Audit & Finance Committee Meeting
May 9, 2022
Peninsula Clean Energy
Agenda
• Call to Order / Roll Call
• Public Comment (for items not on the Agenda)
• Action to set the Agenda and Approve Consent Items
• Chair Report
• Staff Report – None
• Regular Agenda
FY2021-2022
Q3 Financial Review
Ending March 31, 2021
Peninsula Clean Energy
Revenue – Quarterly Trend
4 Quarterly
• Q3 Revenue was $6.5 MM below Budget
• Revenue was 12.9% below Budget
while Load was 7.5% below Budget
• Residential load was 9.6% below
Budget
• Rates and usage were lower than
planned – more significantly in
Residential use
YTD
• Q3-YTD Revenue is $16.6 MM below
Budget
• Revenue is 10.1% below Budget while
Load is 4.6% below Budget
• Residential load is 8.2% below
Budget.
Revenue by Quarter as of
Actual Budget Var Fav/(Unf)
Q1-FY2020/21 75.1 69.3 5.8
Q2-FY2020/21 62.9 41.2 21.7
Q3-FY2020/21 46.3 49.7 (3.4)
Q4-FY2020/21 43.9 55.6 (11.7)
Total YTD 2020/21 $228.1 $215.7 $12.4
Q1-FY2021/22 58.4 61.0 (2.6)
Q2-FY2021/22 45.1 52.5 (7.5)
Q3-FY2021/22 43.8 50.3 (6.5)
Q2-FY2021/22 0.0 0.0
Total YTD FY2021/22 $147.2 $163.8 ($16.6)
March-22
Quarter Revenue Comparison vs Budget
Peninsula Clean Energy
Revenue – Monthly Trend
5 Revenue (Last 13 months)
Actual Budget Var Fav/(Unf)
Mar-21 $13.8 $17.2 ($3.4)
Apr-21 $12.7 $15.0 ($2.2)
May-21 $13.9 $17.2 ($3.4)
Jun-21 $17.3 $23.4 ($6.1)
Jul-21 $19.0 $19.4 ($0.3)
Aug-21 $20.0 $21.0 ($0.9)
Sep-21 $19.3 $20.7 ($1.4)
Oct-21 $14.6 $20.1 ($5.5)
Nov-21 $14.5 $15.3 ($0.8)
Dec-21 $16.0 $17.1 ($1.1)
Jan-22 $15.1 $17.6 ($2.5)
Feb-22 $14.1 $16.0 ($1.9)
Mar-22 $14.7 $16.8 ($2.1)
Month Revenue Comparison vs Budget
March-22
Peninsula Clean Energy
Cost of Energy – Quarterly Trend
6 Quarterly
• Q3 Cost of Energy was $3.4 MM above
Budget
• Cost was 6.4% above Budget
despite lower Load than planned
• Energy market prices were
significantly higher than prior periods
and higher than Budgeted levels
• ~100% hedged position mitigated
most of the higher prices throughout
the quarter
YTD
• Cost of energy is slightly less than
Budget for YTD as higher prices have
been offset by lower usage levels
Cost of Energy by Quarter as of
Actual Budget Var Fav/(Unf)
Q1-FY2020/21 66.7 55.3 (11.4)
Q2-FY2020/21 51.2 51.0 (0.1)
Q3-FY2020/21 49.4 46.7 (2.8)
Q4-FY2020/21 46.5 44.4 (2.0)
Total YTD 2020/21 $213.8 $197.4 ($16.4)
Q1-FY2021/22 56.5 57.6 1.1
Q2-FY2021/22 51.1 53.9 2.8
Q3-FY2021/22 56.2 52.9 (3.4)
Q2-FY2021/22 0.0 0.0
Q2-FY2021/22 $163.8 $164.4 $0.6
March-22
Quarter COE Comparison vs Budget
Peninsula Clean Energy
Cost of Energy – Monthly Trend
7 Cost of Energy (Last 13 months)
Actual Budget Var Fav/(Unf)
Mar-21 $15.9 $15.2 ($0.7)
Apr-21 $15.4 $14.1 ($1.3)
May-21 $16.9 $14.5 ($2.4)
Jun-21 $14.1 $15.8 $1.7
Jul-21 $18.4 $17.9 ($0.6)
Aug-21 $20.6 $20.4 ($0.1)
Sep-21 $17.5 $19.3 $1.8
Oct-21 $17.4 $18.0 $0.6
Nov-21 $15.0 $16.7 $1.7
Dec-21 $18.8 $19.3 $0.5
Jan-22 $20.3 $18.8 ($1.5)
Feb-22 $17.6 $17.2 ($0.4)
Mar-22 $18.4 $16.9 ($1.5)
Month COE Comparison vs Budget
March-22
Peninsula Clean Energy
Financial Statement vs. Budget – Quarter and YTD
YTD Results
• Revenues
• $16.6 MM below Budget for YTD
• Expenses
• YTD - $5.9 MM below Budget
• All categories under Budget
• Program expenses well-below Budget for
YTD, but could be significant $2MM catch-up payment before year-end • Losses in investment portfolio which is
heavily dependent of fixed income markets
that have been volatile and troublesome
• Change in Net Position
• Q3 was negative $21.3 MM, $13.4 MM
worse than Budget
