Regular Meeting of the Board of Directors of the
Peninsula Clean Energy Authority (PCEA)
Minutes
Thursday, March 28, 2024
6:30 p.m.
Zoom Video Conference and Teleconference
CALL TO ORDER
Meeting was called to order at 6:34 p.m. in virtual teleconference, in the Peninsula Clean Energy Authority lobby, in the Los Banos City Hall conference room A, and at the Hotel at Oberlin Lobby.
ROLL CALL
Participating:
Rick DeGolia, Atherton, Chair
Tom McCune, Belmont
Coleen Mackin, Brisbane
Donna Colson, Burlingame, Vice Chair
Ken Gonzalez, Colma
Carlos Romero, East Palo Alto, arrived 6:36 p.m.
Harvey Rarback, Half Moon Bay
Leslie Ragsdale, Hillsborough, participating from the Oberlin Hotel Paul Llanez, Los Banos
Anders Fung, Millbrae
Tygarjas Bigstyck, Pacifica
Jeff Aalfs, Portola Valley
Marty Medina, San Bruno
John Dugan, San Carlos
Amourence Lee, San Mateo
Absent:
Dave Pine, San Mateo County
Ray Mueller, San Mateo County
Roderick Daus-Magbual, Daly City
Sam Hindi, Foster City
Betsy Nash, Menlo Park
Elmer Martinez Saballos, Redwood City
James Coleman, South San Francisco
Ned Fluet, Woodside
A quorum was established.
PUBLIC COMMENT
None
ACTION TO SET THE AGENDA AND APPROVE REMAINING CONSENT AGENDA ITEMS MOTION: Director Fung moved, seconded by Director Romero to set the Agenda, and approve Agenda Item Numbers 1-5.
1. Authorization of Peninsula Clean Energy's General Counsel to Execute with the Law Firm of Clean Energy Counsel, an Engagement Agreement Allowing for a Term from March 1, 2024 Through February 28, 2026 in an Amount Not-to-Exceed $500,000.
2. Authorization of Peninsula Clean Energy's General Counsel to Execute with the Law Firm of Sheppard, Mullin, Richter & Hampton LLP, an Engagement Agreement Allowing for a Term from January 1, 2024 Through December 31, 2025 in an Amount Not-to-Exceed $1,700,000.
3. Approval of One EV Ready Program Fund Reservation Agreement, Providing Approximately $100,000 in Customer Incentives to San Mateo Union High School District.
4. Approval of Contract Amendment with Optony for the GovEV Program for an increase of $410,000 to a total of $800,000 and 16-Month Extension to a Total Contract Term of Approximately 4-years.
5. Approval of Minutes from the July 27, August 24, and September 28, 2023 Board Meetings.
MOTION PASSED: 15-0 (Absent: San Mateo County, San Mateo County, Daly City, Foster City, Menlo Park, Redwood City, South San Francisco, Woodside)
JURISDICTION BOARD MEMBER YES NO ABSTAIN ABSENT
San Mateo County Director Pine X
San Mateo County Director Mueller X
Atherton Director DeGolia X
Belmont Director McCune X
Brisbane Director Mackin X
Burlingame Director Colson X
Colma Director Gonzalez X
Daly City Director Daus-Magbual X
East Palo Alto Director Romero X
Foster City Director Hindi X
Half Moon Bay Director Rarback X
Hillsborough Director Ragsdale X
Los Banos Director Llanez X
Menlo Park Director Nash X
Millbrae Director Fung X
Pacifica Director Bigstyck X
Portola Valley Director Aalfs X
Redwood City Director Martinez Saballos X
San Bruno Director Medina X
San Carlos Director Venkatesh X
San Mateo Director Loraine X
South San Francisco Director Coleman X
Woodside Director Fluet X
Total 15 8
REGULAR AGENDA
6. Chair Report
None
7. CEO Report
Shawn Marshall, Chief Executive Officer, gave a presentation including a regulatory update and a programs update.
8. Community Advisory Committee Report
Cheryl Schaff, Community Advisory Committee (CAC) Chair, gave a report on the March 14, 2024 CAC meeting.
9. Selection of Board of Directors Chair and Vice Chair (Action) Director Fung shared that the Board Chair and Vice Chair Ad Hoc Nominating Committee nominates Donna Colson from Burlingame to serve as the Board Chair and Marty Medina from San Bruno to serve as the Vice Chair.
