Agenda packet — WestLight Energy Executive Committee, January 13, 2025

2075 Woodside Road | Redwood City, CA 94061
(650) 260-0005 | peninsulacleanenergy.com
Regular Meeting of the Executive Committee of the
Peninsula Clean Energy Authority (PCEA)
AGENDA
Monday, January 13, 2025
10:00 am
PLEASE NOTE: This meeting will be held in a hybrid format with both in-person and Zoom participation options for members of the public;
Board members shall appear in person.

In-Person Meeting Location:

PCEA Lobby, 2075 Woodside Road, Redwood City, CA 94061
Zoom, Virtual Meeting Link: https://pencleanenergy.zoom.us/j/83252507093 Meeting ID: 832-5250-7093 Passcode: 2075 Phone: +1 (669) 444-9171 Introduction
This meeting of the Peninsula Clean Energy Executive Committee will be held at the Peninsula Clean Energy Lobby: 2075 Woodside Road, Redwood City, CA 94061 and by teleconference pursuant to California Assembly Bill 2449 and the Ralph M. Brown Act, CA Gov’t Code. Section 54950, et seq.

Members of the Committee are expected to attend the meeting in person and should reach out to Assistant General Counsel for Peninsula Clean Energy, Jennifer Stalzer, with questions or accommodation information ([email protected]). For information regarding how to participate in the meeting remotely, please refer to the instructions at the end of the agenda. In addition, a video broadcast of the meeting can be viewed at https://www.peninsulacleanenergy.com/executive-committee following the meeting.

Public Participation
The PCEA Executive Committee meeting may be accessed through Zoom online at https://pencleanenergy.zoom.us/j/83252507093. The meeting ID is: 832 5250 7093 and the passcode is:
2075. The meeting may also be accessed via telephone by dialing +1(669) 444-9171. Enter the webinar ID: 832 5250 7093, then press #. (Find your local number:
https://pencleanenergy.zoom.us/u/kTlH1Ocod). Peninsula Clean Energy uses best efforts to ensure audio and visual clarity and connectivity. However, it cannot guarantee the connection quality.

Members of the public can also attend this meeting physically at the Peninsula Clean Energy Lobby at 2075 Woodside Road, Redwood City, CA 94061.

Written public comments may be emailed to PCEA Board Clerk, Nelly Wogberg ([email protected]) and such written comments should indicate the specific agenda item on which the member of the public is commenting.

Spoken public comments will be accepted during the meeting in the Board Room(s) or remotely through Zoom at the option of the speaker. Please use the “Raise Your Hand” function in the Zoom platform, or press *6 if you phoned into the meeting, to indicate that you would like to provide comment. 1 1. Approval of Minutes from the November 12, 2024 Executive Committee Meeting

2. Chair Report (Discussion)

3. CEO Report (Discussion)

4. Discussion and Recommendation to Approve Phase One/Strategic Policies of Peninsula Clean Energy's 2026-2030 Strategic Planning Process (Action)

5. Discussion of Rate-Setting Options and Recommendation to Adjust Peninsula Clean Energy Rates in February 2025 (Action)

6. Committee Members' Reports (Discussion)
Please note that Peninsula Clean Energy Executive Committee meetings are a limited public forum, and all public comment must relate to something that is within the subject matter jurisdiction of the Committee. If comments do not relate to the subject matter jurisdiction of the Committee, we will stop the comment and move on to the next speaker. General Counsel will assist in identifying comments that are not related to the subject matter jurisdiction of the Committee.

ADA Requests
Individuals who require special assistance or a disability related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting, should contact Nelly Wogberg, Board Clerk, by 10:00 a.m. on the day before the meeting at ([email protected]). Notification in advance of the meeting will enable PCEA to make reasonable arrangements to ensure accessibility to this meeting, the materials related to it, and your ability to comment.

Closed Captioning is available for all PCEA Board meetings. While watching the video broadcast in Zoom, please enable captioning.

CALL TO ORDER / ROLL CALL / APPROVE TELECONFERENCE PARTICIPATION UNDER AB 2449
This item is reserved to approve teleconference participation request for this meeting by Director pursuant to Brown Act revisions of AB 2449 due to an emergency circumstance to be briefly described.

PUBLIC COMMENT
This item is reserved for persons wishing to address the Committee on any PCEA-related matters that are not otherwise on this meeting agenda. Public comments on matters listed on the agenda shall be heard at the time the matter is called. Members of the public who wish to address the Committee are customarily limited to two minutes per speaker. The Committee Chair may increase or decrease the time allotted to each speaker.

ACTION TO SET AGENDA AND TO APPROVE CONSENT AGENDA ITEMS

REGULAR AGENDA

ADJOURNMENT
Public records that relate to any item on the open session agenda are available for public inspection. The records are available at the Peninsula Clean Energy offices or on PCEA Website at:
https://www.peninsulacleanenergy.com.

JOINING INSTRUCTIONS
2 Instructions for Joining a Zoom Meeting via Computer or Phone Best Practices:

Please mute your microphone when you are not speaking to minimize audio feedback If possible, utilize headphones or ear buds to minimize audio feedback If participating via videoconference, audio quality is often better if you use the dial-in option (option 2 below) rather than your computer audio
Options for Joining
Videoconference with Computer Audio - see Option 1 below Videoconference with Phone Call Audio - see Option 2 below Calling in via Telephone/Landline - see Option 3 below
Videoconference Options:

Prior to the meeting, we recommend that you install the Zoom Meetings application on your computer by clicking here https://zoom.us/download.

If you want full capabilities for videoconferencing (audio, video, screensharing) you must download the Zoom application.

Option 1 Videoconference with Computer Audio:

From your computer, click on the following link that is also included in the meeting calendar invitation: https://pencleanenergy.zoom.us/j/83252507093 The Zoom application will open on its own or you will be instructed to open Zoom.

After the application opens, the pop-up screen below will appear asking you to choose ONE of the audio conference options. Click on the Computer Audio option at the top of the pop-up screen.

Click the blue, "Join with Computer Audio" button.

In order to enable video, click on "Start Video" in the bottom left-hand corner of the screen. This menu bar is also where you can mute/unmute your audio.

Option 2 Videoconference with Phone Call Audio
From your computer, click on the following link that is also included in the meeting calendar invitation: https://pencleanenergy.zoom.us/j/83252507093 The Zoom Application will open on its own or you will be instructed to Open Zoom. 3 After the application opens, the pop-up screen below will appear asking you to choose ONE of the audio conference options. Click on the Phone Call option at the top of the pop-up screen.

Please dial +1 (669) 444-9171.

You will be instructed to enter the meeting ID: 832-5250-7093 followed by #.

You will be instructed to enter in your participant ID. Your participant ID is unique to you and is what connects your phone number to your Zoom account.

After a few seconds, your phone audio should be connected to the Zoom application on your computer.

In order to enable video, click on "Start Video" in the bottom left-hand corner of the screen. This menu bar is also where you can mute/unmute your audio.

Audio Only Options:

Please note that if you call in/use the audio only option, you will not be able to see the speakers or any presentation materials in real time.

Option 3: Calling in via Telephone/Landline:

Please dial +1 (669) 444-9171.

You will be instructed to enter the meeting ID: 832-5250-7093 followed by #.

You will be instructed to enter your Participant ID followed by #. If you do not have a participant ID or do not know it, you can press # to stay on the line.

You will be instructed to enter the meeting passcode 2075 followed by #. 4 DATE: January 10, 2025
MEETING DATE: January 13, 2025
VOTE REQUIRED: Majority Vote
TO: Honorable Peninsula Clean Energy Authority Executive Committee FROM: Brianna Arroyo, Administrative Assistant
SUBJECT: Approval of Minutes from the November 12, 2024 Executive Committee Meeting Item No. 1

PENINSULA CLEAN ENERGY AUTHORITY
JPA Board Correspondence

RECOMMENDATION
Approval of Minutes from the November 12, 2024 Executive Committee Meeting

BACKGROUND
Approval of Minutes from the November 12, 2024 Executive Committee Meeting ATTACHMENTS:
11-12-2024 EC Draft Minutes.pdf
5 Regular Meeting of the Executive Committee of the
Peninsula Clean Energy Authority (PCEA)
Minutes
Monday, November 12, 2024
10:00 a.m.

Zoom Video Conference and Teleconference

CALL TO ORDER
Meeting was called to order at 10:05 a.m. in virtual teleconference and in the Peninsula Clean Energy Authority lobby.

ROLL CALL
Participating:

Rick DeGolia, Atherton,
Coleen Mackin, Brisbane
Donna Colson, Burlingame, Chair
Betsy Nash, Menlo Park
Anders Fung, Millbrae
Jeff Aalfs, Portola Valley
Marty Medina, San Bruno, Vice Chair

Absent:

Dave Pine, San Mateo County
Ray Mueller, San Mateo County
A quorum was established.

PUBLIC COMMENT: None

ACTION TO SET AGENDA AND TO APPROVE CONSENT AGENDA ITEMS Public Comment: None
MOTION: Director Medina moved, seconded by Director Fung to set the Agenda and approve Agenda Item Number 1-2.

1. Approval of the 2025 Executive Committee Meeting Schedule

2. Approval of Minutes from the September 9, 2024 Executive Committee Meeting MOTION PASSED/FAILED: 7-0 (Absent: San Mateo County, San Mateo County)

JURISDICTION BOARD MEMBER YES NO ABSTAIN ABSENT
San Mateo County Director Pine X
San Mateo County Director Mueller X
Atherton Director DeGolia X
Brisbane Director Mackin X
6 Burlingame Director Colson X
Menlo Park Director Nash X
Millbrae Director Fung X
Portola Valley Director Aalfs X
San Bruno Director Medina X
Totals 7 2

REGULAR AGENDA

3. Chair Report
Donna Colson, Chair of the Board gave a brief chair report.

4. CEO Report
Shawn Marshall, Chief Executive Officer, provided a CEO Report.

5. Recommend to the Board of Directors Approval of the Updated Energy Risk Policy, replacing current Policies 7 and 15 (Action)
Nick Bijur, Chief Financial Officer, and Kelly Lew-Quintal, Energy Risk Manager gave a presentation on the updated Energy Risk Policy.

Public Comment: None
MOTION: Director Medina moved, seconded by Director Aalfs to Recommend to the Board of Directors to Approve the Updated Energy Risk Policy, replacing current policies 7 and 15.

MOTION PASSED: 9-0 (Absent: San Mateo County, San Mateo County)

JURISDICTION BOARD MEMBER YES NO ABSTAIN ABSENT
San Mateo County Director Pine X
San Mateo County Director Mueller X
Atherton Director DeGolia X
Brisbane Director Mackin X
Burlingame Director Colson X
Menlo Park Director Nash X
Millbrae Director Fung X
Portola Valley Director Aalfs X
San Bruno Director Medina X
Totals 7 2

6. Committee Members’ Reports
None

ADJOURNMENT
Meeting was adjourned at 11:21 a.m.
7 DATE: January 10, 2025
MEETING DATE: January 13, 2025
VOTE REQUIRED: None
TO: Honorable Peninsula Clean Energy Authority Executive Committee FROM: Shalini Swaroop, Chief Operating Officer
SUBJECT: Discussion and Recommendation to Approve Phase One/Strategic Policies of Peninsula Clean Energy's 2026-2030 Strategic Planning Process (Action) Item No. 4

PENINSULA CLEAN ENERGY AUTHORITY
JPA Board Correspondence

RECOMMENDATION
Discussion and recommend approval of three proposed strategic policies in the 2026-2030 strategic planning process. The full Board of Directors will vote on these 2026-2030 strategic policies at its January 23, 2025 Board meeting.

BACKGROUND
For its 2026-2030 strategic plan, PCE is working with La Piana Consulting. La Piana Consulting has worked with over 1,500 nonprofit organizations in its 20 years of operation, including numerous government agencies.

La Piana Consulting, staff, and the Board's Strategic Plan Ad Hoc Committee have been hard at work on Phase one of PCE’s 2026-2030 strategic plan which has focused on the development of three strategic priorities to guide the Agency's work over the next five years. In this phase, there has been a significant amount of feedback from various community partners, the Community Advisory Committee, the Board Ad Hoc Committee, PCE staff, and the Board of Directors. The strategic planning process thus far is outlined below:
8 The Board of Directors reviewed and opined on PCE’s initial “critical questions” at the Board Retreat on October 24, 2024. Since that meeting, relevant staff and PCE leadership have had multiple rounds of feedback on potential answers to the critical questions. These answers then evolved into “strategic policies" that have been further refined with input from the following groups in November 2024 – January 2025:

Community Advisory Committee
Board Ad Hoc Strategic Planning Committee
Board Ad Hoc Procurement Committee
Board Ad Hoc Programs Committee
PCE staff
Full notes on community engagement throughout the process, including feedback from community-based organizations and union representatives, is included in the Appendix of the attached document.

PCE will soon present three proposed strategic policies to the Board as part of phase one of Plan adoption. The Organizational Strategy consists of the three strategic policies that respond to the three identified critical questions from the October 24, 2024 Board Retreat.

Also included in this first stage of work is the development of two foundational tools: 1) defining PCE’s future value proposition and 2) developing a set of decision-making criteria to guide PCE’s strategic choices during and after this process. This organizational strategy should be stable for five years and act as a “north star” for PCE from 2026-2030. Upon fine-tuning and adoption of this organizational strategy, staff will begin to formulate PCE’s 9 Programmatic and Operational Strategy as part of phase two - the goals, objectives, and key results that PCE will deliver in alignment with its strategic policies. These elements will be more time-bound and be used to create agency, departmental, and individual annual work plans. The five-year programmatic and operational strategies will be brought to the Board later in 2025 and will look more similar to PCE’s last strategic plan. The La Piana strategy pyramid is below:

The final PCE Strategic Plan 2026-2030 will incorporate the following components:

PCE’s Organizational Strategy defining PCE’s strategic policy positions (January 2025) PCE's future value proposition and decision-making criteria as foundational tools PCE’s Programmatic and Operational Strategy establishing Agency goals to implement the strategic policy positions (Summer/early Fall 2025)

DISCUSSION
The Executive Committee meeting will provide an opportunity to discuss the three strategic policies below before they are presented to the Board for adoption in late January. Please note that staff may fine-tune this policy language to reflect feedback received from the CAC on January 9, 2025 and Executive Committee on January 13, 2025. 10 Strategic Policy 1:

Maintain a 100% zero-carbon power resource portfolio while working towards delivering 100% renewable energy on an annual basis by 2030 through strategic and cost-effective procurement of resources that maximize PCE’s 24/7 hourly matching of renewable energy and load.

This policy statement encompasses the following key elements:

Continued commitment to achieving industry-leading renewable energy targets.

Built-in flexibility on the 24/7 hourly matching goal to balance against potential cost impacts on PCE’s customers.

An emphasis on strategic procurement to minimize cost and risk exposure to PCE, minimize cost pressures for customers, and maintain PCE’s financial health.

A target of 60% minimum Renewable Portfolio Standard (RPS) of PCE's annual retail sales prior to 2030, with flexibility on the remaining composition to be determined annually by executive leadership/Risk Oversight Committee while maintaining cost competitiveness with PG&E.

Strategic Policy 2:

Prioritizing rate affordability for all customers and delivering targeted discounts for some equity customer segments.

Providing programs specifically aimed at equity customers and, where programs have broad participation, providing tiered levels of support that enhance equity customer access.

Including 'high economic need' as a criterion to ensure that equity efforts truly focus on customers with the greatest need for support.

Seeking third-party funding to support equity programs through a variety of channels.

Supporting policy initiatives designed to benefit equity customers.

Engaging and supporting equity customers and communities through partnerships with community-based organizations.

Strategic Policy 3:

Expanded DER project development support.

Expanded customer access to capital in support of DER/electrification projects.

Expanded consulting and technical assistance.

Drive relevant policy development and advocacy.
11 These draft strategic policies, the PCE value proposition, and the PCE decision-making criteria are included in the Draft La Piana Strategy Roadmap attached. In addition, the attachment includes Appendices that provides background and context into the strategic planning process that PCE has completed in partnership with La Piana Consulting.

Staff will return to the Executive Committee and Board of Directors this Fall at the conclusion of the phase two work to adopt the full 2026-2030 Strategic Plan which will include the strategic policies as noted above and five-year Agency 'Programmatic and Operational' goals.

ATTACHMENTS:

PCE DRAFT Strategy Roadmap 01-09-25.pdf
PCE DRAFT Strategy Roadmap Appendices 12-4-24.pdf
12 DRAFT Strategy Roadmap
v 1.9.25
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Executive Summary
Context
Peninsula Clean Energy (PCE) launched a strategic planning process in Spring 2024 to focus its efforts through 2030. This Strategy Roadmap is focused on organizational strategy and represents one-third of a full strategic plan. Organizational strategy describes the key focus for the organization through 2030.

Programmatic and Operational Strategies and work plans, to be developed in Spring and Summer 2025, will outline priorities in those areas generally and how organizational activities will align with organizational strategy.

Process Overview
Iterative conversations with staff, Board, and community members were used to, first, identify the critical questions PCE needed to resolve in order to guide it over the coming years and, then, to provide input to potential strategies in response to these questions. The policies proposed in this Roadmap represent PCE’s organizational strategy.

Procurement
The question posed was what are PCE’s procurement priorities and how do affordability concerns affect those priorities?
The proposed updated policy statement is that PCE will:

Maintain a 100% zero-carbon power resource portfolio1 while working towards delivering 100% renewable energy on an annual basis by 2030 through strategic and cost-effective procurement of resources that maximize PCE’s 24/7 hourly matching of renewable energy and load.

