MCE Board of Directors
October 20, 2022

4. Waivers by Guarantor. Guarantor hereby unconditionally waives as a condition precedent to the performance of its obligations hereunder, with the exception of the requirements in Paragraph 2, (a) notice of acceptance, presentment or protest with respect to the Guaranteed Amounts and this Guaranty, (b) notice of any action taken or omitted to be taken by Buyer in reliance hereon, (c) any requirement that Buyer exhaust any right, power or remedy or proceed against Seller under the PPA, and (d) any event, occurrence or other circumstance which might otherwise constitute a legal or equitable discharge of a surety. Without limiting the generality of the foregoing waiver of surety defenses, it is agreed that the occurrence of any one or more of the following shall not affect the liability of Guarantor hereunder:
(i) at any time or from time to time, without notice to Guarantor, the time for payment of any Guaranteed Amount shall be extended, or such performance or compliance shall be waived;
(ii) the obligation to pay any Guaranteed Amount shall be modified, supplemented or amended in any respect in accordance with the terms of the PPA; (iii) subject to Paragraph 9, any (a) sale, transfer or consolidation of Seller into or with any other entity, (b) sale of substantial assets by, or restructuring of the corporate existence of, Seller or (c) change in ownership of any membership interests of, or other ownership interests in, Seller; or
(iv) the failure by Buyer or any other Person to create, preserve, validate, perfect or protect any security interest granted to, or in favor of, Buyer or any Person.

5. Subrogation. Notwithstanding any payments that may be made hereunder by the Guarantor, Guarantor hereby agrees that until the earlier of payment in full of all Guaranteed Amounts or expiration of the Guaranty in accordance with Paragraph 3, it shall not be entitled to, nor shall it seek to, exercise any right or remedy arising by reason of its payment of any Guaranteed Amount under this Guaranty, whether by subrogation or otherwise, against Seller or seek contribution or reimbursement of such payments from Seller.

6. Representations and Warranties. Guarantor hereby represents and warrants that (a) it has all necessary and appropriate [limited liability company][corporate] powers and authority and the legal right to execute and deliver, and perform its obligations under, this Guaranty, (b) this Guaranty constitutes its legal, valid and binding obligations enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting enforcement of creditors’ rights or general principles of equity, (c) the AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC Exhibit L - 4
115678033.2 0065872-00007
execution, delivery and performance of this Guaranty does not and will not contravene Guarantor’s organizational documents, any applicable Law or any contractual provisions binding on or affecting Guarantor, (d) there are no actions, suits or proceedings pending before any court, governmental agency or arbitrator, or, to the knowledge of the Guarantor, threatened, against or affecting Guarantor or any of its properties or revenues which may, in any one case or in the aggregate, adversely affect the ability of Guarantor to enter into or perform its obligations under this Guaranty, and (e) no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or Governmental Authority, and no consent of any other Person (including, any stockholder or creditor of the Guarantor), that has not heretofore been obtained is required in connection with the execution, delivery, performance, validity or enforceability of this Guaranty by Guarantor.

7. Notices. Notices under this Guaranty shall be deemed received if sent to the address specified below: (i) on the day received if served by overnight express delivery, and (ii) four Business Days after mailing if sent by certified, first-class mail, return receipt requested. If transmitted by facsimile, such notice shall be deemed received when the confirmation of transmission thereof is received by the party giving the notice. Any party may change its address or facsimile to which notice is given hereunder by providing notice of the same in accordance with this Paragraph 7.

If delivered to Buyer, to it at [____]
Attn: [____]
Fax: [____]
If delivered to Guarantor, to it at [____]
Attn: [____]
Fax: [____]

8. Governing Law and Forum Selection. This Guaranty shall be governed by and construed, enforced and performed in accordance with the laws of the State of California, without regard to principles of conflicts of law. The Parties agree that any suit, action or other legal proceeding by or against any party (or its affiliates or designees) with respect to or arising out of this Guaranty shall be brought in the federal courts of the United States or the courts of the State of California sitting in the City and County of San Francisco, California.

9. Miscellaneous. This Guaranty shall be binding upon Guarantor and its successors and assigns and shall inure to the benefit of Buyer and its successors and permitted assigns pursuant to the PPA. No provision of this Guaranty may be amended or waived except by a written instrument executed by Guarantor and Buyer. This Guaranty is not assignable by Guarantor without the prior written consent of Buyer. No provision of this Guaranty confers, nor is any provision intended to confer, upon any third party (other than Buyer’s successors and permitted assigns) any benefit or right enforceable at the option of that third party. This Guaranty embodies the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior or contemporaneous agreements and understandings of the parties hereto, verbal or written, relating to the subject matter hereof. If any provision of this Guaranty is determined to be illegal or AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC Exhibit L - 5
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unenforceable (i) such provision shall be deemed restated in accordance with applicable Laws to reflect, as nearly as possible, the original intention of the parties hereto and (ii) such determination shall not affect any other provision of this Guaranty and all other provisions shall remain in full force and effect. This Guaranty may be executed in any number of separate counterparts, each of which when so executed shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Guaranty may be executed and delivered by electronic means with the same force and effect as if the same was a fully executed and delivered original manual counterpart.
[Signature on next page]
AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC Exhibit L - 6
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IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly executed and delivered by its duly authorized representative on the date first above written.

GUARANTOR:
[_______]
By: _______________________________
Printed Name: ______________________
Title: _____________________________
BUYER:
[_______]
By: _______________________________
Printed Name: ______________________
Title: _____________________________
By: _______________________________
Printed Name: ______________________
Title: _____________________________
AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC Exhibit M - 1
115678033.2 0065872-00007

EXHIBIT M

FORM OF REPLACEMENT RA NOTICE
This Replacement RA Notice (this “Notice”) is delivered by Mayacma Geothermal LLC, a Delaware limited liability company (“Seller”) to Marin Clean Energy, a California joint powers authority (“Buyer”) in accordance with the terms of that certain Renewable Power Purchase Agreement dated [date] (“Agreement”) by and between Seller and Buyer. All capitalized terms used in this Notice but not otherwise defined herein shall have the respective meanings assigned to such terms in the Agreement.

Pursuant to Section 3.8(b) of the Agreement, Seller hereby provides the below Replacement RA product information:

AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC Exhibit M - 2
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[_______________________________]
By:

Printed Name:

Title:

AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC Exhibit N - 1
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EXHIBIT N

NOTICES
Mayacma Geothermal LLC (“Seller”) Marin Clean Energy (“Buyer”) All Notices:
3451 N. Triumph Blvd., Suite 201
Lehi, UT 84043
Attn: Manager
Phone: 385-352-8858
Email: [email protected]
All Notices:

Marin Clean Energy
1125 Tamalpais Avenue
San Rafael, CA 94901
Attn: Contract Administration
Phone: (415) 464-6010
Email: [email protected]
Reference Numbers:

Duns:

Federal Tax ID Number:

Reference Numbers:

Duns:

Federal Tax ID Number:

Invoices:

Attn: Accounting
Phone: 385-352-8858
Email: [email protected]
Invoices:

Attn: Power Settlements and Analytics
Phone: (415) 464-6683
Email: [email protected]
Scheduling:

Attn: Manager
Phone: 385-352-8858
Email: [email protected]
Scheduling:

Attn: ZGlobal
Phone: (916) 458-4080
Email: [email protected]
Confirmations:

Attn: Manager
Phone:385-352-8858
Email: [email protected]
Confirmations:

Attn: Director of Power Resources
Phone: (415) 464-6685
Email: [email protected]
Payments:

Attn: Accounting
Phone: 385-352-8858
Email: [email protected]
Payments:

Attn: Power Settlements and Analytics
Phone: (415) 464-6683
Email: [email protected]
Wire Transfer: Wire Transfer:

With additional Notices of an Event of
Default to:

Stoel Rives LLP
Attn: Jennifer Martin
Phone: (503) 294-9852
Email: [email protected]
With additional Notices of an Event of
Default to:

Hall Energy Law PC
Attn: Stephen Hall
Phone: (503) 313-0755
Email: [email protected]
Emergency Contact:

Attn:

Phone:

Email:

Emergency Contact:

Attn:

Phone:

Email:

AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC Exhibit O - 1
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EXHIBIT O

OPERATING RESTRICTIONS
• Nameplate capacity of the Project: 7 MW
• Minimum capacity: 1 MW
• Ramp rate: 1 MW/minute
AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC Exhibit P - 1
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EXHIBIT P

METERING DIAGRAM
[To be provided by Seller]
AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC Exhibit Q - 1
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EXHIBIT Q

COMMUNITY BENEFIT
Seller agrees to contribute in furtherance of Buyer-directed community clean energy education, job training, and clean energy infrastructure (“Community Benefit Fund”). Seller shall cause these funds to be deposited in a distinct and separate account established and maintained at a bank or financial institution selected by Buyer within sixty (60) days prior to the Commercial Operation Date.

The Community Benefit Fund will be administered by Buyer, with the collaboration and input of Seller, and utilized for community clean energy education, job training, and clean energy infrastructure.

AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC Exhibit R - 1
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EXHIBIT R

DIVERSITY REPORTING
AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC 115678033.2 0065872
-00007
Exhibit R -2
AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC 115678033.2 0065872
-00007
Exhibit R -3
AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC 115678033.2 0065872
-00007
Exhibit R -4
AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC 115678033.2 0065872
-00007
Exhibit R -5
AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC 115678033.2 0065872
-00007
Exhibit R -6
AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC Exhibit S - 1
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EXHIBIT S

FORM OF LIMITED ASSIGNMENT AGREEMENT
AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC 115678033.2 0065872
-00007
Exhibit S - 2
AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC 115678033.2 0065872
-00007
Exhibit S - 3
AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC 115678033.2 0065872
-00007
Exhibit S - 4
AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC 115678033.2 0065872
-00007
Exhibit S - 5
AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC 115678033.2 0065872
-00007
Exhibit S - 6
AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC 115678033.2 0065872-00007
Exhibit S - 7
Appendix 1
AI#09_Att. A: Draft Power Purchase Agreement with Mayacma Geothermal, LLC Mayacma Geothermal LLC
Power Purchase Agreement
MCE Board of Directors - October 20, 2022
1 What is Open Season?
2 MCE’s annual solicitation for large-scale
renewable energy and storage projects
Open Season Overview
3 Goals
• Meet Integrated Resource Planning (IRP) targets for renewable energy and energy storage
• Add Resource Adequacy (RA) supply to the portfolio
• Add resources that would fulfill the Mid Term Reliability (MTR) obligations as outlined in the CA Public Utilities Commission (CPUC) decision D.21- 06-035
Product Types
• Renewable Product Content Category 1 energy (PCC1)
• Paired & stand-alone energy storage
CPUC Mid-Term Reliability Mandate
4 CPUC Mid-Term Reliability Mandate
5 Humidor
Contract executed
7/2022
Golden Fields
Contract executed
2/2022
Mayacma
Geothermal LLC
would be compliant
with this tranche of
the mandate
Overview:

Mayacma Geothermal LLC
• 7 MW Geothermal
Energy Installation
• Lake County, CA
• Best combination of
economics and project
viability
6 • 7 MW of RA capacity
• 7 MW of renewable
energy delivered
around the clock
• On-line date: 6/1/2024
• 20 year term
• No credit/collateral
obligations for MCE
Mayacma
Geothermal
7 Why target geothermal resources?
8 Generation shape compliments MCE’s existing portfolio of resources • Helps fill open positions
during important hours
• Incremental
contribution towards
matching load with
renewable generation
• Hedge against
expensive hours
Simulated effect of adding geothermal projects to
MCE’s existing portfolio - 2030 Snapshot
Unique Terms
&
Conditions
• Financial incentives for performance
• Union labor requirement
• $630,000 security deposit to ensure
milestones are met
• Seller will make a one-time
contribution of $21,000 to community
benefit initiatives in MCE’s service
area and/or communities adjacent to
the project location
• RA delivery guarantee
• Fixed price over the contract term
with no annual escalation
9 Recommendation
10 Approve power purchase agreement between MCE and
Mayacma Geothermal LLC
Rationale:
• Energy generation and RA capacity produced by the facility would complement MCE’s existing portfolio of resources
• The project type, size, specifications and commercial operation date fit the requirements detailed in the CPUC MTR mandated procurement order • The project is being developed and will be operated by an experienced team • The project is highly viable. All major pre-construction milestones are complete.

Awaiting clearance from CAISO to finalize the interconnection process Thank You
David Potovsky
Principal Power Procurement Manager
[email protected]
11 October 20, 2022
TO: MCE Board of Directors
FROM: Justin Kudo, Senior Strategic Analysis and Rates Manager RE: Implementation of Electrification Rate Schedule E-ELEC (Agenda Item #10)
Dear Board of Directors:

Summary:

During PG&E’s 2018 Rate Design Window proceeding, CPUC Decision 20-03-003 directed PG&E to propose a residential pro-electrification rate schedule. To meet this requirement, PG&E developed rate schedule E-ELEC, proposed to go into effect on December 1, 2022. E-ELEC would support electrification by replacing a portion of PG&E’s volumetric delivery charges with a flat monthly fee, mitigating the volumetric costs associated with increased electricity usage in lieu of fossil fuel-based resources.

E-ELEC eligibility is limited to customers participating in one of the following activities:
1) Electric vehicle charging;
2) Energy storage; or
3) Electric heat pumping for water heating or heating and cooling.

Due to the complexities of PG&E’s billing system, Solar Net Energy Metering (NEM) customers will be ineligible to sign up for E-ELEC with PG&E until later in 2023.

Customer Impacts
The E-ELEC rate schedule aims to help reduce the electricity costs of customers when their energy usage increases due to electrification. E-ELEC may reduce bills by:
• Reduced volumetric PG&E distribution charges (replaced by a flat daily rate) • No volumetric PG&E Tiered Rates (also known as the Baseline Credit or Conservation Incentive Adjustment), where customers pay higher rates as their monthly usage increases.
• Adjusted seasonal MCE generation rates with higher summer rates, and lower rates the rest of the year.

Currently available residential rate offerings are as follows:

Rate
Schedule
Seasonal
Pricing
Time-Variant Pricing Tiered Distribution Charges
E-1 Limited No Yes Volumetric
E-TOU-C Yes Yes Yes Volumetric
E-TOU-D Yes Yes No Volumetric
EV2 Yes Expanded for Off Peak
Charging
No Volumetric
E-ELEC Expanded Yes No Mixed Volumetric and
Fixed
E-ELEC is most likely to offer savings to MCE customers with high usage, particularly outside of the summer season. Features are otherwise similar to the E-TOU-D and EV2 rate schedules above, and in many cases, customers may still see lower electric charges by remaining on these rates. E-ELEC is optional, and MCE customers would still be eligible for any other available residential rate.

Implementation
To provide service under the E-ELEC rate schedule, MCE must develop comparable generation rates at which to bill customers subscribed to PG&E’s E-ELEC rate schedule.

Staff proposes initial MCE E-ELEC generation rates as follows:

E-ELEC Peak (4p-9p) Partial Peak (3p-4p
and 9p-12a)
Off Peak (all other
hours)
Summer (Jun-Sep) $0.235/kWh $0.148/kWh $0.108/kWh
Winter (Oct-May) $0.089/kWh $0.071/kWh $0.060/kWh
These rates are based on preliminary PG&E generation rates as indicated in its Pro Forma Electric Rate Schedule in Advice Letter E-6690. Final rates may differ, but are not expected to be significantly different. In future years, including the upcoming rate setting cycle, staff would recommend adjusting these rates as necessary to meet revenue requirements and match the appropriate cost of service.

Fiscal Impacts: No direct costs associated with rate implementation. Potential nominal revenue impacts from alternative rates depending on usage behavior.

Recommendation: Approve the implementation of MCE rates for the E-ELEC rate schedule effective December 1, 2022.

October 20, 2022
TO: MCE Board of Directors
FROM: Garth Salisbury, Chief Financial Officer & Treasurer RE: Proposed Amendments to MCE Policy 014: Investment Policy (Agenda Item #11)
ATTACHMENT: Proposed Amended MCE Policy 014: Investment Policy with Glossary of Investment Terms in Strikeout/Underline Format Dear Board Members:

Summary:

In April 2018, your Board approved MCE Policy 014: Investment Policy (the “Policy”) to guide the investment of MCE’s cash and investments. In March of 2019 your Board amended the Policy to include additional investments in compliance with those allowable in the California Government Code (the “Code”) and to add other protections and reporting requirements of the MCE Treasurer. In March, 2020 your Board further amended the Policy to reflect a change in the Code allowing additional investment in FDIC insured bank deposits. Staff is recommending further amendments to the Policy as described below.

