Executive Committee Meeting
This meeting will begin shortly.
January 13, 2025
Peninsula Clean Energy
Agenda
• Call to Order / Roll Call
• Public Comment (for items not on the Agenda)
• Action to set the Agenda and Approve Consent Agenda Items Consent Items o Public Comment
• Regular Agenda
• Committee Members Reports
• Adjourn
2 Chair Report
CEO Report
Peninsula Clean Energy
CEO Report: Welcoming 8 New Board Members!
5 County of San Mateo tbd
County of San Mateo tbd
Foster City Stacy Jimenez
Half Moon Bay tbd
Los Banos Mike Amabile
Pacifica tbd
Portola Valley tbd
Woodside tbd
Board Orientation Plan
• Exec Briefings, Board Orientation on Feb 27,
Board Mentors/Buddies
Committee Members
• Executive Committee – 3 openings
• Audit and Finance – 1 opening
Peninsula Clean Energy
CEO Report: Other News
6 • Senator Josh Becker – Chair, Senate Committee on Energy, Utilities and Communications
• Rep. Kevin Mullin – Member of Committee on Energy and Commerce • Educational Opportunity – Tour of Diablo Canyon Nuclear Power Plant in April - Doodle poll coming soon to include Exec Committee, CAC rep, and possibly other Board members
Peninsula Clean Energy
CEO Report: Staffing Updates
New Hires
• Michael Mielke, Senior Manager Legislative Policy, Starting January 27 7 Questions
8 Peninsula Clean Energy
Executive Committee Meeting
January 13, 2025
Agenda
▪ Process Overview
▪ Roadmap Overview
Organizational Strategy
Critical Questions
Future Value Proposition
Discussion
▪ Vote to Recommend Approval
10 Process Overview
11 Engagement to Date
Phase 1: Organizational Strategy
12 13
▪ Based on the adopted Organizational Strategy, staff will develop Programmatic and Operational Strategies designed to bring the Organizational Strategy to fruition ▪ This part of the process will focus on describing programmatic and operational goals and objectives/key results during Spring and Summer 2025
Process to Come
Phases 2 & 3: Programmatic & Operational Strategy & Planning Spring – Summer 2025
What Are Our Goals? What Are Our Objectives
and Key Results?
14 The final PCE Strategic Plan 2025-2030 will incorporate the following components:
▪ PCE’s Organizational Strategy defining PCE’s strategic policy positions (January 2025) Including Future Value Proposition and Decision-making Criteria as foundational tools ▪ PCE’s Programmatic & Operational Strategy establishing goals and objectives/key results to implement the strategic policy positions (Spring-Summer 2025) Process to Come
Deliverables
15 Participants in the strategy development process identified three critical questions to focus on in this process.
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 areas of work that PCE should engage in to further support decarbonization and electrification in California?
Critical Questions
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 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 priority 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.
A “zero carbon” power resource portfolio might include de minimus emissions from geothermal facilities. 16 Strategic Policy 1: Procurement
17 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).
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-burdened household” spends more than 50 percent of income on housing. 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.
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.
Strategic Policy 2: Equity Definitions
18 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.
Strategic Policy 2: Equity
19 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 I support of DER/electrification projects ▪ Expanded consulting and technical assistance
▪ Drive relevant policy development and advocacy
Strategic Policy 3:
Additional Priority Areas of Work
20 Historically, PCE’s value proposition has been the ability to deliver both “cleaner” (GHG-free) and cheaper energy. 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 purpose that is not profit-driven and that mandates a focus on 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 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.