This policy statement encompasses the following key elements:
 Continued commitment to achieving industry-leading renewable energy targets.  Built-in flexibility on the 24/7 hourly matching goal to balance against potential cost impacts on PCE’s customers.
 An emphasis on strategic procurement to minimize cost and risk exposure to PCE, minimize cost pressures for customers, and maintain PCE’s financial health.  An implied 60% minimum Renewable Portfolio Standard (RPS) of PCE's annual retail sales prior to 2030, with flexibility on the remaining composition to be determined annually by executive leadership/Risk Oversight Committee while maintaining cost competitiveness with PG&E. 1 A “zero carbon” power resource portfolio might include de minimus emissions from geothermal facilities. 14

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Serving Equity Customers
The question posed was how can PCE continue to deliver services within an equity framework while also scaling decarbonization?
The proposed policy position is for PCE to:

Continue to deliver programs and services that benefit all PCE customers and provide meaningful greenhouse gas (GHG) reductions. PCE’s policy is to reduce GHGs as quickly as reasonably possible in order to mitigate future harms that disproportionally impact more vulnerable communities. In addition, PCE will design its programs and services with equity customers’ needs in mind by:
 Prioritizing rate affordability for all customers and delivering targeted discounts for some equity customer segments.
 Providing programs specifically aimed at equity customers and, where programs have broad participation, providing tiered levels of support that enhance equity customer access.  Including ‘high economic need’ as a criterion to ensure that equity efforts truly focus on customers with the greatest need for support.
 Seeking third-party funding to support equity programs through a variety of channels.  Supporting policy initiatives designed to benefit equity customers.  Engaging and supporting equity customers and communities through partnerships with community-based organizations.

Additional Priority Areas of Work
The question posed was are there any new or enhanced areas of work that PCE should engage in to further support decarbonization and electrification in California? The proposed policy is that:

Over the next five years, PCE will work to accelerate the development of distributed energy resources (DERs) in order to support further innovation and market transformation of distributed energy technologies, accelerate greenhouse gas (GHG) reductions, and provide customer and community resilience, including:
 Expanded DER project development support.
 Expanded customer access to capital in support of DER/electrification projects.  Expanded consulting and technical assistance.
 Drive relevant policy development and advocacy.
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Strategic Tools
In addition to its organizational strategy, PCE has developed two tools that will guide its ongoing strategic decision-making.

Future Value Proposition
Historically, PCE’s value proposition has been the ability to deliver both “cleaner” (GHG-free) and cheaper electricity. However, in a changing sector, that may no longer be a differentiating strength for PCE in the long-term. Therefore, PCE should extend its current value proposition and also develop its strengths to deliver a future value proposition built around:
 Being recognized as a leader in the communities it serves, leveraging its mission-based expertise and not-for-profit status to dramatically reduce emissions, lower electricity rates, and invest in the communities it serves.
 Putting its customers first by listening to customer needs, acting as a trusted partner, and supporting customers’ decisions and actions to address climate change.  Leading innovation in the clean energy and electrification sectors and innovating solutions that shape and scale the market and add value for its customers.

Decision-Making Criteria
PCE will be faced with a broad array of decisions over the next five years and will need to assess its choices using identified decision-making criteria. Through this process PCE has identified a number of specific criteria to guide these decisions, built around:
 Achieving the greatest mission impact
 Leveraging and building out its future value proposition  Advancing its commitment to Equity
 Accounting for financial impacts on PCE and its customers Additionally, PCE has identified several criteria it will refer to when creating implementation plans around major initiatives.

Next Steps
Based on the adopted Organizational Strategy, staff will develop Programmatic and Operational Strategies to bring the Organizational Strategy to fruition. This effort will include describing key metrics and milestones for PCE’s range of customer-serving and operational activities including procurement and programs that the Board can use to oversee progress. These will be developed in Spring-Summer 2025 and will come to the Board as part of the organization’s ongoing strategic plan updates. 16

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Strategy Roadmap
Process Summary.........................................................................................................................................2 Process Purpose and Overview.................................................................................................................2 The Strategy Pyramid and Process Outline ...............................................................................................2 Organizational Strategy .............................................................................................................................3 Programmatic and Operational Strategy ....................................................................................................3 Community and Staff Input ........................................................................................................................3 Value Proposition ..........................................................................................................................................4 Context......................................................................................................................................................4 Future Value Proposition ...........................................................................................................................4 Decision-Making Criteria ...............................................................................................................................5 Initial Decision-Making Criteria...................................................................................................................5 Planning Criteria ........................................................................................................................................5 Critical Questions ..........................................................................................................................................6 Context......................................................................................................................................................6 Critical Question One: Procurement Priorities............................................................................................6 Critical Question Two: Serving Equity Customers......................................................................................8 Critical Question Three: Additional Priority Areas of Work .......................................................................15 17

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Process Summary
Process Purpose and Overview
Peninsula Clean Energy (PCE) engaged La Piana Consulting in the early Summer of 2024 to lead its strategic planning process. The primary outcomes PCE sought from the process were a strategic framework providing a clear path forward and the flexibility to anticipate and respond to a constantly changing environment.

The Strategy Pyramid and Process Outline
PCE is advancing its strategy development and planning effort through three distinctive stages. These three stages of work align with the graphic below, including Organizational Strategy, Programmatic Strategy, and Operational Strategy.
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Organizational Strategy
This document is focused on the description of PCE’s proposed Organizational Strategy, to be reviewed and adopted at the January 2025 PCE Board meeting. This document also summarizes the process followed and input received to arrive at PCE’s proposed Organizational Strategy.

The proposed Organizational Strategy incorporates strategic policies related to three identified critical questions. These three strategic policies describe priorities to be used to guide PCE over the next five years.

Also included in this first stage of work are two foundational activities: defining PCE’s future value proposition and developing a set of decision-making criteria to guide PCE’s strategic choices throughout and beyond this process.

Programmatic and Operational Strategy
Based on the adopted Organizational Strategy, staff will develop Programmatic and Operational Strategies to bring the Organizational Strategy to fruition. This effort will include describing key metrics and milestones for PCE’s range of customer-serving and operational activities including procurement and programs that the Board can use to oversee progress. These will be developed in Spring-Summer 2025 and will come to the Board as part of the organization’s ongoing strategic plan updates.

Community and Staff Input
This process has been driven by the extensive engagement of staff, community members, and Board members.

Project Team
A Project Team including two staff members has guided this process as thought partners and logistical guides for La Piana. The Project Team has met approximately every other week during the process. 2 Board Ad Hoc Strategic Planning Committee
The Board’s Ad Hoc Strategic Planning Committee included five members of the Board and provided substantial input into the content of this process — including shaping the critical questions and proposed organizational strategy. The Committee has met three times during the process.3 Staff
All staff have been engaged both in the formative and latter stages of this process through small group conversations and two all-staff meetings.
2 Project Team members included Shalini Swaroop and Jana Kopyciok-Lande. 3 Ad Hoc Strategic Planning Committee members included Adam Loraine, Donna Colson, Leslie Ragsdale, Marty Medina, and Rick DeGolia.
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Senior Staff
Senior staff have been actively involved by participating in all Ad Hoc Committee meetings and meeting independently approximately 3-4 times. Specific senior staff members with primary responsibility for implementing the organizational strategy were responsible for working with their teams to review information gathered and craft policy proposals for Ad Hoc Committee review.

Community
Community groups were engaged both in the formative and latter stages of this process through small group conversations. Groups consulted included the Community Advisory Board, partner Community-based Organizations, Labor, and City and County sustainability staffs (including the primary liaison with Los Banos).

Value Proposition
Context
PCE’s mission is to reduce greenhouse gas emissions by expanding access to sustainable and affordable energy solutions. PCE is able to deliver on this mission through its value proposition — offering a differentiated benefit to the community that appeals to its customers.

Historically, PCE’s value proposition has been the ability to deliver both “cleaner” (GHG-free) and cheaper electricity. However, as long-term contracts expire and all load serving entities (LSEs) are mandated to achieve 100% zero-carbon energy by 2045, PCE’s value proposition may no longer provide a unique differentiation compared to other LSEs.

To ensure sustained success, PCE will need to extend its current value proposition — delivering cleaner and more affordable energy — while it also develops a new, sustainable value proposition. Appendix B outlines key factors PCE considered related to its future value proposition.

PCE will evaluate the need to update this mission statement following adoption of the organizational strategy.

Future Value Proposition
PCE will develop its strengths into a future value proposition built around:
 Being recognized as a leader in the communities it serves, leveraging its mission-based expertise and not-for-profit status to dramatically reduce emissions, lower energy rates, and invest in the communities it serves.
 Putting its customers first by listening to customer needs, acting as a trusted partner, and supporting customers’ decisions that enable actions to address climate change.  Leading innovation in the clean energy and electrification sectors and innovating solutions that shape and scale the market and add value for its customers. 20

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Decision-Making Criteria
Before making major strategic choices, PCE will need to assess its choices using identified decision-making criteria. These criteria should not be used as a rigid framework or a set of absolute values, but rather as a guide to discussions that ensures decision-makers examine relevant factors, challenge assumptions, and avoid skipping over inconvenient truths. It can be used at various levels and stages of decision-making to ensure PCE maintains its “north star.”
The preliminary list of criteria developed during this process is included as Appendix C. These have been refined into two tiers of considerations.

Initial Decision-Making Criteria
The first tier of criteria should be used as a “first pass” in decision-making, leading to broad strategic choices that outline PCE’s preferred path forward. These criteria are included in the chart below.

Tier One Criteria: Use to Drive Preliminary Decisions
Does this decision…
Leverage or build out PCE’s Future Value Proposition: Being a leader in the communities it serves, dramatically reducing emissions, lowering energy rates, and investing in its communities? Leverage or build out PCE’s Future Value Proposition: Putting its customers first, acting as a trusted partner, supporting customers to address climate change? Leverage or build out PCE’s Future Value Proposition: Leading innovation in the sector that shapes and scales the market and adds value for its customers?
Advance PCE’s commitment to Equity:
 Enhance equitable access to the benefits of reduced GHG emissions?  Align with PCE’s DEAI Framework?4
Take into account financial impacts to PCE?
Take into account costs to PCE’s customers?
Planning Criteria
The second tier of criteria should be applied as a “second pass,” as considerations in PCE’s ongoing planning to advance Programmatic and Operational Strategy. These criteria are included in the chart below. 4 The staff-developed DEIA Framework is also included in Appendix C. 21

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Tier Two Criteria: Use in Planning Processes to Advance Programmatic and Operational Strategy
How will the decision be implemented in order to…
Align with or support our organizational strategy?
Enhance or integrate with PCE’s current portfolio of services? Account for operational impacts:
 Consider PCE’s ability to deploy current staff or add new staff to address capacity and expertise needed?
 Assess impacts on current load profile?
 Create mitigation plans around potential risks, including financial, energy, reputational, and legal risks?
Meet compliance, policy, and political needs:
 Meets PCE’s compliance requirements?
 Enhances PCE’s community reputation as a trusted and transparent agent of change? Critical Questions
Context
Participants in the strategy development process identified three critical questions to focus on in this process. These questions, if resolved, provide broad guidance for ongoing decision-making by PCE:

1. What are PCE’s procurement priorities and how do affordability concerns affect those priorities?

2. How can PCE continue to deliver services within an equity framework while also scaling decarbonization?

3. Are there any new or enhanced lines of business that PCE should engage in to further support decarbonization and electrification in California?
Another question that has been raised is PCE’s stance on geographic expansion. Resolving this is not central to this process and can be addressed at a later time.

Critical Question One: Procurement Priorities
Context
PCE’s mission is to reduce greenhouse gas emissions by expanding access to sustainable and affordable energy solutions. PCE’s vision is a sustainable world with clean energy for everyone.

PCE’s power procurement strategy aims to displace fossil fuel generation on the grid and to serve customers with renewable energy each hour of the day while keeping costs low and meeting all regulatory requirements. PCE has been serving its customers with 100% clean energy on an annual basis since 2021. 22

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Strategic Policy
In April 2024, PCE’s Board of Directors approved and adopted the following Strategic Plan Priority, which serves as a general policy-level framework for future power procurement activities:

Deliver 100% renewable energy on an annual basis by 2030 through strategic and cost-effective procurement of resources that maximize PCE's 24/7 hourly matching of renewable energy and load.

While the current policy statement accurately reflects PCE’s forward-looking renewable goals, in an effort to emphasize PCE’s commitment to maintain a 100% zero-carbon resource portfolio at all times, the new policy statement is proposed to be:

Maintain a 100% zero-carbon power resource portfolio5 while working towards delivering 100% renewable energy on an annual basis by 2030 through strategic and cost-effective procurement of resources that maximize PCE’s 24/7 hourly matching of renewable energy and load.

Measurable Expectation (What PCE Is Doing)
Since the adoption of PCE’s Strategic Plan Priority earlier in 2024, PCE released two solicitations for long-term renewable and storage resources and received numerous quality project offers. PCE’s updated selection criteria focuses on:
 Portfolio fit to advance 24/7 hourly renewable matching  Maximizing resource value
 Minimizing operational risk
 Providing benefits to communities surrounding project sites Half a dozen projects have been shortlisted through the solicitation process. Over the next two years, PCE expects to contract an additional 1GW of new renewable and storage capacities to contribute to the renewable transition on the grid.
5 A “zero carbon” power resource portfolio might include de minimis emissions from geothermal facilities. 23

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Rationale
Maintaining the recently updated renewable goal and clarifying procurement criteria is recommended for the following reasons:

1. Since April 2024, there have been no significant changes in resource availability or pricing.

Therefore, the analysis previously performed that justified the adjustment of PCE’s renewable target is still valid. Pursuing a more aggressive 24/7 goal immediately could be both costly and risky.

2. The adopted strategic policy continues to focus on the concept of additionality through the 24/7 hourly matching approach, which has been PCE’s long-standing strategy to facilitate deployment of new renewable and storage capacities on the grid in order to displace fossil fuel generation and reduce emissions.

3. While the adopted strategic policy is not the lowest cost option, it retains flexibility, maintaining room for adjustment on an annual basis based on market conditions and PCE’s financial well-being, which in turn provides opportunities to minimize rate impacts to customers.

4. Accelerating GHG reduction through the 24/7 hourly matching approach is important to push the boundaries for customers interested in achieving rapid carbon reductions or have sustainability goals of their own. Continuing to procure towards a 24/7 target could create opportunities for future products that might be desired by such customers.

Future Policy Considerations
While the proposed strategic policy statement above provides adequate procurement guidance for the next five years, it is imperative for PCE to continue exploring alternatives for future policy considerations as the market keeps on evolving and the political, economic, and regulatory environments change. PCE will continue to look for opportunities to accelerate GHG reduction including considering additional concepts such as:
 How to create an ecosystem that could better facilitate an industry transition from an annual renewable to a hourly renewable framework
 How to adjust PCE’s renewable targets if there are major changes to the current tax credit rules and import tariffs
 Whether or not a 24/7 carbon-free approach would be more viable than 24/7 renewable  Whether minimizing marginal grid emissions should be used as the new metric  Whether it is feasible to pursue or prioritize carbon-free capacity procurement in addition to electricity procurement
Critical Question Two: Serving Equity Customers
Context
PCE’s mission is to reduce greenhouse gas emissions by expanding access to sustainable and affordable energy solutions. PCE’s vision is a sustainable world with clean electricity for everyone. 24

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PCE’s programs and services address multiple goals to reduce climate pollution, lower electricity costs, increase resilience, support economic development and underserved communities, and ensure a sustained customer base and business.

In 2021, PCE’s Board of Directors approved and adopted the following Strategic Plan Priority, which serves as a general policy-level framework for program activities:

Contribute to our community reaching a goal of 100% greenhouse gas-free in buildings and transportation by 2035.

PCE’s core programmatic goal is to decarbonize our communities by leveraging market forces and policy to drive affordability and ultimately achieve clean energy solutions without the need for market support.

In 2021, PCE’s Board of Directors also adopted a strong DEAI Policy, and in 2022 a DEAI Action Plan to direct staff in how to implement it. This policy requires that staff report to the Board twice a year on progress in implementing the Action Plan.

As part of this Action Plan, PCE developed the Diversity, Equity, Accessibility and Inclusion (DEAI) Decision-Making Framework which establishes guidelines for how different customers should benefit from the organization’s investments. It states, “While not all customers will always benefit equally from our expenditures, we should take care to ensure that we are not inadvertently exacerbating inequalities by:
a. distributing ratepayer funds from less wealthy to wealthier6 customers, or b. inadvertently discriminating based on race, ethnicity, or country of origin in the distribution of PCE customer benefits (per Title VI of the Civil Rights Act).” PCE is committed to serving its equity customers with thoughtfulness and intentionality. “Equity customers” is an umbrella term that represents a range of customer groups. PCE will focus its efforts on serving three types of equity customers:

1. Low-income Customers: Customers with household incomes at or below 80% of area median income (AMI).7

2. Customers with High Economic Needs: PCE is striving towards supporting customers with high economic needs under its self-funded programs. At this time, there is no standard definition available to identify such customers. Financial need is often measured by housing burden: a “low wealth household” spends more than 30 percent of income on housing costs and a “severely cost-6 Definition: Wealth, or net worth, is the value of assets owned by a family or an individual (such as a home or a savings account) minus outstanding debt (such as a mortgage or student loan). See https://www.pewresearch.org/social-trends/2020/01/09/trends-in-income-and-wealth-inequality/. 7 Per the US. Department of Housing (HUD). See at https://www.huduser.gov/portal/datasets/il/il2024/select_Geography.odn. In PCE’s service territory there are approximately 56,000 customers that are at or below 80% AMI, which represents about 20% of PCE’s residential customer accounts.
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burdened household” spends more than 50 percent of income on housing.8 This standard definition is based on income, which may not be the optimal metric. PCE will develop metrics to better identify customers with high economic needs later in the strategic planning process.9

3. Disadvantaged Communities (DACs): DACs refer to the areas throughout California that suffer most from a combination of economic, health, and environmental burdens. These burdens include poverty, high unemployment, air and water pollution, presence of hazardous wastes as well as high incidence of asthma and heart disease. California’s official definition of DAC is the top 25% of census tract per the CalEnviroScreen (CES) tool.10
Equity customers are disproportionally impacted by climate change and experience additional energy burdens and other unique challenges, such as language barriers, distrust, non-ownership of assets, and other issues. PCE’s programs provide targeted investments that deliver benefits to equity customers. That said, supporting equity populations through many customer-facing programs is generally more expensive on a per capita basis, often leaves out equity customer segments, may not take into account the difficulty in reaching equity customer segments, and/or emissions reductions can be less certain for more accessible technologies.