Background: Since inception through the close of the most recent fiscal year, MCE has accumulated over $200 million in reserves. Historically, MCE has invested its reserves in FDIC insured or collateralized money market funds and bank certificates of deposit.

During the last two years, interest rates available from these investment vehicles have varied significantly in response to actions by the Federal Reserve Bank (the “Fed”).

During the pandemic, the Fed reduced the Federal Funds Target Rate (interest rate) to a range between zero and 0.25% to encourage economic investment and to stimulate the economy. Since March of this year, the Fed has increased the target rate to over 3% in an effort to cool the economy and get inflation under control. These inflation fighting measures have created increased capital markets volatility, tighter financial conditions, and significantly higher interest rates in a short period of time. (See a tracking of the Federal Funds Rate and US Treasury Note Yields)
In response to these changing financial conditions and in compliance with the Code and the Investment Policy, MCE issued a solicitation for a professional investment manager with the goal of allocating up to 50% of MCE’s liquid assets to be managed professionally.

Rationale for Further Amendments: Further review and recommended changes to the Investment Policy are appropriate following MCE’s retention of an investment advisor.

Chandler Asset Management (“CAM”) was selected as MCE’s investment advisor after an RFP process and they bring the necessary experience, local presence and customer service to assist MCE in this next important phase of our investment strategy. A number of amendments to the Policy are being proposed to capture the latest relevant changes to the Code, add additional permitted investment categories that remain in compliance with the Code, and to add a number of protections, procedures and “best practices” in order to ensure ongoing compliance with the tenets of “safety, liquidity and return on investment”.

MCE’s current Investment Policy limits the investment of funds to: commercial bank checking and savings accounts, negotiable and non-negotiable certificates of deposit, the California State Treasury’s Local Agency Investment Fund (LAIF), U.S. Treasury obligations, Federal Agency Securities, Bankers’ Acceptances, Placement Service Deposits, Money Market Funds and Commercial Paper.

The proposed amendments to MCE’s Investment Policy expand eligible investments to include: municipal securities issued by the State of California and its political subdivisions, collateralized repurchase agreements, high credit quality medium-term corporate notes, asset-backed securities, and supranational debt. The proposed amendments also remove Bankers’ Acceptances as a permitted investment as these securities are now extremely rare and no longer a liquid investment alternative. Please see the new Investment Policy section titled “Glossary of Investment Terms” for a description of these investment categories.

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%
US Treasury Note Yields
2-Year
5-Year
10-Year
Yield (%)

0.00%

0.25%

0.50%

0.75%

1.00%

1.25%

1.50%

1.75%

2.00%

2.25%

2.50%

2.75%

3.00%

3.25%
Effective Federal Funds Rate
Yield (%)
The primary purpose of expanding eligible investments is to enhance diversification of MCE’s investment program, but the additional asset classes are also expected to provide higher return options over the long-run with little incremental risk while remaining, at all times, in compliance with the Code.

Additionally, Staff and CAM also recommend for the Board’s consideration:
• Including a Scope section detailing MCE’s funds subject to the Policy • Augmenting the Policy’s Delegation of Authority section to include the engagement of a professional money manager
• Adding a new section to manage ethics and conflicts of interest • Including additional concentration and credit limits on the different asset classes allowed in order to enhance safety and liquidity • Augmenting the requirements for brokers and other financial institutions doing business with MCE
• Adding new sections addressing the management of credit and market risk in MCE’s investment program
• Including a Glossary of Investment Terms to enhance Policy readability Fiscal Impacts: It is anticipated that the amendments to the Investment Policy and the professional management of a certain amount of MCEs reserves will result in incremental interest earnings on those funds over time.

Recommendation: Approve the proposed amendments to MCE Policy 014: Investment Policy.
1 POLICY 014: Investment Policy
Introduction
This Investment Policy establishes guidelines for the management of cash, deposits and investments (together, “funds”) at MCE (or the “Agency”).

Scope
This policy covers all funds and investment activities under the direct authority of MCE, as set forth in the State Government Code, Sections 53600 et seq., with the following exceptions:
 Proceeds of debt issuance shall be invested in accordance with MCE’s general investment philosophy as set forth in this policy; however, such proceeds are to be invested pursuant to the permitted investment provisions of their specific bond indentures.  Any other funds specifically exempted by MCE’s Board of Directors.

Objectives
. When managing funds, MCE’s primary objectives, in order of importance, shall be to safeguard the principal of the funds, meet the liquidity needs of MCE, and achieve a return on investment on funds in MCE’s control.

Safety: Safety of principal is the foremost objective of cash and investment management activities. The investment of funds shall be undertaken in a manner that seeks to ensure the preservation of principal.

Liquidity: The funds of the Agencyagency shall remain sufficiently liquid to meet all operating needs that may be reasonably anticipated. Since all possible cash demands cannot be anticipated, the investment of funds in deposits or instruments available on demand is recommended.

Return on Investment: The deposit and investment portfolio shall be designed with the objective of attaining a market rate of return throughout the economic cycle while considering risk and liquidity constraints. The return on deposits and investments is of secondary importance compared to the safety and liquidity objectives described above.

Standard of Care
MCE will manage funds in accordance with the Prudent Investor Standard pursuant to California Government Code Section 53600.3.11: “Governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds 1 All further statutory references are to the California Government Code unless otherwise stated.

AI#11_Att.: Prop. Amended MCE Policy 014: Invest Policy w. Glossary of Invest Terms in Strikeout/Underline Format 2 are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling or managing public funds, a trustee shall act with care, skill, prudence and diligence under the circumstances then prevailing, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency. Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law.” Delegation of Authority
Pursuant to Section 53607, the responsibility to manage funds is delegated to the Treasurer of MCE. The Treasurer may appoint Deputy Treasurers as the Treasurer deems necessary and convenient for the prompt and faithful discharge of its duties to invest and reinvest the funds of MCE, pursuant to Section 53607.

MCE may engage the services of one or more external investment advisers, who are registered under the Investment Advisers Act of 1940, to assist in the management of MCE’s investment portfolio in a manner consistent with the MCE’s objectives. External investment advisers may be granted discretion to purchase and sell investment securities in accordance with this Investment Policy.

Ethics and Conflicts of Interest
All participants in the investment process shall act as custodians of the public trust. Investment Officials and any external investment advisors shall recognize that the investment portfolio is subject to public review and evaluation. As is consistent with MCE’s Conflict of Interest Code, Investment Officials involved in the investment process shall refrain from personal business activity that could create a conflict of interest or the appearance of a conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions.

Pursuant to MCE’s Conflict of Interest Code, Investment Officials shall disclose to MCE’s General Counsel or designee i) any material interests in financial institutions with which they conduct business, and ii) disclose any personal investments with a direct, indirect or beneficial interest totaling $2,000 or more. Investment Officials shall refrain from undertaking any personal investment transactions with the same individual from the external investment advisor with whom business is conducted on behalf of MCE.

Investment Officials, in accordance with applicable law, shall not accept honoraria, gifts, and gratuities from advisors, brokers, dealers, bankers, or other person with whom MCE conducts business.

Any individual of an external investment advisor engaged by MCE shall at all times comply with Municipal Securities Rulemaking Board Rule G-37 and shall follow the Investment Advisor Fiduciary Standard established by the U.S. Securities and Exchange Commission.

Authorized Investments
MCE’s investments are governed by California Government Code, Sections 53600 et seq. Within the investments permitted by the Code, MCE seeks to further restrict eligible investments to the guidelines listed below. In the event a discrepancy is found between this policy and the Code, the AI#11_Att.: Prop. Amended MCE Policy 014: Invest Policy w. Glossary of Invest Terms in Strikeout/Underline Format 3 more restrictive parameters will take precedence. Percentage holding limits and minimum credit quality requirements listed in this section apply at the time the security is purchased.

Any investment currently held at the time the policy is adopted which does not meet the new policy guidelines can be held until maturity and shall be exempt from the current policy. At the time of the investment’s maturity or liquidation, such funds shall be reinvested only as provided in the current policy.

The following types of investments are permitted:

Deposits at Bank(s): Funds may be invested in non-interest bearing depository accounts to meet MCE’s operating and collateral needs and grant requirements. Funds not needed for these purposes may be invested in interest bearing depository accounts or Federal Deposit Insurance Corporation (FDIC) insured certificates of deposit with maturities not to exceed five years.

Banks eligible to receive deposits will be federally or state chartered and will conform to Section 53635.2 which requires that banks “have received an overall rating of not less than "satisfactory" in its most recent evaluation by the appropriate federal financial supervisory agency of its record of meeting the credit needs of California's communities, including low- and moderate-income neighborhoods, pursuant to Section 2906 of Title 12 of the United States Code.” FDIC insurance coverage in the United States is $250,000 per Tax ID Number. As per Section 53652, banks must collateralize the deposits of public agencies. The Treasurer, or a duly appointed Deputy Treasurer, will monitor the credit quality of eligible banks to ensure the safety of MCE deposits.

Local Agency Investment Fund (LAIF): Funds may be invested in the Local Agency Investment Fund. The LAIF was established by the California State Treasurer for the benefit of local agencies. Statutory requirements of the Local Agency Investment Fund include:

Section 16429.1
a. There is in trust in the custody of the Treasurer the Local Agency Investment Fund, which fund is hereby created. The Controller shall maintain a separate account for each governmental unit having deposits in this fund.
e. The local governmental unit, the nonprofit corporation, or the quasi-governmental agency has the exclusive determination of the length of time its money will be on deposit with the Treasurer.
j. Money in the fund shall be invested to achieve the objective of the fund which is to realize the maximum return consistent with safe and prudent treasury management. i. Immediately at the conclusion of each calendar quarter, all interest earned and other increment derived from investments shall be distributed by the Controller to the contributing governmental units or trustees. An amount equal to the reasonable costs incurred in carrying out the provisions of this section, not to exceed a maximum of 5 percent of the earnings of this fund and not to exceed the amount appropriated in the annual Budget Act for this function, shall be deducted from the earnings prior to distribution.

Section 16429.4
The right of a city, county, city and county, special district, nonprofit corporation, or qualified quasi-governmental agency to withdraw its deposited moneys from the Local Agency Investment Fund, AI#11_Att.: Prop. Amended MCE Policy 014: Invest Policy w. Glossary of Invest Terms in Strikeout/Underline Format 4 upon demand, may not be altered, impaired, or denied, in any way, by any state official or state agency based upon the state’s failure to adopt a State Budget by July 1 of each new fiscal year.

US Treasury Obligations: Funds may be invested in United States Treasury obligations and other government obligations for which the full faith and credit of the United States are pledged for the payment of principal and interest with a term to maturity not exceeding 5 years. There are no limits on the dollar amount or percentage that MCE may invest in U.S. Treasuries. subject to the limitations set forth in Sections 53601 et seq. and 53635 et seq.

Federal Agency Securities: Funds may be invested in Federal Agency Securities or United States Government-Sponsored Enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government-sponsored enterprises. There are no limits on the dollar amount or percentage that MCE may invest in Federal Agency or Government-Sponsored Enterprises (GSEs) with a term to maturity not exceeding 5 years. No more than 30% of the portfolio may be invested in any single Agency/GSE issuer. Federal Agency and GSE obligations must be rated in a rating category of AA or equivalent or better. The maximum percent of agency callable securities in the portfolio will be 20%.with a term to maturity not exceeding 5 years subject to the limitations set forth in Sections 53601 et seq. and 53635 et seq.

Commercial Paper: Funds may be invested in commercial paper in accordance with the requirements of Section 53601 and subject to the following limitations:
i. No more than 25% of the total portfolio shall be invested in commercial paper; ii. The term to maturity shall not exceed 270 days; and iii. No more than 10% of outstanding commercial paper shall be from any single issuer.

The issuer of commercial paper must have the following:
i. Assets in excess of $500 million;
ii. A credit rating of A-1 or better by a Nationally Recognized Statistical Rating Organization (NRSRO); and
iii. A senior debt rated at A or better.

Additionally, under a provision sunsetting on January Bankers’ Acceptances: Funds may be invested in Banker’s Acceptances provided that they are issued by institutions which have short-term debt obligations rated “A-1, 2026, ” or its equivalent or better by at least one NRSRO. Not more that 30% of the portfolio may be invested in Bankers’ Acceptances, and no more than 40% of the portfolio may be invested in Commercial Paper if the Agency’s investment assets under management are greater than $100,000,000. No more thanthat 5% of the portfolio may be invested in any single issuer. The maximum maturity shall not exceed 180 days.

Negotiable Certificates of Deposit: Funds may be invested in negotiable certificates of deposit issued by a nationally or state-chartered bank, a savings association or a federal association, a state or federal credit union, or by a federally licensed or state-licensed branchin accordance with the requirements of a foreign bankSection 53601 and 53601.8, and subject to the following limitations:
i. Issued by an entity as defined in Section 53601(i); and ii. No more than 30% of funds invested pursuant to this Investment Policy may be invested in certificates of deposit.
iii. The amount of the NCD insured up to the FDIC limit does not require any credit ratings. iv. Any amount above the FDIC insured limit must be issued by institutions which have short-term debt obligations rated “A-1” or its equivalent or better by at least one NRSRO; or long-term obligations rated in a rating category of “A” or its equivalent or better by at least

AI#11_Att.: Prop. Amended MCE Policy 014: Invest Policy w. Glossary of Invest Terms in Strikeout/Underline Format 5 v. one NRSRO.
vi. No more than 5% of the portfolio may be invested in any single issuer. vii. The maximum maturity does not exceed five (5) years.

Collateralized Time Deposits (Non-Negotiable Certificates of Deposit): Funds may be invested in state or federally chartered banks, savings and loans, or credit unions in excess of insured amounts which are fully collateralized with securities in accordance with California law, provided that:
 No more than 50% of the portfolio will be invested in a combination of federally insured and collateralized time deposits, including CDARS.
 The maximum maturity does not exceed five (5) years.

Placement Service Deposits: Funds may be invested in deposits placed with a private sector entity that assists in the placement of deposits with eligible financial institutions located in the United States (Section 53601.8). The full amount of principal and the interest that may be accrued during the maximum term of each deposit shall at all times be insured by federal deposit insurance. The combined maximum portfolio exposure to the deposits placed pursuant to this section, Insured Cash Sweep (ICS) and Certificate of Deposit Account Registry Service (CDARS) is limited to 50 percent and the maximum investment maturity will be restricted to five years, unless otherwise prescribed by law.

Money Market Funds: Funds may be invested in money market funds pursuant to Section 53601(l)(2) and subject to Section 53601(l)(4).

Municipal Securities: Funds may be invested in municipal securities including obligations of MCE, the State of California and any local agency within the State of California, provided that:

 The securities are rated in a minimum rating category of “A+” or its equivalent or better by at least one nationally recognized statistical rating organization (“NRSRO”).  No more than 5% of the portfolio may be invested in any single issuer.  No more than 30% of the portfolio may be in Municipal Securities.  The maximum maturity does not exceed five (5) years.

Repurchase Agreements: Funds may be invested in repurchase agreements collateralized with securities authorized under California Government Code, maintained at a level of at least 102% of the market value of the Repurchase Agreement. There are no limits on the dollar amount or percentage that MCE may invest, provided that:
 Securities used as collateral for Repurchase Agreements will be delivered to an acceptable third party custodian.
 Repurchase Agreements are subject to a Master Repurchase Agreement between the Agency and the provider of the repurchase agreement. The Master Repurchase Agreement will be substantially in the form developed by the Securities Industry and Financial Markets Association (SIFMA).
 The maximum maturity does not exceed one (1) year.

Corporate Medium-Term Notes (MTNs): Funds may be invested in MTMs provided that:
 The issuer is a corporation organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States.

AI#11_Att.: Prop. Amended MCE Policy 014: Invest Policy w. Glossary of Invest Terms in Strikeout/Underline Format 6  The securities are rated in a rating category of “A+” or its equivalent or better by at least one NRSRO.
 No more than 30% of the total portfolio may be invested in MTNs.  No more than 5% of the portfolio may be invested in any single issuer.  The maximum maturity does not exceed five (5) years.

Asset-Backed, Mortgage-Backed, Mortgage Passthrough Securities, and Collateralized Mortgage Obligations from issuers of U.S. Treasuries, Federal Agencies, and Government Sponsored Enterprises: Funds may be invested in these securities provided that:
 The securities are rated in a rating category of “AA” or its equivalent or better by a NRSRO.  No more than 20% of the total portfolio may be invested in these securities.  No more than 5% of the portfolio may be invested in any single Asset-Backed or Commercial Mortgage security issuer.
 The maximum legal final maturity does not exceed five (5) years.