• YTD is negative $35.1 MM, but expected
to recover most of this shortfall before
year-end as rates are expected to be
significantly higher (more on this later in
presentation) 8
`
Actual Budget Var Fav/(Unf) Actual Budget Var Fav/(Unf)
OPERATING REVENUES
Electricity Sales, net 43,206,075 49,690,391 (6,484,316) 145,147,054 161,850,672 (16,703,618) Green electricity premium 633,665 644,905 (11,240) 2,101,242 1,982,977 118,265 Total Operating Revenues 43,839,740 50,335,296 (6,495,556) 147,248,296 163,833,649 (16,585,353)
OPERATING EXPENSES
Cost of energy 56,225,928 52,856,863 (3,369,066) 163,831,443 164,383,966 552,523 Staff compensation 1,681,337 1,628,177 (53,160) 4,600,725 4,836,098 235,373 Data Manager 845,856 855,000 9,144 2,539,479 2,565,000 25,521 Service Fees - PG&E 313,248 315,000 1,752 928,290 945,000 16,710 Consultants & Professional Services 270,160 263,692 (6,468) 795,417 1,017,512 222,095 Legal 213,921 398,250 184,329 866,278 1,221,000 354,722 Marketing and Noticing 186,159 476,693 290,534 1,065,897 1,592,311 526,414 General and Administrative 571,247 582,929 11,683 1,539,589 1,685,327 145,738 Community Energy Programs 655,825 1,133,602 477,777 1,581,437 5,422,533 3,841,096 Depreciation 20,352 29,044 8,691 61,505 80,381 18,876
Total Operating Expenses 60,984,034 58,539,250 (2,444,784) 177,810,059 183,749,128 5,939,069 Operating Income (Loss) (17,144,294) (8,203,954) (8,940,340) (30,561,763) (19,915,479) (10,646,284) Total Nonoperating Income/(Expense) (4,194,768) 225,000 (4,419,768) (4,515,493) 675,000 (5,190,493) CHANGE IN NET POSITION (21,339,061) (7,978,954) (13,360,108) (35,077,256) (19,240,479) (15,836,777)
CHANGE IN NET POSITION
Net Position at the beginning of period 166,605,204 173,009,695 (6,404,491) 180,343,399 184,271,220 (3,927,821) Change in Net Position (21,339,061) (7,978,954) (13,360,108) (35,077,256) (19,240,479) (15,836,777) Net Position at the end of period 145,266,143 165,030,742 (19,764,599) 145,266,143 165,030,742 (19,764,599) Ending Total Cash (Restricted/Unrestricted) 138,837,795 168,264,090 (29,426,295) 138,837,795 168,264,090 (29,426,295) Quarter ending March 2022
Current Quarter Year-to-date
Peninsula Clean Energy
Change in Net Position (Year-to-date)
9 YTD
• CINP is $15.8 MM worse loss than
budgeted due to lower revenues than
Budget
vs: Prior Year
• YTD of $35.1 MM loss versus $2.6
MM gain in prior year
• Revenues significantly lower than
prior year
Change in Net Position - YTD as of
Actual Budget Var Fav/(Unf)
Revenues $147.2 $163.8 ($16.6)
Cost of Energy 163.8 164.4 0.6
Other Opex 14.0 19.4 5.4
Non-Opex/(Income) 4.5 (0.7) (5.2)
Net Position ($35.1) ($19.2) ($15.8)
March-22
Year-to-date vs Budget Accounts
Change in Net Position - Year-over-year
YTD 2021-22 YTD 2020-21 Var Fav/(Unf)
Revenues $147.2 $184.2 ($37.0)
Cost of Energy 163.8 167.4 3.5
Other Opex 14.0 13.8 (0.2)
Non-Opex/(Income) 4.5 0.4 (4.1)
Net Position ($35.1) $2.6 ($37.7)
Accounts Year-over-year Comparison (YTD)
March-22
Peninsula Clean Energy
Cash and Investment Summary – Quarterly Trend
10 Investment Manager balances at 03/31/2022:
• PFM = $64.9 MM
• FRB = $64.7 MM
Note: $7.9 MM of cash is on deposit with CAISO and not reflected in this summary Jun-19 Jun-20 Jun-21 Sep-21 Dec-21 Mar-22
Investment Account - USBank (Combined PFM/FRB)
Asset Summary