Strategic Policy
PCE will continue to deliver programs and services that benefit all customers and provide meaningful GHG reductions. PCE’s policy is to reduce GHGs as quickly as reasonably possible in order to mitigate future harms that disproportionally impact more vulnerable communities. In addition, PCE will design its programs and services with equity customers’ needs in mind by:
 Rates and discounts for equity customers: Prioritizing rate affordability for all customers, and delivering targeted discounts for some equity customer segments through expansion of custom programs such as DAC-GT (DAC Green Tariff) and other opportunities where feasible.  Targeted programs and tiered support: Providing programs specifically aimed at equity customers and, where programs have broad participation, providing tiered levels of support that enhance equity customer access through increased incentives and technical assistance.  Introducing economic needs as a criterion: Including ‘high economic need’ as a criterion to ensure that equity efforts truly focus on customers with the greatest need for support is important as the PCE service area includes a notable number of residents with significant financial means but limited income. Using only income level to define equity customers results in people with substantial financial resources participating in equity programs.
8 See National Equity Atlas. 9 One approach to defining wealth is implied in a report by the Silicon Valley Institute for Regional Studies which indicates that 50% of Silicon Valley households hold 1% or less of the region’s wealth, defined as net household assets. https://siliconvalleyindicators.org/data/economy/income/wealth/. 10 See CES tool at https://oehha.ca.gov/calenviroscreen/report/calenviroscreen-40. Around 23,000 of PCE’s customers are located in the top 25% of DACs, which represents around 8% of PCE’s residential customer accounts. 26

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 Seeking third-party funding to support Equity programs: Through its Innovation Strategy and Policy departments, PCE is actively pursuing state and federal funding for existing and new programs for its equity customers.
 Supporting policy initiatives: Supporting policies designed to benefit equity customers, improving affordability and access to services and benefits.
 Engaging and supporting equity customers and communities: Working with CBOs for identification and enrollment of equity customers and soliciting feedback on ways to improve PCE’s equity services.

Measurable Expectation (What We’re Doing)
To reduce GHG emissions quickly, PCE will prioritize applying its self-funded investments in ways that:
 Can be leveraged for scaling
 Are ready to deploy rapidly
 Are cost-effective by delivering relatively high GHG reduction for the dollars provided  Avoid engaging in PCE self-funded programs in ways that duplicate existing programs operated by community partners or supported by third-party funders
As implied in the policy description above, PCE will incorporate equity considerations into its decision-making in several specific areas:

1. Rates and Discounts
 Providing cost-competitive rates to enhance community affordability  Expanding the DAC-GT program
 Considering new opportunities to provide rate assistance

2. Targeted programs and tiered support
 Continuing to maintain current levels of PCE’s self-funded program revenues (approximately one-quarter of the total) to support efforts by equity customers to reduce GHG  Adhering to PCE’s DEAI Decision-Making Framework to ensure that ratepayer funds are not inadvertently distributed from less-wealthy to more-wealthy customers  Where feasible, increasing the tiers of support in its broad-based programs so that more support is offered to equity customers to enhance access

3. Economic needs as a criterion
 Defining and identifying customers with high economic needs as a foundational step in this approach

4. Third-party funding
 Securing state funding for equity programs such as Equitable Building Decarbonization, Self-Generation Incentive Program, and CPUC energy efficiency funding  Identifying and pursuing additional opportunities as opportunities arise

5. Policy initiatives
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 Advocating for policies that center equity customers’ interests  Advancing affordability policies at the CPUC, CEC, state legislature, and other regulatory bodies  Continuing to offer technical and staff support for cities considering reach codes, which benefit equity customers through new affordable housing being built without gas appliances

6. Equity community engagement
 Creating and implementing community engagement plans to inform program planning, implementation, and evaluation
 Sustaining the Community Grant program and focus groups  Engaging in ongoing program review to ensure its programs are as effective as possible at reducing GHG and reducing barriers to access by equity customers  Identification of equity customers through CBOs
Rationale
This proposed policy retains a strategic emphasis on rapid scaling of GHG reductions while introducing key new concepts in how PCE will support equity customers. Rapid scaling of GHG reduction adheres to PCE’s primary mission while also delivering longer-term benefits to all ratepayers including equity customers. equity customers benefit both through GHG reductions and associated impacts as well as by lowering the costs of products and services needed in the transition to GHG-free electricity. This policy aligns with PCE’s decision-making criteria by emphasizing GHG reductions while supporting PCE’s equity commitments and value proposition.

Relevant Information
During the vetting process, Board and community members asked for more information to support policy decisions made in this process. The information below is not complete and more will be generated when PCE moves into Programmatic and Operational Planning. However, the information here does provide further background so that Board decisions are well informed.  What is PCE’s current program investment to support equity customers? Currently, PCE invests approximately a quarter of its self-funded program budget in serving low-income customers. This percentage does not reflect additional funding that PCE is and will seek from external public funding sources that benefit PCE’s low-income customers, such as the DAC-GT program, Self-Generation Incentive Program, and Equitable Building Decarbonization program.

The financial impact of these public funds targeted toward low income and/or equity programs may be approximately $9 million in 2025-26. These numbers also do not include any electricity rate initiatives that PCE offers to low-income customers (e.g., freezing rates at previous levels or the December 2023 $300 bill credit to CARE/FERA customers).  What is the level of GHG reduction for dollars invested by different programs? 28

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Determining the exact level of GHG reduction per dollar invested in PCE’s energy programs is a complex task. PCE staff is currently working on a detailed analysis and can only provide initial conceptual trends at this time. The table below presents an overview of PCE’s eight existing energy programs and initiatives that benefit residential customers, listed in order of increasing cost for GHG reduction per sector based on historic figures (still under review). The table also describes how quickly GHG reductions are expected (GHG immediacy) and if the concept is scalable (note that “demand-constrained” means the uptake does not exceed available funds (i.e., more funds do not result in more uptake)).
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Table 1: Conceptual analysis of PCE’s residential programs’ GHG benefits and costs.

Program Market target Scalability &
market dynamic Benefits & Costs GHG immediacy
Buildings
Reach codes All High, through
replication in state
policy
High GHG reduction,
very low cost
Not immediate but
grows rapidly as new
buildings are built
and existing ones
are being remodeled
Appliance Mainly owner-occupied single
family
High scalability,
essential for early
market
transformation
High GHG, moderate
cost
Immediate
Home Upgrade
income qualified
Owner-occupied
single family
Med-high, core of
market
transformation
Med GHG,
expensive but
significant co-benefits (including
non-energy home
repairs)
Immediate
Distributed Energy Resources (DERs)
Residential solar &
storage
(forthcoming)
Owner-occupied
single family
Med-high, likely
popular to lower bills
Significant financial
benefit, makes
electrification
attractive
Indirect GHG
benefits through load
shaping
Community Solar Low-income
customers located in
DACs
Med-low, highly
dependent on state
funding
Moderate; customers
receiving a material,
long-term bill
discount
Low; higher when
program evolves to
include storage
Transportation
E-Bikes Broad low-income Uptake is slowing
but could be med-high
Theoretically high
GHG at low cost but
data is uncertain
(self-reported subset
of participants)
Depends on usage
Used EV Broad low-income Uptake is low such
that further
investment will not
increase uptake
(demand-constrained)
Low cost
Delivers customer
financial benefits
Immediate but low
GHG additionality
Used vehicles would
likely have entered
market anyway
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Program Market target Scalability &
market dynamic Benefits & Costs GHG immediacy
EV Ready (EV
charging)
Multifamily (& other) Demand-constrained
but essential for
equity and opening
up the EV market
High GHG
eventually, moderate
cost
Low-med, can take
years for vehicles to
start using chargers
depending on site
 Do we need or do we have any information about what equity customers say they want/value/need?
Multiple workshops and focus groups with equity customers in both English and Spanish find that these customers are interested in:
 Lower rates and help enrolling in discount programs
 More program offerings that are accessible for renters  Improving indoor air quality in their homes
 Resilience, including access to air conditioning during heat emergencies  Increased access to EVs
Critical Question Three: Additional Priority Areas of Work Context
The California energy landscape is in a constant state of transition as it advances towards meeting the State’s aggressive decarbonization goals.11 PCE must continue to be an innovator and thought leader in California’s clean energy transition while focusing on its core strengths. Currently, PCE focuses on providing electrical service to its customers while PG&E provides delivery (i.e., transmission and distribution (T&D)) services. PCE’s core competencies include (1) the procurement of centralized, large-scale front-of-the-meter (FTM) generation and storage projects (supply-side) and (2) offering beneficial energy programs to its customers for a variety of behind-the-meter (BTM) solutions (demand side). PCE must consider if there are other lines of business that it should engage in, or if its existing lines of business should be modified, to adjust to new and emerging realities during California’s transition to a decarbonized and decentralized energy economy.

Through this Strategic Planning process, a variety of possible new or enhanced lines of business were identified and considered for prioritization. Incorporated in these options — as vetted with PCE staff, the Board of Directors, and community members — was the concept of focusing on further fostering the development of distributed energy resources (DERs). DERs are defined as:
“Distributed Energy Resources (DERs) are assets on the distribution grid, either at the consumer’s side of the energy meter (behind-the-meter DERs) or in front of the customer meter connected to the 11 SB 100 (2018) requires that all retail electricity resources must be renewable or zero carbon by 2045. 31

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distribution grid (front-of-the-meter DERs). They can be used individually or in aggregate to provide value to the grid and individual customers.”
Strategic Policy
Over the next five years, PCE will work to accelerate the development of distributed energy resources (DERs) in order to support further innovation and market transformation of distributed energy technologies, accelerate greenhouse gas (GHG) reductions, and provide customer and community resilience.

Measurable Expectation (What We’re Doing)
The initiative to foster DERs will include an array of activities to support the diverse needs of different customers (not in order of priority):
 DER Project Development: Expanded and new means to support the installation of both BTM and FTM DERs in PCE’s service area, such as:
 Growing PCE’s Virtual Power Plant (VPP) by leveraging customer-sited assets for grid flexibility and reliability
 Developing front-of-meter (FTM), distribution-connected projects such as microgrids or local community solar+storage projects in collaboration with local communities  Financial Services: Expanded and new means of increasing customer access to capital in support of DER/electrification projects to install BTM DER projects, such as:
 Offering power purchase agreements (PPAs) for BTM solar+storage projects to an expanded customer group by accessing third-party financing  Offering on-bill financing to customers for carbon-free energy investments with varying interest rates based on financial need
 Exploring the ownership and operation of a spectrum of dispatchable energy assets, including generation, electricity storage, electric vehicle (EV) charging infrastructure, building loads, and other tools to meet PCE’s emission reduction and Equity goals.  Consulting & Technical Assistance: Expanded and new ways to support customers with technical information and direct support to facilitate their installation of DERs, such as:
 Providing direct technical assistance and consulting services — both free and fee-based — to aid commercial and residential customers
 Increasing distribution of educational materials providing “how-to” information for customers seeking to add DERs
 Advocacy: Drive policy development and advocacy to foster the development of DERs, such as:
 Enacting policies to reduce or eliminate regulatory and/or investor-owned utilities (IOU) hurdles to expand DERs
 Addressing limitations to the benefits of DERs because of transmission and distribution (T&D) systems’ weaknesses
This list reflects many examples of what PCE might do to create a comprehensive DER initiative. The actual activities will be developed as part of phases 2 and 3 (Programmatic and Operational Strategy development) of this process.
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Rationale
This proposal was developed by weighing each identified option against PCE’s decision-making criteria. A summary of input provided by PCE senior staff is included as Appendix J. Key considerations from that conversation and from input received from staff, Board, and community include:
 The high mission benefit of accelerating GHG reduction that can be achieved through improved customer economics that DER can provide
 Reduced power resource costs by improving PCE’s load shape, matching demand to clean supply, and lowering commodity costs
 The opportunity to build out of PCE’s future value proposition by becoming a trusted partner with its customers and the community with a range of relevant services  The local investment that DERs represent, providing economic and environmental benefits within PCE’s service area
 The potential for DER support to provide new funding streams to PCE, either through partnerships with for-profit providers, direct fee-for-service activities, or new sources of public support  Response to customer demand that ensures PCE’s position is not eroded by competitors 33

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PCE DRAFT Strategy Roadmap Appendices
v 12.04.24
Table of Contents
Appendix A: Initial Assessment .....................................................................................................................2 Appendix B: Future Value Proposition.........................................................................................................10 Appendix C: Decision-making Criteria .........................................................................................................12 Appendix D: Background on Critical Question One: Procurement ...............................................................17 Appendix E: Background on Critical Question Two: Equity..........................................................................21 Appendix F: Background on Critical Question Three: New or Enhanced Lines of Business.........................24 Appendix G: All-Staff Retreat Notes ............................................................................................................27 Appendix H: Board Input into Critical Questions ..........................................................................................35 Appendix I: Community Input into Three Critical Questions.........................................................................38 Appendix J: Rationale for Priorities for New or Enhanced Lines of Business...............................................51 34

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Appendix A: Initial Assessment
Process
La Piana consultants met with a range of staff members, Board members, and community partners to learn more about PCE and its needs at the start of this effort. Questions included:
▪ What is most needed from this process?
▪ Who else works in PCE’s sector?
▪ What are PCE’s strengths and how do those strengths differentiate the organization from others in the sector?
▪ What are the trends in the sector?
▪ What are critical issues PCE needs to resolve or answer? ▪ What are PCE’s organization and infrastructure needs? These initial conversations provided a base of information that was incorporated into all strategic planning activities that followed and led to three critical questions that defined the process focus. The specific groups La Piana met with at the start of the process included:
▪ The Board Ad Hoc Committee
▪ PCE Staff Leadership group (including a one-on-one conversation with the CEO) ▪ Two small staff groups totaling 16 individuals
▪ Representatives from the Community Advisory Committee Initial Assessment Summary
Key takeaways from these conversations are summarized below:

PCE’s Impact: Key Points
▪ A high value that PCE delivers for the community is by leveraging trust and low costs to advance decarbonization in the energy sector
PCE’s Competitive Landscape: Key Points
▪ PCE faces two areas of traditional “competition”: procurement and customers ▪ PCE also faces a type of “mission competition” with the fossil fuel industry and its supporters that plays out through broad narratives/PR and policy choices ▪ Much of the public does not know the difference between PG&E and PCE PCE’s Strengths and Differentiators: Key Points
▪ Innovation, supported by an ability to model new solutions and take reasonable risks 35

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▪ Financial strength can be leveraged for broader purposes ▪ Mission-based motivations
Critical Trends in the Sector: Key Points
▪ Load and time management are key issues
▪ The sector trend is to focus on a range of customers needing targeted supports, including but not limited to low-income customers
▪ The impacts of political and policy changes loom over the sector ▪ Cost issues are impacting operations and are foremost for many Critical Issues PCE Needs to Address
▪ As we grow, how do we balance the affordability of rates while addressing the need to decarbonize?
▪ How do we balance a commitment to equity-centered services with services that are offered equally to all customers? How do we ensure that all we serve can access our programs? ▪ What does PCE have the ability to meaningfully impact in the coming years? ▪ What is our role in managing power infrastructure (distribution and transmission networks)? ▪ How do we ensure long-term affordable rates and electrification without control of the distribution infrastructure?
▪ How might we increase our role in driving policy and supporting our local governments to help them meet green energy goals?
▪ Is our long-term intention to expand our geographic reach? ▪ What will our value proposition be going forward?
 Sub-question: how will we communicate and brand PCE based on our value proposition? PCE’s Operational Needs
▪ Organizational capacity has not kept pace with significant growth ▪ Staff need better tools to manage change
▪ Core operations are strong, but new and enhanced systems need to be developed in response to organizational growth
▪ Progress on DEAI work has been good and requires explicit continued commitment and development
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Complete Assessment Findings
A fuller survey of findings from the assessment process is included below.

