy
Contract No. DCE-26-005
Project: ACCESS Indian Canyon – REA Phase II - Analysis

2.10 Insurance.

2.10.1 Time for Compliance. Consultant shall not
commence the Services under this Agreement until it has provided evidence satisfactory to DCE that it has secured all insurance required under this section, in a form and with insurance companies acceptable to DCE. In addition, Consultant shall not allow any subcontractor to commence work on any subcontract until it has provided evidence satisfactory to DCE that the subcontractor has secured all insurance required under this section.

2.10.2 Minimum Requirements. Consultant shall, at
its expense, procure and maintain for the duration of the Agreement insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the Agreement by the Consultant, its agents, representatives, employees or subcontractors. Consultant shall also require all of its subcontractors to procure and maintain the same insurance for the duration of the Agreement. Such insurance shall meet at least the following minimum levels of coverage:
(A) Minimum Scope of Insurance. Coverage shall be at least as broad as the latest version of the following: (1) General Liability: Insurance Services Office Commercial General Liability coverage (occurrence form CG 0001 or exact equivalent); (2) Automobile Liability: Insurance Services Office Business Auto Coverage (form CA 0001, code 1 (any auto) or exact equivalent); and (3) Workers’ Compensation and Employer’s Liability: Workers’ Compensation insurance as required by the State of California and Employer’s Liability Insurance. (B) Minimum Limits of Insurance. Consultant shall maintain limits no less than: (1) General Liability: $1,000,000 per occurrence, $2,000,000 for bodily injury, personal injury and property damage. If Commercial General Liability Insurance or other form with general aggregate limit is used, either the general aggregate limit shall apply separately to this Agreement/location or the general aggregate limit shall be twice the required occurrence limit; (2) Automobile Liability: $1,000,000 per accident for bodily injury and property damage; and (3) Workers’ Compensation and Employer’s Liability: Workers’ Compensation limits as required by the Labor Code of the State of California. Employer’s Liability Coverage of at least $1,000,000 per accident for bodily injury or disease.

2.10.3 Professional Liability. Consultant shall
procure and maintain, and require its subcontractors to procure and maintain, for a period of five (5) years following completion of the Services, errors and omissions liability insurance appropriate to their profession. Such insurance shall be in an amount not less than $1,000,000 per claim and in the aggregate. This insurance shall be endorsed to include contractual liability applicable to this Agreement and shall be written on a policy form coverage specifically designed to 5 Desert Community Energy
Contract No. DCE-26-005
Project: ACCESS Indian Canyon – REA Phase II - Analysis protect against acts, errors or omissions of the Consultant. “Covered Professional Services” as designated in the policy must specifically include work performed under this Agreement. The policy must “pay on behalf of” the insured and must include a provision establishing the insurer's duty to defend.

2.10.4 Insurance Endorsements. The insurance
policies shall contain the following provisions, or Consultant shall provide endorsements on forms supplied or approved by DCE to add the following provisions to the insurance policies:
(A) General Liability.
(i) Commercial General Liability Insurance must include coverage for (1) Bodily Injury and Property Damage; (2) Personal Injury/Advertising Injury; (3) Premises/Operations Liability; (4) Products/Completed Operations Liability; (5) Aggregate Limits that Apply per Project; (6) Explosion, Collapse and Underground (UCX) exclusion deleted; (7) Contractual Liability with respect to this Agreement; (8) Broad Form Property Damage; and (9) Independent Consultants Coverage.
(ii) The policy shall contain no endorsements or provisions limiting coverage for (1) contractual liability; (2) cross liability exclusion for claims or suits by one insured against another; or (3) contain any other exclusion contrary to the Agreement. (iii) The policy shall give DCE, its directors, officials, officers, employees, and agents insured status using ISO endorsement forms 20 10 10 01 and 20 37 10 01, or endorsements providing the exact same coverage.
(iv) The additional insured coverage under the policy shall be “primary and non-contributory” and will not seek contribution from DCE’s insurance or self-insurance and shall be at least as broad as CG 20 01 04 13, or endorsements providing the exact same coverage.
(B) Automobile Liability. The automobile liability policy shall be endorsed to state that: (1) DCE, its directors, officials, officers, employees, agents and volunteers shall be covered as additional insureds with respect to the ownership, operation, maintenance, use, loading or unloading of any auto owned, leased, hired or borrowed by the Consultant or for which the Consultant is responsible; and (2) the insurance coverage shall be primary insurance as respects DCE, its directors, officials, officers, employees, agents and volunteers, or if excess, shall stand in an unbroken chain of coverage excess of the Consultant’s scheduled underlying coverage. Any insurance or self-insurance maintained by DCE, its directors, officials, officers, employees, agents and volunteers shall be excess of the Consultant’s insurance and shall not be called upon to contribute with it in any way.
(C) Workers’ Compensation and Employers Liability Coverage. 6 Desert Community Energy
Contract No. DCE-26-005
Project: ACCESS Indian Canyon – REA Phase II - Analysis (i) Consultant certifies that it is aware of the provisions of Section 3700 of the California Labor Code which requires every employer to be insured against liability for workers’ compensation or to undertake self-insurance in accordance with the provisions of that code, and Consultant will comply with such provisions before commencing work under this Agreement.
(ii) The insurer shall agree to waive all rights of subrogation against DCE, its directors, officials, officers, employees, agents and volunteers for losses paid under the terms of the insurance policy which arise from work performed by the Consultant. (D) All Coverages. Defense costs shall be payable in addition to the limits set forth hereunder. Requirements of specific coverage or limits contained in this section are not intended as a limitation on coverage, limits, or other requirement, or a waiver of any coverage normally provided by any insurance. It shall be a requirement under this Agreement that any available insurance proceeds broader than or in excess of the specified minimum insurance coverage requirements and/or limits set forth herein shall be available to DCE, its directors, officials, officers, employees and agents as additional insureds under said policies. Furthermore, the requirements for coverage and limits shall be (1) the minimum coverage and limits specified in this Agreement; or (2) the broader coverage and maximum limits of coverage of any Insurance policy or proceeds available to the named insured; whichever is greater. (i) The limits of insurance required in this Agreement may be satisfied by a combination of primary and umbrella or excess insurance. Any umbrella or excess insurance shall contain or be endorsed to contain a provision that such coverage shall also apply on a primary and non-contributory basis for the benefit of DCE (if agreed to in a written contract or agreement) before DCE’s own insurance or self-insurance shall be called upon to protect it as a named insured. The umbrella/excess policy shall be provided on a “following form” basis with coverage at least as broad as provided on the underlying policy(ies). (ii) Consultant shall provide DCE at least thirty (30) days prior written notice of cancellation of any policy required by this Agreement, except that the Consultant shall provide at least ten (10) days prior written notice of cancellation of any such policy due to non-payment of premium. If any of the required coverage is cancelled or expires during the term of this Agreement, the Consultant shall deliver renewal certificate(s) including the General Liability Additional Insured Endorsement to DCE at least ten (10) days prior to the effective date of cancellation or expiration.
(iii) The retroactive date (if any) of each policy is to be no later than the effective date of this Agreement. Consultant shall maintain such coverage continuously for a period of at least three years after the completion of the work under this Agreement.

Consultant shall purchase a one (1) year extended reporting period A) if the retroactive date is advanced past the effective date of this Agreement; B) if the policy is cancelled or not renewed; or C) if the policy is replaced by another claims-made policy with a retroactive date subsequent to the effective date of this Agreement.
7 Desert Community Energy
Contract No. DCE-26-005
Project: ACCESS Indian Canyon – REA Phase II - Analysis (iv) The foregoing requirements as to the types and limits of insurance coverage to be maintained by Consultant, and any approval of said insurance by DCE, is not intended to and shall not in any manner limit or qualify the liabilities and obligations otherwise assumed by the Consultant pursuant to this Agreement, including but not limited to, the provisions concerning indemnification.
(v) If at any time during the life of the Agreement, any policy of insurance required under this Agreement does not comply with these specifications or is canceled and not replaced, DCE has the right but not the duty to obtain the insurance it deems necessary and any premium paid by DCE will be promptly reimbursed by Consultant or DCE will withhold amounts sufficient to pay premium from Consultant payments. In the alternative, DCE may cancel this Agreement. DCE may require the Consultant to provide complete copies of all insurance policies in effect for the duration of the Project.
(vi) Neither DCE nor any of its directors, officials, officers, employees or agents shall be personally responsible for any liability arising under or by virtue of this Agreement.

2.10.5 Separation of Insureds; No Special Limitations. All insurance required by this Section shall contain standard separation of insureds provisions. In addition, such insurance shall not contain any special limitations on the scope of protection afforded to DCE, its directors, officials, officers, employees, agents and volunteers.

2.10.6 Deductibles and Self-Insurance Retentions.

Any deductibles or self-insured retentions must be declared to and approved by DCE. Consultant shall guarantee that, at the option of DCE, either: (1) the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects DCE, its directors, officials, officers, employees, agents and volunteers; or (2) the Consultant shall procure a bond guaranteeing payment of losses and related investigation costs, claims and administrative and defense expenses.

2.10.7 Acceptability of Insurers. Insurance is to be
placed with insurers with a current A.M. Best’s rating of no less than A:VII, licensed to do business in California, and satisfactory to DCE.

2.10.8 Verification of Coverage. Consultant shall
furnish DCE with original certificates of insurance and endorsements effecting coverage required by this Agreement on forms satisfactory to DCE. The certificates and endorsements for each insurance policy shall be signed by a person authorized by that insurer to bind coverage on its behalf and shall be on forms provided by DCE if requested. All certificates and endorsements must be received and approved by DCE before work commences. DCE reserves the right to require complete, certified copies of all required insurance policies, at any time. 8 Desert Community Energy
Contract No. DCE-26-005
Project: ACCESS Indian Canyon – REA Phase II - Analysis

2.10.9 Subcontractor Insurance Requirements.

Consultant shall not allow any subcontractors to commence work on any subcontract until they have provided evidence satisfactory to DCE that they have secured all insurance required under this section. Policies of commercial general liability insurance provided by such subcontractors shall be endorsed to name DCE as an additional insured using ISO form CG 20 38 04 13 or an endorsement providing the exact same coverage.

If requested by Consultant, DCE may approve different scopes or minimum limits of insurance for particular subcontractors.

2.10.10 Safety. Consultant shall execute and maintain
its work so as to avoid injury or damage to any person or property. In carrying out its Services, the Consultant shall at all times be in compliance with all applicable local, state and federal laws, rules and regulations, and shall exercise all necessary precautions for the safety of employees appropriate to the nature of the work and the conditions under which the work is to be performed. Safety precautions as applicable shall include, but shall not be limited to: (A) adequate life protection and life-saving equipment and procedures; (B) instructions in accident prevention for all employees and subcontractors, such as safe walkways, scaffolds, fall protection ladders, bridges, gang planks, confined space procedures, trenching and shoring, equipment and other safety devices, equipment and wearing apparel as are necessary or lawfully required to prevent accidents or injuries; and (C) adequate facilities for the proper inspection and maintenance of all safety measures.

3. Fees and Payments.

3.1 Compensation. Consultant shall receive compensation, including authorized reimbursements, for all Services rendered under this Agreement at the rates set forth in Exhibit C, attached hereto. The total compensation shall not exceed $87,520 without written approval of DCE’s Board of Directors. Extra Work may be authorized, as described below, and, if authorized, said Extra Work will be compensated at the rates and manner set forth in this Agreement.

3.2 Payment of Compensation. Consultant shall submit to DCE a monthly itemized statement which indicates work completed and hours of Services rendered by Consultant. The statement shall describe the amount of Services and supplies provided since the initial commencement date, or since the start of the subsequent billing periods, as appropriate, through the date of the statement. DCE shall, within 45 days of receiving such statement, review the statement and pay all approved charges thereon.

3.3 Reimbursement for Expenses. Consultant shall not be reimbursed for any expenses unless authorized in writing by DCE.
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Contract No. DCE-26-005
Project: ACCESS Indian Canyon – REA Phase II - Analysis

3.4 Extra Work. At any time during the term of this Agreement, DCE may request that Consultant perform Extra Work. As used herein, “Extra Work” means any work which is determined by DCE to be necessary for the proper completion of the Project, but which the Parties did not reasonably anticipate would be necessary at the execution of this Agreement. Consultant shall not perform, nor be compensated for, Extra Work without written authorization from DCE’s Representative.