Cash & Equivalents $ 4,507,825 $ 58,937,363 $ 2,785,233 $ 297,110 $ 236,618 $ 91,568 Fixed Income $ 90,743,561 $ 105,343,286 $ 153,947,396 $ 138,960,485 $ 138,137,049 $ 129,037,454 Accrued Income $ 546,170 $ 520,977 $ 519,812 $ 470,045 $ 480,040 Ending Balance $ 95,251,385 $ 164,826,819 $ 157,253,606 $ 139,777,407 $ 138,843,713 $ 129,609,062 Other Accounts (Unrestricted)
Unrestricted - M&T LockBox $ 758,192 $ - $ - $ -
Unrestricted - Wilmington LockBox $ 5,632,155 $ 5,030,087 $ 2,465,340 $ 4,922,087 $ 3,979,987 $ 5,200,816 Operating Account - First Republic $ 3,299,345 $ 5,834,142 $ 4,340,702 $ 6,123,653 $ 2,585,297 $ 1,953,448 Savings Account - First Republic $ 9,885,949 $ 2,484,545 $ 1,354,942 $ 6,604,575 $ 10,066,905 $ 1,571,650 Other Accounts $ 573 $ - $ - $ 36 $ (13,570) $ 2,819
Subtotal Unrestricted (non-Investment accounts) $ 18,818,022 $ 13,348,775 $ 8,919,176 $ 17,650,351 $ 16,618,619 $ 8,728,733 Other Accounts (Restricted)
Restricted Cash - Wilmington LockBox $ 1,500,000 $ 1,000,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 Restricted Cash - First Republic $ 11,665,799 $ 31,386,560 $ 3,949,194 $ 3,308,546 $ - $ - Subtotal Restricted (non-Investment accounts) $ 13,165,799 $ 32,386,560 $ 4,449,194 $ 3,808,546 $ 500,000 $ 500,000 Total Cash $ 127,235,206 $ 210,562,154 $ 170,621,976 $ 161,236,304 $ 155,962,332 $ 138,837,795 Unrestricted Cash $ 114,069,407 $ 178,175,594 $ 166,172,782 $ 157,427,758 $ 155,462,332 $ 138,337,795 Peninsula Clean Energy
Cash Reserves – Days Cash on Hand
11 Actual March 31, 2022 Forecast June 30, 2022
Total Cash/Investments Balance $138,837,795 $162,372,061 Restricted by Term/Covenant 500,000
Unrestricted Cash (per Approved Reserve Policy) $138,337,795 $162,372,061 Days Cash on Hand (per Approved Reserve Policy) 213 243 Approved Reserve Policy (Days Cash on Hand) 180 180
Unrestricted Operating Reserve Requirement (180 Days) 120,479,766 120,509,709 Unrestricted Cash in Excess of Current Reserve Policy $17,858,029 $41,862,353 Peninsula Clean Energy
Financial Statement – Forecast Full Year FY2022
12 FY 2021-2022 Budget & Forecast FY 2022 FY 2022 Variance Variance Approved Budget Forecasted Full Year
FY2021-2022
Forecast $ vs.
FY21/22 Budget
Fav/(Unf)
Forecast % vs.
FY21/22 Budget
Fav/(Unf)
OPERATING REVENUES
Electricity Sales, net 219,619,107 236,757,514 17,138,407 7.8% ECO100 Premium 2,621,034 2,764,175 143,141 5.5%
Total Operating Revenues 222,240,141 239,521,689 17,281,547 7.8%
OPERATING EXPENSES
Cost of electricity 216,705,953 222,412,656 (5,706,703) -2.6% Personnel 6,464,275 6,132,735 331,540 5.1%
Data Manager 3,420,000 3,397,930 22,070 0.6%
Service Fees - PG&E 1,260,000 1,243,780 16,220 1.3%
Professional Services 1,351,204 1,060,014 291,190 21.6% Legal 1,615,500 1,328,611 286,889 17.8%
Marketing and Noticing 2,068,197 1,710,255 357,942 17.3% General and Administrative 2,259,391 2,106,435 152,956 6.8% Community Energy Programs 6,555,671 4,887,752 1,667,919 25.4% Depreciation 111,675 86,741 24,934 22.3%
Total Operating Expenses 241,811,865 244,366,909 (2,555,044) -1.1% Operating Income/(Loss) (19,571,724) (4,845,220) 14,726,504 75.2% 0 Total Non-operating Income/(Expense) 900,000 (1,983,245) (2,883,245) -320.4% CHANGE IN NET POSITION (18,671,724) (6,828,465) 11,843,259 63.4%
CHANGE IN NET POSITION
Net Position at the beginning of period 184,271,220 180,343,399 (3,927,821) Inc/(Dec) in Net Position (18,671,724) (6,828,465) 11,843,259 Net Position at the end of period 165,599,497 173,514,934 7,915,437 Approx. Cash & Cash Equivalents 168,332,845 162,372,061 DCOH (Per Policy) 250 243
Substantial Improvement
expected in Q4
• March YTD Change in Net
Position is a loss of $35.1 MM.