What is PCE’s Impact?
Key Points
▪ PCE delivers high value for its community by leveraging trust and low costs to advance decarbonization in the energy sector
Additional
“We solve problems that have not been solved yet about the climate crisis.” PCE does its work locally, “then we influence the broader environment…. What’s really exciting is fundamentally changing the conversation statewide about how to do this effectively.” “We buy trust with the public through low-cost service — that trust creates space to decarbonize.” “We’re using energy as a tool for justice instead of a tool for harm.” “We create the models to do what others can follow, but that doesn’t scream ‘we are a rich county” — so in ways that are equitable, with social equity front and center.” “Once we do it, then the argument that [it’s not possible] goes out the window…. We address barriers so that those who follow [know how to do it].” “We make it easy for all the cities to reduce emissions. [My city] kept saying ‘our emissions are down so much!’ and it was all because of PCE. PCE is making the cities look good.” What Does PCE’s Competitive Landscape Look Like?
Summary
▪ PCE faces two areas of traditional “competition”: procurement and customers ▪ PCE also faces a type of “mission competition” with the fossil fuel industry and its supporters that plays out through broad narratives/PR and policy choices ▪ Much of the public does not know the difference between PG&E and PCE Additional
▪ Procurement competitors are PG&E, other CCAs, and direct providers ▪ PG&E has a lock on procuring large hydro
▪ PG&E is adept at working within the regulatory framework ▪ Direct access providers can tailor their pricing structure to large customers Direct providers are able to “ride on a legacy of being cheaper…. They can also negotiate directly with customers.
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At the regulatory level, “PCE has lots of obligations (from state regulators) to fulfill. That takes away local autonomy … funding we sought for our work is being cut.” ▪ Others (e.g., carbon-based energy providers, climate deniers, investor-owned utilities) are able to engage in politics more directly by donating to political campaigns or influencing the regulatory space. “They do PR well, they do lawsuits well, they work well with regulators and lawmakers.” “We don't compete with other CCAs. But I think we certainly do benchmark ourselves to them.” “This year, where PG&E is claiming to be 100% carbon free, and we're now backtracking and saying, well, we can't say that we're cleaner than PG&E anymore.” ▪ “Competition” with PG&E is challenging because many don’t know the difference between PCE & PG&E
▪ Micro grids are potentially a newly-emerging competitor ▪ PG&E procurement is transparent; direct access procurement is opaque What are PCE’s Strengths and Differentiators?
Key Points
▪ Innovation, supported by an ability to model new solutions and take reasonable risks ▪ Financial strength can be leveraged to broader purpose ▪ Mission-based motivations
Additional
“PCE is has the ability to build models that actually drive decarbonization.” “We have a very supportive and intelligent Board that understands what we’re trying to do.” “Our people are smart and mission-aligned. We get a lot done with a really lean team.” “We have capable, influential, high profile staff — but that is tempered by junior staff who are super staff and committed. That mix [is great] as a people manager, it’s great to have expertise and a pipeline of new fresh talent growing, learning.”
“Our assets, including our financial resources and incredible customer reach. Our enormous flexibility in our range of activities. We can bring together data to do sophisticated analytics.” “We’re innovative. We’re able to think 10 years ahead — and leadership is willing to take risk [supported by our] strong financials.”
“We’re a nonprofit focused on our mission and the public good…. We can funnel any upside of our procurement practice to our customers, instead of to [equity owners].” “Not having a for profit motive is a strength.”
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“The ethos of collaboration at PCE is also a massive strength. We collaborate closely with pretty much every stakeholder, local elected officials, our big customers to understand what's driving the headwinds in the commercial space. Also, our regulators, our peer agencies, and each other. PCE is just not afraid to work together with others — and to work with ourselves together, internally.” “It’s more than just providing electricity. It’s programs.” What Are Critical Trends in the Sector?
Summary
▪ Load and time management is a key issue
▪ The sector trend is away from focusing exclusively on low-income customers as those needing targeted supports
▪ The impacts of political and policy changes loom over the sector ▪ Cost issues are impacting operations and are foremost for many Additional
▪ Oversupply of solar during peak production hours — and over-response to that from regulators — has pushed issues of demand management and load management to the forefront “There’s an increased recognition of the need for energy storage.” ▪ The state is driving towards more electrification
“Costs are increasing. There are trends towards municipalization. There’s growing inequality, especially as measured by wealth.”
“The sector is moving away from income as a measure of who is in need of help and thinking about wealth.”
▪ Political changes could have a big impact on the sector, such as diminished federal funding, changes in investments in battery storage, support for clean energy generally, increased tariffs, etc. “I think we have an affordability crisis that's going on with energy in California right now. Prices are hitting such an untenable level, frankly, that it's putting a lot of pressure on regulatory and energy entities — on the governor's office, on local political officials — to find some way to rein in increasing utility costs.”
“[We’re looking for ways of] making it so that decarbonization is not the boogeyman of affordability.” “We need to do more thinking about serving renters.”
▪ It’s becoming harder to find labor in the region
▪ The State’s policy change on rooftop solar has changed the trajectory of DER ▪ Interest in electric vehicles continues to grow
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What Are the Critical Issues PCE Needs to Address?
Summary
Based on the “additional” input below and follow up conversations, an initial list of key questions emerged including:
▪ As we grow, how do we balance the affordability of rates while addressing the need to decarbonize?
▪ How do we balance a commitment to equity-centered services with services that are offered equally to all customers? How do we ensure that all we serve can access our programs? ▪ What does PCE have the ability to meaningfully impact in the coming years? ▪ What is our role in managing power infrastructure (distribution and transmission networks)? ▪ How do we ensure long-term affordable rates and electrification without control of the distribution infrastructure?
▪ How might we increase our role in driving policy and supporting our local governments to help them meet green energy goals?
▪ Is our long-term intention to expand our geographic reach? ▪ What will our value proposition be going forward?
 Sub-question: how will we communicate and brand PCE based on our value proposition? Additional
“We need to decide how to prioritize all the things we are trying to accomplish. How might we rank being ultra green, compliance, affordability, maybe workforce development, and DEAI.” “There’s [tension] between the speed of decarbonization and serving low-income clients.” “The current challenge for customers is rates, not clean power. So how do we maintain our [carbon reduction] goals while carrying out our mission?”
“Should we be developing new renewable energy systems so there are more out there?” “Should our focus be on more local and distributed generation?” “How will PCE bake DEAI action plan into our processes?” ▪ There’s a question about how PCE can meet its carbon goals without municipalizing the grid; a suggested reframing of this question is “how do we effectuate long term affordable rates and electrification without control of distribution infrastructure?” “How aggressive do we need to get with regulators and the legislature (Energy Commission & CPUC)?”
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“We need the ability to organize politically.”
▪ Does PCE need to create a new approach to its rate structure to increase more flexibility — in essence, abandon the PG&E model?
▪ What kind of learning or new technology is needed, or can be developed by PCE, to deal with the changes in demand/load management?
“We’re going to have to rethink how do we define our value proposition. As we get away from guaranteed savings [on energy contracts]. As we increasingly deal with an environment where PG&E is running near carbon free as well? … What is the scope of our impact intended to be? Is it limited to our service territory?”
“How can we ensure that local governments are moving forward on decarbonization?” “How can we remain innovative?”
“What do we have the ability to meaningfully impact and lead on in the coming years?” “How can we make the maximum use of IRA funding (Inflation Reduction Act & Infrastructure)?” What Are PCE’s Operational Needs?
Summary
▪ Organizational capacity has not kept pace with significant growth ▪ Staff need better tools to manage change
▪ Core operations are strong, but growth systems and procedures need to be established or improved
▪ Progress on DEAI work has been good, and it requires continued commitment and development Additional
“We need to make sure that we're resourced adequately from a people technology and tools perspective. We have, again 65% growth in the past year/ year and a half, we need to make sure that we can retroactively support the projects that we want to launch and have launched. And then whatever PCE’s growth footprint looks like moving forward, we need to make sure we can support the new folks coming on Board.”
“We are resource constrained and have heavy workloads for some of the business, what I call the business infrastructure team. So that means finance, HR, admin and office teams [need expanded capacity].”
“Staff planning is something we could improve on. So gaming out, what is going to be the bandwidth impact of taking on new projects? We hire this one person, what is their support staff needed? And over a three year time horizon? It seems like it's kind of shoot from the hip at this point, hiring on a band aid fashion as opposed to planning in advance for certain staff requirements.” 41

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▪ Given the pace of growth, the numbers of new people joining the agency, and the changing environment PCE works in, staff expressed a need to develop their change management skills ▪ PCE has a track record of hiring great people, and many staff specifically say that they sought out employment at PCE because of its reputation
▪ PCE’s core support functions (account services, transaction management, financial management, etc.) are strong; this provides a base on which innovation can take place “We get the nuts and bolts work done, a solid B+ or A-.” ▪ That said, the organization is still new and its systems are not fully developed. “[Ironically], I think we’re good at change because we don’t have great systems and processes — we don’t have legacy baggage [so we have to innovate]. We need more processes, controls, systems and that’s why we’ve beefed up staff.”
“We need big key, agreed-on, company-wide decision-making criteria or levels to go through.… Historically, we start pursuing a fire in front of us, then come back to other priorities later.” “We need company-wide programs (software, systems) that everyone knows how to work. I just discovered something on Canva, need a project management tool. We’re using Google Docs or some other sharing. We need that all in one place.”
“We need fewer meetings with clearer purpose, better facilitation.” “I'd like to call to attention or the work that is an organization we've been doing on Diversity, Equity access, accessibility and inclusion. And just a deep desire to see that continuing to be institutionalized and implemented in each of the teams.” “It would be great to see more cross team collaboration … or even cross training [across teams] on each other’s separate sets of responsibilities.”
“We have an ethos and culture that believes in what we do and is committed to the mission.” 42

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Appendix B: Future Value Proposition
Based on input during the assessment, at the August Ad Hoc Committee in-person Strategy Retreat, and during the September all-staff retreat, a comprehensive list of elements to consider for inclusion in a future value proposition were identified, as described below.

What could our future value proposition be?
▪ 24/7 Time-Coincident Renewable Energy: Prioritizing round-the-clock access to renewable energy as a differentiating strength.
▪ Not-for-Profit Structure: Focusing on community reinvestment, with no shareholders or profit-driven motivations. ▪ Local Focus: Serving as a trusted, community-led energy provider with elected officials on the Board and a strong local presence.
▪ Innovative Model: Developing new approaches to industry challenges that work for our local community and serve as a model across the state and country. ▪ Customer-Centric Approach: Offering easy ways for customers to learn and benefit from savings on energy decisions, electrification, and emissions reductions, built through trust-building with customers.
▪ Affordability: Maintaining lower rates compared to competitors like PG&E, while balancing between affordability and decarbonization goals.
▪ Trust and Transparency: Building and maintaining trust by being a resourceful, transparent partner in energy decisions.
▪ Nimble and Efficient: Avoiding bureaucratic hurdles to remain responsive and agile in meeting community needs, maintaining commitment to progress, and getting things done.

What new strengths do we need?
▪ Focused Support for Low-Income and Disadvantaged Communities: A better distinction in policies and programs to address the specific needs of these groups. ▪ Expanded Direct Customer Support: Launching the contact center and providing more human, face-to-face interactions.
▪ Customer-Centricity: Aligning policies with customer needs and creating mindsets, platforms, and processes to make customer-centricity real, not just aspirational. ▪ Proactive Communication and Adaptability: Listening to customers, acting quickly, and communicating changes effectively.
▪ Anticipating Technological Changes: Keeping costs low by anticipating changes in technology and procurement strategies.
▪ Energy Equity: Driving structural changes to support equity and lower customer rates. ▪ Innovative: Leveraging the Agency’s business model to take reasonable risks and innovate. 43

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Current Strengths to Reinforce
▪ Mission-Centricity: Continuing to leverage the Agency’s mission-focused structure to attract and retain a dedicated, talented team.
▪ Trusted Community Partner: Building on the organization's role as a trusted advisor and neighbor within the community.
▪ Cost Leadership: Maintaining a lower cost structure compared to competitors like PG&E. ▪ 24/7 Renewable Energy Progress: Focusing on making strides toward delivering 24/7 time-coincident renewable energy. ▪ Diverse Program Portfolio: Offering a variety of programs and support tools, such as financing, rebates, and technical assistance, tailored to customer needs. ▪ Communication on Emissions and Renewable Energy: Improving how greenhouse gas reduction and renewable energy goals are communicated.
▪ Nimbleness and Adaptability: Continuing to act quickly on customer feedback and changing needs, without being constrained by regulations like investor-owned utilities (IOUs). ▪ Nonprofit Advantages: Reinforcing the organization’s ability to focus solely on customer benefit rather than shareholder profit, with flexibility in spending on pro-community and pro-consumer projects.
▪ Efficient Staffing and Resource Allocation: Leveraging a lean staff structure for more efficient program implementation.
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Appendix C: Decision-making Criteria
Initial Criteria Identified
Below is an initial draft of PCE’s decision-making criteria, developed at the August Ad Hoc Committee in-person Strategy Retreat and advanced further at the September all-staff retreat. These criteria were further refined during the process.

Does/Is this decision (both independently and compared to other options) … ▪ Advance maximum mission and strategic impact:
 Further our goals to encourage greenhouse gas reduction and promote electrification locally within our communities?
 Represent sustainable (socially, economically, environmentally), measurable, and describable energy benefits to the communities we serve?
▪ Leverage or build out PCE’s Value Proposition?
▪ Advance our commitment to equity:
 Enhance equitable access to the benefits of cleaner energy production, reduced greenhouse gas emissions, and electrification for individuals and communities most in need?  Align with our DEAI framework?
▪ Advance positive customer and community impact:
 Enable quick action on customer needs (explicit and latent)?  Unlock future options to further innovate and provide additional benefits?  Result in positive learning or influence that extends outside of our service area ▪ Align with our financial sustainability:
 Address economic impacts that are the foundation for PCE’s financial sustainability?  Account for implementation costs for both PCE and its customers? ▪ Enhance the value of PCE’s current portfolio of service offerings via cost reductions, better service efficiencies, technology and customer information enhancements, or new ways to utilize / maximize benefit of interacting with our organization?
▪ Account for operational impacts:
 Consider PCE’s ability to deploy current staff or add new staff to address capacity and expertise needed
 Assess impacts on current load profile (e.g., daylight v. nighttime load requirements)  Include an analysis of potential risks, including financial, energy, reputational, and legal risks ▪ Meet compliance, policy, and political needs
 Meets PCE’s compliance requirements?
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 Enhance PCE’s community reputation as a trusted and transparent agent of change? Diversity, Equity, Accessibility, and Inclusion (DEAI) Framework Following is the staff-developed DEAI framework referred to in the decision-making criteria, as updated in May 2024.

A. Why Use this Decision Framework
This framework is used to implement our DEAI Policy, including this statement:

Peninsula Clean Energy commits to making diversity, equity, accessibility, and inclusion a priority during decision-making. We firmly uphold anti-racism, anti-discrimination, diversity, equity, accessibility, and inclusion as core values.

There is more than one way to meet our mission and priorities. This decision framework is designed to help staff find strategies that are effective in advancing our mission, vision, and goals and that also advance equity.

B. When to Use this Decision Framework
This framework shapes decision-making by helping us analyze all major Peninsula Clean Energy proposals, at the beginning stages of their development.

This allows time to gather additional information about potential equity impacts and shape the proposal as needed to address these impacts before the proposal is baked.

Prompts for When to Engage in the Decision Framework Process ▪ Programs, Marketing, and Customer Care: The intention is to analyze the impact of your departmental portfolio as a whole – the big picture. Use the framework when preparing departmental annual strategic planning, budgeting, and reporting starting in the 2025-26 budget cycle. It would also apply to any mid-cycle spending over $500K that was not included in your annual budget (except for power resources).
▪ Finance and Customer Care: Rate-setting, budgeting
▪ Regulatory: Before starting a major filing
▪ Legislative: When deciding whether to support bills
▪ Admin/HR/Technology: All major decisions
▪ Executive Team: Strategic planning and all-staff meetings ▪ Power Resources: When setting strategic goals for procurement, updating RFP templates, negotiating PPAs, and looking at community benefit agreements 46

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C. How to Use this Decision Framework

1. Research: Department staff researches the equity impacts of the proposal/budget using the questions below using available customer data.

2. Discuss and decide: Department head (and other staff as needed) discusses the equity analysis with one or more DEAI Council member who is outside of the department but familiar with your department’s work for a new perspective. Go through the equity analysis thought process together. Brainstorm actions needed to address any equity concerns raised. Decide on the most effective ways to address or mitigate these concerns. Document these commitments together, and send to the COO and DEAI Council.

3. Act: Amend your proposal/budget plan to address any equity concerns, and seek approval by the COO.

4. Present: If your proposal is going to the Board of Directors, include a brief statement in your memo about how your proposal addresses DEAI.

D. Analysis Questions
All Peninsula Clean Energy ratepayers contribute to our revenues. A key equity question is how different customers benefit from the organization’s expenditure of these funds.

While not all customers will always benefit equally from our expenditures, we should take care to ensure that we are not inadvertently exacerbating inequalities by:
a. distributing ratepayer funds from less wealthy to wealthier customers, or b. inadvertently discriminating based on race, ethnicity, or country of origin in the distribution of PCE customer benefits (per Title VI of the Civil Rights Act) Definition: Wealth, or net worth, is the value of assets owned by a family or an individual (such as a home or a savings account) minus outstanding debt (such as a mortgage or student loan). Source: Pew Research Center
Research and discuss these questions:

For internal-facing decisions only: Does this proposal grow our internal culture of diversity, equity, accessibility and inclusion at PCE?
For decisions that will impact customers:

1. Who would benefit from this proposal (or budget), and how? Who would be eligible for or would be able to access the benefits?
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Consider 1) wealth, including homeowners vs renters, 2) race, ethnicity, and country of origin, 3) language and technology barriers, 4) geography, including San Mateo County and Los Banos, and 5) other potentially relevant demographics such as age or gender.

Also consider communities that are disproportionately harmed by air pollution from fossil fuels (eg state-defined “disadvantaged communities” or DACs).

2. Who would pay for this proposal, and how? In other words, which customers will likely not benefit from this proposal?
Consider 1) wealth, including homeowners vs renters, 2) race, ethnicity, and country of origin, 3) language and technology barriers, 4) geography, including San Mateo County and Los Banos, and 5) other potentially relevant demographics such as age or gender.

Also consider communities that are disproportionately harmed by air pollution from fossil fuels (eg state-defined “disadvantaged communities” or DACs).

3. Could this proposal inadvertently shift ratepayer funds from less wealthy to wealthier customers, or inadvertently discriminate based on race, ethnicity, or country of origin in the distribution of PCE customer benefits? How so?

4. Does this proposal help make energy more affordable, especially for energy-burdened customers? Or could it increase energy bills for energy-burdened customers?