Director Medina expressed gratitude for the opportunity and expressed appreciation to Chair DeGolia.
MOTION: Director Fung moved, seconded by Director Mackin to nominate Donna Colson from Burlingame to serve as the Board Chair and Marty Medina from San Bruno to serve as the Vice Chair of the Peninsula Clean Energy Board of Directors.
Chair DeGolia called for any nominations from the floor.
MOTION PASSED: 15-0 (Absent: San Mateo County, San Mateo County, Daly City, Foster City, Menlo Park, Redwood City, South San Francisco, Woodside)
JURISDICTION BOARD MEMBER YES NO ABSTAIN ABSENT
San Mateo County Director Pine X
San Mateo County Director Mueller X
Atherton Director DeGolia X
Belmont Director McCune X
Brisbane Director Mackin X
Burlingame Director Colson X
Colma Director Gonzalez X
Daly City Director Daus-Magbual X
East Palo Alto Director Romero X
Foster City Director Hindi X
Half Moon Bay Director Rarback X
Hillsborough Director Ragsdale X
Los Banos Director Llanez X
Menlo Park Director Nash X
Millbrae Director Fung X
Pacifica Director Bigstyck X
Portola Valley Director Taylor X
Redwood City Director Martinez Saballos X
San Bruno Director Medina X
San Carlos Director Venkatesh X
San Mateo Director Loraine X
South San Francisco Director Coleman X
Woodside Director Fluet X
Total 15 8
Director Mackin, Director Rarback, Director Bigstyck, Director Loraine, Director Fung expressed their gratitude to Director DeGolia.
Shawn Marshall, Chief Executive Officer, expressed her appreciation to Director DeGolia.
Chair Colson expressed her appreciation to and presented Director DeGolia with a token of the Board’s appreciation.
10. Approval of Revisions to the Net Energy Metering (NEM) Annual Cash Out Policy (Action) Leslie Brown, Director of Account Services, gave a presentation on the Net Energy Metering (NEM) annual cash out policy including fiscal history, considerations and challenges, proposed revisions, alternatives to the $100 check threshold, and customer notification.
Director Bigstyck asked if accounts would be affected by lowering the cap and if our relationships would be affected. Leslie explained that she is not worried as the compensation with Peninsula Clean Energy is better than would be with PG&E.
Director DeGolia asked for the maximum cap at other Community Choice Aggregators. Leslie explained that some do not have a cap, but they the regeneration is being calculated at a much smaller rate. Connor Prince, Senior Analyst, Account Services, confirmed that the highest cap is $10,000 though their compensation model is net surplus compensation making their total compensation much lower despite the higher cap.
Director Loraine asked for clarification on how the credits can be applied to PG&E charges. Leslie explained that excess generators would likely have gas be the largest cost on their PG&E bill in addition to their interconnection fee.
MOTION: Director Rarback moved, seconded by Vice Chair Medina to approve the proposed updates to the Net Energy Metering Annual Cash Out policy including raising the annual cash out check threshold to $500 beginning in April 2024 and lowering the annual cash out cap from $20,000 to $10,000 beginning in April 2025.
MOTION PASSED: 15-0 (Absent: San Mateo County, San Mateo County, Daly City, Foster City, Menlo Park, Redwood City, South San Francisco, Woodside)
JURISDICTION BOARD MEMBER YES NO ABSTAIN ABSENT
San Mateo County Director Pine X
San Mateo County Director Mueller X
Atherton Director DeGolia X
Belmont Director McCune X
Brisbane Director Mackin X
Burlingame Director Colson X
Colma Director Gonzalez X
Daly City Director Daus-Magbual X
East Palo Alto Director Romero X
Foster City Director Hindi X
Half Moon Bay Director Rarback X
Hillsborough Director Ragsdale X
Los Banos Director Llanez X
Menlo Park Director Nash X
Millbrae Director Fung X
Pacifica Director Bigstyck X
Portola Valley Director Taylor X
Redwood City Director Martinez Saballos X
San Bruno Director Medina X
San Carlos Director Venkatesh X
San Mateo Director Loraine X
South San Francisco Director Coleman X
Woodside Director Fluet X
Total 15 8
11. Approval of Hybrid Approach Rate Setting Methodology (Action) Nick Bijur, Chief Financial Officer, gave a presentation on the hybrid approach to the rate setting methodology including background, NewGen analysis, rate setting options, current methodology, cost of service include Peninsula Clean Energy (Peninsula Clean Energy) cost allocation, a hybrid approach, and Community Choice Aggregator (CCA) benchmarking.