Expect to end year at loss of just
$6.8 MM, a $28.3 MM
improvement
• PCE rates effective as of April 1
are expected to be more than
double the prior level. Costs to
ratepayers went up 33% on
average. And the PCIA dropped
significantly which will shift
payments by ratepayers from
PG&E to PCE (more on this in
Draft Budget discussion section)
FY 2022-2023
(July 1, 2022 – June 30, 2023)
Budget Review
Initial Draft
Peninsula Clean Energy
Schedule – Budget Review and Approval
14 • May 9, 2022 – Review Initial Draft Budget with Audit & Finance Committee • May 9, 2022 – Review Initial Draft Budget with Executive Committee • May 26, 2022 – Review Current Draft Budget with Board of Directors • June 13, 2022 – Review Revised Draft Budget with Audit & Finance Committee • June 23, 2022 – Approve Final Budget by Board of Directors Peninsula Clean Energy
Draft Budget FY2022-2023 – Key Assumptions
15 PG&E Generation Rates – significant rise in rates
o April 1, 2022 – increase 33%
o January 1, 2023 – decrease 10%
o Net change of up 20% as of 1/1/23 compared to 3/31/22 o San Mateo County and Los Banos rates are the same
PCIA Rates – significant decrease in rates
o April 1, 2022 – decrease 59%
o January 1, 2023 – increase 65%
o Net change of down 32% as of 1/1/23 compared to 3/31/22 o Los Banos PCIA rate is higher than SMC starting April 1, 2022. Lower starting on 1/1/23. Then, comparable after 1/1/24 Rates to PCE – up more than 100% through Jan 1, 2023 (although customers only pay an additional 33% in total) Load – FY23 forecasted to be 3.2% higher than FY22 forecast – FY22 includes only 3 months of Los Banos load Cost of Energy –
o Budgeted to increase 18% over FY22 forecast to $263 million (includes $15 million conservatism adder) o Increase of 11% without conservatism adder
Peninsula Clean Energy
PG&E and PCIA Rate Change Summary
16 1/1/2021 4/1/2021 4/1/2022 1/1/2023 1/1/2024 1/1/2025 1/1/2026 Actual Actual Forecast Forecast Forecast Forecast
PG&E Generation Rate 0.112 0.109 0.144 0.130 0.126 0.124 0.126 Generation Rate Change (Percent) 33% -10% -3% -1% 1%
Cumulative % Change from 1/1/22 33% 20% 16% 15% 16%
PCIA (System Average)
San Mateo County 0.032 0.047 0.019 0.032 0.033 0.031 0.028 PCIA Change (Percent) -59% 65% 3% -6% -8%
Cumulative % Change from 1/1/22 -59% -32% -30% -34% -39% PCE Rate to Ratepayers
San Mateo County
PCE Rate (net of PCIA and 5% Discount) 0.075 0.056 0.118 0.092 0.087 0.087 0.092 Net PCE Rate Change (Percent) 109% -22% -5% 0% 5%
Cumulative % Change from 1/1/22 109% 63% 55% 55% 62%
Los Banos 0.028 0.025 0.028 0.032 0.030 0.028
PCIA Change (Percent) -11% 13% 16% -6% -9%
Cumulative % Change from 1/1/22 -11% 0% 16% 9% -1%
Peninsula Clean Energy
Draft Budget FY23 – Summary
17 Budget and Forecast 2022 2022 Variance - Fav/ (Unf) 2023 Items Approved Budget Forecast $ Variance Initial Budget $ Change - Inc/(Dec) % Change
OPERATING REVENUES
Electricity Sales, net 219,619,107 236,757,514 17,138,407 364,961,141 128,203,627 54% Green electricity premium 2,621,034 2,764,175 143,141 2,822,550 58,375 2% 222,240,141 239,521,689 17,281,547 367,783,691 128,262,002 54%
OPERATING EXPENSES
Cost of energy 216,705,953 222,412,656 (5,706,703) 262,900,760 40,488,104 18% Staff compensation 6,464,275 6,132,735 331,540 8,249,693 2,116,958 35% Data Manager 3,420,000 3,397,930 22,070 3,600,000 202,070 6% Service Fees - PG&E 1,260,000 1,243,780 16,220 1,350,000 106,220 9% Consultants & Professional Services 1,351,204 1,060,014 291,190 1,431,813 371,799 35% Legal 1,615,500 1,328,611 286,889 1,474,000 145,389 11% Communications and Noticing 2,068,197 1,710,255 357,942 2,686,208 975,953 57% General and Administrative 2,259,391 2,106,435 1,152,272 2,359,806 253,371 12% Community Energy Programs 6,555,671 4,887,752 1,667,919 8,640,000 3,752,248 77% Depreciation 111,675 86,741 24,934 96,000 9,259 11%
Total Operating Expenses 241,811,865 244,366,909 (1,555,728) 292,788,280 48,421,371 20% Operating Income (Loss) (19,571,724) (4,845,220) 15,725,820 74,995,411 79,840,631 NON-OPERATING REVENUES (EXP.)