Supranationals: Funds may be invested in supranationals provided that:
 Issues are US dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank.  The securities are rated in a rating category of “AA” or its equivalent or better by a NRSRO.  No more than 30% of the total portfolio may be invested in these securities.  No more than 10% of the portfolio may be invested in any single issuer.  The maximum maturity does not exceed five (5) years.

Prohibited Investments
Pursuant to Section 53601.6, MCE shall not invest funds in any security that could result in a zero interest accrual, or less, if held to maturity. These prohibited investments include inverse floaters, range notes, or mortgage-derived interest-only strips, futures options. The purchase of foreign currency denominated securities is prohibited. Trading securities for the sole purpose of speculating on the future direction of interest rates is prohibited. Purchasing or selling securities on margin is prohibited. The use of reverse repurchase agreements, securities lending or any other form of borrowing or leverage is prohibited. .

Investment Portfolio Management
The term to maturity of any funds invested shall not exceed 5 years pursuant to Section 53601.

The Treasurer, or a duly appointed Deputy Treasurer, will allocate funds among authorized investments consistent with the objectives and standards of care outlined in this Policy.

Bids and Purchase of Securities
Prior to the purchase of an investment pursuant to this Policy the persons authorized to make investments shall assess the market and market prices using information obtained from available sources including investment services, broker/dealers, and the media. A competitive bid process, when practical, will be used to place all investment purchases and sales transactions.

Brokers
AI#11_Att.: Prop. Amended MCE Policy 014: Invest Policy w. Glossary of Invest Terms in Strikeout/Underline Format 7 To the extent practicable, the Treasurer shall endeavor to complete investment transactions using a competitive bid process whenever possible. In accordance with Section 53601.5, institutions eligible to transact investment business with MCE include:
 Institutions licensed by the state as a broker-dealer.  Institutions that are members of a federally regulated securities exchange.  Primary government dealers as designated by the Federal Reserve Bank and non-primary government dealers.
 Nationally or state-chartered banks.
 The Federal Reserve Bank.
 Direct issuers of securities eligible for purchase.

Selection of financial institutions and broker/dealers authorized to engage in transactions will be at the sole discretion of MCE, except where MCE utilizes an external investment adviser in which case MCE may rely on the adviser for selection.

Selection of broker/dealers used by an external investment adviser retained by MCE will be at the sole discretion of the adviser. Where possible, transactions with broker/dealers shall be selected on a competitive basis and their bid or offering prices shall be recorded. If there is no other readily available competitive offering, best efforts will be made to document quotations for comparable or alternative securities. When purchasing original issue instrumentality securities, no competitive offerings will be required as all dealers in the selling group offer those securities at the same original issue price.

The TreasurerBroker/dealers shall be selected by the Chief Executive Officer upon recommendation by the Treasurer, or a duly appointed Deputy Treasurer. Selection of broker/dealers shall be based upon the following criteria: the reputation and financial strength of the company or financial institution, the reputation and expertise of the individuals employed, and pursuant to the requirements of Section 53601.5. The Chief Executive Officer shall be prohibited from selecting any broker, brokerage firm, dealer, or securities firm that has, within any 48-consecutive month period following January 1, 1996, made a political contribution in an amount exceeding the limitations contained in Rule G-37 of the Municipal Securities Rulemaking Board to any member of the MCE Board, or any candidate for those offices. The broker/dealers shall be provided with and acknowledge receipt of the Investment Policy.

Losses
Losses are acceptable on a sale before maturity and may be taken if required to meet the liquidity needs of the Agencyagency or if the reinvestment proceeds will earn an income flow with a present value higher than the present value of the income flow that would have been generated by the original investment, considering any investment loss or foregoing interest on the original investment.

Delivery and Safekeeping
The delivery and safekeeping of all securities shall be made through a third party custodian when practical and cost effective as determined by the Treasurer, or a duly appointed Deputy Treasurer, and in accordance with Section 53608. The Director of Finance or their designee shall review all transaction confirmations for conformity with the original transaction.

Conflict of Interest Risk Management and Diversification—Mitigating Credit Risk in the Portfolio
AI#11_Att.: Prop. Amended MCE Policy 014: Invest Policy w. Glossary of Invest Terms in Strikeout/Underline Format 8 Credit risk is the risk that a security or a portfolio will lose some or all its value due to a real or perceived change in the ability of the issuer to repay its debt. MCE will mitigate credit risk by adopting the following strategies:
 The diversification requirements included in the “Authorized Investments” section of this policy are designed to mitigate credit risk in the portfolio.  No more than 5% of the total portfolio may be deposited with or invested in securities issued by any single issuer unless otherwise specified in this policy.  MCE may elect to sell a security prior to its maturity and record a capital gain or loss in order to manage the quality, liquidity or yield of the portfolio in response to market conditions or MCE’s risk preferences.
 If a security owned by MCE is downgraded to a level below the requirements of this policy, making the security ineligible for additional purchases, the following steps will be taken:
 Any actions taken related to the downgrade by the investment manager will be communicated to the Treasurer in a timely manner.
 If a decision is made to retain the security, the credit situation will be monitored and reported to the Governing Body.

Risk Management and Diversification—Mitigating Market Risk in the Portfolio Market risk is the risk that the portfolio value will fluctuate due to changes in the general level of interest rates. MCE recognizes that, over time, longer-term portfolios have the potential to achieve higher returns. On the other hand, longer-term portfolios have higher volatility of return.

MCE will mitigate market risk by providing adequate liquidity for short-term cash needs, and by making longer-term investments only with funds that are not needed for current cash flow purposes.

MCE further recognizes that certain types of securities, including variable rate securities, securities with principal paydowns prior to maturity, and securities with embedded options, will affect the market risk profile of the portfolio differently in different interest rate environments.

MCE, therefore, adopts the following strategies to control and mitigate its exposure to market risk:
 MCE will maintain a minimum of $40 million in cash and overnight investments at all times to provide sufficient liquidity for expected disbursements.  The maximum stated final maturity of individual securities in the portfolio will be five (5) years, except as otherwise stated in this policy.
 The duration of the portfolio will generally be approximately equal to the duration (typically, plus or minus 20%) of a Market Benchmark, an index selected by MCE based on MCE’s investment objectives, constraints and risk tolerances.

In accordance with state law, staff shall not accept honoraria, gifts, and gratuities from advisors, brokers, dealers, bankers, or other person with whom MCE conducts business.

AI#11_Att.: Prop. Amended MCE Policy 014: Invest Policy w. Glossary of Invest Terms in Strikeout/Underline Format 9 Audits
MCE’s funds shall be subject to a process of independent review by its external auditors. MCE’s external auditors shall review the investment portfolio in connection with the annual audit for compliance with the Investment Policystatement of investment policy pursuant to Section 27134.

The results of the audit shall be reported to the Director of Finance and the Ad Hoc Audit Committee.

Reports
Monthly: So long as the Board of Directors’ annual delegation of investment authority pursuant to Section 53607 to the Treasurer is effective, the Treasurer or a duly appointed Deputy Treasurer will perform a monthly review of the investment function and shall submit a monthly report of all investment transactions to the Board of Directors. Investment transactions are defined as the purchase, sale or exchange of securities.

Annually: The Treasurer, or a duly appointed Deputy Treasurer, will submit an annual report to the Board of Directors and Chief Executive Officer within 30 days of the end of a fiscal year providing the following:
i. A list identifying the type of investment, issuer, date of maturity, par and dollar amount invested on all securities, the market value and source of the market value information;
ii. A statement that the portfolio is in compliance with the Investment Policy and in accordance with Section 53646 or the manner in which the portfolio is not in compliance; and
iii. A statement of MCE’s ability to meet expenditure requirements for the upcoming 12 months.

Annual Review
The Investment Policy will be reviewed annually by the Treasurer, or a duly appointed Deputy Treasurer. Any changes to the Investment Policy will be submitted to the Board for approval.

AI#11_Att.: Prop. Amended MCE Policy 014: Invest Policy w. Glossary of Invest Terms in Strikeout/Underline Format 1 Glossary of Investment Terms
AGENCIES. Shorthand market terminology for any obligation issued by a government-sponsored entity (GSE), or a federally related institution. Most obligations of GSEs are not guaranteed by the full faith and credit of the US government. Examples are:

FFCB. The Federal Farm Credit Bank System provides credit and liquidity in the agricultural industry. FFCB issues discount notes and bonds.

FHLB. The Federal Home Loan Bank provides credit and liquidity in the housing market.

FHLB issues discount notes and bonds.

FHLMC. Like FHLB, the Federal Home Loan Mortgage Corporation provides credit and liquidity in the housing market. FHLMC, also called “FreddieMac” issues discount notes, bonds and mortgage pass-through securities.

FNMA. Like FHLB and FreddieMac, the Federal National Mortgage Association was established to provide credit and liquidity in the housing market. FNMA, also known as “FannieMae,” issues discount notes, bonds and mortgage pass-through securities.

GNMA. The Government National Mortgage Association, known as “GinnieMae,” issues mortgage pass-through securities, which are guaranteed by the full faith and credit of the US Government.

PEFCO. The Private Export Funding Corporation assists exporters. Obligations of PEFCO are not guaranteed by the full faith and credit of the US government.

TVA. The Tennessee Valley Authority provides flood control and power and promotes development in portions of the Tennessee, Ohio, and Mississippi River valleys. TVA currently issues discount notes and bonds.

ASKED. The price at which a seller offers to sell a security.

ASSET BACKED SECURITIES. Securities supported by pools of installment loans or leases or by pools of revolving lines of credit.

BENCHMARK. A comparison security or portfolio. A performance benchmark is a partial market index, which reflects the mix of securities allowed under a specific investment policy.

BID. The price at which a buyer offers to buy a security.

BROKER. A broker brings buyers and sellers together for a transaction for which the broker receives a commission. A broker does not sell securities from his own position.

CALLABLE. A callable security gives the issuer the option to call it from the investor prior to its maturity. The main cause of a call is a decline in interest rates. If interest rates decline since an issuer issues securities, it will likely call its current securities and reissue them at a lower rate of interest. Callable securities have reinvestment risk as the investor may receive its principal back when interest rates are lower than when the investment was initially made.

CERTIFICATE OF DEPOSIT (CD). A time deposit with a specific maturity evidenced by a certificate.

Large denomination CDs may be marketable.

CERTIFICATE OF DEPOSIT ACCOUNT REGISTRY SYSTEM (CDARS). A private placement service that allows local agencies to purchase more than $250,000 in CDs from a single financial institution (must be a participating institution of CDARS) while still maintaining FDIC insurance coverage. CDARS is currently the only entity providing this service. CDARS facilitates the trading of deposits between the California institution and other participating institutions in amounts that are less than $250,000 each, so that FDIC coverage is maintained.

COLLATERAL. Securities or cash pledged by a borrower to secure repayment of a loan or repurchase agreement. Also, securities pledged by a financial institution to secure deposits of public monies.

COLLATERALIZED MORTGAGE OBLIGATIONS (CMO). Classes of bonds that redistribute the cash flows of mortgage securities (and whole loans) to create securities that have different levels of prepayment risk, as compared to the underlying mortgage securities.

COMMERCIAL PAPER. The short-term unsecured debt of corporations.

AI#11_Att.: Prop. Amended MCE Policy 014: Invest Policy w. Glossary of Invest Terms in Strikeout/Underline Format 1 COUPON. The rate of return at which interest is paid on a bond.

CREDIT RISK. The risk that principal and/or interest on an investment will not be paid in a timely manner due to changes in the condition of the issuer.

CURRENT YIELD. The annual income from an investment divided by the current market value.

Since the mathematical calculation relies on the current market value rather than the investor’s cost, current yield is unrelated to the actual return the investor will earn if the security is held to maturity.

DEALER. A dealer acts as a principal in security transactions, selling securities from and buying securities for his own position.

DEBENTURE. A bond secured only by the general credit of the issuer.

DISCOUNT. The difference between the par value of a bond and the cost of the bond, when the cost is below par. Some short-term securities, such as T-bills and banker’s acceptances, are known as discount securities. They sell at a discount from par, and return the par value to the investor at maturity without additional interest. Other securities, which have fixed coupons, trade at a discount when the coupon rate is lower than the current market rate for securities of that maturity and/or quality.

DIVERSIFICATION. Dividing investment funds among a variety of investments to avoid excessive exposure to any one source of risk.

DURATION. The weighted average time to maturity of a bond where the weights are the present values of the future cash flows. Duration measures the price sensitivity of a bond to changes in interest rates. (See modified duration).

FEDERAL FUNDS RATE. The rate of interest charged by banks for short-term loans to other banks.

The Federal Reserve Bank through open-market operations establishes it.

FEDERAL OPEN MARKET COMMITTEE. A committee of the Federal Reserve Board that establishes monetary policy and executes it through temporary and permanent changes to the supply of bank reserves.

INVESTMENT OFFICIALS. This includes any applicable MCE staff participating in the investment process; MCE Treasurer; MCE Deputy Treasurer(s); and MCE Board of Directors.

LEVERAGE. Borrowing funds in order to invest in securities that have the potential to pay earnings at a rate higher than the cost of borrowing.

LIQUIDITY. The speed and ease with which an asset can be converted to cash.

LOCAL AGENCY INVESTMENT FUND (LAIF). A voluntary investment fund open to government entities and certain non-profit organizations in California that is managed by the State Treasurer’s Office.

LOCAL GOVERNMENT INVESTMENT POOL. Investment pools that range from the State Treasurer’s Office Local Agency Investment Fund (LAIF) to county pools, to Joint Powers Authorities (JPAs). These funds are not subject to the same SEC rules applicable to money market mutual funds.

MARGIN. The difference between the market value of a security and the loan a broker makes using that security as collateral.

MARKET RISK. The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates.

MARKET VALUE. The price at which a security can be traded.

MARKING TO MARKET. The process of posting current market values for securities in a portfolio.

MATURITY. The final date upon which the principal of a security becomes due and payable.

MEDIUM TERM NOTES. Unsecured, investment-grade senior debt securities of major corporations which are sold in relatively small amounts on either a continuous or an intermittent basis.

MTNs are highly flexible debt instruments that can be structured to respond to market opportunities or to investor preferences.

MODIFIED DURATION. The percent change in price for a 100 basis point change in yields. Modified duration is the best single measure of a portfolio’s or security’s exposure to market risk.

MONEY MARKET. The market in which short-term debt instruments (T-bills, discount notes, commercial paper, and banker’s acceptances) are issued and traded.

AI#11_Att.: Prop. Amended MCE Policy 014: Invest Policy w. Glossary of Invest Terms in Strikeout/Underline Format 1 MORTGAGE PASS-THROUGH SECURITIES. A securitized participation in the interest and principal cash flows from a specified pool of mortgages. Principal and interest payments made on the mortgages are passed through to the holder of the security.

MUNICIPAL SECURITIES. Securities issued by state and local agencies to finance capital and operating expenses.

MUTUAL FUND. An entity which pools the funds of investors and invests those funds in a set of securities which is specifically defined in the fund’s prospectus. Mutual funds can be invested in various types of domestic and/or international stocks, bonds, and money market instruments, as set forth in the individual fund’s prospectus. For most large, institutional investors, the costs associated with investing in mutual funds are higher than the investor can obtain through an individually managed portfolio.

NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION (NRSRO).

A credit rating agency that the Securities and Exchange Commission in the United States uses for regulatory purposes. Credit rating agencies provide assessments of an investment's risk. The issuers of investments, especially debt securities, pay credit rating agencies to provide them with ratings. The three most prominent NRSROs are Fitch, S&P, and Moody's.

NEGOTIABLE CD. A short-term debt instrument that pays interest and is issued by a bank, savings or federal association, state or federal credit union, or state-licensed branch of a foreign bank. Negotiable CDs are traded in a secondary market and are payable upon order to the bearer or initial depositor (investor).

PREMIUM. The difference between the par value of a bond and the cost of the bond, when the cost is above par.

PRIMARY DEALER. A financial institution (1) that is a trading counterparty with the Federal Reserve in its execution of market operations to carry out U.S. monetary policy, and (2) that participates for statistical reporting purposes in compiling data on activity in the U.S.

Government securities market.

PRUDENT PERSON (PRUDENT INVESTOR) RULE. A standard of responsibility which applies to fiduciaries. In California, the rule is stated as “Investments shall be managed with the care, skill, prudence and diligence, under the circumstances then prevailing, that a prudent person, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of like character and with like aims to accomplish similar purposes.” REALIZED YIELD. The change in value of the portfolio due to interest received and interest earned and realized gains and losses. It does not give effect to changes in market value on securities, which have not been sold from the portfolio.