Shawn Marshall, Chief Executive Officer, added that there is no stated policy that requires Peninsula Clean Energy to be 5% below PG&E rates, though the Board has always followed that.
Director McCune asked if anyone has complained about the current system, and if this were implemented, which class of customer would see the greatest change. Shawn shared that a general complaint is that PCE sits on a lot of cash and is the biggest driver of the conversation. Nick added that everyone would be impacted equally in the hybrid approach.
Director Rarback asked if the existing cost allocation would give a clear idea of revenue and allow financing of programs. Shawn explained that it would be handled the same as now where the Programs team looks at plans and elevates as part of the overall budget, adding that programs are not being affected, and rates would be set to cover those costs.
Rafael Reyes, Director of Energy Programs, explained that projections are made based on estimated uptick of program size, adding that PCE is anticipating that programs will have to level off with PCE funds and as a consequence is looking to other sources of income including federal earmarks.
Director DeGolia asked what the estimated average rate discount currently is. Leslie Brown, Director of Account Services, explained that the discount is generally around 13%.
Director Taylor asked how likely it would be PCE's energy costs would exceed PG&E’s costs. if PCE Energy costs. Nick estimated that this would be a low likelihood.
Director Taylor asked how much of an issue the excess revenues are, noting the importance of the 5% discount and marketing power. Shawn explained that the Board could choose every year to be below PG&E, if we choose to fall below the minimum threshold as was done in 2020 and 2021. As part of the surplus fund effort, a recommendation was established to maintain the cash on hand of a minimum of 180 days and set an upper target over 250 days, where the Board will reduce rates for customers.
Chair Colson added that rating agencies have made it clear that running negative deficit years, if PCE was not willing to increase rates to be profitable, then the rating would be downgraded.
Director Llanez expressed support for the hybrid approach as it helps explain why rates are what they are.
Director Romero asked if other CCAs have been using the hybrid approach since inception. Nick confirmed that Marin Clean Energy has. Director Romero asked about changing the rates structure and the marketing that will be involved with that since PCE customers have been accustomed to the 5% discount. Shawn explained that other agencies have dealt with this as Silicon Valley rates have changed every year, between 1-4%.
Director Romero asked how costs vary between customer class, and what does it mean to have costs vary by class. Nick explained it is based on demand charges, time of day, and how customers use energy. Director Romero noted that this is a calculatable figure. Nick confirmed.
Director Romero asked for an example of when Peninsula Clean Energy rates might be higher than PG&E.
Roy Xu, Director of Power Resources, explained that the Power Charge Indifference Adjustment (PCIA) and an aggressive renewable goal, that can increase our costs higher than PG&E. Jeremy Waen, Director of Regulatory Policy, added that years when rates would need to be higher than PG&E would be when market conditions are at very low levels affiliated to the PCIA.
Director Bigstyck asked if PCE rates were higher than PG&E, if PCE would be eliminating the buffer from 180 days cash on hand. Nick explained that PCE would be collecting enough revenue to cover costs and say above 180 days cash on hand, leading to a rare situation where we would fall below 180 days cash on hand. In that situation rates would be adjusted mid-cycle.
Director Mackin shared that the 5% messaging hasn’t been as effective, but the integrity of having the best deal consistently is important.
Chair Colson noted that if we move to this model, this is not permanent and can be adjusted in upcoming years if necessary.
Director Taylor asked if public messaging has been factored in as part of the finances. Nick explained that going through the budget process and see where PG&E rates will land and work out where the rates will land.
MOTION: Director Loraine moved, seconded by Director Bigstyck to adopt a “hybrid” approach that includes elements of current “PG&E minus” and cost of service ratemaking methodologies, and better ensures financial stability, while maximizing the discount provided to customers; also avoids subjectivity and possible contention of allocating costs among customers.