4. Accounting Records. Consultant shall maintain complete and accurate records with respect to all costs and expenses incurred under this Agreement. All such records shall be clearly identifiable. Consultant shall allow a representative of DCE during normal business hours to examine, audit, and make transcripts or copies of such records and any other documents created pursuant to this Agreement. Consultant shall allow inspection of all work, data, documents, proceedings, and activities related to the Agreement for a period of three (3) years from the date of final payment under this Agreement.

5. General Provisions.

5.1 Termination of Agreement.

5.1.1 Grounds for Termination. DCE may, by
written notice to Consultant, terminate the whole or any part of this Agreement at any time and without cause by giving written notice to Consultant of such termination, and specifying the effective date thereof, at least seven (7) days before the effective date of such termination. Upon termination, Consultant shall be compensated only for those services which have been adequately rendered to DCE, and Consultant shall be entitled to no further compensation. Consultant may not terminate this Agreement except for cause.

5.1.2 Effect of Termination. If this Agreement is
terminated as provided herein, DCE may require Consultant to provide all finished or unfinished Documents and Data and other information of any kind prepared by Consultant in connection with the performance of Services under this Agreement. Consultant shall be required to provide such documents and other information within fifteen (15) days of the request.

5.1.3 Additional Services. In the event this
Agreement is terminated in whole or in part as provided herein, DCE may procure, upon such terms and in such manner as it may determine appropriate, services similar to those terminated.

5.2 Delivery of Notices. All notices permitted or required under this Agreement shall be given to the respective Parties at the following address, or at such other address as the respective parties may provide in writing for this purpose:
10 Desert Community Energy
Contract No. DCE-26-005
Project: ACCESS Indian Canyon – REA Phase II - Analysis Consultant: Mikael Jakobsson, Principal
Cierco Energy
810 N. Farrell Drive
Palm Springs, CA 92262
(760) 776-3535
DCE: Desert Community Energy
74-199 El Paseo Drive, Suite 100
Palm Desert, CA 92260
Such notice shall be deemed made when personally delivered or when mailed, forty-eight (48) hours after deposit in the U.S. Mail, first class postage prepaid and addressed to the Party at its applicable address. Actual notice shall be deemed adequate notice on the date actual notice occurred, regardless of the method of service.

5.3 Ownership of Materials and Confidentiality.

5.3.1 Documents & Data; Licensing of Intellectual Property. Consultant shall retain all right, title, and interest, including all copyrights and other intellectual property rights, in and to all plans, specifications, studies, drawings, estimates, data, reports, software, source code, and other documents or works of authorship prepared or developed by Consultant or its subcontractors in connection with this Agreement (“Documents & Data”). Consultant hereby grants to DCE a non-exclusive, non-transferable, royalty-free license to copy, use, and modify the Documents & Data solely for purposes directly related to the planning, design, construction, use, operation, and maintenance of the Project for which the Documents & Data were prepared. DCE shall not use, reproduce, distribute, modify, or permit the use of the Documents & Data for any other project or purpose without the prior written consent of Consultant. Consultant shall ensure that all subcontractors engaged in performance under this Agreement grant to DCE licenses on terms no less restrictive than those set forth herein. Consultant shall retain all right, title, and interest in and to all plans, specifications, studies, drawings, estimates, data, reports, software, source code, and other materials or works of authorship prepared or developed by Consultant or its subcontractors under this Agreement (“Documents & Data”). Consultant grants to DCE a non-exclusive, non-transferable license to copy, use, and modify the Documents & Data solely for the purposes of the Project for which they were prepared. DCE shall not use the Documents & Data, or permit them to be used, for any other project, purpose, or by any third party without Consultant’s prior written consent. Consultant shall ensure all subcontractors grant equivalent rights consistent with this provision.

5.3.2 Intellectual Property. All intellectual property, proprietary methods, know-how, software, tools, templates, or other materials developed by Consultant prior to or outside the scope of this Agreement (“Background IP”) shall remain the exclusive property of Consultant. To the extent any Background IP is incorporated into the Documents & Data or deliverables, DCE is granted a limited, project-specific license to use such Background IP only as necessary for the completion, use, and maintenance of the Project. All new intellectual property 11 Desert Community Energy
Contract No. DCE-26-005
Project: ACCESS Indian Canyon – REA Phase II - Analysis created specifically for and under this Agreement shall be owned by Consultant, with DCE granted a non-exclusive, perpetual license to use such IP solely for the Project. Any other use, modification, sublicensing, or transfer by DCE shall require Consultant’s prior written approval.

5.3.3 Confidentiality. All ideas, memoranda, specifications, plans, procedures, drawings, descriptions, computer program data, input record data, written information, and other Documents and Data either created by or provided to Consultant in connection with the performance of this Agreement shall be held confidential by Consultant. Such materials shall not, without the prior written consent of DCE, be used by Consultant for any purposes other than the performance of the Services. Nor shall such materials be disclosed to any person or entity not connected with the performance of the Services or the Project. Nothing furnished to Consultant which is otherwise known to Consultant or is generally known, or has become known, to the related industry shall be deemed confidential. Consultant shall not use DCE’s name or insignia, photographs of the Project, or any publicity pertaining to the Services or the Project in any magazine, trade paper, newspaper, television or radio production or other similar medium without the prior written consent of DCE.

5.3.4 Infringement Indemnification. Consultant shall defend, indemnify and hold DCE, its directors, officials, officers, employees, volunteers and agents free and harmless, pursuant to the indemnification provisions of this Agreement, for any alleged infringement of any patent, copyright, trade secret, trade name, trademark, or any other proprietary right of any person or entity in consequence of the use on the Project by DCE of the Documents & Data, including any method, process, product, or concept specified or depicted.

5.4 Cooperation; Further Acts. The Parties shall fully cooperate with one another and shall take any additional acts or sign any additional documents as may be necessary, appropriate or convenient to attain the purposes of this Agreement.

5.5 Attorney’s Fees. If either Party commences an action against the other Party, either legal, administrative or otherwise, arising out of or in connection with this Agreement, the parties agree to abide by the decision of the court in relation to the re-imbursement of reasonable attorney’s fees and all other costs of such action.

5.6 Indemnification. To the fullest extent permitted by law, Consultant shall indemnify and hold harmless DCE, its officers, employees, and agents from and against any and all third-party claims, demands, causes of action, damages, losses, liabilities, and expenses (including reasonable attorneys’ fees) to the extent arising out of or resulting from the negligent acts, errors, or omissions, or willful misconduct of Consultant, its employees, or agents in the performance of this Agreement. Consultant shall have the right to select legal counsel to defend any such claim, subject to DCE’s reasonable approval, and shall keep DCE reasonably informed of the defence and resolution of such claims. DCE shall promptly notify Consultant in writing of any claim subject to indemnification and shall cooperate fully in the defense thereof. Notwithstanding the foregoing, Consultant shall not be responsible for any claim, loss, or liability to the extent caused by the negligence, recklessness, or willful misconduct of DCE or any of its officers, employees, or agents. Consultant’s obligation to indemnify shall be limited to the coverage and limits of insurance maintained by Consultant pursuant to this Agreement. The provisions of this Section 12 Desert Community Energy
Contract No. DCE-26-005
Project: ACCESS Indian Canyon – REA Phase II - Analysis shall survive the termination or expiration of this Agreement, but only with respect to acts or omissions occurring prior thereto.

5.7 Entire Agreement. This Agreement contains the entire Agreement of the Parties with respect to the subject matter hereof, and supersedes all prior negotiations, understandings or agreements. This Agreement may only be modified by a writing signed by both Parties.

5.8 Governing Law. This Agreement shall be governed by the laws of the State of California. Venue shall be in Riverside County, California.

5.9 Time of Essence. Time is of the essence for each and every provision of this Agreement.

5.10 DCE’s Right to Employ Other Consultants. DCE reserves right to employ other consultants in connection with this Project.

5.11 Successors and Assigns. This Agreement shall be binding on the successors and assigns of the Parties.

5.12 Assignment or Transfer. Consultant shall not assign, hypothecate, or transfer, either directly or by operation of law, this Agreement or any interest herein without the prior written consent of DCE. Any attempt to do so shall be null and void, and any assignees, hypothecates or transferees shall acquire no right or interest by reason of such attempted assignment, hypothecation or transfer.

5.13 Construction; References; Captions. Since the Parties or their agents have participated fully in the preparation of this Agreement, the language of this Agreement shall be construed simply, according to its fair meaning, and not strictly for or against any Party. Any term referencing time, days or period for performance shall be deemed calendar days and not work days.

All references to Consultant include all personnel, employees, agents, and subcontractors of Consultant, except as otherwise specified in this Agreement. All references to DCE include its elected officials, officers, employees, agents, and volunteers except as otherwise specified in this Agreement. The captions of the various articles and paragraphs are for convenience and ease of reference only, and do not define, limit, augment, or describe the scope, content, or intent of this Agreement.

5.14 Amendment; Modification. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing and signed by both Parties.

5.15 Waiver. No waiver of any default shall constitute a waiver of any other default or breach, whether of the same or other covenant or condition. No waiver, benefit, privilege, or service voluntarily given or performed by a Party shall give the other Party any contractual rights by custom, estoppel, or otherwise.

5.16 No Third Party Beneficiaries. There are no intended third party beneficiaries of any right or obligation assumed by the Parties.
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5.17 Invalidity; Severability. If any portion of this Agreement is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect.

5.18 Prohibited Interests. Consultant maintains and warrants that it has not employed nor retained any company or person, other than a bona fide employee working solely for Consultant, to solicit or secure this Agreement. Further, Consultant warrants that it has not paid nor has it agreed to pay any company or person, other than a bona fide employee working solely for Consultant, any fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or making of this Agreement. For breach or violation of this warranty, DCE shall have the right to rescind this Agreement without liability. For the term of this Agreement, no member, officer or employee of DCE, during the term of his or her service with DCE, shall have any direct interest in this Agreement, or obtain any present or anticipated material benefit arising therefrom.

5.19 Equal Opportunity Employment and Subcontracting. Consultant represents that it is an equal opportunity employer and it shall not discriminate on the basis of race, gender, gender expression, gender identity, religion, national origin, ethnicity, sexual orientation, age, or disability in the solicitation, selection, hiring, or treatment of applicants, employees, subcontractors, vendors, or suppliers. Such non-discrimination shall include, but not be limited to, all activities related to initial employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination. Further, Consultant shall provide equal opportunity for subcontractors to participate in subcontracting opportunities.

5.20 Labor Certification. By its signature hereunder, Consultant certifies that it is aware of the provisions of Section 3700 of the California Labor Code which requires every employer to be insured against liability for Workers’ Compensation, or to undertake self- insurance in accordance with the provisions of that Code, and agrees to comply with such provisions before commencing the performance of the Services.

5.21 Authority to Enter Agreement. Consultant has all requisite power and authority to conduct its business and to execute, deliver, and perform the Agreement. Each Party warrants that the individuals who have signed this Agreement have the legal power, right, and authority to make this Agreement and bind each respective Party.

5.22 Counterparts. This Agreement may be signed in counterparts, each of which shall constitute an original.

5.23 Subcontracting. Consultant shall not subcontract any portion of the work required by this Agreement, except as expressly stated herein, without prior written approval of DCE.

Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement.
[SIGNATURES ON FOLLOWING PAGE]
14 Desert Community Energy
Contract No. DCE-26-005
Project: ACCESS Indian Canyon – REA Phase II - Analysis IN WITNESS WHEREOF, the Parties have made and executed this Agreement as of the date first written above.

DESERT COMMUNITY ENERGY
By : _________________________________
Name: Tom Kirk
Title: Executive Director

CONSULTANT
By : _________________________________
Name: Mikael Jakobsson
Title: Principal
APPROVED AS TO FORM:
_________________________________
Ryan Baron, Best Best & Krieger LLP
General Counsel
Exhibit A
15 Desert Community Energy
Contract No. DCE-26-005
Project: ACCESS Indian Canyon – REA Phase II - Analysis

EXHIBIT A

SCOPE OF SERVICES
See following pages.