5. What equity concerns did you identify through this analysis, and how do you plan to address them? Suggestions: seek community input, re-structure proposal, fund mitigating measures Useful links to demographic data and analysis:
▪ US Census Quick Facts San Mateo County
▪ US Census Quick Facts Los Banos
▪ Bay Area Equity Atlas (select San Mateo County, explore the data options) ▪ Cal Enviroscreen 4.0 Map (select census tracts for San Mateo County or Los Banos, explore the data layers)
▪ CEQ Climate and Economic Justice Screening Tool:
https://screeningtool.geoplatform.gov/en#8/33.469/-97.502 ▪ Coming soon: Blastpoint
Reach out to your colleagues and other teams as needed to find the data to conduct your analysis. For customer demographic data or ideas about seeking community input, talk to the Community Relations Team.
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E. Additional Background on Energy Equity
What is equity in the context of energy?
Several actors are currently trying to define energy equity. The University Michigan Energy Equity Project identifies four types of equity to consider in the energy sector:

1. Recognition: understand who we are serving, and acknowledge injustices our customers experience in the energy system

2. Procedural: how are we serving our customers (process)

3. Distributive: who is benefitting from energy systems and programs

4. Restorative: how are we rectifying inequities and harm that has been done in the energy system What does achieving energy equity look like?
Draft staff definition of energy equity:

That all community members – regardless of race, ethnicity, age, gender, career, religion, identity, citizenship, or marital status – have access to zero carbon energy and an all-electric life without compromising their general welfare; the ability to meet their basic needs; the ability to attain housing, homeownership or prosperity; or going into undo personal financial debt on behalf of the environment. 49

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Appendix D: Background on Critical Question One: Procurement The information below was developed to inform the October 24 Board Retreat discussion.

Context
SB 100 (2018) requires that all retail electricity resources must be renewable or zero carbon by 2045. To achieve this goal, PCE (and other LSEs in the State) have been driving towards the decarbonization of the energy supply by procuring greenhouse gas (GHG) free and renewable energy. At this time, according to their Power Content Labels, many electric Load-Serving Entities (LSEs) in California, including PCE and the IOUs, are reporting almost 100% GHG-free energy on an annual basis. However, there are many considerations and approaches to the decarbonization of energy (see below) that can obscure progress against proclaimed goals. For example, natural gas still accounts for 39% of California’s electricity on the grid. This natural gas is often not reflected on the Power Content Label by LSEs through the procurement of excess renewable or GHG-free electricity. In short, the system is imperfect; yet the shortfalls of the state’s mandated annual emissions reporting through the power content label are a key factor in evaluating and reporting on current PCE procurement goals. As a reminder, PCE’s current goal is to achieve 100% renewable energy on an annual basis by 2030 through strategic and cost-effective procurement of resources that maximize Peninsula Clean Energy’s 24/7 hourly matching of renewable energy and load.

Furthermore, recent market changes, increased market demand for clean power, wildfire and outage concerns, and regulatory mandates have increased price pressure on PCE’s procurement of generation resources. Subsequently, rate affordability has become a bigger concern for customers and policymakers given recent bouts of inflationary price pressure in the economy. Considering these pressures, PCE must determine what its priorities are as it continues to build out its generation resource portfolio.

Competing considerations include (but are not limited to):
▪ Centering rate affordability for PCE customers
▪ Reducing GHG emissions from electric supply using the following approaches:
 Procurement of GHG-free/carbon-free energy on annual basis  Procurement of renewable energy procurement on an annual basis  Focusing procurement to achieve 24/7 time-coincident renewable energy Definitions
Decarbonization: The reduction or elimination of carbon dioxide and other greenhouse gas (GHG) emissions from the process of generating and delivering electricity, and from end-use processes such as transportation, space heating, water heating, industrial processes, etc. In the context of Question 1, we are only focusing on decarbonization of electricity generation and delivery.

GHG-free energy: Energy produced from resources that generate no carbon emissions1including large hydroelectric resources and nuclear power in California. 1 From Environmental Protection Agency.
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Renewable Energy: Resources that meet California’s renewable portfolio standard (RPS) which include solar, wind, geothermal, small hydroelectric, biopower, and ocean thermal and tidal facilities.2 PCE’s procurement policy excludes biomass although this energy is still considered renewable energy under state law.3
Generation Provider: PCE, as a California load serving entity, is the default electric generation service provider for all of its customers, signing contracts with developers and other counterparties to deliver electricity that is supplied to California’s grid on behalf of its customers.

Power Content Label: Each load-serving entity in California is required to send a Power Content Label (PCL) to its customers every year. The PCL reflects the environmental attributes associated with the energy procured by the LSE on an annual basis. The format and reporting of the PCL is regulated by the California Energy Commission in response to state law. 24/7 time-coincident matching renewable energy goal: Matching renewable energy with customer demand in each and every hour of the day. PCE’s current approach to 24/7 is to maximize hourly matching while balancing affordability. This may result in “partial” 24/7 matching during some periods of the year. 24/7 matching can be more expensive than annual accounting but will also result in greater emissions reduction.

The term “clean power” or “clean energy” is often used interchangeably to reference renewable and/or carbon-free energy, but it has no consistent definition, and we are not relying on these terms during this process.

Possible Answers
Resolution of this question will require a policy position that provides enough specificity for staff to be able to manage to clear goals and for PCE to communicate clearly with customers and the public. At the same time, it must equip PCE to adapt to the evolving energy landscape.

Previous policy has been to keep PCE’s energy rates “reasonable” — which has meant approximately 5% less than PG&E’s comparable rates — while seeking to achieve a 24/7 time-coincident renewable energy goal. PCE now seeks to improve this strategy by more clearly delineating the factors that contribute to “clean” energy and assessing how to prioritize those factors in its procurement decisions.

The policy options that follow were developed by PCE senior staff — informed by conversations at the August Ad Hoc Committee and September all-staff retreat — in order to provide examples of how this critical question might be answered. We are now seeking additional input into the options — or policy answers — PCE might adopt to answer this question. We are not trying to identify the “right option” during the Board retreat. The questions for the Board to consider are:
▪ How do you think PCE should balance the four factors (see above) driving procurement decisions? 2 Refer to the RPS Guidebook at https://www.energy.ca.gov/programs-and-topics/programs/renewables-portfolio-standard. 3 From PCE 2020-2025 Strategic Plan.
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▪ What else should PCE be considering during procurement decision-making and priority setting? ▪ What else do you need to know when voting on a PCE policy in this area? 52

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Question One Policy Options
As noted above, the following options are offered as a way to consider the question of balancing customer affordability while maintaining aggressive renewable and carbon-free energy goals. These are not offered as rigid options but rather to be used to spur discussion, questions, and direction.

Option A:

Prioritize GHG Reduction
Option B:

Balanced Priorities (Status
Quo)
Option C:

Most Affordable
Factors
Prioritize in this order:

1. 24/7 as soon as possible

2. Renewable (100% on annual
basis by 2030)

3. GHG-free energy on an annual
basis

4. Affordability
Factors
Prioritize in this order:

1. GHG-free energy on an annual
basis

2. Affordability

3. Renewable (100% on annual
basis by 2030)

4. 24/7
Factors
Prioritize in this order:

1. Affordability

2. GHG-free energy on an annual
basis

3. Renewable (100% on annual
basis by 2030)

4. 24/7
Result
In order to prioritize 24/7 matching,
PCE would forego affordability and
annual GHG-free goals in exchange
for building and operating a power
portfolio that matches renewable
energy supply to customer demand
each and every hour of the day. PCE
would build new resources (solar
plus storage, stand-alone storage,
wind, and geothermal) that would
displace the most emission-intensive
natural gas generation. This
approach would be significantly
more expensive than the status quo.

Result
Option B reflects PCE’s current
approach, which is to prioritize retail
products that minimize emissions on
PCE’s Power Content Label to
illustrate 100% GHG-free electricity
and a low carbon content on an
annual basis. Low emissions are
aligned with PCE’s founding mission
and are key to PCE’s reputation with
its customers. Affordability is
secondary to PCE’s annual
emissions. For example, in early
2024, PCE’s Board adjusted its
100% renewable goal to 2030 and
modified the 24/7 matching goal
based on affordability concerns.

Result
Option C emphasizes customer
affordability by meeting minimum
mandated content requirements, and
only exceeding those requirements if
renewable energy is cheaper than
alternatives. This would slow and
potentially reverse PCE’s emissions
reductions. This option would conflict
with PCE’s currently stated primary
mission of reducing emissions and
would likely lead to reputational
damage among our customers, peer
agencies, and regulators.
24/7 matching and renewable
content will fluctuate depending on
market conditions.
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Appendix E: Background on Critical Question Two: Equity The information below was developed to inform the October 24 Board Retreat discussion.

Context
PCE continues to invest a significant amount of its revenue in developing and delivering customer programs. PCE’s customer programs are aimed at decarbonizing homes and businesses in PCE’s service area while also considering equity goals (e.g., supporting low-income customers or customers that have been historically underserved by energy programs). Currently, PCE invests approximately 25% (or an average of $8 million per year) of its self-funded program budget in serving low-income customers. This percentage does not reflect additional funding that PCE is and will seek from external public funding sources that benefit PCE’s low-income customers, such as the DAC-GT program, Self-Generation Incentive Program, and Equitable Building Decarbonization program. The financial impact of these public funds targeted toward low income and/or equity programs is expected to be ~$9 million in 2025. These numbers also do not include any rates initiatives that PCE offers to low-income customers (e.g. freezing rates at previous levels or the December 2023 $300 bill credit to CARE/FERA customers).

Moving forward, PCE must determine how to prioritize program spending that is self-funded through its ratepayer revenues.4 For example, should PCE adjust its current spending (expressed as a percentage of the overall programs budget) to serve “equity customers”? If so, how are “equity customers” defined? And how do we balance offering programs serving equity customers with those serving both equity and market rate customers, which allows for greater levels of decarbonization?5 Considerations include (but are not limited to):
▪ The extent to which PCE should serve all customers, regardless of wealth segment, with accessible programs to maximize impact and decarbonization
▪ The extent to which PCE should focus its self-funded energy programs on equity customers to:
 Address historic impacts of the fossil fuel production economy  Increase access to customers that have been traditionally underserved by programs (e.g., renters)
 Deliver disproportionate benefit to low-income customers  Reach customers in disadvantaged communities (DACs)
▪ The right balance between improving affordability for low-income/equity customers through rates (such as rate stabilization or discounts for low-income customers) compared to energy programs (such as financial incentive programs like Home Upgrade for low-income customers) 4 PCE uses some CPUC ratepayer funds for its energy programs (DAC-GT and FLEXmarket), as well as some grant funding, but the large majority of PCE energy programs are currently funded by PCE generation revenues. This discussion focuses on how PCE generation revenues should be spent on programs, not public funding (which typically comes with its own set of rules and requirements).
5 Serving low-income customers via programs tends to be more expensive on a per-capita basis as those customers will need more financial assistance to implement decarbonization measures than non-low-income customers. 54

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Of note, PCE developed a Diversity, Equity, Accessibility and Inclusion (DEAI) framework in 2022 that outlines PCE’s commitment to accessible and inclusive policies, programs and practices across the organization and within all of PCE’s workstreams. The questions posed here address just a small subset of PCE’s DEAI commitment as it specifically relates to future program funding for disadvantaged/equity customers.

Definitions
Equity customer: PCE is using this as the “umbrella” term for all customers that we define as (1) historically underserved; (2) are low income and/or low wealth; (3) have been negatively impacted by the fossil fuel economy, and (4) live in a disadvantaged community (DAC).

Underserved Customers: Customers who have been historically underserved by California’s energy programs and services due to income, wealth, geography, redlining or other forms of racism, cultural biases, language barriers, discrimination, or structural challenges for serving them.

Low-income Customers: Customers with household incomes at or below 80% of San Mateo’s or Los Banos’ area median income (AMI).6In PCE’s service territory there are approximately 56,000 customers that are at or below 80% AMI, which represents about 20% of PCE’s residential customer accounts.

Low-Wealth Customers. Low wealth is often measured by housing burden: as described by the National Equity Atlas, a low wealth household spends more than 30 percent of income on housing costs and severely cost-burdened spending more than 50 percent of income on housing.7 Historically Impacted Communities: Neighborhoods or groups of people that have disproportionally borne the negative impacts and burdens of fossil fuel production.

Disadvantaged Communities: Disadvantaged communities (DAC) refer to the areas throughout California that suffer most from a combination of economic, health, and environmental burdens.

These burdens include poverty, high unemployment, air and water pollution, presence of hazardous wastes as well as high incidence of asthma and heart disease. California’s official definition of DAC is the top 25% of census tract per the CalEnviroScreen (CES) tool.8 Around 23,000 of PCE’s customers are located in the top 25% of DACs, which represents around 8% of PCE’s residential customer accounts.

Possible Answers
The policy options that follow were developed by PCE senior staff — informed by conversations at the August Ad Hoc Committee and September all-staff retreat — in order to provide examples of how this critical question might be answered. We are now seeking additional input into the options — or policy 6 Per the US. Department of Housing (HUD). See at
https://www.huduser.gov/portal/datasets/il/il2024/select_Geography.odn. 7 National Equity Atlas.
8 See CES tool at https://oehha.ca.gov/calenviroscreen/report/calenviroscreen-40. PCE’s DEAI Framework has established a different definition than the State’s definition for DACs (including renters, families of Title 1 school etc.).

We are proposing to update the definitions under the DEAI Framework with the definitions used in this Strategic Plan once finalized.
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answers — PCE might adopt to answer this question. We are not trying to identify the “right option”, or a specific percentage carve out in this meeting today.

The questions for the Board to consider are:
▪ Which equity customer segments should PCE prioritize serving with its self-funded program revenues (vs. use of additional public funding)?
▪ How should PCE balance its programs funding considering a desire to achieve two goals: to decarbonize and to serve equity customers?
▪ How do rate discounts and periodic rebates factor into this discussion? ▪ What else do you need to know when voting on a PCE policy in this area? Option A – Greater Focus on Equity Programs: PCE will invest more of its self-funded program revenues into programs to serve Equity customers, while taking every step possible to achieve PCE’s decarbonization goals (for example, seeking to spend about three quarters of the programs budget on programs serving Equity customers).

Option B – Parallel Focus: PCE will invest its self-funded revenues into programs that achieve the greatest level of decarbonization and will meet established goals for serving equity customers (for example, seeking to spend about half of the programs budget serving Equity customers).

Option C – Greater Focus on Decarbonization Programs: PCE will invest its self-funded revenue into programs based primarily on achieving the greatest level of decarbonization and will meet its Equity goals through other resources and investments such as rate and bill assistance (for example, not setting aside a specific portion of the budget on programs serving Equity customers). Equity customers would still be served under programs but not an explicit carve out and would be primarily resourced through external, public funding.
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Appendix F: Background on Critical Question Three: New or Enhanced Lines of Business
The information below was developed to inform the October 24 Board Retreat discussion.

Context
PCE focuses on providing electrical service to its customers while PG&E provides delivery (i.e., transmission and distribution (T&D)) services. PCE’s core competencies include (1) the procurement of centralized, large-scale front-of-the-meter (FTM) generation and storage projects (supply-side) and (2) offering beneficial energy programs to its customers for a variety of behind-the-meter (BTM) solutions (demand side). As California moves towards the decarbonization and electrification of its energy demand, PCE needs to have confidence that the T&D grid can support that shift. In the longer term, as distributed energy generation grows, PCE’s generation revenues could decrease, which may ultimately yield an unsustainable business model.

PCE must consider if there are other lines of business that it should engage in, or if its existing lines of business should be modified to adjust to new and emerging realities during California’s transition to a decarbonized and electrified grid.

Definitions
Electrical service: Provision of electricity to end users.

Transmission system: The bulk movement of electrical energy from a generating site, such as a power plant, to an electrical substation (where it transitions to a distribution system)9.

Distribution system: Local wiring between high-voltage substations and customers10.

Delivery service: Includes both transmission and distribution (T&D) services.

Front of the Meter (FTM): Encompasses all electricity produced on the utility side of the meter and interconnected to the transmission and distribution (T&D) grid.

Behind the Meter (BTM): Encompasses electricity produced on the customer’s side of the meter (i.e. at a customer site).

Distributed Energy Resources (DER): DERs are assets on the distribution grid, either connected behind the meter or in front of the meter. They can be used individually or in aggregate to provide value to the grid and individual customers.11
Possible New or Enhanced Lines of Business
The goal of this conversation is to provide input into potential new lines of business, or how PCE might modify existing lines of business, to further support California’s transition to a decarbonized and electrified 9 From Wikipedia.
10 From Wikipedia.
11 Definition from current PCE Programs Team usage.
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grid. The “blue sky” list below includes several opportunities PCE could consider. PCE is not able to pursue all these options; through this process we will seek to identify the highest priority issues to address now, while others may not be of interest or could be considered at a later time. The opportunities identified below are not listed in any order of priority.

1. Energy and Decarbonization Consulting & Technical Assistance  Consulting Services: Offer low-cost consulting for businesses and local government entities with environmental, social, and governance (ESG) goals. For example, PCE has a very successful reach codes program but could develop additional services for local government agencies.
 Concierge Services: Launch personalized energy services to commercial and residential customers, potentially charging for premium services like energy system management and consultation for architects and homebuilders.
 CCA Consulting: Provide consulting to help other communities design and implement community choice aggregations (CCAs).
 PCE University: Facilitate clean energy education programs, potentially charging tuition to fund operations and outreach.

2. Diversifying PCE’s Energy Supply
 Behind the Meter Approach (BTM) – Continue to Grow Virtual Power Plants (VPP): Building on the recently issued request for proposal (RFP) for a distributed energy resource management system (DERMS), leverage customer-sited assets to create a VPP, optimizing decentralized energy systems for grid flexibility and reliability.
 Front of the Meter Approach (FTM) – Support the Development of Smaller, Distribution-Connected Projects: At this time, PCE is focusing on contracting with large, centralized FTM projects connected to the transmission grid, as well as the installation of customer-sited, or BTM, energy resources. PCE could further support the “missing middle” by focusing on the development of FTM, distribution-connected projects located in load pockets in PCE’s service area. Examples include:
▪ Community-Scale Microgrids: Develop multi-customer microgrids in areas with frequent grid outages to increase community resilience.
▪ Community Solar (or Solar + Storage): Decentralize energy procurement and provide an alternative to customers who cannot install BTM solar + storage.