Total Nonoperating Income/(Expense) 900,000 (1,983,245) (2,883,245) 600,000 2,583,245 CHANGE IN NET POSITION (18,671,724) (6,828,465) 12,842,575 75,595,411 82,423,876 Net Position at the beginning of period 184,271,220 180,798,537 (3,472,684) 173,970,072 Net Position at the end of period 165,599,497 173,970,072 9,369,891 249,565,483 Total Cash & Cash Equivalents 168,332,845 162,964,482 (5,368,362) 238,559,894 Unrestricted Cash Days on Hand 250 243 297
Current Fiscal Year FY22
Variance Initial Budget vs. Prior Year
Forecast
Peninsula Clean Energy
Draft Budget Detail - Revenues
18 Budget and Forecast 2022 2023
Items Forecast Initial Budget $ Change - Inc/(Dec) % Change
OPERATING REVENUES
Electricity Sales, net 236,757,514 364,961,141 128,203,627 54% Commercial - Demand 19,060,125 19,622,891 562,766 3%
Streetlight and Agr- Demand 258,039 155,461 (102,577) -40% Commercial - Gen 112,412,969 176,626,802 64,213,833 57% Residential - Gen 103,186,947 166,666,713 63,479,766 62% Street lighting and Agr - Gen 2,213,075 3,723,249 1,510,174 68% CAPP Proceeds 1,667,791 - (1,667,791) -100%
Bad Debt Expense (2,041,432) (1,833,976) 207,457 -10%
Green electricity premium 2,764,175 2,822,550 58,375 2% 239,521,689 367,783,691 128,262,002 54%
Current Fiscal Year FY22
Variance Initial Budget vs. Prior Year
Forecast
Initial Fiscal Year Budget FY23
Peninsula Clean Energy
Draft Budget FY2022-2027 – Budget Summary & 5-year Plan 19 Budget and Forecast 2022 2022 2023 2024 2025 2026 2027 Items Approved Budget Forecast Initial Budget Forecast Forecast Forecast Forecast
OPERATING REVENUES
Electricity Sales, net 219,619,107 236,757,514 364,961,141 315,583,351 310,221,811 321,390,127 334,096,231 Green electricity premium 2,621,034 2,764,175 2,822,550 2,973,323 3,132,849 3,301,644 3,480,252 222,240,141 239,521,689 367,783,691 318,556,673 313,354,660 324,691,771 337,576,483
OPERATING EXPENSES
Cost of energy 216,705,953 222,412,656 262,900,760 266,150,723 259,404,029 261,318,950 265,549,966 Staff compensation 6,464,275 6,132,735 8,249,693 8,742,875 9,265,647 9,819,786 10,407,173 Data Manager 3,420,000 3,397,930 3,600,000 3,708,000 3,819,240 3,933,817 4,051,832 Service Fees - PG&E 1,260,000 1,243,780 1,350,000 1,390,500 1,432,215 1,475,181 1,519,437 Consultants & Professional Services 1,351,204 1,060,014 1,431,813 1,454,973 1,453,785 1,450,217 1,449,390 Legal 1,615,500 1,328,611 1,474,000 1,505,320 1,538,876 1,574,838 1,613,390 Communications and Noticing 2,068,197 1,710,255 2,686,208 2,916,529 3,129,555 3,218,162 3,309,427 General and Administrative 2,259,391 2,106,435 2,359,806 2,420,600 2,485,030 2,553,341 2,625,797 Community Energy Programs 6,555,671 4,887,752 8,640,000 13,750,000 15,550,000 18,850,000 23,000,000 Depreciation 111,675 86,741 96,000 96,000 96,000 96,000 96,000 Total Operating Expenses 241,811,865 244,366,909 292,788,280 302,135,520 298,174,377 304,290,293 313,622,411 Operating Income (Loss) (19,571,724) (4,845,220) 74,995,411 16,421,154 15,180,283 20,401,478 23,954,072 NON-OPERATING REVENUES (EXP.)