Exhibit B
16 Desert Community Energy
Contract No. DCE-26-005
Project: ACCESS Indian Canyon – REA Phase II - Analysis

EXHIBIT B

SCHEDULE OF SERVICES
Exhibit C
17 Desert Community Energy
Contract No. DCE-26-005
Project: ACCESS Indian Canyon – REA Phase II - Analysis

EXHIBIT C

FEES AND COMPENSATION BILLING RATES
See following pages.
1 Desert Community Energy
Renewable Energy Assessment Services
Phase II – Analysis
“RFP 2024-03 (Continued)”
Issue Date:

September 4, 2025
CIERCO Proposal
2 Contents
COVER LETTER ...............................................................................................................3 QUALIFICATIONS, RELATED EXPERIENCE & REFERENCES .......................................................4 PROPOSED STAFFING & PROJECT ORGANIZATION................................................................6 WORK PLAN (Tasks A – F).................................................................................................8 A. TRANSMISSION AVAILABILITY.................................................................................8 B. SOLAR/WIND/STORAGE ANALYSIS ..........................................................................9 C. ELECTRICAL & STRUCTURAL ANALYSIS ...................................................................10 D. ECONOMIC FEASIBILITY & FINANCIAL ANALYSIS......................................................10 E. TENTATIVE TIMELINE, ACTION AREAS & REQUIRED SUPPORT....................................12 F. COORDINATION .................................................................................................12 OVERALL SUMMARY .....................................................................................................14 COMMENTS & RESERVATIONS ........................................................................................15 APPENDICES ................................................................................................................16 RECENT RELEVANT PROJECT EXAMPLES........................................................................17 LITIGATION...............................................................................................................20 PROJECT TEAM RESUMES ...........................................................................................21 3 COVER LETTER
Tom Kirk, Executive Director
Desert Community Energy
74-199 El Paseo Drive, Suite 100
Palm Desert, CA 92260
Date: September 25, 2025
Subject: Proposal for Renewable Energy Assessment Services – Phase II (Analysis) Dear Mr. Kirk,
Cierco, Inc., in partnership with Hot Purple Energy (C&H), is pleased to submit this proposal in response to Desert Community Energy’s Request for Proposals for Renewable Energy Assessment Services – Phase II (Analysis), RFP No. 2025-03.

As one of the two shortlisted proposers from the Phase I Feasibility Study process, our team brings a proven understanding of the ACCESS Indian Canyon project’s technical, environmental, and policy framework. Together, Cierco and HPE combine international renewable development expertise with deep local implementation capacity. Our Phase II approach is built around Desert Community Energy’s goals of resilience, affordability, and climate-forward innovation, ensuring that this next stage of analysis supports actionable, community-driven energy planning.

We appreciate the opportunity to continue supporting DCE’s vision for sustainable, community-based energy solutions. Our proposal reflects our shared commitment to thorough analysis, transparent communication, and the delivery of a practical, implementable roadmap that aligns with CPUC guidance, city planning objectives, and regional economic development priorities.

This proposal shall remain valid for 180 days from the submittal date. We affirm that all information provided is accurate and that no conflict of interest exists between our team and any party participating in this solicitation.

Sincerely,
Mikael Jakobsson
Principal, Cierco, Inc.

Nate Otto
CEO, Hot Purple Energy
4 QUALIFICATIONS, RELATED EXPERIENCE & REFERENCES
Firm Overview
Cierco Group (CIERCO) is an independent renewable energy developer with a portfolio spanning onshore and offshore wind, solar, and hybrid systems. With decades of experience delivering utility-scale projects across North America and Europe, Cierco brings the full developer capabilities with advanced analytical, financial modeling and interconnection expertise, essential to this Phase II analysis. The company is also developing the CADEMO project, being the first offshore wind project in California, partially funded by the State, see www.cademo.net. Also see www.ciercoenergy.com Hot Purple Energy (HPE) is a Palm Springs based solar and storage contractor with more than 15 years of experience designing and implementing distributed renewable systems throughout the Coachella Valley.

As DCE’s local partner, HPE offers unmatched insight into regional permitting, SCE interconnection processes, site conditions, and public agency coordination. HPE also maintains strong affiliations with workforce development initiatives, College of the Desert, and GRID Alternatives, but is most proud of the many student interns who have grown through the Regional Energy Academy Learning (REAL) program into the renewable energy workforce. Also see www.hotpurpleenergy.com Together, the Cierco and HPE team offers the ideal combination of analytical depth and local execution experience required to deliver a credible, community focused analysis that can translate directly into viable project development.

Relevant Experience
• Cierco: Through time the company has experience in both Coachella Valley and California as a whole. Being a front-line developer with experience over 30 years, the capabilities range from asset management, technical and supply chain work, formal interconnection work (CAISO), state grant receiver, full scope of permitting work (federal and state) as well as financial assessments for multiple 20–200 MW renewable energy projects across California and Europe. Cierco is also well networked in the California environment from tribal work to State Labor unions and State political leadership.
• HPE: Designed and implemented solar + storage systems for public and private clients in SCE territory, including battery-integrated community centers and microgrids under NEM and SGIP frameworks.
• Joint Team: Phase I participation in the ACCESS Indian Canyon Feasibility Study; energy audits for DCE member agencies; and consultation for City of Palm Springs resilience planning.

References (see next page)
5 References (can be viewed upon request)
Cierco

1. California Workforce Development Board – HRTP report (2023)

2. Department of Defense – Mitigation Agreement (2023)

3. CAISO/PG&E– Interconnection process, System Impact Study 60 MW (2022)

4. California State Lands Commission – Application for 60MW project deemed “complete” (2020)

5. California State Building Trades – Project Labor Agreement process for offshore wind (2022)

6. Santa Ynez Chumash Band of Indians – Community Benefit Agreement (2023) Hot Purple Energy

1. Desert Community Energy – ACCESS Phase I Feasibility Study (2024)

2. City of Palm Springs – Fire Station Energy Retrofit (2023)

3. County of Riverside – Microgrid Feasibility Analysis (2022) 6 PROPOSED STAFFING & PROJECT ORGANIZATION
Key Personnel
• Project Director – Hot Purple Energy:

Nate Otto, responsible for oversight, deliverable quality, and coordination with DCE. • Lead Analyst – Cierco:

Miriam McColgan, manages modeling, cost analysis, and regulatory compliance review. • Local Project Manager – Hot Purple Energy:

Drew Allanbeck, manages local coordination, field data validation, and SCE interconnection engagement.
• Technical Advisors – Cierco:

David Keenlyside, oversees constructability assessments, permitting feasibility, and grid-tie.

Mikael Jakobsson, oversees wind package, development roadmap, risks & mitigation strategies.

Scott Harper, oversees financial analysis, contracts, funding and ownership options.

Organizational Structure
Cierco will serve as Prime Consultant, contractually responsible for project execution, reporting, and deliverable submission. Hot Purple Energy will serve as Subconsultant, responsible for regional site analysis, permitting, and infrastructure coordination. Communication and reporting between DCE and the consultant team will be managed through Hot Purple Energy’s Project Director with monthly progress updates and milestone reviews.

All key personnel are committed to the duration of the project, and substitutions will not occur without prior written consent from DCE.
7 8
WORK PLAN (Tasks A – F)
The following work plan corresponds directly to Section 5.4 of the RFP and builds on the findings and assumptions established in Phase I. Each section includes task objectives and deliverables.

A. TRANSMISSION AVAILABILITY
Summary: C&H will conduct a strategic-level transmission assessment to confirm current capacity, identify connection options, and develop a roadmap for scalable renewable integration focused on cost, time, and feasibility.

1. CONFIRM AVAILABLE FIRM TRANSMISSION CAPACITY
Confirm with SCE available firm transmission capability at the proposed ACCESS sites (SCE has indicated 3 MW is available but it may be greater). During Phase 1 a hosting capacity of 7 MW was assumed, which also should be used for Phase II - Analysis. DCE will submit a SCE WDAT Pre-Application Request for confirmation.

Verify capacity with SCE, comparing the 3 MW figure to the 7 MW Phase I assumptions. Define realistic capacity ranges and assist with SCE WDAT Pre-Application.

2. IDENTIFY CLOSEST/MOST FEASIBLE GRID TIE POINTS
Identify closest / most feasible likely SCE grid tie points for any ACCESS Renewable Project (ARP).

Completed in Phase I. SCE Garnet Substation was identified.

Confirm the Garnet Substation and evaluate alternate tie points for feasibility, redundancy, and proximity to available transmission. Provide a comparative summary showing relative difficulty and constraints.

3. ESTIMATE INCREMENTAL SIZE, COST & TIMELINE (50 MW SCENARIO) Estimate incremental size, cost and timeline of any needed transmission additions for the 50 MW scenario.

Outline broad cost and time ranges for scaling from current hosting capacity up to 50 MW, including key upgrade milestones and estimated durations for interconnection studies and approvals.

4. IDENTIFY MODEST-COST UPGRADES
Are there upgrades or additions that might be developed at a modest cost? Up to what MW level? Identify any system improvements that could increase hosting capacity at moderate cost before major investments are required.

5. ESTIMATE COST FOR FULL TRANSMISSION ADDITIONS
What is the estimated cost for “full and new” transmission additions? (This will ultimately be a function of project size).
9 Provide order-of-magnitude cost ranges for new substation or transmission extensions to support a staged build-out to 50MW, including associated infrastructure and land considerations.

6. OUTLINE STEPS & TIMELINES TO EXPAND TRANSMISSION
Outline steps/timelines necessary to utilize existing transmission and or to expand transmission access.

Develop a conceptual roadmap describing required coordination with SCE, study milestones, permitting phases, and construction sequencing to guide DCE’s long-term planning.

Deliverable: Transmission Availability Summary Report with estimated ranges, constraints, and key decision points.

B. SOLAR/WIND/STORAGE ANALYSIS
Summary: This phase will compare the technical potential and site suitability for solar, wind, and battery-storage systems at the designated Palm Springs parcel. The outcome will guide DCE toward the most practical and cost-effective renewable mix.

1. SITE ASSESSMENT & ENVIRONMENTAL CONSIDERATIONS
Assess locating wind, solar field, or battery storage technology near the rail station on Palm Springs’ property, APN 669-070-001. The proposed improvements should consider the stormwater flows that impact the site. Solar and battery storage should be mindful of the existing drainage courses. Wind turbines proposed within the flood plain must account for stormwater flows and the effects of erosion and scour to the foundations. Please refer to the project location maps included with this scope (Attachment B). In carrying out such assessment, the Consultant shall consider the various setback requirements for wind turbines in Palm Springs Zoning Code Section 93.23.07, including within 500 feet of Indian Canyon Drive. However, if locating the turbines within the setback areas is determined to be technically and economically feasible, the Consultant shall assess seeking a reduction in the setback as part of the conditional use permit for wind turbines required from the Palm Springs Planning Commission.

Assess the parcel (APN 669-070-001) for terrain, floodplain conditions, and drainage impacts. Address stormwater flow, scour risk, and zoning setback restrictions, and evaluate the potential for setback reductions through conditional use permitting.

2. GENERATION & STORAGE POTENTIAL & BEST-FIT RECOMMENDATION Advise on total generation and storage potential, given available space, as well as minimum and maximum recommended installation capacity. Suggest a “best fit” technology option(s) and describe why it is the best fit.

Estimate generation and storage capacity ranges using representative power-density factors. Present minimum, typical, and upper-range scenarios for solar, wind, and battery systems, and options for the best-fit configuration balancing feasibility, cost, and reliability. 10 3. REGULATORY ALIGNMENT
Advise on configuring the technology option so that the project would satisfy the requirements of the CPUC’s Mid-Term Reliability decisions D.21-06-035 and D.23-02-040 and be eligible under the Community Renewable Energy Program adopted by the CPUC in D.24-05-065.

Advise on configuring technology options to satisfy CPUC Mid-Term Reliability requirements (D.21-06- 035, D.23-02-040) and eligibility under the Community Renewable Energy Program (D.24-05-065).

Deliverable: Renewable Technology Feasibility Summary in the context of the complexities of the site.

Deliver recommendations with a comparative summary showing cost, time, and regulatory considerations.

C. ELECTRICAL & STRUCTURAL ANALYSIS
Summary: C&H will perform a conceptual feasibility review of electrical and structural conditions to determine how renewable systems might interconnect with nearby City facilities to enhance resiliency.

1. FEASIBILITY OF INTERCONNECTION TO NEARBY FACILITIES
Review ACCESS site electrical and structural components to determine the feasibility of connecting one of the three technologies being considered to the electrical systems of nearby buildings, including but not limited to buildings owned and operated by the City of Palm Springs, with the objective of enhancing community resiliency.

Review accessible electrical data to identify potential interconnection points between the ACCESS site and adjacent buildings or other opportunities. Evaluate voltage compatibility, routing feasibility, and basic structural readiness for new energy systems. The findings will describe practical pathways, estimated cost/time ranges, and primary hurdles to local interconnection.