3. Transmission and Distribution Infrastructure Advocacy  Enhance PCE’s ability to engage more deeply in policy development and advocacy to ensure that the transmission and distribution grids are set up to serve increasing electrification demands in an affordable manner. This includes, but is not limited to, engagement in:
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 Expansion of the CAISO Market: Continue engagement in expansion and regionalization discussions at the California Independent System Operator (CAISO)12  CPUC High DER Proceeding: Developing systems and processes for improved distribution system planning, data availability, and consideration of a Distribution System Operator (DSO) model13
 CPUC Energization Proceeding: Establishing timelines for interconnecting distributed energy resources to the grid14

4. Financial Services and Partnerships
 Partner with Banks: Collaborate with financial institutions to provide expanded decarbonization programs both in total customers reached and into segments not currently served such as commercial or large energy consumers:
▪ Offer BTM solar and storage via Power Purchase Agreements (PPAs) to select customers, with a financial model that reduces PCE power resources costs and/or generates revenues. ▪ Implement lease-to-own models for solar battery storage, allowing more customers to access renewable energy solutions.
▪ Continue to incentivize EV charging infrastructure, and consider operating chargers, offering discounted rates to equity customers, and setting different pricing structures to meet emission reduction and equity goals.15
 Financing Products: Offer on-bill financing to customers, expanding to higher percentage loans with varying interest rates based on financial need.16
 Bond Authority: Consider options for issuing public bonds to finance investments in renewable energy to help PCE meet its procurement goals more quickly.

5. Neighborhood Decarbonization Zones
 Engage in State and utility initiatives that promote the electrification of entire neighborhoods with the goal of removing the need for gas service. Create a replicable model that can change regulation and support energy independence of communities.

The questions for the Board to consider are:
▪ Which opportunities seem most relevant or important for PCE to consider over the next five years? ▪ Should PCE consider adding or expanding any lines of business not expressed here? ▪ What other factors should PCE be considering within this discussion? 12 Learn more at: https://www.caiso.com/about/our-business/regional-collaboration. 13 Learn more at: https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/infrastructure/distribution-planning. 14 Learn more at: https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/infrastructure/energization. 15 Support for electrification of public transit has been identified as an option but was removed from this list because other agencies are focused on this need.
16 PCE may be limited by regulations in the financing tools or structures it may offer. 59

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Appendix G: All-Staff Retreat Notes
All PCE staff met September 4-5 with the bulk of the time spent on exploring various elements of the strategy development process. Summary notes are included below.

Decision-Making Criteria
Suggestions from staff conversations are captured below.

Relative to other potential options and absolutely in terms of net impact, will this decision:
▪ Further our goals to encourage greenhouse gas reduction and promote electrification locally within our communities?
▪ Enhance equitable access to the benefits of cleaner energy production, reduced greenhouse gas emissions, and electrification for individuals and communities most in need? ▪ Enable PCE to quickly act on customer needs (explicit and latent), and/or also unlock future options to further innovate and provide additional benefits?
▪ Represent sustainable (socially, economically, environmentally), measurable, and describable energy benefits to the communities we serve?
▪ Enhance the value of PCE’s current portfolio of service offerings via cost reductions, better service efficiencies, technology and customer information enhancements, or new ways to utilize / maximize the benefit of interacting with our organization?
▪ Enhance PCE’s community reputation as a trusted and transparent agent of change, ethically and legally navigating current policy and industry oversight to meet our goals? Critical Questions
Critical Question One: Competing Procurement Needs
Staff engaged in far-ranging conversations about how to balance GHG-reduction and affordability in procurement. A summary of several small group conversations is included below.

What Will Change?
General Comments:
▪ Communications & Transparency: The organization will need to be more candid about its Power Content Label (PCL) and natural gas usage, educating customers on what these mean. ▪ Reputation & Credibility: Changes in procurement strategy may impact how the organization is perceived by the public and stakeholders, affecting its reputation and credibility. ▪ Customer Engagement: Depending on the chosen option, the target audience may shift, focusing on either informed, policy-minded customers or casual users, impacting how the organization communicates its mission and goals.

Option A (Affordability-focused) or B (Reduce Natural Gas First) (Changes if Chosen):
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▪ Increased Costs: If shifting toward 24/7 renewable energy (Options A or B), prices may increase, leading to changes in procurement strategy, requiring the organization to decide whether to purchase from existing sources or invest in building new ones. ▪ Customer Choice: Higher prices might lead to a model where customers affirmatively choose the organization for its energy strategy, but affordability may no longer be the primary draw. ▪ Impact on ECO+/ECO100 Programs: Changes in procurement approach will affect how the organization manages its renewable energy offerings, such as the ECO+/ECO100 programs. ▪ Collaboration: Option B requires coordination with other Community Choice Aggregators (CCAs) for success, offering the best societal impact but potentially challenging optics for local governments and communities.

Option C (Current Strategy, “Layered Priorities”):
▪ Lower Rates & Affordability: Currently targeting 50% renewable energy with a 5% discount from PG&E, prioritizing affordability to attract customers like Los Banos, which joined because of lower rates.
▪ Nuclear Decline: More likely to avoid nuclear energy, aligning with current procurement choices. ▪ Risk of Mission Compromise: There’s concern that prioritizing affordability may cause the organization to miss its mission of sustainability and clean energy.

Key Considerations:
▪ Target Audience: Will the organization cater to informed, policy-driven customers willing to pay more for renewable energy, or continue to attract casual customers with affordability? ▪ Strategic Decisions: Whether to prioritize short-term cost benefits or long-term sustainability and emissions reductions will shape the organization’s direction and procurement decisions.

What Do We Like/Dislike About Each Option?
The main concerns revolve around balancing affordability, reducing greenhouse gases, and maintaining the organization's mission.

Likes & Dislikes Across All Options:
▪ General Concerns:
 There's a missing option to maximize greenhouse gas (GHG) reduction, which is distinct from focusing on evening peaks or 24/7 energy.
 More data is needed on the costs and GHG impacts for each option.  24/7 energy procurement doesn't necessarily reduce grid-wide GHG emissions and should focus on the broader grid rather than just the organization’s needs.  The options don't clearly articulate their long-term impacts.

Option A (Affordability-Focused):
▪ Likes:
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 Affordability is a consistent theme, aligning with customer expectations.  The option aligns with the short-term response needs of the organization and its current default strategy until 2030.
▪ Dislikes:
 It's seen as a short-term fix, which goes against long-term sustainability goals.  Although it’s GHG-free, it doesn't reduce overall emissions on the grid.  The focus is not aligned with deeper mission-driven goals, which may lead to dissatisfaction from customers focused on sustainability.

Option B (Natural Gas Reduction-Focused):
▪ Likes:
 Focuses on reducing natural gas usage and takes a holistic grid view, which could have a broader impact on emissions reduction.
 The best option for showing that the organization is reducing the most emissions while being affordable.
 Doesn't immediately imply new costs in 2025, meaning no immediate price hikes. ▪ Dislikes:
 Could be seen as giving up the organization's mission and reputation, undermining the work done so far.
 Communicating the benefits to customers could be challenging, making it hard to show the good that is being done.
 Stepping away from clean energy efforts, which California is ready for as part of a broader movement toward decarbonization.

Option C (Status Quo, Layered Priorities, Long-Term Strategy with Higher Costs):
▪ Likes:
 Helps achieve the organization's long-term goals, including broader decarbonization efforts.  Seen as stable, with a focus on the organization's foundational mission of reducing emissions.  Aligns with the idea of becoming "decarbonization warriors", which is why the organization was founded.
▪ Dislikes:
 Could make the organization more expensive than PG&E, leading to potential customer opt-outs.  There’s a reputational risk if the organization departs from its Power Content Label (PCL) commitments.
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 Affordability wasn't the reason for the organization's formation, but higher costs may create challenges.
 It's the most expensive option, with concerns over how renewables are presented on the PCL and the fact that it doesn't add new renewables.

Key Themes:
▪ Affordability vs. Mission: There’s tension between keeping costs low for customers and staying true to the mission of deep decarbonization. Many discussions note that affordability should be a lower priority, yet higher costs might lead to customer dissatisfaction and opt-outs. ▪ Communication and Education: All options would require effective communication strategies to educate customers, especially around complex topics like the PCL, GHG emissions, and the benefits of various procurement strategies.
▪ Long-Term Sustainability: There's a strong push to focus on long-term GHG reduction and decarbonization, with some dissatisfaction with short-term fixes that don't fully address climate change goals.

Are Any Preferable Potential Answers Missing?
Missing Options & Considerations:

1. Extreme 24/7 Option: No option aggressively pursues a true 24/7 matching renewable energy strategy, which could serve as a strong competitive differentiation.

2. Gas Resource Adequacy (RA) Expenses: A significant portion (2/3) of RA is based on natural gas, but this isn't adequately addressed in the options.

3. Affordability as Priority #1: No option focuses purely on affordability, relying solely on Renewable Portfolio Standards (RPs) while addressing GHG-free strategies, which are seen as more political optics than substantive change.

4. Impact on Affordability: A clear understanding of how significant these changes will be for customer affordability is missing, along with concerns about whether power prices will ever become more affordable or whether technology will serve as a deflationary force.

5. Affordability Tipping Point: There's a question of whether affordability will become less of a decisive factor for customers in the future.

6. Outreach and Education: Greater outreach and customer education are seen as potential tools to close any gaps in affordability concerns and build trust.

7. Rate Design & Product Options: A missing approach involves offering a base product that satisfies regulators, with an opt-in option for higher environmental benefits.

8. Programs as a Mitigation Tool: If affordability declines, there’s a need to offer more customer programs to justify the higher cost.

9. Business Customers & Clean Energy Requirements: Business customers may require different products to meet their clean energy requirements, which are not addressed in the current options. 63

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10. Prioritization Framework: An option is missing that prioritizes affordability while incorporating GHG reductions, reducing natural gas usage, additionality (ensuring new renewable projects), and ultimately achieving 24/7 energy. This would serve strategic customers with specific ESG (Environmental, Social, and Governance) goals.

11. Power Content Label (PCL) Relevance: There’s a gap in recognizing that most customers don't pay much attention to the PCL, yet the organization's 24/7 energy strategy could serve as a powerful competitive differentiator if communicated effectively.

Key Themes:
 Affordability vs. Sustainability: The balance between keeping rates low and advancing GHG-free and 24/7 renewable goals remains a crucial missing element.  Customer-Centricity: The need for tailored approaches (e.g., new products for business customers, more customer programs) to meet diverse customer needs is underdeveloped.  Long-Term Communication & Trust: There’s a strong need for sustained customer education and outreach to explain the trade-offs and build trust in the organization’s energy procurement strategies.

Critical Question Two: Delivering Services in an Equity Framework Staff engaged in far ranging conversations about how to balance affordability, customer participation, and achieving equity goals overall. A summary of several small group conversations is included below.

What Will Change?
Key Changes Across Options:

1. Policy Initiatives: There’s potential to add more policy-driven programs, such as reach codes, to the portfolio, which could enhance equity-driven efforts across all options.

2. Affordability Focus (Options A & B): Options A and B are liked for their emphasis on affordability, which aligns with equity goals by making energy more accessible to low-income customers.

3. Participation Challenges:
 Option A (greatest affordability emphasis): While Option A is affordable, it may be difficult to engage customers, leading to a lot of work with less impact on achieving equity outcomes.  Option B (balanced affordability emphasis): Also offers affordability but with broader challenges in gaining impactful customer participation.

Option-Specific Changes:
▪ Option A:
 Equity prioritization may lead to less GHG reduction and more customer gain, but there's concern that this trade-off might not be realistic. Focusing more on equity customers could mean having fewer resources overall.
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 Reaching renters is a specific challenge that needs to be addressed, as renters are often part of underserved or equity-priority groups.
 Reducing reliance on the gas system can align with equity goals by lowering costs for low-income customers. ▪ Option B:
 Similar to Option A, this option is praised for affordability but faces challenges in balancing equity and GHG reduction goals.
▪ Option C (greatest GHG-reduction focus):
 Option C requires less effort to transform the industry, supporting a broader portfolio approach to energy delivery.
 However, equity in this option is seen more as an aspirational value, implying it may not be a central focus in its implementation.

Key Themes:
▪ Equity vs. GHG Reduction: There is a tension between focusing on equity (serving low-income and marginalized communities) and reducing GHG emissions. The more focus on equity, the less emphasis there is on deep GHG cuts, which may need to be carefully balanced. ▪ Customer Participation & Engagement: Equity-focused strategies, especially in Option A, may struggle with achieving high customer participation, particularly among renters and other underserved groups.
▪ Long-Term Sustainability: Option C is seen as easier to implement with a broad portfolio but lacks the deep commitment to equity that might be required to fully serve marginalized communities.

The organization will need to weigh the trade-offs between affordability, GHG reduction, and customer engagement when prioritizing equity across the different options.

What Do We Like/Dislike About Each Option?
The main concerns center on how to balance equity, emission reduction, and resource allocation.

Likes & Dislikes Across All Options:
▪ Likes:
 Access to equity customers is important, as these customers are often underserved, and no one else may create or invest in programs for them.
 Maximizing emission reduction remains a priority, even within an equity framework.  Option C provides rate and bill assistance, which is valued for its support of low-income and equity customers.
▪ Dislikes:
 There's discomfort with the 50% minimum goal for equity customer focus, as it may lead to over-representation without translating to access for ratepayers. 65

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 Equity customers being positioned as first movers may increase their financial or adoption risk.  Programs indirectly affecting equity customers by simply offering cheaper procurement for the organization are seen as inadequate.

Option-Specific Feedback:
▪ Option A:
 Disliked because focusing entirely on equity customers could reduce resources available for achieving greenhouse gas (GHG) reduction goals, leading to less overall impact on emissions. ▪ Option B:
 Seen as flexible, with potential to set a balanced goal for both equity and decarbonization. There is a recognition that a middle-ground approach might be best. ▪ Option C:
 Criticized because it may benefit the wealthiest customers, leading to unequal distribution of benefits. Additionally, investments tied to this option are seen as expensive, which could impact rate discounts and make it less equitable overall.
 Positive aspects include the rate and bill assistance, which is viewed as a good support mechanism for low-income customers.

Key Themes:
▪ Equity vs. Emissions: There's tension between allocating resources to equity customers and still achieving meaningful GHG reductions. A total focus on equity may divert resources from emissions goals.
▪ Stakeholder Reception vs. Long-Term Impact: There's a noted tension between how stakeholders perceive equity programs (reputation) and the future macro effects on emissions and affordability.
▪ Supply Side vs. Demand Side Investment: There's a question about the relative value of investing in supply-side (procurement) versus demand-side (equity-focused programs) approaches.

Are Any Preferable Potential Answers Missing?
The focus is on creating additional options or strategies that balance GHG reduction, equity, and affordability for all customers.

Key Missing Options:

1. Alternative Option: A proposed option that focuses on delivering the greatest GHG reductions while also serving both equity and general customers. This would involve a portfolio of decarbonization programs and rate discounts to maximize total customer benefit.

2. Option D (Long-Term Commitment): Another proposed option that indirectly helps equity customers by improving access to technologies like used EVs over the long term, with benefits expected in 5–10 years. This requires a long-term commitment and potential financing solutions. 66

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3. Affordability Focus: The notes emphasize that affordability is often the most appealing factor for equity customers, as basic needs may take precedence over decarbonization efforts when people are struggling financially.

4. Tiered Programs & Segmentation:
 The organization could consider tiering programs, starting with a focus on equity and building up to decarbonization efforts.
 Further segmenting programs within an equity framework could be done by using tools like mapping to target specific customer groups more effectively.

5. Additional Program Ideas:
 Free burner/cooktops for equity customers to help with decarbonization and affordability.  Programs that diversify revenue streams alongside supporting equity and decarbonization.  The organization could use a $10M hypothetical budget to explore how to allocate resources across different equity and decarbonization initiatives.  Setting a clear % budget (e.g., 20-40%) for equity-focused initiatives is seen as more impactful than vague goals like "prioritize as much as possible." Mentioned Considerations:
▪ It is suggested that the organization evaluate what provides the biggest bang for the buck, both in terms of efficacy and balancing equity with decarbonization. ▪ There's interest in identifying low-hanging fruit that can generate real-time impact in communities where decarbonization may not be the primary focus.
▪ The ability to build trust with equity customers by providing lower long-term bills. ▪ Programs can also be viewed as part of a marketing or expansion strategy to build the organization's reputation and customer base.
▪ The organization should focus on what is more transformative for equity customers, such as comparing the benefits of a bill credit versus providing equipment like energy-efficient appliances. ▪ Making these equity programs palatable for local politicians is also important for pushing policies forward. Having a clear goal or specific targets for equity programs, rather than vague language, can help build support.
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Appendix H: Board Input into Critical Questions
Board Retreat
The PCE Board of Directors convened on October 24, 2024, to provide input on the three critical questions as well as PCE’s future value proposition. A summary of the Board’s input is included below.