MOTION PASSED: 15-0 (Absent: San Mateo County, San Mateo County, Daly City, Foster City, Menlo Park, Redwood City, South San Francisco, Woodside)
JURISDICTION BOARD MEMBER YES NO ABSTAIN ABSENT
San Mateo County Director Pine X
San Mateo County Director Mueller X
Atherton Director DeGolia X
Belmont Director McCune X
Brisbane Director Mackin X
Burlingame Director Colson X
Colma Director Gonzalez X
Daly City Director Daus-Magbual X
East Palo Alto Director Romero X
Foster City Director Hindi X
Half Moon Bay Director Rarback X
Hillsborough Director Ragsdale X
Los Banos Director Llanez X
Menlo Park Director Nash X
Millbrae Director Fung X
Pacifica Director Bigstyck X
Portola Valley Director Taylor X
Redwood City Director Martinez Saballos X
San Bruno Director Medina X
San Carlos Director Venkatesh X
San Mateo Director Loraine X
South San Francisco Director Coleman X
Woodside Director Fluet X
Total 15 8
Chair Colson announced that Item Number 13 would be heard ahead of Agenda Item Number 12.
13. Approval of Revisions to Peninsula Clean Energy's Organizational Priority Number 1 of the Strategic Plan from "Delivering 100% Renewable Energy Annually by 2025" to "Delivering 100% Renewable Energy Annually by 2030 Through Strategic Procurement of Resources to Maximize Peninsula Clean Energy's 24/7 Hourly Renewable Matching Goal" (Action) Shawn Marshall, Chief Executive Officer, noted 2 corrections to the staff report: removing the word hourly from the second page of the staff report in the last paragraph to read, “Due to the reduced availability of new long-term resources, Peninsula Clean Energy would need to rely more on short-term PCC1 RECs to meet its stated hourly renewable target…” and on the fourth page of the staff report under Mid Cost Option changing the percentage from 62% to 60% to read, “Annual renewable percentage between 2025 and 2029 will continue on an upward trajectory with a minimum of 60 62% but will remain flexible based on available renewable resources…”.
Roy Xu, Director of Power Resources, gave a presentation including current priorities and goals, a timeline, renewable percent with the current resource portfolio, challenges with the 2025 target year, important terminology, and product content.
Director Romero asked for clarification on Portfolio Content Categories (PCC)-2. Roy explained that PCC-2 can be gas, and it is unclear if it could be coal.
Leslie Brown, Director of Account Services, elaborated on greenhouse gas (GHG) free and clean, noting that geothermal energy has had some emissions assigned to it in the recent past, which is why Peninsula Clean Energy’s product is clean, but not completely GHG free.
Director Loraine asked for clarification on PCC-1 renewable energy credits (RECs). Roy confirmed that the RECs are being purchased for Eco100 and EcoPlus customers.
Roy continued the presentation including the update of 100% annual renewable energy goal.
Mehdi Shahriari, Planning and Analytics Manager, continued the presentation with the calendar year 2025-2026 cost of energy analysis.
Director Taylor asked what is driving the higher prices. Mehdi explained that there are many factors including a project contract that was terminated, and projects with delays in 2025 and 2026, as well as other changes in the market such as Resource Adequacy (RA) changes. Roy added that in general, a shortage in supply and high demand for the products.
Director Taylor asked if changes in California law and the difficulty in out of state imported power would increase the available market. Roy explained that transmission lines into California are an obstacle and a large undertaking.
Chair Colson clarified that Eco100 customers do not get the 5% discount as it is a premium product.
Director Romero asked how the 2030 goal is achieved. Roy explained that the expectation is that projects will start to come online in 2029/2030 and that contracts can be signed now with 2029/2030 operation dates. Roy noted that he believes there will be more opportunities to contract these resources to come online in later years. Shawn added that those resources would fill out the hourly matching goal.
Director Romero asked if in 2030, will Peninsula Clean Energy have enough agreements, or will we negotiate more? Roy confirmed that we will negotiate more and explained that we can only be as confident as the currently available data in reaching this goal.
Public Comment: None
Director Mackin shared that if these contracts are not pursued now, other people will, and if we don’t push forward, we will lose ground. Roy confirmed, adding that we are in a high-cost environment for all products.
Director Loraine expressed interest in the mid-cost option and this decision is the core to the mission, “to reduce greenhouse gas emissions by expanding access to sustainable and affordable energy solutions”. Director Loraine added that to stay the course to our first goal is no longer affordable, but it needs to be sustainable, and to be clear eyed about the true cost of taking these steps forward, part of what we are talking about is the idea of investing in Power Purchase Agreements (PPAs) and longer term agreements for a more sustainable price that we can offer to customers.
Director Romero asked if the net asset position declines every year or are we passing these costs off to our residents. Nick Bijur, Chief Financial Officer, explained that under the old rate system, we wouldn’t have changed rates, this would impact days cash on hand, under new rate making approach, this would directly impact customer rates.