Deliverable: Electrical and Structural Feasibility Summary identifying opportunities, challenges, and next steps if any.

D. ECONOMIC FEASIBILITY & FINANCIAL ANALYSIS
Summary: This section provides a broad financial comparison of the three technologies, solar, wind, and battery storage, covering cost ranges, energy potential, incentives, and financial returns for multiple ownership models.

1. INSTALLED COST PER MW & TECHNOLOGY COMPARISON
Provide estimated installed costs per MW for each of the three technology options (wind, solar field and battery storage), and list which is recommended as most optimal and why. Refine estimate provided in Phase One.

Provide estimated installed cost ranges per MW for each technology, refined from Phase I, and identify which appears most cost-effective for the site.
11 2. ANNUAL ENERGY PRODUCTION ESTIMATES
Estimate the average annual energy production associated with each evaluated technology.

Estimate average annual energy generation using regional capacity factors, showing typical MWh ranges for each technology.

3. COST COMPONENT BREAKDOWN
Identify and separate estimated cost components, including planning, design, permitting, engineering, procurement, construction, etc.

Separate total cost into planning, permitting, engineering, procurement, construction, and commissioning categories, summarized in percentage ranges.

4. ECONOMIC FEASIBILITY & PROJECT COST PROJECTIONS
Evaluate the economic feasibility of the three technologies in consideration, including project cost projections. Refine estimate provided in Phase One.

Evaluate overall economic viability, identifying major cost drivers, scaling sensitivities and cost of energy.

5. AVAILABLE INCENTIVES & FUNDING SOURCES
Advise what federal and state grants may be available to reduce total project costs.

Identify applicable federal and state grants, REC’s, direct pay, and IRA funding mechanisms, assessing feasibility and timing for each.

6. ONGOING MAINTENANCE CONSIDERATIONS
Evaluate ongoing maintenance requirements for the three technology options. Issues to consider include excessive wind and sand damage in the area and the continued maintenance required for the project to exist at the proposed site.

Summarize operational challenges such as site exposure to wind, heat, and sand. Including additional maintenance needs, reliability and effect on lifespan.

7. OWNERSHIP & FINANCING OPTIONS
The financing methods should include consideration of direct ownership by DCE of the generation or storage assets and/or a Power Purchase Agreement from a third-party developer, as well as other options deemed financially viable including the ability to obtain direct pay and other financial benefits under the Inflation Reduction Act. Describe and quantify the effect of proposed/upcoming changes to relevant federal subsidies.

Evaluate ownership, PPA, and hybrid structures, noting administrative complexity and long-term benefit potential.
12 8. METHODOLOGY & ASSUMPTIONS
Provide methodology documentation of the economic feasibility and financial analysis, including all relevant assumptions.

Document financial assumptions, sources, and parameters for transparency and future refinement.

Deliverable: Economic Feasibility and Financial Roadmap summarizing cost/benefit ranges and strategic funding pathways.

E. TENTATIVE TIMELINE, ACTION AREAS & REQUIRED SUPPORT
Summary: This section provides a high-level roadmap showing how DCE might move from concept to implementation, the expertise needed, and where to obtain support.

1. REASONABLE PROJECT TIMELINE
If one or more projects appear feasible, what might be a reasonable timeline to go from conceptual approval through project completion.

Provide broad timeframes for concept validation, permitting, design, procurement, and construction depending on scale and regulatory complexity.

2. KEY ACTION AREAS & SKILL SETS
Identify key action areas and skill set necessary for further project development and oversight as consideration moves from conceptual to planning and development.

Depending on the technology selected and the path forward DCE chooses to pursue, our team will identify the key steps to advance the project from concept to development, outlining major action areas and the corresponding skill sets required for each phase.

3. SOURCES OF TECHNICAL EXPERTISE
Outline likely sources of attaining needed technical services (individuals and/or firms). If the Consultant may be able to provide or access all/some of requisite project expertise, provide names, education, and experience of such staff and/or subcontractors.

Identify likely sources for specialized services and outline Cierco and HPE’s qualifications for future phases.

Deliverable: Strategic Development Roadmap outlining timelines, responsibilities, and external resource needs.

F. COORDINATION
Summary: C&H will maintain consistent coordination and communication with DCE, and CVAG to ensure efficient progress and data integrity.
13 1. COORDINATION WITH SCE & STAKEHOLDERS
Coordinate as necessary with SCE for the duration of this scoping project and provide periodic updates and guidance to CVAG / DCE staff.

Engage with SCE to confirm data and provide ongoing updates to DCE as information becomes available, supported by scheduled monthly reports to DCE/CVAG.

2. PROJECT COMPLETION COMMITMENT
Complete the study no later than April 30, 2026.

Provide a final report consistent with all available information no later than April 30, 2026. This will be accomplished by maintaining transparent communication and alignment with DCE and all project stakeholders throughout the duration of the project.

Deliverable: Coordination and Schedule Summary confirming timely completion and stakeholder engagement.
14 OVERALL SUMMARY
This proposal provides DCE with a comprehensive roadmap for evaluating renewable energy options including solar, wind, and storage, supported by transmission and financial feasibility, strategic coordination, and realistic next steps. The Cierco and HPE team brings local expertise, utility coordination experience, and a deep understanding of regulatory and environmental factors unique to the Coachella Valley. Our approach is forward looking, pragmatic, and data driven, designed to guide informed decision making and position DCE for implementation success.
15 COMMENTS & RESERVATIONS
The following reservations form an integral part of this proposal and clarify the limits of responsibility for Cierco and Hot Purple Energy (HPE) under the Phase II – Analysis Scope of Work.

1. Third-Party Information
This study relies on data from outside sources, including SCE, agencies, and suppliers. Cierco and HPE are not responsible for errors, omissions, or delays caused by information provided by third parties.

2. Schedule and Delays
The target completion date of April 30, 2026 assumes timely responses from SCE and other stakeholders.

We cannot be held liable for delays or schedule impacts caused by factors beyond our control.

3. Scope Limitations
This work is a planning-level feasibility analysis, not an engineering design or permit-ready package.

Findings are based on available data and standard industry assumptions.

4. Market and Cost Variability
Cost and financial estimates reflect conditions known at the time of this proposal. Cierco and HPE are not responsible for future changes in material, labor, or regulatory conditions affecting pricing or feasibility.

5. Utility and Regulatory Coordination
While coordination with SCE and agencies will occur as needed, their internal policies, timelines, and approvals remain outside our control.

6. Force Majeure
Cierco and HPE are not liable for delays or non-performance due to events beyond reasonable control, including weather, supply disruptions, or government actions.

7. Limitation of Liability
Cierco and HPE’s total liability shall not exceed the compensation paid for services performed. Neither party shall be responsible for indirect or consequential damages. 16 APPENDICES
17 RECENT RELEVANT PROJECT EXAMPLES
Provide an example of a similar scoped project deliverable conducted within the last three (3) years, or in process if at least in the final draft stage. If published online, the Proposer may provide a link in lieu of inserting a lengthy document into the appendices.

CIERCO:
• High Road Training Partnership (HRTP) – Cierco was awarded a 2-year task to deliver a high road approach for workforce training and industry for California Workforce Development Board. The program value was in the range of $2m, where a partnership with workforce groupings, educators, labor unions, tribe and industry generated a unique first of a kind program for offshore wind power. See attached link for the deliverable of HRTP website and the report generated: https://offshorewindhrtp.slocoe.org/
• CADEMO Offshore Wind Project, 2018 to present, expected COD 2029, 60 MW, >$400M: Cierco initiated the greenfield development of CADEMO in 2018, and is responsible for all project development on the path to reaching an investment ready project (FID). Cierco has worked extensively with state and federal regulators for permitting, and all stakeholders including CPUC, Tribal nations, labor unions, Department of defence, potential off-takers, local stakeholders, grid system operators, and supply chain. Preliminary electrical design has been completed, and Cierco has progressed through the interconnection process with CAISO and PG&E, including Phase 1 and 2 Full Capacity Deliverability Study Results, and progressing towards a Generator Interconnection Agreement (GIA). Cierco has reached significant project development milestones including the first Project Labor Agreement, Department of Defence Mitigation Agreement, and Tribal Community Benefits Agreement for the West Coast offshore wind industry. CADEMO website: https://cademo.net/ and the website of California State Lands Commission: https://www.slc.ca.gov/renewable-energy/offshore-wind-applications/ Additional specific Cierco deliverables relative to DCE include:
- Wind resource analysis (WRA)
- Annual Energy Production (AEP) reports
• Llŷr 1 & 2 Offshore Wind Projects, expected COD 2028, two 100 MW wind farms. It aims to test and demonstrate innovative floating wind technologies, providing clean energy for approximately 200,000 homes and supporting the development of the UK’s floating wind supply chain. Cierco was the initiator and is responsible for all project development.

We delivered a wind resource analysis (WRA) involving the evaluation of wind speed, direction, and consistency at the site to determine its suitability for wind energy generation. This analysis helps in selecting optimal turbine type, size, locations, and configuration. 18 We produced Annual Energy Production (AEP) reports to the estimated electricity output which the wind farm can generate in a year, based on the site-specific wind resource data and turbine efficiency. Accurate AEP calculations are crucial for assessing the economic viability and performance of onshore wind projects.

Llŷr website: https://www.llyrwind.com/
Additional specific Cierco deliverables relative to DCE include:
- Grid connection & onshore substation and cable corridor routing - Environmental Impact Report
- Stakeholder consultation and management including engagement with local schools - Supply chain initiative https://ore.catapult.org.uk/programmes/f4or ) sponsor to support and include local businesses in Wales (Three Welsh companies selected for F4OR) • Bayview Methil Dock Community Renewable Energy Project – 2023 to present. Cierco has formed a partnership with a local community organisation and social enterprise organisations, Fifers for the Community (FFTC) and Community Enterprise (https://communityenterprise.co.uk/) , to collaborate on a feasibility study to assess the supply and demand of onshore renewable energy production, storage, and distribution at in Methil, Scotland. The work involves developing a roadmap to secure a commercially viable pathway for the development of an onshore renewable energy project (up to 4 MW wind and potential solar), while striving to maximise the benefits to local communities including options to provide the energy generated to the locality at an affordable, consistent rate. Cierco’s involvement includes building a financial model in the development of the project that assess the lifecycle model, undertaking scenario analysis to demonstrate cost outcomes associated with differing investment and sourcing strategies, undertaking the technical energy production assessments and project managing the development and construction of the project.

Hot Purple Energy:
• Find Food Bank – Partnered with ELM for a large commercial Solar and Storage project. Provided backup storage to power critical refrigeration during grid failure situation. • Monrovia Metro Link – 280-ft wide, 30-ft tall LSX solar canopy array installed by Hot Purple Energy. We were awarded the safety award the first week on our project and were recognized for our proactive design incorporating safety features for future maintenance work. https://lumossolar.com/2015526metro-gold-line-operations-campus-to-meet-leed-gold standard-with-lsx/
• Living Out Apartments – Worked with Slater Construction and FCP to install Solar and covered parking for over 200 units. As well as provide interconnection with SCE. 19 • Projects in Imperial Irrigation District (IID) – Over the past year, we have been heavily engaged in projects throughout the East Valley served by Imperial Irrigation District (IID), collaborating with developers to design and deliver off grid power solutions. We have completed several small to medium scale installations, and our largest project, currently in the design phase, includes a 2.5 MW battery system paired with 0.75 MW of solar. Our team is responsible for every stage, from system design and generator coordination to full electrical integration, project completion, and ongoing maintenance.
20 LITIGATION
Provide litigation history for any claims filed by your firm or against your firm related to the provision of Services in the last five (5) years.

CIERCO – Has had no Litigation in the last 5 years.