REGIONAL DEALER. A financial intermediary that buys and sells securities for the benefit of its customers without maintaining substantial inventories of securities and that is not a primary dealer.

REPURCHASE AGREEMENT. Short-term purchases of securities with a simultaneous agreement to sell the securities back at a higher price. From the seller’s point of view, the same transaction is a reverse repurchase agreement.

SAFEKEEPING. A service to bank customers whereby securities are held by the bank in the customer’s name.

SUPRANATIONAL. A Supranational is a multi-national organization whereby member states transcend national boundaries or interests to share in the decision making to promote economic development in the member countries.

TOTAL RATE OF RETURN. A measure of a portfolio’s performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending value; it includes interest earnings, realized and unrealized gains, and losses in the portfolio.

U.S. TREASURY OBLIGATIONS. Securities issued by the U.S. Treasury and backed by the full faith and credit of the United States. Treasuries are considered to have no credit risk, and are the benchmark for interest rates on all other securities in the US and overseas. The Treasury issues both discounted securities and fixed coupon notes and bonds.

AI#11_Att.: Prop. Amended MCE Policy 014: Invest Policy w. Glossary of Invest Terms in Strikeout/Underline Format 1 TREASURY BILLS. All securities issued with initial maturities of one year or less are issued as discounted instruments, and are called Treasury bills. The Treasury currently issues three-and six-month T-bills at regular weekly auctions. It also issues “cash management” bills as needed to smooth out cash flows.

TREASURY NOTES. All securities issued with initial maturities of two to ten years are called Treasury notes, and pay interest semi-annually.

TREASURY BONDS. All securities issued with initial maturities greater than ten years are called Treasury bonds. Like Treasury notes, they pay interest semi-annually.

VOLATILITY. The rate at which security prices change with changes in general economic conditions or the general level of interest rates.

YIELD TO MATURITY. The annualized internal rate of return on an investment which equates the expected cash flows from the investment to its cost.

AI#11_Att.: Prop. Amended MCE Policy 014: Invest Policy w. Glossary of Invest Terms in Strikeout/Underline Format

SEPTEMBER FILINGS
California Community Choice Association
SUBMITTED 09/09/2022, 03:05 PM
Contact
Shawn-Dai Linderman ([email protected])

1. Please provide a summary of your organization's comments on the Draft Final Proposal.

SUPPORT WITH CAVEATS
The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the California Independent System Operator Corporation’s (CAISO’s) Energy Storage Enhancements Draft Final Proposal.

CalCCA continues to support the CAISO’s co-located enhancements that would provide co-located storage resources with optional functionality in the day-ahead and real-time markets to ensure storage charging schedules do not exceed onsite renewable generation. This proposal will enable co-located storage resources to more effectively manage storage charging in a way that aligns with investment tax credit regulations. To improve this proposal, the CAISO should allow co-located resources to flag the ability to schedule charging up to its day-ahead forecast of renewable output, as opposed to the current proposal that would not schedule day-ahead charging or schedule charging only if there is a storage self-schedule. Otherwise, if the operator does not bid the renewable component in day-ahead (as is permitted under the Resource Adequacy (RA) must offer obligation rules), the renewable component would not receive a charging schedule until real-time. Scheduling storage charging subject to the renewable component’s day-ahead forecast will reflect the co-located resource’s expected ability to charge in the day-ahead timeframe and result in more efficient schedules in the day-ahead and real-time markets. Finally, CalCCA supports the ability for storage operators to toggle this functionality on or off and the removal of language around outage card submission and Resource Adequacy Availability Incentive Mechanism (RAAIM) application for the inability to charge from the grid.

CalCCA also supports the CAISO’s proposals to:
• Include opportunity costs in the day-ahead storage default energy bid; • Improve accounting for state-of-charge of resources providing regulation; and
• Enhance the CAISO’s exceptional dispatch tools for storage resources by holding state-of-charge and compensating them for their opportunity costs of being exceptionally dispatched.

2. Please provide comments on the EIM Governing Body classification.

SUPPORT
CalCCA has no additional comments at this time.

3. Please provide any additional input not included above related to the Draft Final Proposal.

CalCCA has no additional comments at this time.

California Community Choice Association
SUBMITTED 09/15/2022, 04:41 PM
Contact
Shawn-Dai Linderman ([email protected])

1. Please provide a summary of your organization’s comments on the WEIM Resource Sufficiency Evaluation (RSE) Enhancements Phase 2 revised draft final proposal and September 2, 2022 stakeholder call discussion:

California Community Choice Association’s (CalCCA’s) comments on the WEIM RSE Phase 2 revised draft final proposal (Revised Draft Final Proposal) are limited to Section 5, Energy Assistance (EA). Specifically, the CAISO should clarify several aspects of the EA proposal to address: (1) how the CAISO will decide whether to opt in to the EA program, (2) whether EA properly incentivizes load-serving entities (LSEs) within CAISO to procure sufficient capacity; and (3) the mechanisms, cost allocation and relevant cost causation, incentives, and decision-making by Balancing Authority Areas (BAAs) where the BAA is composed of multiple LSEs like in the CAISO.

2. Please provide your organization’s overall position on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal:

SUPPORT WITH CAVEATS
Support with caveats, as set forth below.

3. Provide your organization’s comments on the proposal to not include load forecast adjustments as an obligation of the WEIM RSE, as described in section 4.1 of the revised draft final proposal:

No comments at this time.

4. Provide your organization’s comments on the interaction between advisory WEIM transfers, intertie import offers and lower priority exports cleared by the HASP, as described in section 4.2 of the revised draft final proposal:

No comments at this time.

5. Provide your organization’s comments on the resource sufficiency evaluation’s proposed treatment of lower priority exports, as described in section 4.2.2 of the revised draft final proposal:

No comments at this time.

6. Provide your organization’s comments on the proposal to change the E-TAG designation of lower priority exports, as described in section 4.2.3 of the revised draft final proposal:

No comments at this time.

7. Provide your organization’s comments on the proposed treatment of uncertainty within the WEIM RSE, as described in section 4.3 of the revised draft final proposal:

No comments at this time.

8. Provide your organization’s comments on the proposal to cure supply insufficiencies through WEIM assistance energy transfers that embed the transfers cost in the deficient BAA’s LMPs, as described in section 5.1 of the revised draft final proposal:

Section 5.1 does not sufficiently explain mechanisms, cost allocation and relevant cost causation, incentives, and decision making by BAAs where the BAA is composed of multiple LSEs such as in the CAISO. First, Section 5.1 is not clear on all of the locational marginal prices (LMPs) in the scenario depicted. The example in Section 5.1 appears to depict two nodes where there is a generation node from outside of the BAA, and what appears to be an aggregated node to serve the load inside of the emergency energy receiving BAA. While the example is clear on what happens to the LMP within the energy receiving BAA, it is not clear what happens to the price at the node where the generator was dispatched to provide emergency assistance. Only the Marginal Cost of Energy (MCE) is included, along with an indication of a $1,000 incremental transfer cost which appears to be accounted for as a Marginal Cost of Congestion (MCC). It would appear then in total that the LMP for the generator providing emergency assistance that the total LMP will also be $1,175. The example says nothing of what this LMP will mean to other generation providing energy that is serving local load and not providing emergency energy. Section 5.1 likewise does not indicate how the price at this LMP will enter into calculating the price paid by load in its DLAP pricing when a single node in the area is provided a transfer payment that is incorporated in the MCC of its node. Without answers to these questions, it is not clear what the total impact of this emergency energy is to the providing entity and what costs will need to be recovered.

In the case of a BAA where the BAA is the only LSE, decisions to use or not use emergency assistance are clear since the costs and alternatives are known to that entity who can make rational choices and for whom the costs will be incurred by all BAA customers. In the case of the CAISO where there are multiple LSEs and any single or combination of LSEs may be the cause of an RSE insufficiency, however, it is not clear that the costs to procure emergency energy follow cost causation principles. Since the example in Section 5.1 does not provide clarity about how the Default Load Aggregation Point (DLAP) costs will be calculated, one can only assume that the LMP will be factored into the costs and all LSEs in the DLAP will be charged for the emergency energy. It is therefore not clear how all load in the BAA will pay equally for this failure of the RSE, since it is not clear that the LMP at the import node will impact all of the DLAPs equally. Not accounted for is which entity caused the emergency energy to be necessary in the first place. In the CAISO, the resource adequacy (RA) process should provide sufficient energy from the RA capacity to pass the RSE. A failure of the RSE then is either: (1) the failure of an LSE to meet its RA requirements; (2) an outage of a resource shown as RA that is then unavailable to provide energy to the CAISO market; or 3) an unanticipated condition (forecast error, transmission outage, etc.) that causes the RA to be insufficient. It is not clear that each of these conditions mean that all load in the DLAP was the cause of the need for emergency energy, and therefore it is not clear that charging all load in the DLAP is consistent with cost causation principles.

Further, when cost causation principles are not followed, it is unclear whether any entity will have an incentive to ensure that sufficient energy is made available to the CAISO to meet an RSE test.

Finally, where the BAA is composed of multiple LSEs, Section 5.1 appears to leave the decision to participate in emergency energy provision up to the BAA. This means that LSEs who will pay the costs will not have an ability to choose whether to participate – rather, the decision to opt in or out will be left up to the BAA. Combined with unclear cost allocation based upon cost causation principles, this leaves LSEs with insufficient ability to find and obtain alternative energy to provide to the market to make least cost decisions.

The CAISO should provide further information in Section 5.1 including how settlements will work for both the generator providing emergency energy, as well as the settlements for other generation at the same node as the generator providing emergency energy. In addition, the CAISO should clarify the cost allocation to all load receiving energy assistance including BAAs for which there are multiple DLAPs impacting LSEs within those DLAPs differently. The CAISO should also explain how these settlements are consistent with cost causation principles and provide sufficient incentive to all parties to find least cost solutions to curing an RSE insufficiency. Finally, the CAISO should describe how it will make its own decision to participate in receipt of emergency energy on behalf of multiple LSEs who will be impacted by the costs of this decision.

9. Provide your organization’s comments on the proposal to optionally elect to receive assistance energy transfers through a masterfile designation, as described in section 5.1 of the revised draft final proposal:

The logistics of opting in or out of the EA should be clarified by the CAISO. The Revised Draft Final Proposal provides that the election to utilize EA will be made in the CAISO Master File and any changes to that election will occur through the existing Master File process. However, the CAISO fails to explain its internal processes for deciding whether to opt in or out of the EA. For example, who makes the decision for the CAISO to opt in or out, and what are the parameters for making that decision? CAISO’s decision may subject all LSEs within the CAISO to the potentially high penalty prices. Therefore, the CAISO risks disincentivizing LSEs from procuring sufficient capacity to serve their load as they may face the penalty pricing if the CAISO opts in and fails the RSE, regardless of whether particular LSEs procured sufficient capacity.

10. Provide your organization’s comments on the allocation of assistance energy revenue, as described in section 5.1.1 of the revised draft final proposal:

No comments at this time.

11. Provide your organization’s comments on the proposal to monitor for misuse of WEIM assistance energy transfers, as described in section 5.1.2 of the revised draft final proposal:

No comments at this time.

12. Provide your organization’s comments on the proposed WEIM decisional classification, as described in section 6 of the revised draft final proposal:

No comments at this time.

13. Provide any additional comments on the WEIM Resource Sufficiency Evaluation Enhancements Phase 2 revised draft final proposal or September 2, 2022 stakeholder call discussion:

No comments at this time.

California Community Choice Association
SUBMITTED 09/16/2022, 04:28 PM
Contact
Shawn-Dai Linderman ([email protected])

1. Please provide a summary of your organization’s comments on the Transmission Service and Market Scheduling Priorities Phase 2 straw proposal and August 11, 2022 stakeholder call discussion:

California Community Choice Association (CalCCA) appreciates this opportunity to provide comments on the Straw Proposal. Of paramount importance to community choice aggregators (CCAs) as load serving entities (LSEs) whose customers pay for transmission on the California Independent System Operator Corporation (CAISO) grid is ensuring that the wheeling through proposals do not negatively impact transmission capacity to meet native load needs even in extremely constrained conditions. Therefore, the CAISO’s calculation of existing transmission commitments (ETC) must be accurate, current, and representative of peak load conditions. CalCCA looks forward to its participation in this initiative and provides more detailed comments on the ETC calculation below.

2. Provide your organization’s comments on the design principles discussed in section 4:

CalCCA is supportive of the Design Principles set forth in section 4, with two additions.

First, the CAISO should not only ensure that it “maintains sufficient transmission capacity to meet native load needs reliably” presently but should consider future needs in terms of likely load growth over and above historical levels based on increased electrification and economic growth. Similarly, CAISO should not only consider historical and present climate conditions but must incorporate into its analysis the likelihood of future increased instances of extreme weather events due to climate change, similar to the heat wave experienced in early September 2022.

3. Provide your organization’s overall comments on calculating ATC in the monthly horizon, as described in section 5.1.1. In particular, the different approaches for calculating native load needs as an existing commitment and other components of the ATC methodology as discussed in the proposal. The ISO encourages stakeholders to share potential alternative methods for consideration in calculating components, particularly native load needs.

CalCCA generally agrees with CAISO’s “Approach 3” – deriving native load needs based on the “higher of” Approaches 1 and 2, as long as the data used for the calculations represents the most constrained scenario. CalCCA is concerned that viewing historical data (the prior year or further back) will not adequately portray the likely future increased incidence of severe climate events such as the September 2022 heat wave. In addition, with respect to load growth, while the CAISO quotes a one percent per year average load growth figure, future electrification and economic growth will likely fuel increased load growth that must be considered. Given that other proceedings considering procurement needs, including the Integrated Resource Plan (IRP) and Resource Adequacy (RA) proceedings at the California Public Utilities Commission, are considering both climate and electrification as substantially contributing to load growth over the coming years, the CAISO must also consider these factors in calculating ATC.

In addition, CalCCA supports CAISO similarly taking a “higher of” approach to options 2A, 2B, and 2C to determine the highest native load need.

4. Provide your organization’s comments on each of the ISO’s proposed approaches for calculating existing transmission commitments (ETC) as it relates to the ATC methodology as described in section 5.1.1.2. Particularly, the ISO seeks comment on the methods or approaches identified for estimating native load needs across a 13-month horizon and encourages stakeholders to suggest potential variations to inputs in deriving the amount of transmission capacity to set aside for native load needs.

Please see response to Question 3.

5. Provide your organization’s comments on the Transmission Reliability Margin (TRM) and the Capacity Benefit Margin (CBM) as it relates to the ATC methodology, as described in section 5.1.1.3:

CalCCA has no comment at this time.

6. Provide your organization’s overall comments on calculating the ATC in the daily horizon, as described in section 5.1.2:

CalCCA has no comment at this time.

7. Provide your organization’s comments on calculating existing transmission commitments (ETC), particularly native load needs, as it relates to the calculation of daily ATC, as described in section

5.1.2.2:

Please see response to Question 3.

8. Provide your organization’s comments on the Transmission Reliability Margin (TRM) and the Capacity Benefit Margin (CBM) as it relates to daily ATC, as described in section 5.1.2.3:

CalCCA has no comment at this time.

9. Provide your organization’s comments on the method for accessing ATC to establish wheeling through scheduling priority, as described in section 5.1.3. In particular, consider comments on the requirements identified for accessing ATC.

CalCCA has no comment at this time.

10. Provide your organization’s comments on the proposed enhancement to establish a window during which the submitted requests are vying for limited ATC based upon the underlying duration of the supply contract duration of ATC request as described in section 5.1.3:

CalCCA has no comment at this time.

11. Provide your organization’s comments on a wheeling through priority rights holder’s ability to resell the wheeling through scheduling priority as described in section 5.1.3:

CalCCA has no comment at this time.

12. Provide your organization’s comments on the ISO’s proposal to establish a process through which entities seeking to establish wheeling through priority on a long-term basis (longer than 1-year) can do so through submission of a study request and the ability to fund upgrades on the ISO system, including the ability of import (wheel in) requests driving Maximum Import Capability (MIC) upgrades as described in section 5.1.4:

CalCCA has no comment at this time.

13. Provide your organization’s comments on compensation for wheeling through scheduling priority, as described in section 5.1.5, along with any suggestions your organization may have regarding other potential ways to assess transmission charges for high priority wheeling through transactions:

CalCCA has no comment at this time.

14. Provide your organization’s comments on the proposed WEIM decisional classification, as described in section 6:

CalCCA has no comment at this time.

15. Provide any additional comments on the Transmission Service and Market Scheduling Priorities Phase 2 straw proposal and August 11, 2022 stakeholder call discussion:

CalCCA has no comment at this time.