Director Taylor asked if the mid-cost option will impact and if there are enough reserves to cover this.
Nick explained there are not reserves to cover $216 million, so rates will need to go up, but suspects that PG&E rates will also likely go up in that time.
Chair Colson asked if we have set ourselves into a box with parameters that have changed- has the environment for electricity changed, political, and others where we have to make a readjustment.
Director DeGolia asked if the low-cost option includes selling REC’s. Roy confirmed.
Director DeGolia expressed that the goal to be 100% renewable isn’t particular important but to be 100% without fossil fuel generation and to spend our money in ways that creates additional emissions reductions. Director DeGolia believes that in the whole energy mix it is important to have the goals and advocate for goals that leave fossil fuel generated energy. Director DeGolia added that being customer centric means that cost is critical. We have to stay to the low-cost commitment that we made and is more important than being 100% renewable.
Director McCune supports the Staff recommendation as it is progress and achievable and doable.
MOTION: Director McCune moved, seconded by Director Medina to approve revisions to Peninsula Clean Energy's Organizational Priority Number 1 of the Strategic Plan from: "Delivering 100% Renewable Energy Annually by 2025" to, "Delivering 100% Renewable Energy Annually by 2030 Through Strategic Procurement of Resources to Maximize Peninsula Clean Energy's 24/7 Hourly Renewable Matching".
Director Taylor asked if we didn’t sell RECs is that still the mid-cost option? Director DeGolia explained that contracts will be reviewed too see if it makes sense to get to 80% or 100%, as long as the contracts help us move to hourly matching that will be good for customers and good for Peninsula Clean Energy.
Director Taylor suggests softening the strategy for the next 3 years or so, and then ramping it back up when the costs come back down. Shawn Marshall, Chief Executive Officer, explained she doesn’t want to kick the can down the road and make another huge jump in 5 years. This is why in the staff report talks about an upward trajectory, starting low and bumping up.
Chair Colson noted that $216 million is a lot of decarbonization programs and lower electricity that we could provide. A balance between cost and product. What is good about mid-range is the momentum is moving in the right direction without boxing us into a direction that in untenable.
MOTION PASSED: 14-1 (Absent: San Mateo County, San Mateo County, Daly City, Foster City, Menlo Park, Redwood City, South San Francisco, Woodside)
JURISDICTION BOARD MEMBER YES NO ABSTAIN ABSENT
San Mateo County Director Pine X
San Mateo County Director Mueller X
Atherton Director DeGolia X
Belmont Director McCune X
Brisbane Director Mackin X
Burlingame Director Colson X
Colma Director Gonzalez X
Daly City Director Daus-Magbual X
East Palo Alto Director Romero X
Foster City Director Hindi X
Half Moon Bay Director Rarback X
Hillsborough Director Ragsdale X
Los Banos Director Llanez X
Menlo Park Director Nash X
Millbrae Director Fung X
Pacifica Director Bigstyck X
Portola Valley Director Taylor X
Redwood City Director Martinez Saballos X
San Bruno Director Medina X
San Carlos Director Venkatesh X
San Mateo Director Loraine X
South San Francisco Director Coleman X
Woodside Director Fluet X
Total 14 1 8
Chair Colson asked for clarification on the no vote. Director Romero explained that the market is so unsettled that we may be back here again. Chair Colson clarified that the status quo is not what you are in favor of. Director Romero confirmed.
12.Discussion of Draft Load Management Standard (LMS) Plan for submission to California Energy Commission (CEC) (Discussion)
Jeremy Waen, Senior Director of Regulatory Policy, introduced the item and Doug Karpa, Managing Counsel for Regulatory Policy, gave a presentation that including goals of the load management standard, load management standard regulations and requirements, and options for marginal cost-based rates and cost-based programs.
Director Taylor asked about the magnitude of what to move off peak. Doug explained that, no, there isn’t, because we don’t know how responsive customers will be to price signals.
Director Loraine asked how good we feel about PG&E’s pilots and if we would be able to continue with internal programs. Doug confirmed that we can opt out.
Leslie Brown, Director of Account Services, added that we have been engaged for a couple of years before the LMS requirement. PG&E needs some Community Choice Aggregator (CCA) partners to make them functional since so much of their load is being served by CCAs. PG&E doesn’t have enough customers to run functional pilots without CCA participation.
14.Board Members’ Reports
None
ADJOURNMENT
Meeting was adjourned at 9:41 p.m.