HPE – Has had no Litigation in the last 5 years.
21 PROJECT TEAM RESUMES
Cierco Ltd Curriculum Vitae
Personal Data
Name: Mikael Jakobsson
Place of Birth: Dannemora, Sweden
Gender Identity: Male
Nationality: Swedish (Resident of the Desert community since 1991) Education
Dates: School/College/University Name: Course/Qualification:
1988 University of Toender, Denmark Wind technology course Trin 3 1987-1988 University of Alnarp, Sweden MBA
1986 University of Finsta, Sweden Agricultural Management Course 1982-1983 University of Finsta, Sweden Machine Technology 1979-1981 Agricutural college of Uppsala, Sweden Basic Course 1971-1979 Österbybruk, Sweden Secondary education (score 4.5 of 5) Work Experience
2018 – today Chairman and CEO, Cierco Group, Global – USA (and Europe) Chairman of the global activity of Cierco, developing onshore and offshore projects globally. As CEO of the USA market withmain office in Palm Springs, a key activity is developing the first offshore project in California, working with State Lands Commission (CEQA), Department of Defence, tribal community, PG&E and CAISO, CPUC, CEC, California Workforce Development Board, wind power supply chain and key stakeholder, developing in front line a project in all aspects to construction ready. Furthermore developing multiple smaller on and offshore project. 2006 – 2018 Co- founder and COO, 2-B Energy, The Netherlands 2-B Energy is developing and introduced a new design concept for far offshore wind power plants with a significant lower cost of energy produced compared to current technologies, including design, build and full scale testing of onshore 6.2MW unit.
2005 – 2006 Senior Advisor to EON, Sweden
As a result of the acquisition of Airicole assets, Senior avisory service was provided for one year to secure transition of team and assets .
2001 – 2005 CEO, Airicole AB/EDF Energies Nouvelle, Sweden, Founding Cierco, USA Founded and lead Airicole AB in Sweden. Joint venture with EDF Energies Nouvelle where EDF owned 65% and Cierco Corp 35%. Development of offshore projects from pre-feasibility to finished permits, including technology analysis, financial analysis and modelling as well as full EIA in-house execution. Company had under development projects from 50 MW to >1000 MW for total portfolio of over 1800 MW. The company also developed HVDC cable connection project (SwindLit). In 2005, Cierco acquired the EDF assets and sold the company and assets to EON. 2001 – 2005 Founder and owner, leader, SASH System AB, Sweden In parallel with Airicole activities in Sweden, SASH Systems was founded with main purpose to provide for Airicole sea activities and offshore services related to offshore wind projects and developed access/boat landing systems (patented and GL certified).
1996 – 2001 Director of Sales, Head of Offshore wind activities, Enron Wind (USA/DE), Tacke Windtechnik (DE), Zond Inc. (USA)
Joined Zond in Tehachapi in Spring 1996 with the purpose to head up and structure in Scandinavia, Germany and India. Organizations and sales were realized in both Scandinavia and India. Headed offshore activities which led to the successful execution of the Utgrunden project (2000) and built an organization to pursue several in depth bids as turbine manufacturer in the offshore wind market. This organization is today GE’s offshore wind group.
1991 – 1996 Vice President, BTM Consult Corporation, USA Run the BTM subsidiary in Palm Springs, CA as Vice President where several full management contracts for large scale windfarm were in place. Contracts included financial as well as legal management. Performed and drove service restructuring and retrofit programs. The company was also engaged in construction managment in several projects (Vestas, Nedwind (2- blades) etc.).
1989 – 1991 Sales Manager, Wind World A/S, Denmark
Joined Wind World in Skagen Denmark in 1989 as sales manager. Built up Sales and launched the Swedish introduction leading to development and sales of over 50 projects. This work included the structuring of the Community Owned turbines and securing of land leases for the company. In 1990, I was responsible for the execution of the first offshore project globally. The work in Wind World also included leading bidding processes for many larger wind turbine supply tenders in Europe.
1988 – 2001 Founder and owner, JMR Vindkraftkonsult AB, Sweden Formed JMR in 1988 to work on consulting activities within Wind power in Sweden. From 1989, the company developed multiple wind turbine project assets, of which three own projects were developed and built during 1991 - 1995.

Other Relevant Internships/Activities/Information
2024 Co-Author of book “Leadership DNA” by Forbes/USA Today. 2020 - 2024 Board member – California Wind Energy Association. 2005 - 2006 Co-writer of "Offshore Windfarm book". (Twidell, AMSET Centre, UK). 2001 - 2006 Developed, patented and GL Certified offshore access system (first in the world). 2001 - today Founder and owner of Cierco Corp. (USA), the parent company to SASH and 2-B. 1988, 2001 Training on WindPro development software package for wind power development. 1988 Scholarship from Swedish fund for wind education by BTM Consult, Denmark. 1984 - 1985 Machine and Vehicle education, Sergeant in Swedish Army, Norrtelje, Sweden 1982 – 1985 Secretary/Treasurer - Swedish Wind Energy Association Cierco Ltd Curriculum Vitae
Personal Data
_________________________________________________________________________________________________________ Name: Scott Harper
Place of Birth: Scotland
Gender Identity: Male
Nationality: Scottish
Education
_________________________________________________________________________________________________________ Dates: School/College/University Name: Course/Qualification:
1995 Royal Institute of Chartered Surveyors Member (MRICS) 1987-1991 Abertay University BSc Quantity Surveying (With Distinction) 1981-1987 Beath High School, Cowdenbeath 5 Highers, 8 Ordinary Grades Work Experience
_________________________________________________________________________________________________________ Mr. Harper, has a proven track record in raising finance and operating in developing markets and initially provided consultancy support to 2B Energy before joining Cierco in 2014. Scott has a significant background in construction procurement and related activities throughout all career roles, in a wide variety of project areas, from site development and infrastructure engineering, commercial property development, housing, health and educational facilities and latterly holding responsibility for procurement of the Forthwind project for the 2B Energy technology.

CEO, CIERCO – Scott is responsible for all operational delivery in CIERCO. He has been responsible for the production of management accounts, loan drawdowns and grant funding programmes including the DECC Offshore Wind Component Technology Demonstration Scheme and the EU ERANET Demowind 2 programme. Scott is responsible for the commercial funding strategy for Cierco in driving project delivery to successful conclusion. Scott managed and secured the first offshore wind Section 36 consent in Scotland; today occupied by the Levenmouth turbine. Scott has over 10 years’ experience in managing stakeholder and regulatory issues in the offshore wind sector.

Director, Bracklinn Projects Ltd. In 2008, Scott established his own consultancy business providing project management and development services to the private sector including the provision of consultancy services as the UK manager of 2B Energy where responsibilities company management, commercial agreements, securing leases, licences and consents for proto-type demonstration, grant funding applications and managing the environmental consenting activities in the UK.As a consultant development manager for a commercial property developer Scott managed the refurbishment of industrial premises and the development of over 50,000ft of new build office facilities which included an innovative Hydrogen Project where he also provided support for the disposal of land assets and negotiating commercial leases.

Senior Manager, Strategic Projects, Scottish Enterprise – Scott spent over 12 years with Scottish Enterprise (Scotland's national economic development agency and a non-departmental public body of the Scottish Government) procuring and delivering infrastructure projects and large-scale industrial developments; having responsibility for the delivery of National Priority Projects.

During this period Scott has led the management of a number of port and renewable energy infrastructure developments, including the Fife Energy Park Development, Methil Dock Redevelopment, Rosyth Waterfront Redevelopment (including support for the International Ferry Link). Scott also managed the delivery of necessary infrastructure to support business park developments and transport infrastructure projects.

Cierco Ltd Curriculum Vitae
Personal Data
Name: Marc Murray
Place of Birth: Monaghan, Republic of Ireland
Gender Identity: Male
Nationality: Irish
Education
Dates: School/College/University: Course/Qualification:
2009 Lancaster University MBA – Masters of Business Administration 2005 Oxford University Executive Education Programme - Commercial Delivery 1996 Sheffield Hallam University M.Sc. - Environmental Management 1995 University of Ulster B.Sc. (Hons) Environmental Science Work Experience
With over 20 years in managing complex multi-stage energy projects, Marc brings wide-ranging experience of project development in the nuclear, wave energy and offshore wind fields. 2018 – Present Projects Director Cierco
Cierco is a technology independent renewable energy company aiming to accelerate commercial floating wind power through step-wise demonstrations through to commercial scale projects. Responsible for leading the company project development activities; including establishing and managing the delivery of the necessary seabed leases, project development permits and grid agreements for pioneering offshore wind pathfinder projects the CADEMO (California Demonstration) Project offshore wind project in Santa Barbara County (scheduled to be the first on the US west coast), the Llŷr Offshore Floating Wind Demonstration Project in Wales (two innovative floating wind projects in the UK) and the Forthwind Project in Scotland (due to host the world’s largest offshore wind turbine). The role includes engagement with key federal, state, local governmental officials, ENGO’s, fishing and tribal/local communities.
2015 –2018 Project Manager, 2B Energy
2B Energy is a Dutch wind turbine technology company and a new entrant into the global offshore wind market.

Responsible for providing analysis on the market entry strategy for the 2B Energy technology within the UK market. Activities included developing an offshore wind demonstration site in Scotland (including securing required consents, grid capacity, seabed rights, community acceptance and stakeholder management); supporting the development of the project financial model (including engagement with potential investors, current investors and developing the risk profile, cost basis and schedule for delivery of the demonstration project); and developing corporate internal procedures and standards.
2010 –2015 Commercial Development Manager, Aquamarine Power Aquamarine Power was a pioneering wave energy technology company. Reporting to the CEO, responsibilities included management of the commercial strategy; including customer engagement, project finance, grant applications, seabed leases, consenting, completing grid access agreements, land agreements, governmental relations and consenting legal aspects of all marine renewable development sites in the Aquamarine Power pipeline across the globe. Activities including being the Development Director of Brough Head Wave Farm Ltd (BHWFL); a 50/50 joint venture with leading energy company SSE Renewables in Orkney, Scotland, Project Managing the delivery of the Lewis Wave Power array and early development work on sites in Ireland and Oregon.

In this role I also acted as a Technical Committee Member of the European Commission Ocean Energy Markets and Finance Steering Group, and represented the company on the Pentland Firth and Orkney Waters Developers Forum, the Oregon Wave Energy Trust (OWET), the Irish Marine Renewables Industry Association, the European Commission’s Ocean Energy Forum environment / consenting task force, and the Scottish Governments consenting task force. The role also was responsible for delivery of environmental and feasibility consultancy services for wave, tidal and onshore wind developments with clients such as SSE, 2020 Renewables and ABB. 2007–2010 Environment Projects Manager, Dounreay Site Restoration Limited (DSRL) A former centre of the UK Fast Breeder Reactor Programme from 1950’s until the early 1990’s, DSRL is now pioneering the clean-up of a major UK nuclear research site. Responsible for providing technical direction for a team of embedded environmental personal and acting as the site qualified expert for discharge permits.

Achievements included developing and implementing DSRL’s environmental management strategy (designing and implementing new compliance arrangements and introducing a pioneering environment safety case approach for facilities under the Radioactive Substances Act (RSA)); Project Management of cross site environmental improvement issues (>£3m programme of works); leading a corporate culture change programme on regulatory compliance and organisational behaviour; managing the delivery of the RSA environmental monitoring programme; maintaining ISO14001 accreditation and improving regulatory relations with the Scottish Environment Protection Agency (SEPA). Represented DSRL on nuclear industry panels relating to clean processes, regulatory compliance and best practice (including the Environment Agencies Regulatory Working Group (EARWG) and the Nuclear Industry Liaison Group (NILG) Best Practicable Means (BPM)/Best Available Technologies (BAT) Working Group)
2004 –2006 Technical Advisor, United Kingdom Atomic Energy Authority (UKAEA) Provision of direct technical support to the Dounreay Site Director on operational issues; including Business development (delivering the business case for an environmental restoration consulting business to Board level approval and undertaking a strategic review and market analysis of the Tier 1 nuclear decommissioning market), manging corporate reputation engagement activities, regulatory and client management, and political engagement, including provision of written and oral evidence, to the Westminster Scottish Affairs Select Committee inquiry on “Meeting Scotland’s Future Energy Needs”. 1998 – 2014 Senior Environment Officer, UKAEA
Provision of environmental support to the major decommissioning projects on site, including 3 nuclear reactors, Intermediate Level Waste (ILW) storage facilities and facilities within the Fuel Cycle Area.