Total Nonoperating Income/(Expense) 900,000 (1,983,245) 600,000 618,000 636,540 655,636 675,305 CHANGE IN NET POSITION (18,671,724) (6,828,465) 75,595,411 17,039,154 15,816,823 21,057,115 24,629,377 Net Position at the beginning of period 184,271,220 180,798,537 173,970,072 249,565,483 266,604,637 282,421,460 303,478,574 Net Position at the end of period 165,599,497 173,970,072 249,565,483 266,604,637 282,421,460 303,478,574 328,107,951 Total Cash & Cash Equivalents 168,332,845 162,964,482 238,559,894 255,599,047 271,415,870 292,472,985 317,102,362 Unrestricted Cash Days on Hand 250 243 297 309 332 351 369 Current Fiscal Year FY22 Fiscal Year Projections
Overview of Stochastic Modeling to Evaluate
and Measure Risk to Cost of Energy
5/9/2022
Peninsula Clean Energy
Agenda
• Stochastic Analysis
• Background
• Hourly Simulation Examples
• Cost of Energy
• Load
21 Stochastic Analysis
Peninsula Clean Energy
Modeling Risk/Uncertainty
• The current process for modeling the budgeted cost of energy is deterministic – there is one set of inputs and one output for the cost of energy
• However, there is uncertainty associated with a number of the inputs into the cost of energy – load, resource generation, market prices • To model the impact of uncertainty in our forecasts, we can use a stochastic model to evaluate multiple simulations
• Stochastic modeling can help us to understand the risk associated with our budget due to uncertainty
23 Peninsula Clean Energy
Big Drivers of Risk
24 Peninsula Clean Energy
Deterministic vs Stochastic Simulation
25 Stochastic approach captures the
uncertainty around renewable
generation by looking at multiple
simulations.
Deterministic approach looks at 1
simulation without uncertainty.
Peninsula Clean Energy
Importance of Stochastic Analysis
• Stochastic analysis helps us to better understand the risks associated with PCE’s portfolio and find ways to manage and minimize risks
o Co-simulation of load and prices (load and prices are correlated) o Simulate uncertainty around forecasts for:
o Market prices
o Load MWh
o Renewable generation
26 Peninsula Clean Energy
Software for Stochastic Simulation
• Performing stochastic analysis is complicated and requires specialized knowledge and tools
o We initially performed deterministic analyses using a variety of Excel and Python modeling tools mostly developed internally
o As the complexity of our power portfolio has increased, the complexity of our analysis needs has increased as well.
o 3rd party tools and services provide a more rigorous and sophisticated approach to modeling including the use of stochastic analysis tools which will better analyze the inherently incremental nature of renewable resources 27 Peninsula Clean Energy
Pilot for Stochastic Models
• PCE engaged in short-term pilots to test two tools that provide stochastic modeling functionality Ascend Analytics and cQuant.io o Both are software providers that can provide specialized services in portfolio analysis, budget planning, and long-term resource planning o We performed extensive analysis and modeling to test both options and concluded that Ascend’s software (PowerSimm) includes features/capabilities that better suites our needs
28 Peninsula Clean Energy
Ascend Analytics
• Energy software company founded in 2002 in Boulder, CO – 20+ years experience o Software has been tested over many years and by many clients • Several integrated software products for operations, portfolio analytics, and planning • Provide custom analytical solutions and consulting
• Serves many CCA and utility clients -
29 Background
Peninsula Clean Energy
Motivation
• Provide a range of likely outcomes for cost of energy instead of just one single deterministic number
• Evaluate the risk associated with our portfolio and understands the biggest contributors
31 Peninsula Clean Energy
Budget Process