Critical Question One: What are PCE’s procurement priorities and how do affordability concerns affect those priorities?
Additional information the Board identified as needing:
▪ What are the cost differences to each element: 24/7, renewable, and GHG-free? ▪ Can the environmental impacts among three elements (24/7, renewable, GHG-free) be clarified? ▪ Is there a way to utilize carbon pricing as a means of promoting greater GHG reduction? ▪ How is affordability defined?
▪ Is there any information about customers’ priorities between environmental impacts v. affordability? ▪ Is there a time consideration? Is investment in renewable energy now more expensive in the short term but cheaper in the long term?
Preferred approaches identified by Board members included:
▪ Most Board members who spoke generally favored Option B as described (although only 3-4 members specifically said this)
▪ There was some sentiment (by 2-3 Board members) for leaning into PCE being more aggressive around achieving environmental benefits
 For example, one option could be to swap the positions of renewable and affordability in Option B
▪ One Board member suggested leaning in strongly to affordability (purchasing power that is less expensive to PCE) and investing additional “profits” into the most effective GHG reducing programs ▪ There was a request to explore a “24/7 GHG-free” option (would that be more affordable than a 24/7 renewable approach and also achieve greater environmental benefits than an annual GHG-free option?) ▪ At least 1-2 Board members supported Option C (affordability) based on difficult economic times for many customers
Question #2: How can PCE continue to deliver programs and services within an equity framework while also scaling decarbonization?
Additional information the Board identified as needing:
▪ What is the level of GHG reduction for dollars invested by different programs? 68

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▪ Are there approaches or programs that disproportionately benefit low-income customers, even though the programs are created for all customers (e.g., community solar)? ▪ Is there an opportunity to stratify PCE’s income benefits differently? ▪ Overall, can staff provide better analysis and data about the choices when coming back with a strategic policy proposal? Also, can examples or metaphors be included to increase members’ understanding of the implications of the Board’s decision? Preferred approaches identified by Board members included:
▪ PCE’s starting point around equity should be to do no harm (for example, electrifying a low-income neighborhood could create harm to that community if residents are without power for weeks following a natural disaster)
▪ One Board members spoke in favor of prioritizing the highest environmental return on investment ▪ 3-4 Board members spoke in favor of Option A (increasing investments based on equity considerations) citing an opportunity to transform the market, bring new solutions to scale, and lean into increased grants (i.e., non-PCE funds)
▪ 3-4 Board members spoke in favor of Option B (balanced investments)  Some members spoke of the need to consider how renters (only a portion of whom are equity customers) are served
▪ One Board member suggested adopting either Option B or Option C, but leaning into more rate support for low-income customers
Question #3: Are there any new or enhanced lines of business that PCE should engage in to further support decarbonization and electrification in California? Board members had a particularly robust conversation around this question. At least six or more Board members firmly spoke to the importance of PCE focusing on distributed energy resources (DER).

Supporting comments in favor of a focus on DER included:
▪ The future is with DER
▪ DER makes grid upgrade unnecessary
▪ DER provides more resiliency (including as an equity issue, such as continued access to energy even for low-income communities during power outages)
▪ Local governments own property that could be repurposed for DER ▪ DER could be offered along with complementary services such as customized financing and neighborhood decarbonization
Other Board members spoke in support of:
▪ Increased advocacy and engagement with regulatory agencies as a necessary investment ▪ Concierge services or other forms of support for customers seeking to electrify 69

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Future Value Proposition
During a brief conversation Board members identified several ideas about what PCE’s future value could be:
▪ PCE is a trailblazer, the first to figure things out (innovator) ▪ As the utility that puts all reinvestment back into the community: PCE is a nonprofit set up to benefit the San Mateo County and Los Banos communities; as such, it redirects funds it earns back into its communities through programs and community investments
▪ PCE is a partner with its customers, acting as customers’ agent to address climate change 70

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Appendix I: Community Input into Three Critical Questions La Piana facilitated several small group conversations with community partners to solicit input into the three critical questions. Several individuals also submitted written comments or provided feedback in short interviews. A summary of input gathered is included below.

Community Advisory Committee
Critical Question One: What are PCE’s procurement priorities and how do affordability concerns affect those priorities?
Summary
▪ Most members are motivated by the need to address climate change and see PCE as a primary driver of decarbonization, so even if costs must remain competitive, PCE must also keep its focus on decarbonizing to the greatest extent possible.
▪ The ability to persuade customers to electrify will be difficult if electric rates are high. ▪ An alternative option is to decarbonize to the extent possible without losing market share.

Additional Input
“We need to emphasize affordability.”
“Climate change will not be affordable, but the things that need to be affordable [like electricity] should be. Especially for those who most need assistance, though perhaps it doesn’t need to be low for everybody. For example, [maybe rates could be higher] for those who can pay more.” “People are pretty mad about high electrical rates. We need electricity to be affordable to promote electrification.”
“It’s going to cost more sooner or later. I prefer for it to cost more now. We’re selling electricity, but also a response to the climate crisis.”
“We’ll need more public education about energy costs.”
“It doesn’t make the most sense to do the most expensive option now, when renewable energy is at its most expensive. Those options will get cheaper in the future. Invest more down the road when 24/7 is more affordable.”
“Make ‘as soon as possible’ explicit. Define affordability as performance based — do not lose market share [by setting prices too high]. An [alternative] option is to maximize GHG reduction while retaining market share.”
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Critical Question Two: How can PCE continue to deliver programs and services within an equity framework while also scaling decarbonization? Are there other ways to further provide services for equity customers besides through programs?
Summary
▪ Overall, members supported each options presented (greater emphasis on equity customers, current emphasis, greater emphasis on reducing GHG).
▪ Many CAC members want PCE to increase its attention to supporting renters.

Additional Input
“If you haven’t defined equity customers, how do you know what they want? You need to ask them to know what they want. Don’t just assume that you know.” “The process is in place for staff to listen to the community. That information should shape what PCE does. Put more resources into that listening, make it more robust.” ▪ Leverage distributed energy resources to benefit equity customers “Since 50% of SMC residents are renters, put a lot of emphasis on that.” “We need to emphasize serving renters more. Work with mom-and-pop landlords, offer them 0% loans for decarbonizing their units.”
“You are going to get your maximum bang for your buck by addressing equity communities. For example they drive older, gas-guzzling cars. Help them get into electric cars.” “Plus one to the need to serve renters – they’ve been overlooked. PCE can be the technical advisor to help landlords take advantage of other incentives.”
Critical Question Three: Are there any new or enhanced lines of business that PCE should engage in to further support decarbonization and electrification in California? Which opportunities seem most important for PCE to consider? Should PCE consider adding or expanding any lines of business not identified?
Summary
▪ Many members supported more focus on DER.
▪ A few members spoke in favor of financial programs.

Additional
▪ Several committee members asked questions about why DERs are so difficult, and expressed interest in microgrids.
“I recommend PCE invest in community microgrids. It’s more difficult than building in the central valley, but it’s also local so you avoid transmission losses.” 72

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“I’ve been pushing staff here at PCE to work on DERs for 4-5 years. I’m glad [there’s new staff focused on finding new funding streams for this and other programs]. Let’s be creative, entrepreneurial.”
“Electrification plus microgrids has potential.”
“Provide technical assistance to large commercial and multifamily buildings, big emitters that are being missed.”
“DERs in parking lots, also community storage. Look at spreadsheet of innovative ideas from around the country researched by the CAC DER working group last year. Also look into resilience as a factor in selecting projects and programs.”
“I met a banker at the SMC Climate Summit who was looking for investment opportunities. We should connect with more financial institutions. Look into green bonds.” “If PG&E does not have to repair old gas lines, they will save money. That money should not go to PG&E, but rather to those communities to invest in electrification.” ▪ PCE could shift to financing instead of rebates.

Regionally Integrated Climate Action Planning Support Programs (RICAPS) Question One: Procurement
Summary
▪ General desire to be affordable and to reduce GHG.

Additional Input
“Affordability is primary – we need to electrify but that’s hard to do with high rates. But, there’s also a lot of miscommunication about the cost of electrification.” “We kind of need to do both. Can BTM solutions (that have co-benefits) be considered a more affordable solution?”
“Reliability is an important issue. [It’s important to secure] more local resources.” Question Two: Equity
Summary
▪ Several individuals thought some renters and small businesses should be included in this discussion.
▪ There was a request for information about the environmental impact of different programs. 73

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Additional Input
“Can you build equitable pricing into your price structure? Can lower income customers pay less per kWh?”
▪ Members requested more information about where program funding is currently invested. ▪ Members requested more information about the environmental benefit provided by different programs now (including impacts for current investments with equity customers as well as investments in all programs).
▪ There was interest in more attention to supporting small businesses and renters through PCE’s programs.

Question Three: Additional or Enhanced Lines of Business Summary
▪ Community partnerships and microgrids were the primary areas of interest Additional
“Resilience and reliability is an important component.” “Lean into VPPs and microgrids/community scale. For example, Pescadero and Half Moon Bay are trying to do community microgrids and VPPs.”
“Financial services and partnerships [are needed].”
“Concierge service is very important — it can even be a paid service.” ▪ Cooperative solar in collaboration with community members was discussed as an opportunity.

Community-Based Organizations
The feedback below was given from organizations that partner with PCE to carry out its programs.

Critical Question One: Procurement
Summary
▪ General agreement that PCE should push for the greatest GHG reduction possible while keeping customer costs lower than alternative providers.
▪ There is interest in knowing that PCE is pursuing as many alternatives as possible, such as effectively promoting the ECO100 program.
▪ Retaining customers and moving them to electrify at costs lower than gas may be more important than getting to 24/7 time-coincident.

Additional Input
▪ Can PCE increase the number of people paying more for environmental benefit? 74

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“PCE was created to reduce emissions. Push as far as possible on the 24/7 goal — push it to the point of PCE being sustainable as a business, just below cost parity with PG&E.” “We [were founded to] get rid of gas. I’m seeing less of that and more promotion of ‘we are best provider.’ Let’s focus again on reducing GHG.”
“San Mateo County is the envy of others for its focus on policies that center econonomic equity — especially with the wealth gap, not only for low income customers, but also modest income in a staggeringly expensive environment. Recognize there are challenges for a person like me [who’s modest income to pay for environmental benefits].”
“Those who can afford to should pay more if there is really going to be equity.” “I support doing everything we can do to achieve 24/7 hourly matching of renewable energy and load while ensuring our neighbors with less resources have the ability to get their needs met.” Could some customers pay more [through opt-in rate options] and promote it especially among corporate customers, to bring people along in solving the problem. PCE needs to stay aware of public opinion.”
“Do what you must for the climate, get to the goals of 24/7, but not at the expense of customers. I’m very interested in the details.”
“How many customers choose ECO100? I’m totally for 24/7, but we have to acknowledge reality….

It’s not easy to get people to pay more. Right now, gas is less expensive, so getting people to go electric and it’ll be more expensive [will be difficult]….I’m not saying don’t try, but you really need a strategy to address that.”
“Affordability is the top #1 concern of the community/clients we serve.” “We must do both in taking care of planet and also meeting affordability needs. Our clients’ top needs are affordability. Many community members are struggling to make ends meet. But how do we bring in other customers without it being a burden, or go electric without it costing a lot more [for the customer].”
“You need to be careful you don’t push so hard on GHG that you become known as that more expensive option only for people who are climate early adopters. Getting everyone on PCE and electrified may be a bigger win than getting to 24/7.”
Critical Question Two: Equity
Summary
▪ Equity is served by keeping the costs for electrification low and ensuring programs are accessible to low income customers and renters.
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Additional Input
▪ What is the data about the number of customers who can be described as “equity” customers? ▪ What is the cost difference in reducing GHG when focused on equity customers compared all customers?
“[Low-income customers] are tired of proving that they’re poor all the time. It has a negative effect.

Then thinking about the rebate for used EVs, which is available without income qualification originally and not income qualified … that seems inappropriate if we’re trying to promote adoption of a technology. [I’m] deeply concerned] at how people are not heating homes or don’t have hot water.

They [say they are] doing it because they don’t want to use gas, but it makes me think also it was the [high] cost of making the switch to electricity.’
“This comes back to the cost of electricity. I’ve heard that elsewhere that people don’t want to electrify because the cost is too high.”
“Our communities are very interested in taking care of the climate, but the issue is accessibility.

They do want to electrify their home, but then then the [landlord] increases the rent or kicks them out and puts in new renters. Programs are geared towards homeowners and not tenants…. We need to work with homeowners to work with tenants without jeopardizing the tenants…. And the rebate process challenging, needing to put up money up front, then getting it back.” “Is there a scheme we can offer to wage earners without a good credit history?” “I don’t envy the CCAs, it’s hard to make a decision like this and you’ll be the bad guys. I trust you’ll make the best decisions to balance caring for people and caring for planet. If you’re making a decision, be super transparent about what went into that decision. Communicate the good, the bad, the ugly. People are not stupid. People may not like it, but most will understand.” “I believe that if we are truly prioritizing equity we need to continue to provide access to communities who have not had access in a long time.”
Critical Question Three: New or Enhanced Lines of Business Summary
▪ Some interest expressed in DER.
▪ Some interest expressed in financial services.
▪ Avoid duplicating activities offered by others.

Additional Input
▪ The “lines of business” term was off-putting to some, implying that PCE is just a money earning business rather than a mission-driven service
“I would be very much in favor of PCE working for more distributed energy resource.” “Could PCE consider investing in developing its own clean energy production, for example, building a solar farm next to the one in Los Banos?”
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“Why wait [to offer] financial services? [Our] constituency needs to access these programs and can’t when we don’t have funding. Could PCE be the financial institutution that gets funding to buy the eBike? Seems like an opportunity for PCE to elevate its social equity as a partner in the just transition.’
“{If considering] consulting, talk with the other CCAs — don’t duplicate what others are doing. “Could PCE explore having PCE develop community solar, systems that are owned by PCE, but leased to rate payers?”
▪ Focus on the activities where PCE really brings additional value, things that PCE can do alone or in partnerships, that is difficult for customers to do alone, such a neighborhood decarbonization ▪ Step up education around the health benefits of electrification and the dangers of using gas, especially as other states and policy makers are moving against electrification ▪ Create model projects such as partnering with CBOs to electrify a building to show how it can be done
San Mateo County Sustainability Department Staff
Critical Question One: Procurement
Summary
▪ Maintaining affordability as a high priority is important.

Additional Input
“Affordability right now is so important. We need to keep energy affordable to make sure community angst does not go higher. PCE has had a strategy for us getting off gas and doing that is hard, there’s friction in that, there’s lots of work happening. But to get it perfect [i.e., to push to 24/7 standard immediately] will not mean a lot if the community is too upset. Be reasonable.” “I think GHG free on an annual basis is the first element, then affordability is right after. Keep affordability #2.”
Critical Question Two: Equity
Summary
▪ Consider the needs of small businesses that are often left out of the conversation. ▪ Consider using definitions of “equity” or “low income” that do not align with the state’s definition in order to better serve high-cost San Mateo County.
▪ Base any decisions on good community needs assessments (which others have already conducted).
▪ Driving market change is as important to benefiting equity clients as direct investments. 77

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Additional Input
“It would be great to have programs that help small businesses as well.” “It would be interesting for PCE to do more equity focused work. PCE shouldn’t reinvent the wheel, but current equity programs are determined more by state [definitions of equity] or low income. It would be nice.”
“CalEnviroScreen isn't a great tool for San Mateo County.” “PCE could do a deep community needs assessment: who needs what, who isn’t being served, what different communities need to electrify. Given what we know and as we transition to an all-electric future, customers will be cost-burdened. We have to make sure those who are [in need are known].” “Look at the costs over the long run. Look at the business case, it might cost more over the long term [to not pay more in the short term].”
“We definitely need to think about supporting those who need it, but we also need to move the market. Some customers just need the information or a trusted voice, you don’t have to pay for the whole thing.”
“Looking at PCE’s core goals, delivering clean energy … the market forces that come from that will benefit the equity groups we’re talking about…. If PCE can stay on track on a driven pace to hit its current goals it will benefit everyone.”
Critical Question Three: New or Modified Lines of Business Summary
▪ Participants expressed support for more DER.
▪ Participants would welcome PCE acting as a leader in scaling change and building collaborations for change, for example, in working with PG&E, large retailers, landlords or other groups where there are opportunities for broad agreements about how to work together. ▪ PCE should increase advocacy by increasing the capacity of the statewide CCA organization.

Additional Input
“In general there’s not [public] support for electrification. That’s key.” “[If PCE pursues electrification], it would be best to get solar at the same time. PCE should offer that as a package — and battery, too. Do it all together to get the best financial [returns].” “One thing that could be improved upon or expanded is that the EV program offers EV charger design, but they’re not actually designs you could take to a contractor. It’s more like a base level assessment, which is good. But it would be better to get engineer-approved designs …. Also, could PCE hold a [master] contract for EV chargers because contracting takes so long. So PCE could hold a suite of contractors that we could all use.”
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“What we need today might change over the course of the next few years. [Good criteria to consider when making a decision about this include]: How could PCE be nimble to address changes, and also meet new procurement needs. Where are there gaps? What can PCE do that others cannot do? How can PCE diversify the energy supply? Adding DERs would be really great. We’re getting independent from our utility with DERs, and diversifying that is helpful when it comes to resilience.

What is within PCE’s ability to control?”
“What I think about as a unique role that PCE is positioned to do, transmission reliability is something we’re not positioned to do …. Finding some other way to have more reliability and redundancy in transmission, it would be good for PCE to have a voice in that.” “We’re learning how to scale and how to get beyond building by building. We need to do more than just collaborate with PG&E. It would be great to have PCE as a strong technical voice and collaborator…to electrify individual buildings. But piecemealing won’t get us where we need to go.

So how can we do groups of buildings and move things in groups. We want to pilot groups of buildings and have PCE as a partner. And to pilot, gas service is a barrier…. It would be great to have PCE as part of this conversation.”
“Thinking about communities and problems they have with reliability and issue of equity. We know that some of the communities, like rural communities, can be without power for a week. There are issues with smaller communities that need grid reliability for emergencies. It would help communities to know that there is greater reliability. Address reliability.” “One thing our team thinks about is building equitable decarbonization. Especially renters getting pushed out when a building is electrified. Rent control is a non-starter right now, or other forms of tenant protections. So we’re in a difficult situation because we don’t have basic tenant protections … so if PCE could intervene with landlords around tenant protection agreements that would be really valuable for us.”
On the school funding … what would be even more helpful is for each district to have an allocation, just like other government groups have had. That would be helpful so that each district has to do something. If you say ‘you could use this money’ it’s not as helpful as ‘this is your rmoney.’” “It would be helpful to band with other CCAs and encourage retailers to stock and promote water heaters or stoves. We do so much work [educating the public], then walk into Home Depot and you’d never know about the [efforts to electrify].”
“Leverage the consortium of CCAs for policy and advocacy, rather than PCE taking on all policy.