BEFORE THE PUBLIC UTILITIES COMMISSION

OF THE STATE OF CALIFORNIA
Application of Pacific Gas and Electric
Company for Approval of 2024-2031
Energy Efficiency Business Plan and 2024-
2027 Portfolio Plan. (U 39 M)
Application 22-02-005
(Filed February 15, 2022)
And Related Matters.

Application 22-03-003
Application 22-03-004
Application 22-03-005
Application 22-03-007
Application 22-03-008
Application 22-03-011
Application 22-03-012
(Consolidated)

OPENING COMMENTS OF MARIN CLEAN ENERGY ON ADMINISTRATIVE LAW JUDGE’S RULING INVITING COMMENTS ON STAFF PROPOSAL FOR GAS

ENERGY EFFICIENCY INCENTIVES AND CODES AND STANDARDS SUB-PROGRAMS AND BUDGETS Mad Stano
Policy Counsel
Marin Clean Energy
1125 Tamalpais Avenue
San Rafael, CA 94901
Telephone: (415) 464-6024
E-Mail: [email protected]
September 23, 2022
1 BEFORE THE PUBLIC UTILITIES COMMISSION

OF THE STATE OF CALIFORNIA
Application of Pacific Gas and Electric
Company for Approval of 2024-2031
Energy Efficiency Business Plan and 2024-
2027 Portfolio Plan. (U 39 M)
Application 22-02-005
(Filed February 15, 2022)
And Related Matters.

Application 22-03-003
Application 22-03-004
Application 22-03-005
Application 22-03-007
Application 22-03-008
Application 22-03-011
Application 22-03-012
(Consolidated)

OPENING COMMENTS OF MARIN CLEAN ENERGY ON ADMINISTRATIVE LAW JUDGE’S RULING INVITING COMMENTS ON STAFF PROPOSAL FOR GAS

ENERGY EFFICIENCY INCENTIVES AND CODES AND STANDARDS SUB-PROGRAMS AND BUDGETS

1. Introduction
Pursuant to Rule 6.2 of the California Public Utilities Commission (“Commission,” or “CPUC”) Rules of Practice and Procedure, Marin Clean Energy (“MCE”) submits the following opening comments on Administrative Law Judge’s Ruling Inviting Comments on Staff Proposal for Gas Energy Efficiency Incentives and Codes and Standards Sub-Programs and Budgets1issued on August 2, 2022, Email Ruling Extending Due Dates for Comments to August 2, 2022 Ruling and Providing Notice of Corrections to Staff Proposal issued on August 18, 2022 and E-mail Ruling Extending Due Dates for Comments to August 2, 2022 Ruling issued on September 8, 2022. 1 Referred to in this document as “Staff Proposal.”
2 MCE participated in the workshop to discuss the Staff Proposal on August 26, 2022. MCE specifically offers: (1) strong support for eliminating fossil fuels; (2) additional criteria to strengthen the Staff Proposal, public health impacts of natural gas measures in energy efficiency (“EE”), equity considerations, other relevant decarbonization proceedings; and (3) recommendations to ensure meaningful progress on Environmental and Social Justice Action Plan2 (“ESJ Action Plan”) goals.

MCE strongly supports the goals of the Staff Proposal “to decarbonize the electric sector” and ensure ratepayer funded EE programs help California achieve its climate mandates. 3 MCE
thanks the Commission for its commitment to decarbonization outlined in its Staff Proposal and the opportunity to collaborate with stakeholders on its refinement. MCE additionally recognizes and appreciates the leadership of the Sierra Club filing its Motion to Prohibit Energy Efficiency Funding for Non-Cost-Effective Gas Appliance Measures (“Motion”). 4 Sierra Club’s motion
thoroughly documents several reasons for ratepayer EE programs to transition away from natural gas incentives and strategies to improve building decarbonization.

2. MCE Supports Greater Promotion of Electrification and Decarbonization in Energy Efficiency Programs
MCE’s mission to eliminate fossil fuel greenhouse gas emissions and create equitable community benefits informs its EE programs and comments on the Staff Proposal. MCE identified “support[ing] electrification and decarbonization efforts” as an overarching strategy for its Application of Marin Clean Energy for Approval of 20024-2031 Energy Efficiency Business Plan 2 See Cal. Pub. Util. Comm’n, Environmental and Social Justice Action Plan version 2.0 (April, 2022), available at: https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/news-and-outreach/documents/news-office/key-issues/esj/esj-action-plan-v2jw.pdf. 3 Staff Proposal at 1.
4 Filed on January 13, 2022, in R.13-11-005.
3 and 2024-2027 Energy Efficiency Portfolio Plan (“Application”).5 MCE designed its Application to “scale the impact of its EE programming and support California’s decarbonization goals.”6 For example, “MCE supports building electrification in its WE&T program,7 Strategic Energy Management (SEM) programming and by layering electrification programs available to customers through its ‘Any Open Door’ strategy across proposed programs.” 8 MCE specifically tailored its
electrification and decarbonization strategies to help redress and identify barriers to electrification for “Equity customers”
9 and in the EE workforce.10 MCE intentionally limited its inclusion of non-exempt gas measures11 in its Application. MCE proposed an estimated total dollar amount of $224,600 for combustible natural gas measures which constitutes 0.29 percent of MCE’s total portfolio budget and 1.16 percent of MCE’s total proposed Equity segment budget. However, outlining the full depth and breadth of potential impacts of this proposal on MCE’s Application and customers requires additional time and information from the Commission.

MCE agrees with the Staff Proposal and Sierra Club’s motion that ratepayer funded EE programs must transition away from natural gas incentives. The Commission must not question whether it should transition EE programming away from natural gas, but rather how. This Staff Proposal should be strengthened to ensure all ratepayers who fund EE, especially Equity customers, may benefit from and be protected through the transition. The how must be a detailed, 5 Application at 8.
6 Application at 2.
7 Workforce, Education & Training Program.
8 Application at 6.
9 MCE refers to all categories of customers eligible for its proposed Equity segment programs using the umbrella term “Equity customers.” See Application, Exhibit 2, Chapter 3, Section 4.2.

MCE defines “Equity customers” as residential customers and businesses in ESJ communities.” “ESJ communities” defined by the Commission’s ESJ Action Plan (2019) with the additional income modifier[.]”
10 Application at 10-12.
11 Staff Proposal at 11 (defining “Exempt measures”).
4 actionable, sustainable, affordable, safe, regionally specific and equitable pathway to building decarbonization. As a Program Administrator (“PA”), MCE has piloted various strategies and programs to promote electrification like its Low-Income Families and Tenants Pilot.12 MCE’s administration experiences13 inform its commitment to adding additional specificity to the Staff Proposal with stakeholders.

MCE offers recommendations to strengthen the Staff Proposal including:
• Greater community engagement and workshops on potential barriers and solutions to electrification measures in EE portfolio programs prioritizing ESJ communities consistent with ESJ Action Plan Goal 5.14
• Piloting varied approaches to eliminating gas incentives and building decarbonization investments. In piloting approaches, prioritize Equity customers and communities that face barriers to electrification.15
12 DNV, MCE Low-Income Families and Tenants Pilot Program Evaluation (August 2022), available at:
https://pda.energydataweb.com/api/downloads/2529/MCE_LIFT_Final%20EMV%20Report_Au gust2021.pdf at 34 (discussion of electrification barriers and mitigation strategies for low-income multi-family households). 13 “In 2018, MCE launched our Low-Income Families and Tenants (LIFT) Pilot Program to reduce the energy burden and improve the quality of life for residents in income-qualified multifamily properties. The program offers energy efficiency, electrification, and upgrades for health, safety, and comfort…The 680 qualifying households received upgrades such as switching natural gas and propane heating equipment to high-efficiency electric heat pumps. Participants saved over 7,800 kilowatt-hours and decarbonized energy loads from space and water heating.” MCE, Program Plug-in: Energy Efficiency for Low-Income Families and Tenants (May 2022), available at: https://www.mcecleanenergy.org/mce-news/program-plug-in-energy-efficiency-for-low-income-families-and-tenants/. 14 “Enhance Outreach and Public Participation Opportunities for ESJ Communities to Meaningfully Participate in the CPUC’s Decision-Making Process and Benefit from CPUC Programs.”
15 BEEP Coalition, Community Priorities for Equitable Building Decarbonization Report (March 2022), available at: https://ww2.arb.ca.gov/sites/default/files/2022- 03/BEEP%20Letter%20and%20Report_Equitable%20Decarb%20March%202022.pdf at 8 5 • Requiring judicious electrification and natural gas incentive phaseout specific reporting that documents the non-energy benefits (“NEBs”) and affordability impacts of varied EE program administration approaches.16 The Commission should comprehensively review existing portfolio metrics and consider eliminating or limiting metrics with potentially less relevance under the Staff Proposal. This will allow the Commission to mitigate any associated risks or unintended burdens of certain phase out approaches in addition to scaling successful strategies for greater cost-effective benefits. • Identifying resources and requiring PAs dedicate resources for enhanced and culturally specific technical assistance and education on electrification measures. 17 • Guidance and flexibility on program integration. There are many complementary incentives in California18 and federally19 that can provide electrification and (recommending piloting decarbonization approaches, strategies, considerations and requirements).
16 The Disadvantaged Communities Advisory Group, Re: Comment on Energy Efficiency Business Plan Application Equity Segment (August 2022), available at:
https://efiling.energy.ca.gov/GetDocument.aspx?tn=245162 at 1 (“The Energy Efficiency Business Plans, Related Metrics and Cost-Effectiveness Tests Must Include an Adequate Consideration of Non-Energy Benefits”).
17 See D.18-12-015 at 81-85 (outlining the need and function of a “Community Energy Navigator” community-based technical assistant for decarbonization pilot projects as a “key to the success of the pilot”).
18 NRDC, $1.4B for Climate-Resilient CA Homes, Schools, Communities (September 2022), available at: https://www.nrdc.org/experts/merrian-borgeson/ca-budget-climate-resilient-homes-schoolscommunities#:~:text=With%20the%20funds%20allocated%20in,income%20families%2 0and%20disadvantaged%20communities (detailing additional building decarbonization funding sources approved in FY 2022-2023 budget).
19 Fast Company, 650,000 efficient houses and 7.2 million free heat pumps: How the Inflation Reduction Act will impact U.S. homes (September 2022), available at:
https://www.fastcompany.com/90783677/650000-efficient-houses-and-7-2-million-free-heat-pumps-how-the-inflation-reduction-act-will-impact-u-s-homes (“The details of the rebate programs still need to be ironed out at the state level, and it could take one to two years before those incentives are available to homeowners and builders. The tax credits, which expand already existing programs, will be available January 1, allowing homeowners to get heat 6 decarbonization related resources. However, the coordination of those programs, the eligibility requirements, the timelines, the spending restrictions, the administrative burdens and the permissible measures vary tremendously. Identifying programs to layer, analyzing eligibility requirements, reorganizing programs to layer incentives, and adopting potential necessary changes to EE portfolio rules requires additional time, research and discussion.

MCE offers these recommendations in a good faith effort to support achieving the goals of the Staff Proposal—phasing out natural gas incentives in EE portfolio programs. MCE hopes to collaborate on next steps with the Commission, parties and other stakeholders absent from this proceeding who stand to be impacted. As the Building Energy, Equity and Power (“BEEP”) Coalition stated in their Community Priorities for Equitable Building Decarbonization Report:
“We believe that there is not a one-size-fits-all solution to decarbonization and electrification efforts must be more than just replacing appliances. We are looking for holistic and equitable solutions that include emissions reductions, meaningful building improvements and protections for residents. The BEEP Coalition is calling for an intersectional approach that prevents further harm and ensures our communities benefit through increased resiliency.” 20 3. Administrative Law Judge’s Ruling Questions

1. Are there additional criteria that should be taken into account in the staff proposal? Yes, the Commission should consider and conduct greater analysis on:
• Forecasted bill impacts for Equity customers.
• Identifying potential barriers to electrification by customer class and program segment.
pumps and other energy-saving devices installed for less than half of what they would cost today.”).
20 BEEP Coalition, Community Priorities for Equitable Building Decarbonization Report (March 2022), available at: https://ww2.arb.ca.gov/sites/default/files/2022- 03/BEEP%20Letter%20and%20Report_Equitable%20Decarb%20March%202022.pdf at 1. 7 • The time and resources required for decarbonization focused technical assistance and community engagement.
• The total cost of infrastructure upgrades21 required for electrification upgrades for Equity customers.
• The availability, timelines, eligibility requirements and qualifying measures for external decarbonization and electrification funding sources. • Forecasted ability of PAs to meaningfully serve all customers especially Equity segment customers.
b. What other information should be taken into account in supporting the claim that there are adverse public health impacts from natural gas appliances? There are numerous studies documenting the varied, serious and disproportionate public health impacts of natural gas appliances in California and across the United States. MCE offers the following studies recognizing many additional studies provide valuable documentation as well:
• Effects of Residential Gas Appliances on Indoor and Outdoor Air Quality and Public Health in California.
22 • Health Effects from Gas Stove Pollution.
23 21 Staff Proposal at 15.
22 UCLA Fielding School of Public Health Department of Environmental Health Sciences (April 2020), available at: https://coeh.ph.ucla.edu/effects-of-residential-gas-appliances-on-indoor-and-outdoor-air-quality-and-public-health-in-california/. 23 RMI (2020), available at: https://drive.google.com/file/d/14gOwnrhanMdrQJpb-qWnTh9FU74qKppt/view. 8 • Results of the California Healthy Homes Indoor Air Quality Study of 2011–2013: Impact of Natural Gas Appliances on Air Pollutant Concentrations. 24 • California Air Resources Board (“CARB”) Draft Scoping Plan 2022: Appendix F Building Decarbonization.25
• MCE Low-Income Families and Tenants Pilot Program Evaluation. 26 The severity of these health impacts and their inequitable distribution in ESJ communities only emphasizes the need for the Commission to holistically outline and ensure its decarbonization efforts materially improve health and safety conditions for participants.27 Not all decarbonization efforts meaningfully or equally improve health conditions for participants.

Different behavioral decisions, infrastructure barriers and individual measures can significantly impact potential health improvements resulting in varied outcomes. For example, a largely uninsulated household will reduce the efficiency of heating appliances. Some households may also require significant retrofitting resources to use electrification appliances not presently available in the EE portfolio or lack the supportive infrastructure for some electrification 24 Mullen, N. A., J. Li, M.L. Russell, M. Spears, B.D. Less, and B.C. Singer, Indoor Air Volume 26 (2016), available at: https://onlinelibrary.wiley.com/doi/10.1111/ina.12190 at 231-245. 25 Available at: https://ww2.arb.ca.gov/sites/default/files/2022-05/2022-draft-sp-appendix-f-building-decarbonization.pdf. 26 DNV (August 2022), available at:
https://pda.energydataweb.com/api/downloads/2529/MCE_LIFT_Final%20EMV%20Report_Au gust2021.pdf at 5, 29-30 (documenting beneficial health, safety and comfort impacts of fuel-switching and electric heat pump measures). 27 BEEP Coalition, Community Priorities for Equitable Building Decarbonization Report at 3 (“Concern: Many homes and apartments simultaneously need energy efficiency upgrades and other upgrades to accommodate building decarbonization technologies and to ensure cost savings after a project is completed. Recommendation: Take a holistic approach to building decarbonization policy and program design by packaging it with energy efficiency, indoor habitability, and resiliency measures; and expand critical programs that offer energy efficiency and solar PV at no cost.”).
9 technologies like a broadband service provider.28 These households facing significant barriers could presently be functionally ineligible for EE electrification measures and experience worse health outcomes because of their ineligibility.29
Additionally, decarbonization efforts that fail to protect low-income customers from potential and avoidable damaging bill impacts can increase disconnection risks during an existing affordability crisis30 which produces many negative health impacts.31 EE programs provide valuable health and safety benefits to participants. A pathway to decarbonization that could result in limiting or excluding some customers from receiving meaningful or parity of EE services risks negative health impacts as well. MCE recommends the Commission add additional record via comments, workshops or public participation hearings on decarbonization health impacts and guidance to ensure EE services deliver on the promise of improved health outcomes from greater decarbonization of portfolio programs.
28 CPUC, Broadband Mapping Program (2022), available at: https://www.cpuc.ca.gov/industries-and-topics/internet-and-phone/broadband-mapping-program (documenting the many communities across California that lack access to broadband internet services). 29 See California Air Resources Board, Draft Scoping Plan: Appendix F – Building Decarbonization (2022), available at: https://ww2.arb.ca.gov/sites/default/files/2022-05/2022- draft-sp-appendix-f-building-decarbonization.pdf at 35 (discussing low-income residents are more likely to live in older buildings in need of greater health and safety upgrades to be eligible for some existing decarbonization incentive programs and therefor end up eliminating the greatest possible health benefits of those programs to potential participants with the greatest health needs).
30 CPUC, Utility Costs and the Grid of the Future: An Evaluation of Electric Costs, Rates, and Equity Issues Pursuant to P.U. Code Section 913.1 (May 2021), available at:
https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/office-of-governmental-affairs-division/reports/2021/senate-bill-695-report-2021-and-en-banc-whitepaper_final_04302021.pdf. 31 The Utility Reform Network, Living Without Power: Health Impacts of Utility Disconnections in California (2018), available at: http://www.turn.org/wp-content/uploads/2018/05/2018_TURN_Shut-Off-Report_FINAL.pdf. 10 6. Do gas appliances serve a market support and/or equity function given the state’s goals and progress towards electrification?
In advancing the Staff Proposal, the Commission must ensure all Equity customers may benefit from equity programs in a manner leading to “increased comfort and safety, improved indoor air quality, and more affordable utility bills, consistent with Goals 1, 2, and 5 in the ESJ Action Plan.”32 The salient question for the Commission to consider is how to ensure Equity customers will benefit and not experience harmful burdens from varied decarbonization approaches replacing natural gas appliances. This requires forecasting bill impacts33 and NEBs impacts of measure changes in addition to identifying and potentially authorizing necessary program design changes for the portfolios to ensure participants benefit. The bill impacts alone from electrification efforts depend on the characteristics of buildings, types and models of appliances, customer behavior and preferences, climate variation and more.34 These outcomes cannot and should not be left to chance because the risks of failure may significantly harm the wellbeing of participants in violation of the Commission’s goal and requirements for the Equity segment. The Equity segment supports programs with the “primary purpose” of providing the benefits of EE to customers facing historic access barriers.35 The need for the Equity segment is because conventional market-focused EE programs that overemphasized non-equity specific criteria like traditional cost-effectiveness tests36 failed to 32 D. 21-05-031 at 14-15.
33 A noted data gap in the Staff Proposal at 16-17 (“More information is necessary to understand the bill impact of electrification.”).
34 Navigant Consulting, Inc, Impacts of Residential Appliance Electrification: California Building Industry Association (2018), available at:
https://drive.google.com/file/d/14cFig3V_G_scSpSJggrI2RcXFhbgx593/view at 14. 35 D. 21-05-031 at 14-15.
36 D.21-05-031 at 15 (discussing the need to remove cost-effectiveness requirements from Equity customers).
11 serve or benefit a subset of paying ratepayers. The Commission should not replicate old barriers by failing to thoughtfully outline pathways to successful implementation of the Staff Proposal.