• Work with Finance team to develop our base budget using deterministic Excel model
• Run budget through PowerSimm
o Use same inputs from our budget and evaluate in PowerSimm stochastic model to understand risks associated with the budget
• Main Differences
o Excel model: 1 simulation for load, prices and renewable generation o PowerSimm: 50 simulations for load, prices, and renewable generation 32 Peninsula Clean Energy
Stochastic Simulation
• 50 simulations for load, prices, and renewable generation in PowerSimm o Monthly load MWhs match monthly load MWhs in budget, but PowerSimm simulates 50 different hourly profiles based on our historical load data o Monthly renewable generation MWhs match Monthly MWhs in budget, but PowerSimm simulates 50 different hourly profiles based on historical renewable data o Average monthly prices match average monthly prices in budget, but PowerSimm simulates 50 different hourly profiles based on historical prices 33 Peninsula Clean Energy
Deterministic vs Stochastic
34 Peninsula Clean Energy
Stochastic Results
35 • There are several main metrics
to look at in a stochastic
analysis: o Expected: Average value across all
simulations
o P5 or 5th percentile: only 5 percent of
values are smaller than P5
o P50 or median: 50 percent of values are
smaller and 50 percent are bigger than
P50
o P95: only 5 percent of values are bigger
than P95
o Risk Premium: The difference between
P95 and P50 is referred to as risk premium
Hourly Simulation
Examples
Peninsula Clean Energy
Price-Load Correlation
• In general, higher load results in higher prices but load is not the only driver behind prices 37 0
20 40
60 80
100
120
140
0 100 200 300 400 500 600 700
Price ($/MWh)
Load (MWh)
December 2025
-100
0 100
200
300
400
500
600
0 100 200 300 400 500 600 700
Price ($/MWh)
Load (MWh)
August 2025
* Each dot, represent a single hour, hourly data for 50 simulations shown here
* Each dot, represent a single hour, hourly data for 50 simulations shown here
Peninsula Clean Energy
Hourly Load Simulation • 50 hourly trends
(simulations) for
load. Shapes are
created based
on our historical
load.
38 0
100
200
300
400
500
600
700
Load (MWh)
Hour
12 34
56 78
9 10
11 12
13 14
15 16
17 18
19 20
21 22
23 24
25 26
27 28
29 30
31 32
33 34
35 36
37 38
39 40
41 42
43 44
45 46
47 48
49 50
* 50 simulations, August of 2025
* P5, P50 and P95 of simulations, August of 2025, Month-Hour Average 200
250
300
350
400
450
500
550
159 13 17 21
Load (MWh)
Hour
P5 P50 P95
Peninsula Clean Energy
Hourly Price Simulation • 50 hourly trends
(simulations) for prices.
Shapes are created
based on forecasted
future price shapes.
39 -1000
100
200
300
400
500
600
Price ($/MWh)
Hour
12 34
56 78
9 10
11 12
13 14
15 16
17 18
19 20
21 22
23 24
25 26
27 28
29 30
31 32
33 34
35 36
37 38
39 40
41 42
43 44
45 46
47 48
49 50
* 50 simulations, August of 2025
* Prices shown here are for DLAP-PG&E node
-
20 40
60 80
100
120
140
160
180
200
159 13 17 21
Price ($/MWh)
Hour
P5 P50 P95
* P5, P50 and P95 of simulations, August of 2025, Month-Hour Average Peninsula Clean Energy
Hourly Solar Generation Simulation
• 50 hourly trends (simulations)
for solar generation. Shapes
are created based on
historical solar generation.
40 0
20 40
60 80
100
120
140
160
180
200
8/1/2025
8/1/2025 6:00
8/1/2025 12:008/1/2025 18:00
8/2/2025
8/2/2025 6:00
8/2/2025 12:008/2/2025 18:00
8/3/2025
8/3/2025 6:00
8/3/2025 12:008/3/2025 18:00
Generation (MWh)
Hour
1 9
30 50
* 50 simulations, August of 2025
* 4 simulations, 8/1/2025-8/3/2025
0 20
40 60
80 100
120
140
160
180
200
Generation (MWh)
Hour
1 2
3 4
5 6
7 8
9 10
11 12
13 14
15 16
17 18
19 20
21 22
23 24
25 26
27 28
29 30
31 32
33 34
35 36
37 38
39 40
41 42
43 44
45 46
47 48
49 50
Peninsula Clean Energy
Hourly Wind Generation Simulation
• 50 hourly trends
(simulations) for wind
generation. Shapes are
created based on
historical wind generation.