Have CalCCA hire or take the lead on policy and advocacy.” Union Representatives
Critical Question One: Procurement
Input
“Ideally, getting to 24/7 is best, but it’s a very hard goal to reach.” 79

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“We’re not experts on this.”
“It’s a hefty goal to reduce GHG [and to be affordable], but as long as it’s union [that’s our concern].” Critical Question Two: Equity
Input
“Where there’s a population ready to [go GHG free], then do it.” “You need to get the word out [about available programs].” Critical Question Three: New or Modified Lines of Business “What PCE is doing is running themselves out of business if everyone self generates…. They’re recognizing that if they go into self generation, then they can’t sell their green energy…. That’s their model going forward: installing batteries and self generating and owning it and getting residuals….

Community solar [is a good example of what they need to do], they need to become the generator.

Create the energy and sell it.”
Input from Individuals
Individual comments were received through interviews or from individuals who were invited to participate in the small group conversations — and who either could not attend or who wanted to add further thoughts for Board consideration. We have summarized their input below and not reproduced full written comments.

Respondents include:
▪ Ori Paz, Management Analyst, City of Menlo Park
▪ Eduardo Pelegri-Llopart, Resident, Menlo Park
▪ Stacy Souza, Community and Economic Development Director, Los Banos ▪ Robert Whitehair, Elders Action Network
Critical Question One: Procurement
Summary of Comments
“As an ambassador [from my community], the consensus of the community is that it’s about affordability, period. If 100% renewable will be more expensive, then our community would rather see the rates more affordable than PG&E.”
“The community would not be supportive of [of subsidizing rates for low and moderate income customers in order to increase environmental benefits]. The mindset of the Central Valley is frugality around financial status. For example, even if somone owns their own company and are doing well, they’re going to pick dollars and cents over renewable. Even if most rate payers get a discount. The community as a whole will be dissatisfied. They’re just looking for a cheaper rate. Rates comparable to PG&E are OK; more than PG&E and there’ll be issues.” 80

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“a) Affordability is critical for the overall electrification initiative. b) 100% renewable 24/7 hourly matching is a critical component of CAP strategies. c) Input is to identify why we cannot achieve both – not choosing between the two (e.g. identifying the cost factors and examining alternatives):
consider identifying and analyzing alternatives to purchasing the more expensive 24/7 renewable offerings and grading them on the established scale.”
“How should PCE balance the four factors driving procurement decisions? The 3 options given in the presentation are: (A) Prioritize GHG Reduction, (B) Balanced Priorities (status quo), (C) Most Affordable. This is the hardest question for me to answer. “I used to select option (B) [balanced approach], but the acceleration of the climate crisis this summer is making me wonder if we should move to option (A) [greater environment benefits more quickly]…. I want to do whatever I can to help reduce our GHG. I hope PCE will help me do that — my most immediate option would be to export my surplus solar power at the right time, through the distribution grid. I hope PCE's VPP will help me do that.”
Critical Question Two: Equity
“PCE does a really good job right now of trying to focus on equity in how they create their programs.

We have seen quite a bit of benefit from those programs …. From our perspective, the priority is not on sustainability, it’s on dollars and cents.”
“[The most important “equity customers” are] mostly low income. Also, PCE is very good about speaking Spanish and making sure there are no language barriers there. On rentals, [that is not a high priority because] we have a higher rate of home ownership because it’s more affordable than rentals.”
▪ Broadly, the community needs more data on how programs perform in providing environmental benefits to really weigh in on this question.
“More turnkey programs [will drive more adoption].”
“Transportation is the largest emissions sector for [my city]. Additional transportation programs would be helpful for our goals.”
“Are there other ways to further provide services for equity customers besides through programs? I'd like to add a thought about ownership of assets that can generate revenue and can provide empowerment. One example is solar panels; they do not just reduce the electric bill but are a tool that a household can use to control their expenses. Similar with batteries and time-of-use rates, and even with exports at the right time. These tools provide monetary value but also give the household a sense of empowerment, an ability to actively control the asset and the costs, independent of external costs, like PG&E rate hikes.”
Critical Question Three: New or Modified Lines of Business “To prioritize, Financial Services and partnerships is something our community would be interested in because we’d look at affordability.”
▪ Written comments support:
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 Establishing cooperatively owned community solar and microgrids, including opportunity for residents to own and profit from these initiatives through energy storage, car sharing/charging, sliding scale rates for investments
 Exploring becoming a publicly owned utility
 Supporting more advocacy in favor of DER, gas pruning, or community-owned microgrids  Continuing to diversify the energy supply and factor in the multiple benefits of DERs/microgrids  Considering turnkey EV infrastructure support/group procurements that double as VPP or battery banks
 Considering additional opportunities for other transportation programs “Electrification is the one most direct method that any one of us can take, to stop the climate crisis.

To be specific, if elimination of natural gas and fossil fuels is going to happen anywhere, it will happen here on the Peninsula, where there are the means and the passion to do something about the climate crisis.”
“We, your customers, trust PCE to prioritize our needs. We also trust you to run a sound business. I believe PCE can capitalize on this perception to expand its reach into households and businesses.

PCE is already involved in a VPP effort. I believe PCE should continue the effort and it should expand it. The new residential batteries are safer, cheaper, more powerful, more capable, and modular. The main challenge for households is understanding the technical capabilities, and getting an electrician in, but PCE can help there, and, if presented well to households, we might be willing to invest some of our $$s to get benefits like resilience, as well as some economic benefits from exporting electricity at the right time, all while providing renewable energy and helping the grid. It would be wonderful if PCE expanded its role on the distribution grid. Right now there are legislature challenges on this, but it seems to me some DER resources in front of the meter could be very compelling, both for residential but perhaps more for commercial businesses.” On advocacy for the distribution grid — one of the challenges in advocating for the benefits of DERs, behind or in front of the meter, is the lack of information on the behavior of the distribution grid. A question I’d like to know is ‘how does the electricity exported from our households propagate through the distribution grid.’ This would help address the question of ‘how useful is residential solar panels and batteries’ and ‘how much do these resources help reduce transmission cost.’ PG&E has the information but this is not made public. I believe PCE can derive this information from the data it has from its customers and from the topology of the distribution grid…. This type of information could help PCE advocate for a petter policy on the distribution grid,” “On leveraging DERs, it is my understanding that PCE has the ability to set rates for exported electricity. The current rates for NBT are very low and disincentive any exports. The current rates for NEM 2.0 are very generous and are not encouraging export at the most critical times of day to contribute renewable energy to our grid. I recently learned about the two-way tariffs in Australia. The principle is to penalize exports at the wrong time of day but to reward exports at the right time. I wonder if PCE could create export tariffs targeting that behavior. In the case of our household, we have surplus energy buy we are under NEM 2.0 so we are not motivated to add battery [capacity] 82

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and adjust our export behavior. A targeted tariff could convince PCE customers like us to add a battery and export when PCE needs the renewable energy the best. Maybe combine the tariff with some financial incentive to install the battery. With a bit of structural help like the above household like ours might do the switch to gain resilience and help the grid and the planet.’ Other Comments
“I want to amplify what I said about PCE becoming corporate. Upon its founding, PCE was first and foremost an idea, a community agreement that a group of people working together in community can respond to the climate crisis. The focus has shifted to being profitable, to selling more electricity. PG&E already does that. Peninsula Clean Energy needs to work on the niche market, that is what distinguishes us, is our commitment to getting rid of fossil fuels.” 83

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Appendix J: Rationale for Priorities for New or Enhanced Lines of Business The chart below captures the detailed rationale for the recommendation related to Critical Question 3. The core of this chart was developed during a meeting of all senior staff before additional information was added.

Key High: Do select this option based solely on this criterion Medium: This option generally aligns with this criterion, but to a lesser extent Low: This option is not the best choice based only on this criterion Criteria A. Consulting &
Technical
Assistance
B. Diversifying
Energy Supply
(Incl. DER)
C. Advocacy D. Financial
Services
E. Neighborhood
Decarbonization
Greatest mission
impact:
 Encourage
greenhouse gas
reduction
 Expand access to
sustainable energy
solutions
 Mission impact is
only indirect
 Concierge
services can
underpin scaling
 If PCE prioritizes
this option, it
should be very
specific about
which
TA/consulting
services it will
offer — focusing
on services that
drive the highest
GHG reduction
HIGH-minus
 Represents a
direct way to
reduce GHG
 Doesn’t do more
to reduce GHG
than other choices
 Must be coupled
with other options
as a package to
be successful,
such as providing
financing and
consulting
 This option
addresses
additionality, but
it’s not easy to
advance at scale
 Will need
additional
information about
T&D capacity to
do this at scale
 Mission impact is
only indirect
LOW
 Mission impact is
only indirect
 High impact if this
allows PCE to
scale its programs
HIGH (in combination
with other choices)
 Direct impact
 Any progress will be
on a small, pilot scale
which means low
near-term impact
LOW
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Criteria A. Consulting &
Technical
Assistance
B. Diversifying
Energy Supply
(Incl. DER)
C. Advocacy D. Financial
Services
E. Neighborhood
Decarbonization
HIGH (as a package
of services)
Greatest mission
impact:
 Expand access to
affordable energy
solutions
 For Gov & Large
customers, this
can unlock cost
savings
 Probably less for
bulk of customers
MEDIUM
 Best – once
installed,
essentially less
expensive
(especially BTM)
 Promotes
resiliency
 Helps with diverse
supplies to get to
24/7
 Front of grid
difficult to
implement, energy
goes to PG&E
HIGH
  If supporting
DERs, making
accessible
HIGH (if supporting
DERs)
 Supports resiliency
(but not main point)
 This is more of an
intellectual exercise
— affects very few
people
LOW
Leverage or build out
PCE’s Value
Proposition: community
leadership and
investment17
 To a lesser extent
MEDIUM
 Yes — DER is
local investment,
comes with econ
benefits
HIGH

LOW (T&D
Advocacy)
 Yes — allows
more of local
investment with
econ benefits
HIGH
 High connection with
community investment
(for 1 community!)
HIGH (for very narrow
part of community)
17 PCE’s value add to be its customers’ partner to address climate change is redundant with the mission element to reduce GHG gasses, so is not included twice.
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Criteria A. Consulting &
Technical
Assistance
B. Diversifying
Energy Supply
(Incl. DER)
C. Advocacy D. Financial
Services
E. Neighborhood
Decarbonization
Leverage or build out
PCE’s Value
Proposition: partnering
with customers as agent
for GHG reduction
 Expansion in this
area (e.g.,
supporting Reach
implementation)
might dilute PCE’s
expertise or
overlap with the
role of the cities
 Expands PCE’s
engagement with
and support for
customers
HIGH (if focused on
differentiated service)
   Expands PCE’s
engagement with
and support for
customers
MEDIUM

Leverage or build out
PCE’s Value
Proposition: a
trailblazer in building
model solutions in the
sector
    
Advance PCE’s
commitment to Equity:
 Enhance equitable
access to the
benefits of reduced
GHG emissions
 Align with DEAI
framework
 Provides some
value in this area
by providing more
assistance to
Equity customers
if services are
accessible
 Could provide
benefits to Equity
customers by
working through
cities
MEDIUM
 Could be high
DEAI benefit
depending on
BTM strategy
 Requires
accessibility to
Equity customers
HIGH (if Equity
customers supported)

LOW
 Provides a
pathway for Equity
customers to
access beneficial
change
HIGH
 Unlikely to be
established in Equity
community
LOW
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Criteria A. Consulting &
Technical
Assistance
B. Diversifying
Energy Supply
(Incl. DER)
C. Advocacy D. Financial
Services
E. Neighborhood
Decarbonization
Takes into account
financial impacts to PCE
 If provided as a
fee-for-service
program, this
could be neutral or
financially
beneficial
HIGH
 This needs more
information; this
could be
financially if it
reduces RA and
peak supply costs
 If PCE doesn’t do
this, others will,
opening up new
competitors for
PCE’s core
service: this is a
“must do” in the
long run
HIGH
 Essentially no
financial impact
MEDIUM
 This option does
not have a
financial impact for
PCE as a stand
alone initiative (it
might offer returns
as a tool to
advance other
initiatives)
 Higher financial
returns might be
possible through
partnerships
(rather than PCE
providing financial
services directly)
MEDIUM
 Essentially no
financial impact
MEDIUM
Takes into account cost to
PCE’s customers
    
87 DATE: January 8, 2025
MEETING DATE: January 13, 2025
VOTE REQUIRED: Majority Vote
TO: Honorable Peninsula Clean Energy Authority Executive Committee FROM: Nick Bijur, Chief Financial Officer, Leslie Brown, Director of Account Services and Justin Kudo, Associate Director, Strategic Analysis & Rates SUBJECT: Discussion of Rate-Setting Options and Recommendation to Adjust Peninsula Clean Energy Rates in February 2025 (Action)
Item No. 5

PENINSULA CLEAN ENERGY AUTHORITY
JPA Board Correspondence

RECOMMENDATION
Discuss rate-setting options and provide Peninsula Clean Energy (PCE)’s Board of Directors (Board) with a recommendation regarding whether and how to adjust PCE rates, effective February 1, 2025, or as soon thereafter as possible.

BACKGROUND
On March 28, 2024, the Board approved implementation of an independent rate-setting approach based on PCE’s Cost of Service model. The approved “hybrid” rate-setting approach uses PG&E cost allocation across customer classes and ensures sufficient revenues to support PCE operations, while also providing competitive rates that can deliver savings to PCE customers.

On June 27, 2024, the Board approved ECOplus rates to be set at a net 5% discount to PG&E generation rates, effective August 1, 2024. Rates were based on the Board-approved FY24- 25 Budget, with an adjustment “mid-cycle” only if needed or warranted.

On January 1, 2025, PG&E implemented its Annual Electric True-Up, its primary annual rate change. This included updates to PG&E generation rates, non-generation rates (i.e., transmission, distribution, and most other fees), and the Power Charge Indifference Adjustment (PCIA). Non-generation rates increased by $0.013/kWh, or about $5 per month for the typical household. The changes to PG&E generation rates and PCIA fees (netted together) were negligible. Staff estimates that the resulting systemwide discount on generation rates for PCE customers decreased 0.4% from 5% to 4.6%. On a rate-by-rate basis there is some variation; however, most PCE rates as they currently stand provide a discount of 4-6% off the updated PG&E generation rates.

Notably, PG&E’s allocation of costs was adjusted for a few rate schedules for large commercial and industrial (C&I) customers. These changes appear to be caused by how the 88 PCIA is calculated within bundled customer rates, as well as the relationship between higher resource adequacy costs and demand charges. As a result, PCE large C&I rates under these schedules are lower than PG&E for certain time-of-use periods (e.g. summer peak rates) but higher for other time-of-use periods (e.g. spring super off-peak rates). Under these select rate schedules, PCE rates still result in savings on an annual basis but may be higher during certain months of the year.

Absent a “mid-cycle” adjustment, PCE is scheduled to next update rates on July 1, 2025, based on the FY25-26 Budget, which will be presented to the Board for approval in June 2025.

As part of its mid-fiscal year budget review, staff recently updated PCE's financial forecast.

Based on favorability in cost of energy and customer programs, staff now expects FY25 Change in Net Position of approximately $40 million versus the prior budget forecast of $5 million.

DISCUSSION
Consistent with PCE’s rate-setting policy approved in March 2024, PCE’s rates should only be updated mid-cycle if needed or warranted, with any budget deviations carried into PCE’s financial position for the following fiscal year.

Current reasons that could warrant adjusting PCE rates in February include:

1. Updated Financial Position – PCE’s updated financial forecast projects Change in Net Position of $40 million in FY25, which is approximately $35 million higher than originally forecast.

2. Rate Allocation Issues – these include minor inconsistencies in savings with individual rate schedules, and more significant deviations in cost allocations for certain rates.

Rates as currently approved in June 2024 are expected to result in FY25 Change in Net Position of $40 million, at which point it would be at the Board’s discretion whether to apply some or all of this favorability as a credit towards the FY26 revenue requirement and reflected in subsequent rates.

Alternatively, given PCE’s strong financial position and our customers’ focus on affordability, it is possible to reduce PCE generation rates now and increase the discount to PG&E from 4.6% to 10% until our next rate-setting period that would come into effect in July 2025. This deeper discount would absorb approximately $13 million of the projected $35 million favorable FY25 budget variance.

A key consideration in this rates discussion is that the market prices used to determine the 2025 PCIA were unusually high. Staff expects the PCIA will increase on January 1, 2026, and PG&E generation rates will decrease, necessitating a significant decrease in PCE rates (and thus revenues) to remain competitive. As a result, staff recommends that a significant portion of the projected financial favorability should be held until 2026, at which point it could be used as either an offset to the PCIA increase and/or as an additional rate discount for our customers in 2026.

Regarding rate allocation issues noted above, staff recommends updating large commercial and industrial (C&I) rates (B-19, B-20, E-19 and E-20) to provide consistent rate savings across all rate components; this will avoid potentially higher, non-competitive rates during the 89 March-May period this year. This would also create consistency in PCE rates for these key accounts, which is appreciated by our largest customers. Other minor rate allocation issues do not result in significant cost differences and can be resolved during PCE’s next annual rate-setting cycle in July 2025.

PCE will likely adjust rates in July 2025 based on the adopted FY25-26 Budget. At this time, we should also have a better idea of the PCIA forecast for 2026 and its implications for future rate-setting.

FISCAL IMPACT
Increasing the electric generation discount from 4.6% to 10% from February - June 2025 will decrease PCE’s Change in Net Position by approximately $13 million. Reallocation of large C&I rates will decrease revenues through July 2025 by approximately $250,000. 90

WestLight Energy Executive CommitteeJanuary 13, 2025

WestLight Energy Executive Committee
January 13, 2025