The Commission should consider and incorporate the robust set of equity focused building decarbonization program design and policy recommendations in California. These resources include, but are not limited to:
• California’s Gas System in Transition;
37 • Equitable Building Electrification: A Framework for Powering Resilient Communities;
38 • Community Priorities for Equitable Building Decarbonization Report; 39 • San Joaquin Valley Affordable Energy Pilots.
40 MCE recommends the Commission hold additional workshops and or public participation hearings to discuss potential impacts of the Staff Proposal on the Equity segment specifically and 37 Gridworks (2019), available at: https://gridworks.org/wp-content/uploads/2019/09/GW_Calif-Gas-System-report-1.pdf at 2-4 (detailing recommendations on bill protections, renter protections, one-stop-shop for low-income households, prioritizing resources to transition low-income and disadvantaged communities etc). 38 The Greenlining Institute (2019), available at: https://greenlining.org/wp-content/uploads/2019/10/Greenlining_EquitableElectrification_Report_2019_WEB.pdf (proposing a five step process to support equitable building electrification programs and projects).
39 BEEP Coalition (March 2022), available at: https://ww2.arb.ca.gov/sites/default/files/2022- 03/BEEP%20Letter%20and%20Report_Equitable%20Decarb%20March%202022.pdf (including recommendations to ensure bill savings, community-led education on building decarbonization, focused on affordable housing, workforce development, non-energy benefits and holistic upgrades for health, safety and resiliency). 40 D.18-12-015 at 4 (listing elements required for each pilot project to ensure ESJ participants benefit including a community-based community energy navigator, methods to ensure reduced energy costs, “…specific pilot elements on workforce development, training and education, appliance warranties, and bulk purchasing. It directs use of property owner and tenant agreements to address split-incentive challenges. It directs quarterly reporting starting in 2020 on remediation costs and needs in the communities and on pre- and post- pilot implementation bill impacts, and annual reporting on progress of the pilots more generally.” 12 strategies to ensure intended customers may benefit. MCE further recommends the Commission collaborate with the California Energy Efficiency Coordinating Committee to conduct additional and targeted outreach to equity stakeholders for these activities. One of the key principles of environmental justice is “self-determination”41 and the Commission can benefit from the expertise of those who stand to be directly impacted. MCE also notes the need to include a discussion of the required Equity segment metrics. Given the number of factual uncertainties related to potential implementation of the Staff Proposal, the Commission needs metrics specifically designed to evaluate the related impacts, successes, and areas for improvement.

8. What other options should the Commission examine for promoting electrification through the staff proposal, beyond redirecting incentives from gas measures? The Commission should examine targeted pilot projects and programs in ESJ communities and communities that face significant barriers to electrification. These pilots must include meaningful community engagement, technical assistance to participants,42 specific resources to support overcoming the varied barriers to electrification, consideration of protections for renters at greater risk of displacement from electrification investments, and NEBs metrics.43 MCE supports a regional pilots to ensure the CPUC may serve the diverse needs of different geographic regions, “There are no two regions in California that experience energy the 41 First National People of Color Environmental Leadership Summit, The Principles of Environmental Justice (1991), available at: http://lvejo.org/wp-content/uploads/2015/04/ej-jemez-principles.pdf (Principle 5: “Environmental Justice affirms the fundamental right to political, economic, cultural and environmental self-determination of all peoples.”). 42 See e.g. “Community Energy Navigator” role in D.18-12-015 at 80-85 (“We recognize that the CEN component will be key to the success of the pilot and we direct all pilot administrators and the third-party PA/PI to offer this service in all pilot communities.”). 43 Gridworks, California’s Gas System in Transition: Equitable, Affordable, Decarbonized and Smaller (2019), available at: https://gridworks.org/wp-content/uploads/2019/09/GW_Calif-Gas-System-report-1.pdf at 3. 13 same way, so our approach to transitioning our energy system needs to create space for local leadership and community-based pilots.”
44 10. How does the transition and timeline to phase out energy efficiency gas incentives align with other related proceedings?
The Commission should review the records, program rules and reporting from several of its related proceedings including, but not limited to:
• Order Instituting Rulemaking to Identify Disadvantaged Communities in the San Joaquin Valley and Analyze Economically Feasible Options to Increase Access to Affordable Energy in those Disadvantaged Communities: R.15-03-010; • Order Instituting Rulemaking to Establish a Framework and Processes for Assessing the Affordability of Utility Service: R.18-07-006;
• The Mobilehome Park Utility Upgrade Program (“MHP”) and Mobilehome Utility Conversion Program (“MHP-UCP”): R.11-02-018, R.18-04-018; • Order Instituting Rulemaking to Establish Policies, Processes, and Rules to Ensure Safe and Reliable Gas Systems in California and perform Long-Term Gas System Planning:

R.20-01-007;
• Self-Generation Incentive Program45 (“SGIP”);
• Technology and Equipment for Clean Heating46 (“TECH’); The Commission should conduct inter-agency coordination with the California Air Resources Board (“CARB”) and the California Energy Commission (“CEC”) on the following studies, proceedings, initiatives and programs:
44 BEEP, Community Priorities for Equitable Building Decarbonization Report at 1. 45 D.22-04-036 (establishing heat pump water heater program requirements). 46 https://energy-solution.com/tech/.
14 • CARB: Equitable Building Decarbonization Study,47 Draft 2022 Scoping Plan. 48 • CEC: Equitable Building Decarbonization Program,
49 Building Decarbonization and
Electric Vehicle Charging One Stop Shop,50 the Building Initiative for Low-Emissions Development Program (“BUILD”). 51 11. How does the transition to phase out energy efficiency gas incentives align with the nine objectives of the CPUC’s Environmental and Social Justice Action Plan? MCE offers recommendations to the Staff Proposal to advance ESJ Action Plan goals 1, 2, 5, and 9. As stated throughout these comments, the Staff Proposal requires additional direction to ensure meaningful progress on ESJ Action Plan goals and to avoid potential unintended harmful consequences to ESJ customers and communities.

Goal 1: Consistently Integrate Equity and Access Considerations Throughout CPUC Regulatory Activities.

MCE recommends the Staff Proposal:
• Fully analyze and document potential equity impacts and Equity segment impacts. • Develop specific policy recommendations and guidance to mitigate any potential negative impacts and maximize potential equity benefits. 47 https://ww2.arb.ca.gov/our-work/programs/sustainable-communities-program/research-solicitations/equitable-building-decarb-approaches. 48 Appendix F – Building Decarbonization (2022), available at:
https://ww2.arb.ca.gov/sites/default/files/2022-05/2022-draft-sp-appendix-f-building-decarbonization.pdf. 49 Approved in the FY 2022-2023 California State Budget. LAO, Clean Energy Package (2022), available at: https://lao.ca.gov/Publications/Report/4554. 50 https://www.energy.ca.gov/event/workshop/2022-08/staff-workshop-building-decarbonization-and-electric-vehicle-charging. 51 https://www.energy.ca.gov/programs-and-topics/programs/building-initiative-low-emissions-development-program. 15 Goal 2: Increase Investment in Clean Energy Resources to Benefit ESJ Communities, Especially to Improve Local Air Quality and Public Health.

MCE recommends the Staff Proposal:
• Conduct additional workshops with an ESJ focus to identify any barriers and generate policy recommendations to ensure beneficial investments in ESJ communities. • Document the implementation paths to overcoming potential barriers and serving ESJ and Equity segment customers.
• Develop specific equity protections or program rule changes to ensure ESJ and Equity segment customers may meaningfully benefit from EE programs.

Goal 5: Enhance Outreach and Public Participation Opportunities for ESJ Communities to Meaningfully Participate in the CPUC’s Decision-Making Process and Benefit from CPUC Programs.

MCE recommends the Staff Proposal:
• Conduct additional outreach with ESJ and equity stakeholders on the Staff Proposal including, but not limited to ESJ and equity rooted community-based organizations. • Provide public opportunities for ESJ and equity stakeholders, including those who may not be a party to this proceeding, to offer feedback and recommendations. • Discuss ESJ decarbonization and electrification education and technical assistance guidance for EE programs.

Goal 9: Monitor the CPUC’s Environmental and Social Justice Efforts to Evaluate How they are Achieving their Objectives.
16 MCE recommends the Staff Proposal:
• Include guidance on updated decarbonization metrics specifically designed to evaluate the related equity impacts, successes, and areas for improvement. These metrics include affordability impacts, health, safety and comfort and additional NEBs.

4. Conclusion
MCE thanks Energy Division staff and the Sierra Club for the bold Staff Proposal. MCE additionally thanks Commissioner Shiroma, Administrative Law Judge Fitch and Administrative Law Judge Kao for the opportunity to share its perspectives and recommendations. MCE looks forward to working with the Commission, parties, and other stakeholders to advance an actionable and equitable phase out of EE natural gas incentives.

Respectfully submitted,
By: /s/ Mad Stano_______________
Mad Stano
Policy Counsel
Marin Clean Energy
1125 Tamalpais Avenue
San Rafael, CA 94901
Telephone: (415) 464-6024
E-Mail: [email protected]
DATED: September 23, 2022

BEFORE THE PUBLIC UTILITIES COMMISSION

OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking to Continue
Electric Integrated Resource Planning and
Related Procurement Processes.

R.20-05-003
CALIFORNIA COMMUNITY CHOICE ASSOCIATION’S
COMMENTS ON SECTION 2 OF THE ADMINISTRATIVE LAW JUDGE’S

RULING SEEKING COMMENTS ON POTENTIAL NEAR-TERM ACTIONS TO

ENCOURAGE ADDITIONAL PROCUREMENT
Evelyn Kahl,
General Counsel and Director of Policy
Leanne Bober,
Senior Counsel

CALIFORNIA COMMUNITY CHOICE

ASSOCIATION
One Concord Center
2300 Clayton Road, Suite 1150
Concord, CA 94520
Telephone: (415) 254-5454
E-mail: [email protected]
September 26, 2022
FILED
09/26/22
04:12 PM
R2005003
i

TABLE OF CONTENTS
I. INTRODUCTION ...............................................................................................................1 II. RESPONSES TO QUESTIONS IN SECTION 2.1 OF THE RULING ..............................3

1. For LSEs: Identify resources and their capacity amounts that were listed in the D.19-11-016 baseline but that are not yet online............................................................................................................3

2. Describe why you support or oppose the proposal described in Section 2 above to modify the approach to “baseline” for purposes of procurement in compliance with D.19-11-016 and D.21-06-035 requirements to be based on actual online date for new resources. If you prefer a different change to D.19-11-016 and/or D.21-06-035 baseline requirements, describe it in detail. ................3

3. Are there other modifications to prior decisions that the Commission should make to facilitate continued procurement by LSEs subject to the IRP process and the requirements of D.19-11-016 and D.21-06-035? If so, describe your proposal in detail. ............................................................................................................3 III. PREEMPTIVE SOLUTIONS WILL ENSURE PROJECTS REMAIN

VIABLE AND ADDITIONAL PROCUREMENT REMAINS FEASIBLE

DESPITE CHALLENGING MARKET CONDITIONS AND PROJECT
DELAYS ..............................................................................................................................3 A. The Factors to be Considered in Assessing Penalties Should be Clarified and the Potential for Penalty Waivers Strengthened to Provide Greater Certainty to Market Participants ....................................................4

1. The Uncertainties Regarding MTR Penalties and Waivers Impact Market Transactions ........................................................................4

2. In Considering the Totality of the Circumstances in Assessing MTR Penalties or Waivers, the Commission Should Recognize the Impact on LSEs of Potential Multiple Layers of Penalties Under the IRP, RA and RPS Regulatory Programs .....................................6

3. The Commission Should Provide Clarity on Backstop
Procurement .................................................................................................8

4. The Commission Should Clarify How Net CONE Is Calculated for Purposes of MTR Penalties Given Modifications to the Avoid Cost Calculator..................................................................................8 ii

TABLE OF CONTENTS
(Continued)
B. The Commission Should Clarify that LSEs can Trade Compliance Obligations ...............................................................................................................9 C. Projects Without a CAISO Deliverability Study Should Temporarily Count Toward MTR Requirements .......................................................................10 IV. CONCLUSION ..................................................................................................................12 iii

TABLE OF AUTHORITIES
Page
California Public Utilities Commission Decisions
D.14-12-023 .................................................................................................................................... 8 D.20-04-010 .................................................................................................................................... 9 D.21-12-015 ............................................................................................................................ 11, 12 California Public Utilities Commission Proceedings
R.11-05-005 .................................................................................................................................... 8 R.20-05-003 .................................................................................................................................... 1 Other
Resolution M-4846 ................................................................................................................. 4, 5, 6 p
iv

SUMMARY OF RECOMMENDATIONS
CalCCA takes no position on the Ruling’s proposal on reframing of the “baseline” resources. However, the following alternative solutions are provided in response to the Ruling Section 2.1, Question 3, to ensure projects remain viable and additional procurement remains feasible despite challenging market conditions and project delays:
• The factors to be considered by the Commission in assessing penalties should be clarified and the potential for penalty waivers strengthened to provide greater certainty to market participants;
• The Commission should clarify requirements concerning MTR backstop procurement and the calculation of net CONE for MTR penalties;
• The Commission should clarify that LSEs can trade compliance obligations to encourage LSEs to collectively meet procurement mandates; and
• Projects without a CAISO deliverability study should temporarily count toward MTR requirements under certain conditions.

BEFORE THE PUBLIC UTILITIES COMMISSION

OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking to Continue
Electric Integrated Resource Planning and
Related Procurement Processes.

R.20-05-003
CALIFORNIA COMMUNITY CHOICE ASSOCIATION’S
COMMENTS ON SECTION 2 OF THE ADMINISTRATIVE LAW JUDGE’S

RULING SEEKING COMMENTS ON POTENTIAL NEAR-TERM ACTIONS TO

ENCOURAGE ADDITIONAL PROCUREMENT
The California Community Choice Association1 (CalCCA) submits these Comments in response to the Administrative Law Judge’s Ruling Seeking Comments on Staff Paper on Procurement Program and Potential Near-Term Actions to Encourage Additional Procurement (Ruling), issued on September 8, 2022. Specifically, the Comments respond to Section 2 of the Ruling seeking input on near-term actions the California Public Utilities Commission (Commission) can take to encourage immediate additional electricity procurement between now and 2026 or beyond, and to ensure that the requirements of Decision (D.) 19-11-0162 and D.21-06-0353 are met.