41 0
25 50
1/8/2025
1/8/2025 6:00
1/8/2025 12:001/8/2025 18:00
1/9/2025
1/9/2025 6:00
1/9/2025 12:001/9/2025 18:00
1/10/2025
1/10/2025 6:00
1/10/2025 12:001/10/2025 18:00
Generation (MWh)
Hour
1 9
30 50
* 4 simulations, 1/8/2025-1/10/2025
* 50 simulations, August of 2025
0 25
50 Generation (MWh)
Hour
1 2
3 4
5 6
7 8
9 10
11 12
13 14
15 16
17 18
19 20
21 22
23 24
25 26
27 28
29 30
31 32
33 34
35 36
37 38
39 40
41 42
43 44
45 46
47 48
49 50
Cost of Energy
Peninsula Clean Energy
Cost of Energy Summary • PowerSimm values are
averaged across 50
simulations o There are slight
differences in how the
models treat certain
assumptions including
resale of RECs/RA.
o We are working with
Ascend to
update/modify
modeling to more
accurately reflect how
these assumptions are
treated in our budget
43 Peninsula Clean Energy
Cost of Energy, Risk of Exposure to Market (FY 2023)
• If we didn’t have any hedge or
PPA contracts (yellow dots), our
cost of energy would increase
significantly as market prices
increase
44 Portfolio At price of
$60/MWh
At price of
$70/MWh
Current Portfolio $244 million $252 million
No Hedge Portfolio $276 million $305 million
No PPA Portfolio* $260 million $283 million
No Hedge/PPA Portfolio* $293 million $335 million
* Not considering impacts on RA/REC costs
Peninsula Clean Energy
Box-Whisker Plot
• A box-whisker plot can show a range of
values
o The box shows the values between 25th and
75th percentiles
o Any value lower than Q1−(1.5×IQR) or
greater than Q3+(1.5×IQR) are considered
outliers (values above upper extreme or
below the lower extreme)
* IQR: Interquartile Range = Q3 – Q1
Q3: 75th percentile, Q1: 25th percentile
45 Peninsula Clean Energy
Cost of Energy • Over time, range
of likely outcomes
becomes larger as
we have a larger
open position
* Yellow boxes show open
position for each FY
46 Peninsula Clean Energy
Cost of Energy: Range of likely Outcomes (FY 2023)
• P95: $254 million
• P50: $245 million
• Risk Premium: $9
million
47 Peninsula Clean Energy
Risk Premium • Over time, risk
premium increases
as our open
position becomes
larger
*Risk premium is defined as
the difference between p95
of simulations and p50 of
simulations
* Yellow boxes show open
position for each FY
48 Peninsula Clean Energy
Monthly Cost of Energy • Cost of energy
varies month-to-
month
• More uncertainty
around cost of
energy in Summer
and Winter months
due to higher
volatility in load and
prices
• Cost of energy in
Spring has very low
uncertainty
49 Load
Peninsula Clean Energy
Load Simulation • PowerSimm is
capable to simulate
a range of likely
outcomes for our
load
• In FY 2023, load
could vary between
3,655 and 3,772
GWh
51 Peninsula Clean Energy
Load Cost • Expected MWh of
load * Expected
price at DLAP
• Load cost
decreasing over
time due to
expected lower
prices
• Cost of Energy
includes load cost
as well as the
cost of hedges
and contracts to
manage load cost
52 Peninsula Clean Energy
Load Cost, Monthly
• Larger uncertainty
around load costs
in Summer months
due to possibility of
heatwaves
53 Appendix
Peninsula Clean Energy
WACP, Range of Likely Outcomes
• Over time, range
of likely outcomes
becomes larger as
we have a larger
open position
55 Peninsula Clean Energy
WACP, Risk of Exposure to Market (FY 2023)
• If we didn’t have any hedge or
PPA contract (yellow dots), our
cost of energy could have
significantly increased with
higher market prices
56 Portfolio At price of
$60/MWh
At price of
$70/MWh
Current Portfolio $66.2/MWh $67.7/MWh
No Hedge Portfolio $75.1/MWh $81.8/MWh
No PPA Portfolio* $70.6/MWh $76.0/MWh
No Hedge/PPA Portfolio* $79.50/MWh $90.1/MWh
* Not considering impacts on RA/REC costs
PPAs
Peninsula Clean Energy
PPA MWh
• PowerSimm will
simulate the
uncertainty around
renewable generation
58 Peninsula Clean Energy
Net PPA Cost • Net PPA Cost (PPA
Cost – PPA
revenue) could
vary significantly
based on market
prices
59 Peninsula Clean Energy
Net PPA Cost, Monthly
• Net PPA Cost (PPA
Cost – PPA
revenue) has much
larger uncertainties
in summer months
60 Hedges
Peninsula Clean Energy
Net Hedge Cost • Net Hedge Cost
(Hedge Cost –
Hedge revenue)
could vary
significantly based
on market prices
62 Peninsula Clean Energy
Net Hedge Cost, Monthly
• Net Hedge Cost
(Hedge Cost –
Hedge revenue)
has much larger
uncertainties in
winter months due
to larger volumes of
hegdes in these
months
63