Other Qualifications
Qualifications Awarding Body
Chartered Environmentalist (C.Env.) Society for the Environment (SocEnv) Member (MIEMA) Institute of Environmental Management and Assessment PRINCE 2 Practitioner International Project Management Association (IPMA) APMP Certificate (IPMA Level C) Association for Project Management Professionals (APMP) Lead Auditor - ISO 9000 and ISO 14000 Lloyds Register
Languages
English – First Language Irish – Basic
Cierco Ltd Curriculum Vitae
Personal Data
Name: David Keenlyside
Gender Identity: Male
Nationality: British
LinkedIn: https://www.linkedin.com/in/keenlyside/
Education
Dates: School/College/University Name: Course/Qualification:
2020-2021 Delft University of Technology (TU Delft), Netherlands Offshore Wind Farm Technology: Design, Installation & Operation
Member of the Engineering Council CEng
Member of the Institution of Structural Engineers MIStructE Member of Institution of Civil Engineers MICE
Member of Association of Project Management MAPM
1992-1994 Joint Board of Engineering Mangement DipEM, Diploma in Engineering Management (Postgraduate)
1987-1991 Heriot-Watt University, Edinburgh UK BEng (Hons) Civil Engineering Work Experience
2021 – today Engineering Director, Cierco
Engineering Director for Cierco’s project portfolio in Europe and the USA. Focusing on early-stage development opportunities.

Projects include:
• Llŷr1 & 2 floating offshore wind farms, consisting of two x 100MW offshore wind farms in the Celtic Sea to generate power in 2027.
• CADEMO 60MW floating offshore wind demonstration project off Vandenberg Space Force Base on the Central Coast of California to generate power in 2027/28.
• ForthWind, Scotland a demonstrator for the next generation of 15MW++ wind turbine to generate power in early 2025. This offshore fixed base facility will support the testing of a leading Turbine suppliers next generation turbine/blade option. 2020 – 2021 East Sea Projects Ltd, Managing Director
Independent Consultant providing co-ordinated solutions to the design and successful delivery major and complex projects in floating offshore wind.
• Shell / CoensHexicon JV – MunmuBaram (Donghae TwinWind), South Korea, Floating Offshore Wind Farm. Work included specific advice and direction on the developed of Local Content policy and strategy, risk assessment & management; consents & permitting report summary sheets; decision points & decision timeline development; concept down-selection methodology and stakeholder engagement.
• ScotWind Supply Chain Development Support, with focus on the Infrastructure Gap Analysis; Supply Chain Gap Analysis; Local Content Analysis; strategic Action List; and support with the supply Chain Development Statement for a confidential Client looking at a number of sites.
2010 – 2020 Engineering Manager / Chief Engineer, Atkins Energy Glasgow Within Atkins Energy business David provided client solution working on various project in adaptable positions as Engineering Manager, Interface Manager, Package Manager, Chief Engineer and Project Manager for Offshore Wind and Oil & Gas, • Major newbuild facility, Sellafield Nuclear Power Station complex in Cumbria Technical Management & Coordination of the architectural, Structural and CE&I engineering detailed design, site interface and installation of a major newbuild facility with an array of specialist requirements and environments.
• Shell / CoensHexicon JV – MunmuBaram (Donghae TwinWind), South Korea, Floating Offshore Wind, High strategic level and detailed advice for floating offshore wind farm on the ‘Project Technical and Commercial Feasibility Gate Report’, Stakeholder management .
• Beatrice (BOWL) Offshore Wind Farm, Coordination of the FEED, detailed design and full 3rd Party Certification of the WTG jacket structure and foundation design.
• Offshore Wind Foundation Design Optimisation, SSE. Leading a team in a study to development the decision-making process and to aid in reducing the overall lifetime cost of delivering and operating a major wind far. This formed part of the Management System.
• Neart na Gaoithe (NNG) Offshore Wind Farm, Appointed by Seaway Heavy Lifting as part of their EPCI Contract Bid to deliver the Concept and FEED design for the WTG & OSS jacket and foundations. 2009 – 2010 Regional Director, Atkins Design Solutions (Major Projects), Glasgow Delivering complex and major building and civil engineering projects including:
• £300m New College Campus in Glasgow, where David led the Civil & Structural Design Team and the • $1.5bn Gautrain Light Rail Link between Pretoria and Johannesburg. David provided complex site interface co-ordination which involved extended trips to South Africa and Hong Kong for Client and Contractor liaison. Focus was on the delivery of profitable projects delivered on time to a high technical standard. 2004 – 2009 Regional Director & Business Unit Lead, Atkins Design Solutions, Edinburgh Business Unit Leader with overall P&L and HR responsibilities to manage and development of a team of multidisciplinary construction professionals, including Architects, Civil & Structural Engineers, Building Services Engineers, CDMC Coordinators and administrative support staff. David was responsible for the financial management of the Edinburgh Office and its projects and the co-ordination of the team leaders where I reported to the North East of England & Scottish Operations Director and I was a member of the Scottish Operations Board.
• British Energy, Framework agreement for structural advice at nuclear power stations. • Murray Royal, Perth, NHS Tayside, £90m, C&S design for a public-sector comparative design. • Telephone Exchange Upgrade, Framework Agreement, various sites in Scotland, British Telecom • Ratho Adventure Centre - Provided input for a due diligence survey and report of the Council on the fitness for purpose and completion status of a facility in receivership.
1995 – 2004 Associate Director, WSP Buildings Ltd, Edinburgh David progressed within WSP over a 9 year period, working in the Edinburgh Office as a Senior Engineer until October 2000, when David moved to the Glasgow office as an Associate to help build, develop and strengthen Glasgow’s structural capabilities in a developing marketplace. In June 2002 he moved to WSP’s Major Projects Team to lead the structural design team on the new £335m World Headquarters building for the Royal Bank of Scotland at Gogarburn and was promoted to Associate Director. • Railtrack, Scotland - Team leader for the structural inspection and surveys. • Royal Bank of Scotland, World Headquarters Building, £335M • Old Kilpatrick, Clydebank, Dumbartonshire, £120M - Desktop study and feasibility appraisal • Forth Valley NHS Trust, £9.0M - Feasibility Study to amalgamation of 3 primary care facilities. • Dalquharran Castle, South Aryshire, £18M – Refurbishment Feasibility study. 1992 - 1995 RMJM Scotland Ltd, Edinburgh - Graduate Engineer 1992 Northumbrian Engineering Consultants, Newcastle – (secondment from FC&A) 1991 - 1992 Fraser Cook & Associates, Newcastle - Graduate Engineer Cierco Ltd Curriculum Vitae
Personal Data
Name: Miriam McColgan
Place of Birth: Bristol, UK
Gender Identity: Female
Nationality: Irish
LinkedIn: https://www.linkedin.com/in/miriamnoonan/
Education
Dates: School/College/University Name: Course/Qualification:
2009-2013 Imperial College London Civil and Environmental Engineering 2:1 MEng (Hons) 2006-2008 St Brendan’s Sixth Form, Bristol A Levels: Physics (A), Mathematics (A), French (A) AS Levels: Further Mathematics (A), Art (B)
St Bede’s School, Bristol GCSEs: 5 A*, 6 A
Work Experience
2021 – today Commercial Manager, Cierco
• Responsible for the creation and ongoing development of high-quality business cases for offshore wind projects. • Co-ordinate with technical departments to evaluate options and support cost-effective decision making • Prepare decision material and financial updates to Cierco management and JV Board of Directors • Building strong, positive, and trust-based relations with key business partners, stakeholders, and authorities across target markets. Representing the company at key stakeholder meetings and events. 2020 – 2021 Analysis and Insights Manager, ORE Catapult • Lead projects related to offshore renewables cost reduction, UK supply chain and economic value, and energy policy. In particular, I have led a number of studies for the Floating Offshore Wind Centre of Excellence. • Manage a suite of excel based cost models. This included building a bottom-up FOW cost model to estimate project costs based on site and technology parameters.
• Act as key reviewer for externally-funded milestones and deliverables. 2019 – 2020 Senior Financial Analyst, ORE Catapult
• Lead Wave & Tidal sector engagement with senior industry and policy stakeholders. • Scope and lead delivery of supply chain and GVA-related analysis. • Develop, manage and maintain financial modelling for ORE Catapult projects and concepts. • Identify opportunities for, and deliver, publications on finance-related themes. 2016 – 2019 Financial Analyst, ORE Catapult
• Economic modelling for offshore renewables projects, working with SMEs up to global OEMs to bring innovative technologies to the commercial market.
• Produce ad hoc financial and economic analysis for industry events and lobbying efforts. • Lead the offshore wind workstream for IEA Wind Task 26 (Cost of wind energy).

Relevant Publications (Lead author on all reports below) (2021) Floating Offshore Wind: Cost Reduction Pathways to Subsidy Free (2020) Benefits of Floating Offshore Wind to Wales and the South-West Supply Chain (2018) International Energy Agency Task 26: Offshore Wind Energy Comparative Analysis (2018) Tidal Stream and Wave Energy Cost Reduction and Industrial Benefit (2018) The Economic Value of Offshore Wind: Benefits to the UK of Supporting the Industry Curriculum Vitae
Personal Data
Name: Arne Y. Nielsen
Place of Birth: Ringe, Denmark
Gender Identity: Male
Nationality: Danish
Education
Dates: School/College/University Name: Course/Qualification:
2012-2013 Iowa State University Wind Energy Science, Engineering and Policy (WESEP PhD program)
1984-1987 Odense Teknikum (now University of Southern
Denmark)
B.Sc. Engineering (w/ electro-, control- and regulation courses)
1983-1985 Ringe HF (now Gymnasium) HF (= Higher Preparation Examn) 1979-1980 Kolding Tekniske Skole EFG Jordbrug (= agricultural courses) 1972-1974 Vejstrup Ungdomsskole Secondary school
Work Experience
1986 – 1988 Danish Windpower, Denmark
Upgraded the 90kW Smedemester-mølle to 110kW for the US wind energy market. Directed and monitored the installation of 50 turbines in Tehachapi.
1988 Danish Windpower Production, Denmark
Designed the 150kW Danish Windpower turbine. Installed one demo turbine near Sahupuram (Tamil Nadu) India. 1988 Bonus Energy, Brande Denmark
Development of retrofit kits for the 108kW Micon turbine installed in the US. Kits included major components including the control system.
1988 – 1990 TMC (Turbine Maint. Corp., a subsidiary of Bonus Energy), Palm Springs CA, USA Technical management of the testing and implementation of retrofit kits for some ~700 Micon 108 turbines installed in Palm Springs, Mojave and Altamont.
1996 – 2007 Wind Engineers, Inc.

Owner and manager of the small consultancy company installing and monitoring meteorological met. towers, data acquisition, wind project analyses & reporting along with wind farm efficiency modeling, noise and shadow analyses and other layout work & mapping.
1996 Consultant for BTM Consult Corporation, Palm Springs CA, USA Blade performance enhancements and testing. Misc. management activities. 2000 Vestas (Vestas American Wind Technology), USA
Technical sales and consulting in US, Canada, India, Mexico. Start-up efforts of wind developments in Izmir Turkey.

Technical development of markets with local managers and developers. 2007 – today AmeriWild LLC.

Owner. Joined RPMA (Renewable Power Market Access), an Iowa corporation that have (so far) developed some

1.2GW of wind projects mainly within the Iowa state. Responsibilities include: Transmission power-flow modeling and analyses, MET‐work, wind reports and other technical aspects of wind farm developments, project construction and aspects of operational reporting.
2020 – today Cierco.

Part time. Floating offshore activities include: West Coast interconnection studies, wind measurements and studies, long term correlations, modeling of wind farm production including time related statistics, wind resource campaign recommendations, collection system and tie-line options, real estate needed for tie line and interconnection facilities, technical aspects of required permits and permanent leases for tie line and interconnection facilities, FAA and thus DoD (Clearinghouse) determinations, applicable technical aspects in stakeholder engagements, applicable technical aspects of supply chain choices including their anticipated transportation infrastructure issues, expected performance testing and documentation for stakeholders and investors, general and technical information exchange.