I. INTRODUCTION
A confluence of events – the COVID pandemic, climate change, governmental investigations and geopolitical conflicts, regulatory and statutory changes, as well as significant supply chain 1 California Community Choice Association represents the interests of 23 community choice electricity providers in California: Apple Valley Choice Energy, Central Coast Community Energy, Clean Energy Alliance, Clean Power Alliance, CleanPowerSF, Desert Community Energy, East Bay Community Energy, Lancaster Choice Energy, Marin Clean Energy, Orange County Power Authority, Peninsula Clean Energy, Pico Rivera Innovative Municipal Energy, Pioneer Community Energy, Pomona Choice Energy, Rancho Mirage Energy Authority, Redwood Coast Energy Authority, San Diego Community Power, San Jacinto Power, San José Clean Energy, Santa Barbara Clean Energy, Silicon Valley Clean Energy, Sonoma Clean Power, and Valley Clean Energy.
2 D.19-11-016, Decision Requiring Electric System Reliability Procurement for 2021-2023, Rulemaking (R.) 16-02-007 (Nov. 7, 2019) (2019 Order).
3 D.21-06-035, Decision Requiring Procurement to Address Mid-Term Reliability (2023-2026), R.20-05-003 (June 24, 2021) (MTR Order).
2 delays – all impact the ability of load serving entities (LSEs), including community choice aggregators (CCAs), to procure sufficient resources to comply with Integrated Resource Planning (IRP) procurement mandates. As noted by the Ruling, LSEs are contracting for resources to comply with the 2019 Order and the MTR Order, but various factors are impacting and delaying actual planned online dates of resources.

Compounding the resulting market constraints, increased prices, and demands of suppliers to renegotiate contractual terms and/or terminate contracts based on claims of force majeure, are potential penalties faced by LSEs for failure to meet MTR compliance obligations. In addition, LSEs face potential additional penalties for failure to meet both resource adequacy (RA) and renewables portfolio standard (RPS) obligations given the project delays. The looming penalties impact the market, and place LSEs in tenuous negotiating positions with suppliers aware of the penalty potential.

CalCCA appreciates the Ruling’s attempts to address the difficulties faced by LSEs in the near-term regarding project delays, as well as the reliability needs of the system overall. CalCCA takes no position on the Ruling proposal to reframe the “baseline” resources. However, the following alternative solutions are provided in response to the Ruling Section 2.1, Question 3 to ensure projects remain viable and additional procurement remains feasible despite the challenging market conditions and resulting project delays:
• The factors to be considered by the Commission in assessing penalties should be clarified and the potential for penalty waivers strengthened to provide greater certainty to market participants;
• The Commission should clarify requirements concerning MTR backstop procurement and the calculation of net cost of new entry (net CONE) for MTR penalties; • The Commission should clarify that LSEs can trade compliance obligations to encourage LSEs to collectively meet procurement mandates; and
3 • Projects without a California Independent System Operator Corporation (CAISO) deliverability study should temporarily count toward MTR requirements under certain conditions.

II. RESPONSES TO QUESTIONS IN SECTION 2.1 OF THE RULING

1. For LSEs: Identify resources and their capacity amounts that were listed in the D.19-11-016 baseline but that are not yet online.

Not applicable to CalCCA.

2. Describe why you support or oppose the proposal described in Section 2 above to modify the approach to “baseline” for purposes of procurement in compliance with D.19-11-016 and D.21-06-035 requirements to be based on actual online date for new resources. If you prefer a different change to D.19-11-016 and/or D.21-06-035 baseline requirements, describe it in detail.

CalCCA takes no position on the proposal described in Section 2 to reframe the “baseline” resources.

3. Are there other modifications to prior decisions that the Commission should make to facilitate continued procurement by LSEs subject to the IRP process and the requirements of D.19-11-016 and D.21-06-035? If so, describe your proposal in detail.

See Section III., below.

III. PREEMPTIVE SOLUTIONS WILL ENSURE PROJECTS REMAIN VIABLE AND

ADDITIONAL PROCUREMENT REMAINS FEASIBLE DESPITE CHALLENGING

MARKET CONDITIONS AND PROJECT DELAYS
Preemptive solutions can be adopted by the Commission to address the current market constraints and potential project delays, and to ensure projects in the pipeline remain viable and additional procurement of resources continues. As set forth below, CalCCA proposes that the Commission institute the following in the near term: (1) clarify the factors to assess penalties and strengthen the potential for waivers under the MTR Order for failure to bring projects online; (2) provide clarity on backstop procurement and the calculation of net CONE for MTR penalties; (3) 4 clarify that LSEs can trade compliance obligations; and (4) allow projects without a CAISO deliverability study to temporarily count toward MTR Requirements under certain conditions.

A. The Factors to be Considered in Assessing Penalties Should be Clarified and the Potential for Penalty Waivers Strengthened to Provide Greater Certainty to Market Participants
The Commission should provide greater certainty and clarification around the potential for penalties and penalty waivers in light of the current difficult market conditions and supply chain constraints. The MTR Order provides for Commission assessment of penalties and potential waivers based on its Resolution M-4846 and consideration of “good faith efforts.”4 However, the identification by the Commission of additional indicators regarding its assessment of penalties and its willingness to waive penalties due to the current exigent circumstances can “calm” the market and level the playing field among suppliers and LSEs. Furthermore, the Commission should consider the potential exposure of LSEs to multiple layers of penalties (in IRP, RA, and RPS) for project delays.

1. The Uncertainties Regarding MTR Penalties and Waivers Impact Market Transactions
The ambiguities built into the MTR Order regarding the potential assessment of penalties and the availability of penalty waivers for missing MTR compliance obligations can impact the negotiating positions of suppliers and LSEs in contracting for resources. Penalty and waiver potential can also impact post-contracting demands by suppliers for renegotiation of contract terms (both pricing and delivery dates) and/or declarations of force majeure for failure to perform under power supply contracts due to market conditions and supply chain delays. Greater certainty, and strengthening the potential for penalty waivers, will therefore “calm” the market and allow market participants to negotiate with additional information regarding potential project costs. 4 Id., Conclusion of Law (COL) 27 at 93.
5 The MTR Order provides that assessment of penalties for non-compliance will “follow the process outlined in Resolution M-4846 and may take into consideration good faith efforts to procure the required capacity.”5 Penalties accrue at the time of backstop procurement (first backstop may occur on December 1, 2023).6
Penalties will be set at “Net-Cost of New Entry (net Cone)” “included in the Avoided Cost Calculator,” assessed once after the June 1, 2025 compliance date for non-compliance with procurement and reporting deadlines throughout 2023-2025.7 Resolution M-4846 includes the Commission Enforcement Policy and a Penalty Assessment Methodology.8 The Enforcement Policy outlines the tools available to Commission Staff to enforce Commission rules and requirements, while maintaining due process for regulated entities. The Enforcement Policy emphasizes ensuring compliance and providing a meaningful deterrent to violations through progressive enforcement and adequate remedies. Remedies include “refunding or depriving the economic benefit gained by noncompliance,” along with penalties “higher than the amounts required to be refunded or deprived.”9 Factors to be considered in the Penalty Assessment Methodology include: (a) severity of the offense (including physical harm or harm to the integrity of the regulatory process); (b) conduct of the utility (including previous violations); (c) financial resources of the regulated entity; (d) totality of the circumstances; and (e) the role of precedent.10 The conduct of the regulated entity includes several factors, including actions taken to detect, prevent, disclose to Commission staff, and rectify a violation.11 Finally, the totality of the circumstances will be considered, including the need to deter further unlawful conduct, consideration 5 Id., COL 27, at 93.
6 Id. at 74.
7 Id., COL 26, at 93.
8 Resolution M-4846 (Nov. 5, 2020).
9 Id., Attachment at 3, Section C, and 4, Section E.
10 Id., Attachment, Section II.C.2. at 3. 11 Id, at Appendix I, Section II. at 17-18. 6 of facts that mitigate or exacerbate the degree of wrongdoing, and consideration of any economic benefit to the regulated entity (and setting the penalty at least 10 percent higher than the benefit amount).12
Resolution M-4846 provides multiple factors for the Commission’s enforcement and assessment of penalties for non-compliance with MTR obligations. The Commission, however, should further clarify the factors that it will consider, and the potential for penalty waivers, in the context of the current situation. The Ruling provides further clues, but does not go far enough, to provide adequate certainty to market participants:

LSEs should also note that, in the event of a failure to meet one or more the required procurement targets, the Commission will carefully evaluate whether an LSE continued to procure to help meet system reliability and GHG needs, even if the procurement is slightly delayed or otherwise does not meet the letter of the decisions’ requirements.13 As a result of the ambiguity surrounding potential penalties for delayed projects, suppliers understand the difficult negotiating position of LSEs. Greater clarity in these difficult market conditions of how the Commission will react to such project delays in terms of penalties and waivers may provide the certainty that the market needs to place both suppliers and LSEs on a level playing field.

2. In Considering the Totality of the Circumstances in Assessing MTR Penalties or Waivers, the Commission Should Recognize the Impact on LSEs of Potential Multiple Layers of Penalties Under the IRP, RA and RPS Regulatory Programs
In considering the totality of the circumstances in assessing MTR penalties or waivers, the Commission should recognize that LSEs procuring under the IRP program may also be procuring the 12 Id. at Appendix I, Section IV. at 19-21.
13 Ruling at 9.
7 same resources for purposes of RA and RPS compliance. While IRP, as well as ongoing monthly and annual RA compliance, are likely more pressing than RPS compliance as the current RPS compliance period extends through 2024 (and penalties will not be assessed until then), the potential for multiple layers of penalties in IRP, RA and RPS also impacts market conditions and the position of LSEs in their attempts to bring projects online.

As stated above, an LSE with delayed projects could face potential penalties under the MTR Order. However, RA penalties also loom over delayed projects. LSEs are subject to monthly and annual requirements to procure System, Flexible and Local RA. If an LSE cures a deficiency within five business days of a notification from Energy Division, it could face penalties of $5,000-$20,000 per incident depending on the MW size of the deficiency and the LSE’s number of deficiencies in the same calendar year. For LSEs failing to cure the deficiency within five business days, an LSE must pay:
• $8.88/kW-month for system RA deficiencies between May-October, and $4.44/kW-month for system RA deficiencies between November and April (with points accruing for multiple violations resulting in potential higher penalties of up to $26.24/kW-month);
• $4.25/kW-month for local RA deficiencies; and
• $3.33/kW-month for flexible RA deficiencies.

In addition, penalty waivers are only available for Local RA if the LSE can demonstrate that it made every commercially reasonable effort to contract for RA resources. Deficient LSEs are still responsible for backstop procurement costs even if they receive a waiver of penalties. In addition to penalties assessed by the Commission, LSEs may also be subject to CAISO backstop charges, at a likely charge at the soft-offer cap of $6.31/kW-month.

The same LSE can also be subject to RPS penalties at the end of the current compliance period (2021-2024) if it fails to meet its RPS compliance requirements as a result of project delays. 8 Penalties will be assessed at a rate of $50 per renewable energy credit out of compliance (subject to cap). Waivers are available under certain circumstances, including permitting delays, interconnection issues, and insufficient supply.14 For example, absent a penalty waiver, if an LSE needs to procure 10,000 MWh of RPS energy and only procures 5,000 MWh, the penalty would equal $250,000.15
Given the multiple penalties that can be assessed from delayed procurement of resources, LSEs face potentially high exposure and costs despite their best efforts to bring resources online.

While considering the “totality of the circumstances” in assessing MTR penalties and waivers, the Commission should therefore consider the potential “layering” of penalties due to the multiple regulatory programs in IRP, RA and RPS.

3. The Commission Should Provide Clarity on Backstop Procurement The Commission should also clarify whether in the event of an order to an IOU to conduct backstop procurement for an LSE deficient on its MTR procurement, such backstop will be required for a full ten-year contract term. In the alternative, will the Commission require backstop only until an LSE can remedy a deficiency? Clarification on this issue will be helpful for LSEs as they navigate through project delays.

4. The Commission Should Clarify How Net CONE Is Calculated for Purposes of MTR Penalties Given Modifications to the Avoid Cost Calculator
The Commission should also clarify how net CONE will be calculated in the event the Commission assesses penalties under the MTR Order. The MTR Order sets the penalty at the level 14 See D.14-12-023, Decision Setting Enforcement Rules for the Renewables Portfolio Standard Program, Implementing Assembly Bill 2187, and Denying Petitions for Modification of Decision 12-06-038, R.11-05-005 (Dec. 4, 2014) at 22 (regarding RPS waiver considerations). 15 See Commission “Frequently Asked Questions” regarding RPS Compliance (June 2020), located at https://www.cpuc.ca.gov/-/media/cpuc-website/industries-and-topics/documents/energy/rps/rps-compliance-faq_2020.pdf 9 of “net CONE,” based on the cost of a new battery storage facility.16 The penalty will be set “at the level of net CONE included in the Avoided Cost Calculator (ACC), after assessing compliance after the June 1, 2025 compliance filing date.”17 The ACC is referred to as the Commission’s ACC “for demand-side resources, which was last updated in D.20-04-010 as part of the integrated distributed energy resource (IDER) proceeding.”18 However, the IDER proceeding has changed the calculation of ACC to use “Real Economic Carrying Charge” (RECC) (including the lifetime costs and revenues of the asset) instead of net CONE (which only considers the first year costs and revenues of a storage asset). The Commission should clarify what level and vintage of net CONE it will use to calculate penalties in 2025.

B. The Commission Should Clarify that LSEs can Trade Compliance Obligations The Commission can further maximize program flexibility and LSE IRP compliance by clarifying that LSE procurement obligations under both the 2019 Order and the MTR Order are “tradable.” Trading excess incremental resources above an LSEs’ procurement requirement is allowed under both D.19-11-016 and MTR.19 However, whether LSEs can trade procurement obligations has not been clarified and can provide another tool for LSEs to balance their positions while collectively still meeting the mandated procurement requirements. 16 MTR Order at 74.
17 Id., COL 26 at 93.
18 Id. at 74.
19 Staff states in “Frequently Asked Questions” regarding D.19-11-016 that the decision “is silent on whether LSEs must directly contract for the resources they procure to meet their incremental resource procurement obligations. Consequently, staff believes that LSEs can use contracts for resources procured from other LSEs to meet their procurement obligations, provided the underlying resource meets the D.19- 11-016 definition of incremental resource (and, of course, provided that the LSE from which the resource was purchased backs the sold portion of the resource out of their own compliance showing.” See “IRP Procurement Track Frequently Asked Questions,” at 1-2, Question 3, located at https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-power-procurement/long-term-procurement-planning/more-information-on-authorizing-procurement/irp-procurement-track. The Commission also states in the MTR Order that “LSEs will continue to have the ability to transact for excess procurement from another LSE, as long as that procurement has not yet been shown for IRP compliance by the first LSE.” MTR Order at 77.
10 If one LSE develops an eligible resource, it can dedicate any portion or any period of the resource commitment to meet the compliance requirement of another LSE. For example, LSE A has a new resource coming online in 2025 for its own compliance obligation and may only need a two-year bridge to its online date. LSE B may have procured resources in excess of its allocated share for 2023-24. Rather than requiring backstop procurement for LSE A who is short for 2023-24, LSE A can transact the 2023-24 share of its procurement obligation to LSE B. In another example, LSE A may invest in a project that exceeds the share of incremental procurement allocated to LSE A. LSE A should be permitted to dedicate any additional “compliance rights” to LSE B which chooses not to invest in a new resource (or who faces project delays), regardless of whether the capacity is actually sold to LSE B.

By encouraging LSEs to work together in this way to trade compliance obligations when some LSEs are long and some LSEs are facing shortages due to project delays, the Commission can ensure the collective obligations are met, and that LSEs avoid penalties to the extent possible.

C. Projects Without a CAISO Deliverability Study Should Temporarily Count Toward MTR Requirements
The Commission should allow projects that have not yet been studied for deliverability, or that are waiting for transmission or interconnection upgrades to be completed to become fully deliverable, to count towards an LSEs’ MTR obligation on a temporary basis. The MTR procurement order requires LSEs to procure fully deliverable projects.20 The CAISO determines projects’ deliverability status through deliverability studies within the interconnection study process. 20 IRP and RA procurement orders require LSEs to meet their obligations with fully deliverable resources. Resources obtain deliverability status through a study performed within the CAISO interconnection study process. If the study finds that a project is not fully deliverable on the existing transmission system and interconnection facilities, transmission system upgrades and/or network upgrades must take place to make the project deliverable. Such upgrades may take many years, and for CCAs often depend on an IOUs’ timing and ability to make those upgrades. CCAs have identified delays in online dates due to both interconnection queue delays as well as IOU interconnection and transmission upgrade delays. 11 The CAISO interconnection queue has, however, received an unprecedented number of project requests, creating an interconnection backlog delaying interconnection of projects.21 The severely backlogged CAISO interconnection study process can take many years. Projects not already in the interconnection queue in the current study cluster will not progress through the queue in time to obtain full deliverability by the first MTR compliance year. These timelines, in conjunction with the other drivers of project delays, give projects already in the queue without contracts the ability to inflate prices because they know LSEs need them to meet the MTR Order.

To expand the pool of resources eligible to meet MTR procurement obligations, projects that have not yet been studied for deliverability should be counted towards the MTR Order on a temporary basis. LSEs that use such projects to meet their MTR compliance obligations will: (1) still be required to meet their RA obligations with deliverable resources; and (2) need to commit to having their resources go through the deliverability study process and obtain deliverability. If, after the project goes through the deliverability study process, the study finds the project is not fully deliverable, LSEs will need to commit to having the network upgrades completed to make the project fully deliverable, or to procuring different resources with sufficient deliverable capacity to meet their MTR compliance obligation. This ensures the LSE continues to meet its RA requirements for immediate grid reliability needs while in the process of bringing online new deliverable resources.

There is precedent for allowing resources that are not fully deliverable to count towards previous procurement orders. In D.21-12-015 within the Emergency Reliability proceeding (R.20- 21 Overall, the project requests in the CAISO interconnection queue total approximately 605 projects and 236,225 MW, exceeding the 2019 Order and MTR Order procurement requirements by 15 times. See CAISO Interconnection Process Enhancements 2021, Phase 2 – Longer Term Enhancements Straw Proposal (June 7, 2022) at 4-5; CAISO Supercluster Interconnection Procedures Final Proposal (June 14, 2021) at 6.
12 11-003), the Commission allowed energy storage projects that are not fully deliverable to fulfill compliance obligations so long as they provide peak and net peak grid reliability benefits.22 The Commission recognized the need for resources to come online in an expedited manner to avoid repetition of the reliability challenges faced in the summer of 2020. California is currently facing the culmination of exigent circumstances resulting in supply chain issues and project delays necessitating the ability to expedite project online dates where possible. To expedite procurement, the Commission should therefore defer the requirement for MTR projects to be fully deliverable.

IV. CONCLUSION
For all the foregoing reasons, CalCCA respectfully requests consideration of the Comments herein and looks forward to an ongoing dialogue with the Commission and stakeholders.

Respectfully submitted,
Evelyn Kahl,
General Counsel and Director of Policy

CALIFORNIA COMMUNITY CHOICE

ASSOCIATION
September 26, 2022
22 D.21-12-015, Phase 2 Decision Directing Pacific Gas and Electric Company, Southern California Edison Company, and San Diego Gas & Electric Company to Take Actions to Prepare for Potential Extreme Weather in the Summers of 2022 and 2023, R.20-11-003 (Dec. 2, 2021), COL 60 at 159.

DOCKETED
Docket Number: 21-OIR-03
Project Title: 2022 Load Management Rulemaking
TN #: 246220
Document Title: California Community Choice Association Comments - on the Proposed Amendments to the Load Management Standards
Description: N/A
Filer: System
Organization: California Community Choice Association
Submitter Role: Public
Submission Date: 9/27/2022 4:28:47 PM
Docketed Date: 9/27/2022
Comment Received From: California Community Choice Association Submitted On: 9/27/2022
Docket Number: 21-OIR-03
on the Proposed Amendments to the Load Management Standards Additional submitted attachment is included below.

STATE OF CALIFORNIA ENERGY RESOURCES CONSERVATION AND

DEVELOPMENT COMMISSION
In the Matter of:
2022 Load Management Rulemaking Docket No. 21-OIR-03
CALIFORNIA COMMUNITY CHOICE ASSOCIATION’S COMMENTS

ON THE PROPOSED AMENDMENTS TO THE LOAD MANAGEMENT
STANDARDS, CALIFORNIA CODE OF REGULATIONS, TITLE 20
(NOTICE OF THIRD 15-DAY PUBLIC COMMENT PERIOD)
Evelyn Kahl
General Counsel and Director of Policy
Leanne Bober
Senior Counsel

CALIFORNIA COMMUNITY CHOICE

ASSOCIATION
One Concord Center
2300 Clayton Road, Suite 1150
Concord, CA 94520
(415) 254-5454
[email protected]
September 27, 2022

STATE OF CALIFORNIA ENERGY RESOURCES CONSERVATION AND

DEVELOPMENT COMMISSION
In the Matter of:
2022 Load Management Rulemaking Docket No. 21-OIR-03
CALIFORNIA COMMUNITY CHOICE ASSOCIATION’S COMMENTS

ON THE PROPOSED AMENDMENTS TO THE LOAD MANAGEMENT
STANDARDS, CALIFORNIA CODE OF REGULATIONS, TITLE 20
(NOTICE OF THIRD 15-DAY PUBLIC COMMENT PERIOD)
The California Community Choice Association1 (CalCCA) submit these Comments pursuant to the Notice of Proposed Action (NOPA) With Proposed Amendments to the Load Management Standards (LMS), California Code of Regulations (CCR), Title 20, Division 2, Chapter 4, Article 5, dated December 24, 2021, and Notice of Third 15-Day Public Period (Third Notice), dated September 12, 2022.

I. INTRODUCTION AND SUMMARY OF RECOMMENDATIONS
CalCCA appreciates the continued efforts of the California Energy Commission (Commission) to address stakeholder concerns with the proposed load management standards (LMS). Revisions to the LMS Regulations in the Third Notice that impact CCAs include: (1) limiting the application of the regulations to “Large CCAs”; (2) allowing CCAs to first seek 1 California Community Choice Association represents the interests of 23 community choice electricity providers in California: Apple Valley Choice Energy, Central Coast Community Energy, Clean Energy Alliance, Clean Power Alliance, CleanPowerSF, Desert Community Energy, East Bay Community Energy, Lancaster Choice Energy, Marin Clean Energy, Orange County Power Authority, Peninsula Clean Energy, Pico Rivera Innovative Municipal Energy, Pioneer Community Energy, Pomona Choice Energy, Rancho Mirage Energy Authority, Redwood Coast Energy Authority, San Diego Community Power, San Jacinto Power, San José Clean Energy, Santa Barbara Clean Energy, Silicon Valley Clean Energy, Sonoma Clean Power, and Valley Clean Energy. 2 approval of their compliance plans, rates and programs from their rate-approving bodies; (3) continuing to require the development and request for approval from CCA rate-approving bodies of the prescribed marginal cost rates, despite allowing CCAs to seek approval from the Commission of rates or programs enabling automated response to marginal cost signals; and (4) providing additional time for LMS compliance for CCAs.

The revised regulations, as well as all prior revisions, fail to remedy the jurisdictional overreach by the Commission mandating that CCAs comply with the LMS. As set forth in CalCCA’s prior comments, the core jurisdictional problem is clear – the Commission has no explicit or implicit authority under the LMS implementing statute, California Public Resources Code section 25403.5, or any other statute, to require CCA participation in the LMS.2 In addition, the LMS, even as revised, infringes on CCA rate autonomy.3 Given these issues, the Commission should either remove CCAs from the application of the LMS regulations, or make CCA participation voluntary.

II. THE PROPOSED CHANGES DO NOT REMEDY THE COMMISSION’S

JURISDICTIONAL OVERREACH AND INFRINGE ON CCA RATE

AUTONOMY
This third round of revisions to the proposed LMS regulations continue to fail to remedy the Commission’s jurisdictional overreach and infringement on CCA rate autonomy. As set forth below, the proposed changes: (1) fail to remedy the jurisdictional overreach by restricting 2 See Comments of the California Community Choice Association to the California Energy Commission on the Draft Staff Report, Docket 19-OIR-01 (June 4, 2021); California Community Choice Association’s Comments on the Proposed Amendments to the Load Management Standards Contained in the California Code of Regulations, Title 20, Docket 21-OIR-03 (Feb. 7, 2022); California Community Choice Association’s Comments on the Proposed Revisions to the Load Management Standards, Docket 21-OIR-03 (Apr. 20, 2022); California Community Choice Association’s Comments on the Proposed Revisions to the Load Management Standards (Notice of Second 15-Day Public Comment Period), Docket 21-OIR-03 (July 21, 2022).
3 See id.
3 the application of the regulations to “Large CCAs”; (2) do not alter the Commission’s ultimate enforcement authority by allowing CCAs to first seek approval of their compliance plans, or rates and programs, from their rate-approving bodies; and (3) continue to infringe on CCA rate autonomy by requiring the development of and application to CCA rate-approving bodies for a prescriptive marginal cost rate, even if the CCA ultimately seeks from the Commission approval of a program instead of a rate.

A. Restricting the Application of the Regulations to “Large CCAs” Does Not Remedy the Commission’s Jurisdictional Overreach
Limiting the application of the regulations to “Large CCAs,” or CCAs that provide in excess of 700 gigawatt-hours of electricity to customers in any calendar year, does not remedy the Commission’s jurisdictional overreach or infringement on CCA rate autonomy. In fact, most CCAs will still fall within the application of the LMS regulations, despite the Commission’s lack of statutory jurisdiction to require CCA participation. As a result, the revision to restrict the application of the LMS to “Large CCAs” fails to remedy the overreach by the Commission.

B. The Commission Retains Ultimate Enforcement Authority Even Though the Revised Regulations Allow CCAs to Seek Initial Approval from Their Rate-Approving Bodies of Compliance Plan and Rates/Programs Despite the revision of the “compliance path” to allow CCAs to seek approval of their plans, rates and programs from their rate-approving body prior to seeking approval from the Commission, the Commission’s ultimate enforcement authority over all parts of the LMS regulations remains intact in section 1623.1(d). Therefore, even if a CCA rate-approving body approves a plan, rate or program, the Commission retains authority to require changes, and the Commission’s Executive Director retains the ability to file a complaint for non-compliance with 4 the Commission, or to seek injunctive relief.4 In all cases, the Commission oversteps its jurisdictional authority and infringes upon the rate autonomy of CCA rate-approving bodies.

C. The Revised Regulations Continue to Infringe on CCA Rate Autonomy by Requiring the Development and Application to CCA Rate-Approving Bodies of a Prescriptive Marginal Cost Rate
The revised LMS regulations continue to infringe on CCA rate autonomy as set forth in CalCCA’s previous comments. The revisions will allow CCAs to offer either marginal cost rates or programs to achieve the goals of the LMS.
5 However, section 1623.1(b)(2) still mandates that:

Within . . . twenty-seven (27) months of the effective date of these regulations each Large CCA, shall apply to its rate-approving body for approval of at least one marginal cost-based rate, that meets the requirements of Subsection 1623.1(b)(1).6
Therefore, CCAs can now offer an approved rate or program to its customers within fifty-one (51) months of the regulations. However, Large CCAs must still develop and apply for approval from its rate approving body of the prescriptive marginal cost-based rate described in section 1623.1(b)(1). Therefore, the revised regulations continue to infringe on the rate authority of CCAs by requiring CCAs to develop and request approval for a rate design prescribed by the Commission.
4 Third Revised LMS Regulations, § 1623.1(d).
5 Section 1621 requires entities subject to the LMS offer rates or programs. In addition, section 1623.1(a)(1)(A) requires a plan to be submitted within one year of the effective date of the regulations, approved by the CCA rate approving body, and then submitted to the Commission for approval. The plan shall “evaluate cost effectiveness, equity, technological feasibility, benefits to the grid, and benefits to customers of marginal cost-based rates for each customer class.” If, after consideration of these factors, a CCA’s plan does not propose development of marginal cost-based rates, section 1623.1(a)(1)(B) requires the plan to “propose programs that enable automated response to marginal cost signal(s) for each customer class and evaluate them based on their cost-effectiveness, equity, technological feasibility, benefits to the grid, and benefits to customers.” (Emphasis supplied) 6 Id., § 1623.1(b)(2) (emphasis supplied).
5 III. LENGTHENING THE TIME FOR CCA COMPLIANCE PROVIDES

FLEXIBILITY IN THE EVENT A CCA VOLUNTARILY PARTICIPATES

IN THE LMS
While for the reasons set forth above and in CalCCA’s previous comments the Commission cannot require CCA participation in the LMS program, the revisions providing additional time for CCAs to comply will provide flexibility in the event a CCA decides to voluntarily participate. As explained in prior CalCCA comments, CCAs cannot implement an hourly locational marginal cost-based rate until the IOUs develop the data and billing systems to incorporate the CCA rate. Therefore, delaying CCA participation until after the IOUs develop their own rates and programs will allow the appropriate systems to be in place to ensure that CCAs can actually implement the LMS provisions if they choose to do so.

IV. CONCLUSION
For the reasons set forth herein and in CalCCA’s previous comments in this proceeding, CalCCA requests that CCAs be removed from the application of the LMS regulations due to the Commission’s lack of jurisdiction to mandate CCA participation. In the alternative, the Commission should make CCA participation voluntary. CalCCA appreciates Commission Staff’s efforts in Docket 21-OIR-03 and looks forward to further collaboration on this topic.

Respectfully submitted,
Evelyn Kahl
General Counsel and Director of Policy

CALIFORNIA COMMUNITY CHOICE

ASSOCIATION
September 27, 2022

OCTOBER FILINGS
California Community Choice Association
SUBMITTED 10/04/2022, 03:27 PM
Contact
Shawn-Dai Linderman ([email protected])

1. GENERAL COMMENTS: Please provide a summary of your organization’s comments on the Extended Day-Ahead Market revised straw proposal:

The California Community Choice Association (CalCCA) appreciates the extensive work by the California Independent System Operator Corporation (CAISO) and stakeholders on the Extended Day-Ahead Market (EDAM) Revised Straw Proposal and the opportunity to comment on the proposal. In summary:
• CalCCA remains concerned about the impacts the imbalance reserve product proposed in the Day-Ahead Market Enhancements (DAME) initiative will have on the California resource adequacy (RA) program;
• CalCCA supports a voluntary EDAM participation model in which all resources within the EDAM balancing authority area (BAA) participate in the market through economic bids or self-schedules;
• CalCCA generally supports EDAM transfers receiving equal priority to load but asks for further consideration around the situation where an economic import into CAISO supports an EDAM transfer out of CAISO;
• CalCCA does not oppose the proposal to give BAA operators the discretion to assign lower priority to EDAM transfers into a BAA that failed the day-ahead resource sufficiency evaluation (RSE) so long as it is reserved for emergency situations and so long as EDAM BAAs and/or their load serving entities (LSEs) have opportunities to cure the RSE deficiency first;
• CalCCA generally supports the concept of transmission “buckets” as a way to frame the discussion around the treatment of different types of transmission; • CalCCA supports the CAISO’s proposal to automatically make bucket 2 transmission not scheduled by 10:00 a.m. available to the EDAM for optimization through the market;
• The CAISO should not make costs associated with new transmission build eligible for transmission revenue recovery;
• CalCCA supports the RSE framework that would conduct the binding EDAM RSE at 10:00 a.m. prior to running the day-ahead market with the ability to conduct advisory runs prior to the binding run;
• CalCCA supports the proposal to not include transmission constraints within the EDAM RSE and monitor the results of the EDAM RSE at the onset of EDAM; • CalCCA supports the ability to count WSPP Schedule-C contracts and import bids at the CAISO BAA border in the RSE;
• The curing process to resolve an RSE shortfall in the CAISO BAA requires further development given the BAA is not the LSE and multiple LSEs are contributing towards meeting the resource sufficiency evaluation; • CalCCA supports including BAAs that pass the day-ahead RSE or cure a day-ahead RSE insufficiency by the short-term unit commitment (STUC) horizon in the pooled Western Energy Imbalance Market (WEIM) RSE;
• Of the two mechanisms proposed to manage supply in excess of the RSE, CalCCA prefers mechanism two (the net EDAM transfer export limit constraint); • CalCCA supports the development of system market power mitigation for the CAISO BAA; and
CalCCA supports the resource-specific approach for green-house gas (GHG) accounting in EDAM. Any future modifications to the resource-specific approach for EDAM, or any deviations from the resource-specific approach, will require California Air Resources Board (CARB) acceptance.