Other Relevant Internships/Activities/Information
▪ Team work activities and management of green field wind farm developments ▪ Transmission power‐flow modeling and transmission system ATC analyses ▪ Interconnection study management
▪ Substation and interconnection requirements and real estate leases ▪ Wind farm electrical collection system and tie line routing and real estate leases ▪ Filing/handling of FAA permits
▪ MET tower and LiDAR siting, installation and documentation ▪ MET and environmental data storage, analysis and reporting ▪ Wind farm production modeling based on measured data, long term correlations, wind flow, shear and array efficiencies ▪ Modeling of wind farm visibility, noise and shadow impact for neighbors ▪ Design of wind farm layouts based on required setbacks and environmental parameters ▪ Preparation of wind reports and updates
▪ Specification and design of access roads and environmental. ▪ Project layout optimizations based on modelled variables ▪ Project production comparisons based on turbine/layout variables ▪ Revenue modeling based on LMPs at nearby ISO nodes
▪ Curtailment risk modeling based on production patterns and historical LMPs ▪ Modeling of potential bat curtailments
▪ Technical analyses and report generation
▪ Load‐, fatigue‐ and electrical‐ measurements on wind turbines, towers and equipment ▪ An 8-year attention to H2, NH3 and green fuels economies ▪ A 44-year keen interest in what started as ‘alternative energy’ in the late ‘70s and early ‘80s thus designing and installing a 2m 500w wind generator in my back yard in 1981
1 Cierco Ltd Curriculum Vitae
Personal Data
Name: Selin Yildiz Nielsen
Location: California
Place of Birth: Ankara, Turkey
Gender Identity: Female
Nationality: American (USA)
Education
Dates: School/College/University Name: Course/Qualification:
2003-2010 University of California, Riverside Ph.D. in Institutional Leadership and Policy Studies (ILPS) 1998-2002 California State University MA in Education
1991-1994 University of California, Berkeley BA in French 1989-1991 College of the Desert A.Sc. Architecture
Work Experience
2021 – today Cierco
Executive Coordinator of an Offshore Wind Development Company Coordinate and manage all admin related activities for the California office and report and inform related parties.

Participate in planning functions of the company activities Independently assemble relevant data for directors and compile pertinent statistics or information, plan and attend meetings.

Interact with internal and external sources, give input for the stakeholder engagement activities.

Attend and report conference activities, provide surveys and research. 2015 – 2021 Glocally Connected, Riverside CA, USA
President, Founder
Non-profit organization that promotes community building in order to support the refugee populations.

Built the organization from the ground up and established educational and integration programs both in the US and Turkey for refugee populations.

Advocated refugee rights; promote educational and economic opportunities to assist refugees in becoming productive members of their communities including entrepreneurship of women.

Established grants, and promote fundraising efforts to sustain the organization. 2016 - 2018 ISCA Technologies, Riverside CA, USA
NSF Grant Coordinator
Coordinated the National Science Foundation, Small Business Innovation Research Grant (NSF SBIR). Established commercialization research activities and stakeholder outreach by connecting with related entities and arranging collaboration, interviewing potential clients to establish a needs analysis. Helped social Media Marketing Strategy for the global stakeholders.
2017 Ravdanur Fund, Gaziantep, Turkey
Founding Board Member and Consultant
Non profit organization for the aid and advocacy for refugees.

Consulted in establishing the organization and setting up educational projects for girls. 2014 - 2015 BAU International University, Washington D.C., USA 2 Graduate Program Director and Professor
Established the Executive MBA Program, prepared and presented webinars and cultivated students for the program.

Designated and managed faculty for the undergraduate and graduate programs.

Cultivated relationships and liaisons with other universities.

Designated and planned special short-term certificate programs.

Lead the accreditation process of the newly established university. 2011 - 2022 Drake University, IA, Zirve University Turkey, University of California, Riverside, CA, California State University, San Bernardino, CA, Westcliff University, Irvine, CA, La Sierra University, Riverside, CA, New York University, NY, NY.

Professor and Lecturer of Global Studies, History, Politics, Sociology, Culture, Education and Human Development in graduate and undergraduate faculties.
2008 - 2011 Iowa International Center
Researcher for the non-profit organization that has projects and programs for the international newcomers to the state of Iowa.

Published reports about the state assistance services and their efficiencies; gender and ethnicity influence reports for various governmental and non-governmental organizations. 2007 - 2011 AmeriWild LLC.

Co-Owner, share holder. an Iowa corporation that has developed wind projects mainly within the Iowa state. 1996 – 2007 Wind Engineers, Inc. Palm Springs, CA, USA
Co-Owner, Bookkeeper and Admin Assistant for the Wind Engineering consultancy company.

Kept all admin related paperwork, set up accounts receivables/accounts payables.

Other Activities – Projects and Services
• UCR – Glocally Connected Collaboration for the Afghan newcomers’ integration into the local community, (2021-2022) • Riverside refugee women entrepreneurship project for Afghan refugee women for economic inclusion, Glocally Connected (2017-2022)
• Collaborator, Rotary International and Glocally Connected Joint Education Project in Torbali, Turkey Established connections and resources to support refugee children’s education and integration, (2019) • Team Leader, Frankfurt School of Management and EBRD, Lead the team in Turkey for a Gender Baseline Assessment for refugee women in business. Analyzed information and provided expertise in the social and economic status of local refugee populations in Southeast Turkey (2016-2017)
• Organizer, Peace Walk, Glocally Connected. Organize community in commemorating the United Nations International Day of Peace in collaboration with various organizations in the community (2015, 2016, 2017, 2018) • Co-Organizer, Summer program for refugee kids’ integration in collaboration with SCRIPPS, CSU San Bernardino, and Inlandia Institute (2017) 3 Fellow and researcher in Education policies at CTC, a Washington DC-based think tank; a private, apolitical, nonprofit organization (2015-2017)
• Co-organizer 5th Annual International Conference in Educational Supervision organized by TEMSEN (Turkish Educators’ and Superintendents’ Union) at Sütçü İmam University in Kahramanmaraş, Turkey (2013) • Organizer, Social Responsibility Projects, Gaziantep Municipality (2013) (1-Organized home visits to bring teenage girls back to school that were taken by their parents to work at home 2-Trauma training workshops for Syrian volunteer teachers) Nate Otto
CEO, Renewable Energy Expert | Palm Springs, CA
Professional Experience
Hot Purple Energy – Palm Springs, CA
CEO | 2010-Present
- Founded Hot Purple Energy, a leading renewable energy company focused on solar power and battery integration.
- Expanded focus beyond solar to explore all aspects of renewable energy production. - Pioneered early battery integrations into solar projects as early as 2012.

Hot Purple Battery Solutions
CEO | Current
- Leads battery energy storage solutions, enhancing renewable energy systems.

Solterra Construction – Palm Springs, CA*
Co-Founder & RMO | 2006-2010
- Co-founded Solterra Construction, specializing in high-end home building. - Managed the first LEED-certified home construction in Palm Springs.

Otto Construction – Los Angeles, CA
Owner | 1992-2001
- Built custom homes along the Mulholland Mountain range, focusing on challenging hillside projects.
- Worked on projects with strict regulations, delivering them on time and within budget.

MWH Development – Los Angeles, CA
Project Manager | 2002-2006
- Project manager for custom home division overseeing the construction of hillside luxury residences.
- Advisor and facilitator of site work for track homes when developing land in adverse conditions.
- Relationship started in 1989 as a framing foreman then dozens of projects contrfacted through Otto Construction.

Education & Skills
- Studied Architecture and engineering at orange coast and Pierce - Extensive expertise in concrete, framing, and structural steel. - Deep knowledge in trades and ability to self-perform critical and complex construction tasks. - Leadership, project management, and technical consulting in construction. - Renewable energy systems integration.

Community Involvement
- Actively supports many Palm Springs’ area schools.
-have served on several boards.
-Served on PS sustainability commission.
-Invested time and contributed funds to hundreds of area charities and not for profits -Supported city initiatives and resources in the areas of energy, infrastructure and innovation.

Personal Background
- Raised in Orange County but always connected to Palm Springs through family. - Family history in Palm Springs dates to 1918, with ties to the city's early construction history. - Nate and his wife met during PS spring break in ‘88 and have lived in Palm Springs since 2000 choosing the area to raise their daughter in.
- Hobbies include motorcross and auto racing, snowboarding, wakeboarding and other action sports.

Drew Allanbeck
Phone: (760) 406-6411| Email: [email protected]
Professional Summary
Drew Allanbeck brings over 13 years of experience in the solar industry, with a focus on solar product design, energy storage integration, and the development of comprehensive renewable energy systems. He has successfully managed both residential and commercial energy projects, integrating advanced storage solutions to optimize energy efficiency. Drew's expertise also includes business development, client relations, and innovative problem-solving.

Highlights of Qualifications
- Over 15 years of experience in Business Development and Sales - Strong leadership, communication, and problem-solving skills - Proficient in Microsoft Office, QuickBooks, Salesforce, and various web-based software - Experienced in contract management, sales forecasting, and financial analysis - Skilled in creating marketing materials and managing customer relationships Professional Experience
Hot Purple Energy – Palm Springs, CA
Commercial Sales/Contracts Manager/Finance Manager | 2016 – Present - Analyze commercial electrical usage for solar viability - Present proposals to key decision-makers in commercial settings - Research and integrate new energy storage technology
- Develop marketing materials and presentations
- Explore financing options for both company and clients Potere Solar – Rancho Mirage, CA
Sales/Sales Manager/Finance Manager | 2012 – 2016
- Conduct in-home solar consultations and sales
- Educate clients on solar technology and financing
- Supervise and train new sales staff
- Ensure sales targets are met and exceeded
- Maintain strong client relationships and networking
Coachella Valley Sewer – Thousand Palms, CA
General Manager | 2008 – 2012
- Create material quotes and manage contractor relations - Supervise production and ensure project targets are met - Oversee accounts receivable and financial management
Skills
- Leadership and Staff Training
- Client Consultation and Sales Strategy
- Financial Analysis and Contract Management
- Marketing and Presentation Development
- Energy Storage and Solar Technology Integration

Chris Ritter
Phone: (760) 406-6408 | Email: [email protected] Professional Summary
Highly skilled general contractor and licensed electrician with over 20 years of experience in construction, specializing in complex projects and solar installations. Proven track record in building luxury homes, and electrical systems, and managing large-scale projects from conception to completion. Known for deep knowledge in concrete, steel, framing, and fabrication, making a significant contribution to Hot Purple Energy’s reputation as a leader in solar and energy storage solutions.

Professional Experience
Hot Purple Energy – Palm Springs, CA
Project Manager | 2011 – Present
- Oversee solar and energy storage projects from initial design through installation. - Specialize in electrical systems, leveraging C-10 electrical knowledge and building expertise. - Played a key role in establishing Hot Purple Energy as a full-service general contractor, not just a solar company.
- Ensure that all projects are completed on time and within budget, with a focus on quality and client satisfaction.

Nate Otto Construction – Palm Springs, CA
Superintendent | 2008 – 2010
- Supervised the construction of luxury homes, working closely with clients and architects to bring high-end projects to life.
- Managed complex builds, including subterranean rooms, basements, and homes with elevators.
- Developed strong working relationships with contractors, suppliers, and clients, maintaining a high standard of work.

Self-Employed General Contractor
2000 – 2008
- Built large custom homes and undertook significant remodeling projects. - Specialized in challenging builds that required innovative problem-solving and advanced construction techniques.
- Integrated unique features such as large subterranean rooms and elevators into high-end homes.

Skills
- General Contractor (C-10 Electrical License)
- Luxury Home Construction
- Solar & Energy Storage Systems
- Low Voltage Electrical Systems
- Project Management & Supervision
- Concrete, Steel, Framing, Fabrication
- Metal Fabrication & Custom Art Projects
- Aviation Enthusiast, RC Glider World Record Holder
Education
College of the Desert– Palm Desert, CA
Associate of Arts (AA), Culinary Arts
Additional Experience
- Metal Fabrication: 25 years of experience in metalworking, contributing to projects ranging from art installations to national-level show cars.
- RC Glider Enthusiast: Holds a world record in RC glider flying and actively participates in the aviation community.

Certifications
- California General Contractor License
- C-10 Electrical Contractor License

Nick Salvail
Phone: (760) 406-6427 | Email: [email protected] Professional Summary
Licensed electrician and former general contractor with over 12 years of experience at Hot Purple Energy (HPE). Bringing a wealth of construction and electrical expertise, I am a reliable leader and a mentor within the team. I have a strong work ethic and a passion for evolving technology, serving as a crucial resource for engineering projects and leading service technician efforts. My diverse background in both large-scale projects and detailed service work helps drive continuous improvements in the renewable energy industry.

Professional Experience
Hot Purple Energy (HPE) – Palm Springs, CA
Lead Service Technician & Mentor | 2011 – Present*
- Provide leadership and mentorship to the team, sharing extensive construction and electrical knowledge.
- Lead service technician, specializing in complex, large-scale projects, offering solutions to improve processes in an evolving industry.
- Collaborate with the engineering team to integrate new technologies and troubleshoot emerging challenges in solar and energy solutions.

Self-Employed General Contractor
Remodeling Business Owner | 2004 – 2011
- Managed and led crews for residential and commercial remodeling projects. - Specialized in hotel and motel finishes for new construction and renovations. - Established a reputation for quality craftsmanship and project leadership before transitioning into solar energy.

Stepfather’s Construction Company – Canada
Construction Supervisor | 1994 – 2004
- Worked from age 16, quickly advancing to a supervisory role by age 18. - Oversaw teams in completing high-end hotel/motel finish projects, both for new builds and remodels.

Certifications & Licenses
- Licensed Electrician (State of California)
- General Contractor License (2004, California)
Volunteer Work
North Palm Springs Fire Station
Volunteer Firefighter | 2006 – 2008
Palm Springs Search and Rescue
Member | August 2024 – Present
Skills
- Electrical Systems Design & Installation
- Construction Project Management
- Service Technician Leadership
- Team Mentorship & Training
- Technology Integration & Troubleshooting
- Strong Work Ethic & Tenacity
Personal Interests
- Radio-Controlled (RC) Cars
- Technology & Electronics
- Problem-solving in engineering and technological advancements Education
High School Diploma, Canada (1997)
Personal Details
- Married, with one 19-year-old daughter.
- Originally from Canada, residing in Palm Springs, CA.

Marissa Woodard
Phone: (760) 406-6420 | Email: [email protected] Professional Summary
Experienced administrative professional with over 10 years of experience, including 8 years in the solar and energy management sector. Skilled in multitasking, process improvement, data management, and team coordination. Known for developing efficient workflows, optimizing operations through innovative system solutions, and fostering collaboration across departments. Plays a key role in organizational development, marketing initiatives, and community engagement efforts that strengthen company culture and public presence.

Professional Experience
Hot Purple Energy – Palm Springs, CA
Project Manager | 2017 – Present
- Manages administrative staff and supports multiple departments to ensure seamless daily operations.
- Assisted in migrating all company data into a new operating system (Quickbase) and continues to oversee updates and system management.
- Collaborated with leadership to streamline processes across departments, including panel cleaning, monitoring, and other administrative programs. - Supports marketing efforts such as advertisements, commercials, promotional materials, and company apparel.
- Organizes company events and coordinates logistics for community and sponsorship activities. - Manages communications with nonprofit organizations regarding sponsorships, donations, and partnerships.
- Acts as a central liaison between office operations, technical teams, and management to maintain efficiency and accountability.

Skills
- Administrative Management and Operations
- CRM and Data Systems (Quickbase)
- Process Development and Workflow Optimization
- Marketing and Event Coordination
- Community and Nonprofit Partnerships
- Solar and Energy Management Industry Knowledge

1 REQUEST FOR PROPOSALS
FOR

RENEWABLE ENERGY ASSESSMENT SERVICES

PHASE II - ANALYSIS

ADDENDUM
Addendum Date: September 16, 2025
Purpose: This addendum supplements, amends, and takes precedence over the original Request for Proposals (RFP) for Renewable Energy Assessment Services dated August 12, 2024 and the request for revised scope for Phase I – High-Level Feasibility Study dated October 11, 2024, and shall be considered when preparing responses and shall become part of the Contract documents.

Proposers shall review the Addendum and incorporate any effects the Addendum may have on their scope of services and fees proposed for the Phase II – Analysis RFP issued September 4, 2025.

Note: All requirements of the Phase II - Analysis RFP document remain unchanged except as cited herein.

Questions & Requests:

The following are clarifications and responses to the questions received by Desert Community Energy (DCE) by the deadline of 2:00 p.m. on September 12, 2025.

Please note the deadline for submitting proposals has been extended two weeks.

Proposals are due by 2:00 p.m. on October 9, 2025.

1. Question: In reading the prefeasibility report, we recognize that the wind power components was quite minimal. Is this a reflection of CVAGs intention with the outcome of this project in regards to wind power?
Response: All three technology options outlined in Section 5.4 Project Tasks (Key Tasks) are being considered by DCE. These include and are re-worded for clarity as follows:
• Wind
• Solar
• Battery storage of at least 4 hours.

2. Question: Although the project is a combined assessment between wind, solar and battery storage, given timelines associated in developing a wind power project, we would like to know what degree of detail and readiness CVAG would like to see as a result of this new Phase in regards to the first project development execution phase of 7MW versus the second Phase of 50MW, where we believe this needs to be one integrated plan in Phases developed under very coordinated management?
2 Response: Refer to Section 1 Background and Introduction and Section 5.4.3 Project Tasks (Key Tasks).

DCE desires that the Proposer’s proposed scope of work and analysis in response to this RFP Section 5 Phase II – Analysis Scope of Work will lead the Proposer to identifying what they recommend as the most feasible option given the site constraints up to a 50MW development.

Note that Section 5.4 Project Tasks (Key Tasks) are substantially the same as the original RFP.

3. Question: If the wind power component is a serious consideration, given the vastly different development process and procurement, what requirements of experience and background is CVAG requiring of the party to now take this Phase forward, and how will this be assessed as potentially the 50MW wind project may become the overall predominant component of the CVAG energy plan?
Response: This RFP is looking for an analysis to build on Phase I – Feasibility Study. As mentioned in Q1, Wind, Solar, and Battery storage of at least 4 hours are being considered.

DCE is looking to engage the party that can best demonstrate they can provide the requested level of analysis as presented in Section 5.4 Project Tasks (Key Tasks) of the RFP.

4. Question: What does CVAG expect the next Phase to be, following this proposed Phase of analysis (ready to start development or another assessment Phase)? Response: The results of this Phase II - Analysis will be used by DCE to determine next steps.

5. Question: Pertaining to previous questions in regards to the wind energy component in this next Phase, given the complexities in this more detailed planning for potentially an extensive windfarm, which requires insight and understanding of all related processes, supply chain navigation and permitting topics, we foresee it will be very complex and potentially clashing for one party building a strategy and process for such project to develop this for another party to execute, so therefore; how does the outcome of this next Phase award play into who will undertake such defined scope and strategy of development work? Response: See response to Q4.

6. Question: We would also like to ask for a 2-week extension of the submission date, to allow for proper preparation, assuming we decide to engage. If not, we will let CVAG know as soon as possible as such decision is made.

Response: DCE is extending the deadline for submitting proposals by two weeks.

Proposals are due by 2:00 p.m. on October 9, 2025.
3 Section 4.1 Selection Schedule is updated as follows:

ACTION DATE

1. Release of Request for Proposals September 4, 2025

2. Deadline to Email Questions to Procurement
Representative September 12, 2025 by 2:00 p.m. PDT

3. Responses to Questions via Addendum September 16, 2025

4. Deadline for Receipt of Proposals to
Procurement Representative
October 9, 2025 by 2:00 p.m. PDT

5. Proposal Evaluation and Scoring October 10 - 21, 2025

6. Proposer Interviews October 29, 2025 (morning)*

7. Expected Contract Authorization November 17, 2025
*DCE kindly requests that Proposers HOLD the morning of October 29, 2025 for virtual interviews.

Acknowledgement: Proposers must acknowledge receipt of this Addendum by signing in the space provided below. This signed Addendum shall be included with the proposal submitted.

Authorized
Signature: Date
Company:
10/08/2025
CIERCO US Corporation
1 Desert Community Energy (DCE) Renewable Energy Assessment – CIERCO Fee Proposal As defined in the RFP and further described in our Technical and Service Proposal, we have assessed the work required to undertake an envisioned scope and tasks accordingly.

In this Fee proposal, there is the following content:

1. Cost Overview (below)

2. Payment Terms (below)

3. Incremental Cost Description (pages 2 & 3)
The overview table below outlines the cost for each increment, between Consultant, Sub-consultant and subcontractors:

DCE Renewable Energy Services Assessment Fee Proposal Cierco / HPE A. Transmission Availability $21,760
B. Solar/Wind/Storage Analysis $8,960
C. Electrical and Structural Analysis $1,280
D. Economic Feasibility and Financial Analysis $21,760
E. Tentative Timeline, Action Areas, Required Support $6,400 F. Coordination $2,560
G. Project Management $24,800
TOTAL $87,520
Payment Terms
10% upon commencement
80% billed monthly as progress payments
10% upon completion
21-day net
2 DCE Renewable Energy Services Assessment Fee Proposal Hours Cost A. Transmission Availability

1. Confirm with SCE available firm transmission capability at the proposed ACCESS sites (SCE has indicated 3 MW is available but it may be greater). 32

2. Identify closest / most feasible likely SCE grid tie points for any ACCESS Renewable Project (ARP). Completed in Phase I. SCE Garnet Substation was identified. 8

3. Estimate incremental size, cost and timeline of any needed transmission additions for the 50 MW scenario. 16

4. Are there upgrades or additions that might be developed at a modest cost? Up to what MW level? 16

5. What is the estimated cost for “full and new” transmission additions? (This will ultimately be a function of project size). 32

6. Outline steps/timelines necessary to utilize existing transmission and or to expand transmission access. 32
136 $21,760
B. Solar/Wind/Storage Analysis

1. Assess locating wind, solar field, or battery storage technology near the rail station on Palm Springs’ property, APN 669-070-001. The proposed improvements should consider the stormwater flows that impact the site.

Solar and battery storage should be mindful of the existing drainage courses. Wind turbines proposed within the flood plain must account for stormwater flows and the effects of erosion and scour to the foundations.

Please refer to the project location maps included with this scope (Attachment B). In carrying out such assessment, the Consultant shall consider the various setback requirements for wind turbines in Palm Springs Zoning Code Section 93.23.07, including within 500 feet of Indian Canyon Drive. However, if locating the turbines within the setback areas is determined to be technically and economically feasible, the Consultant shall assess seeking a reduction in the setback as part of the conditional use permit for wind turbines required from the Palm Springs Planning Commission. 32

2. Advise on total generation and storage potential, given available space, as well as minimum and maximum recommended installation capacity.

Suggest a “best fit” technology option(s) and describe why it is the best fit. 16

3. Advise on configuring the technology option so that the project would satisfy the requirements of the CPUC’s Mid-Term Reliability decisions D.21- 06-035 and D.23-02-040 and be eligible under the Community Renewable Energy Program adopted by the CPUC in D.24-05-065. 8
56 $8,960
C. Electrical and Structural Analysis

1. Review ACCESS site electrical and structural components to determine the feasibility of connecting one of the three technologies being considered to the electrical systems of nearby buildings, including but not limited to buildings owned and operated by the City of Palm Springs, with the objective of enhancing community resiliency. 8
8 $1,280
3 D. Economic Feasibility and Financial Analysis

1. Provide estimated installed costs per MW for each of the three technology options (wind, solar field and battery storage), and list which is recommended as most optimal and why. Refine estimate provided in Phase One. 8

2. Estimate the average annual energy production associated with each evaluated technology 8

3. Identify and separate estimated cost components, including planning, design, permitting, engineering, procurement, construction, etc. 32

4. Evaluate the economic feasibility of the three technologies in consideration, including project cost projections. Refine estimate provided in Phase One 16

5. Advise what federal and state grants may be available to reduce total project costs. 16

6. Evaluate ongoing maintenance requirements for the three technology options. Issues to consider include excessive wind and sand damage in the area and the continued maintenance required for the project to exist at the proposed site. 16

7. The financing methods should include consideration of direct ownership by DCE of the generation or storage assets and/or a Power Purchase Agreement from a third-party developer, as well as other options deemed financially viable including the ability to obtain direct pay and other financial benefits under the Inflation Reduction Act. Describe and quantify the effect of proposed/upcoming changes to relevant federal subsidies. 32

8. Provide methodology documentation of the economic feasibility and financial analysis, including all relevant assumptions. 8 136 $21,760
E. Tentative Timeline, Action Areas, Required Support

1. If one or more projects appear feasible, what might be a reasonable timeline to go from conceptual approval through project completion. 16

2. Identify key action areas and skill set necessary for further project development and oversight as consideration moves from conceptual to planning and development. 16

3. Outline likely sources of attaining needed technical services (individuals and/or firms). If the Consultant may be able to provide or access all/some of requisite project expertise, provide names, education, and experience of such staff and/or subcontractors. 8
40 $6,400
F. Coordination

1. Coordinate as necessary with SCE for the duration of this scoping project and provide periodic updates and guidance to CVAG / DCE staff. 8

2. Complete the study no later than April 30, 2026 8
16 $2,560
G. Project Management

1. Internal Meetings 50

2. DCE Update Meeting 30

3. Admin 50

4. Insurance
130 $24,800
GRAND TOTAL 522 $87,520
PAG