Future Value Proposition
Discussion
21 ▪ Three Strategic Policies
▪ Future Value Proposition
22 Vote on
Resolution
Thank you! Lester Olmstead-Rose
[email protected]
23 January 2025 Rates and
Updated Financial Forecast
Justin Kudo, Associate Director of Rates and Strategic Analysis Nick Bijur, Chief Financial Officer
Leslie Brown, Director of Account Services
Peninsula Clean Energy
PG&E Rates Background
PG&E electric rates (including transmission, distribution and bundled generation) are some of the highest in the world
• Typical residential rate (without low-income discounts): $0.436/kWh • National average rate: $0.17/kWh
Driven in part by wildfire-related costs: $7.6 billion in 2023-2024 • Residential distribution rates have increased by $0.085/kWh since 2022 alone (~$34/month) Generation only represents ~30% of the typical PG&E electric bill 25 Basic Residential Bill Rate ($/kWh) Billed Cost % of Bill Generation (PCE) $ 0.13634 $ 54.54 31%
Fees (PG&E) $ 0.01215 $ 4.86 3%
Non-Generation (PG&E) $ 0.28797 $ 115.19 66%
Total $ 0.43646 $ 174.58
Peninsula Clean Energy
PCE Rates Background
PCE has historically provided its customers a fixed discount of 5% off PG&E generation rates • Necessitated a PCE rate change every time PG&E adjusted generation rates In March 2024, PCE’s Board directed staff to set rates independently of PG&E • Ensures revenue sufficiency driven by cost-of-service rate-making In June 2024, PCE’s Board approved rates for the subsequent 12-month period • Based on the Board-approved budget; went into effect August 1, 2024 • 5% net discount to PG&E’s then-current rates
Peninsula Clean Energy
PG&E January 2025 Rate Changes
PG&E’s generation rates and the PCIA essentially unchanged in 2025, resulting in a 4.6% net discount for PCE customers effective January 1
Other classes have similar results, with some slight differences 27 Basic Residential Rates 12/1/2024 1/1/2025 Change
PG&E Generation (w/PCIA) $ 0.1565 $ 0.1557 $(0.0008)
PCE Generation $ 0.1363 $ 0.1363
+ PG&E Bundled PCIA (2016) $ 0.0123 $ 0.0122
PCE Generation (w/PCIA) $ 0.1487 $ 0.1485 $(0.0002)
Percentage Savings 5.0% 4.6% -0.4%
Peninsula Clean Energy
Rate Allocations
PCE serves 85 rate schedules with nearly 500 rate components PG&E typically makes small updates to cost allocations as part of their annual rate changes • Allocations determine revenue collected from each customer class (e.g., residential, commercial, industrial, etc.) and from each rate component (e.g., peak, off-peak, demand, etc.) • Changes can impact comparability with PCE for select rates Staff has identified a handful of rates with larger outliers and recommends updating cost allocations to ensure equitable customer savings
28 Peninsula Clean Energy
$000's
Forecast Budget Variance
Revenues $ 448,979 $ 476,693 $ (27,714)
Cost of Energy 378,911 423,404 (44,493)
Revenues less Cost of Energy 70,068 53,289 16,779
General & Administrative 28,874 29,770 (896)
Community Energy Programs 17,522 27,370 (9,848)
Operating Expenses 46,396 57,140 (10,744)
Operating Income (Loss) 23,672 (3,851) 27,523
Non-Operating Income 15,716 9,103 6,613
CHANGE IN NET POSITION $ 39,473 $ 5,252 $ 34,221
FY 2025
Updated Net Position Forecast
• Updated FY25 Change in Net Position
forecast is ~$40 million, which is ~$35
million higher than Board-approved
budget in June 2024
• Favorability due to lower Cost of
Energy and lower Programs spend
than budgeted
• Original budget also included $15
million reduction in Rate Stabilization
Fund (recognition of revenues), which
is no longer expected to be needed
29 Rate Change Options
30 Peninsula Clean Energy
Option 1: No Change; Reallocate Large C&I Rates Only
Address C&I cost allocation inconsistencies so that all PCE customers benefit from a discount to PG&E generation rates throughout the year
• Absent this adjustment, a few select customer classes (large C&I) would pay a premium to PG&E during certain times of the year
• ~$250,000 impact to FY24-25 budget
Remaining customers would experience no change in their gen rate until July 2025 • Consistent with Board policy to set rates for 12-month period and not change rates “mid-cycle” except when warranted/significant updates
Any FY25 net revenue in excess of budget would be considered in the next budget cycle • Excess revenues applied against future revenue requirement to reduce PCE rates and/or used to expand the Rate Stabilization Fund
31 Peninsula Clean Energy
Option 2: Reduce All Gen Rates to 10% Discount
Given forecasted financial favorability and focus on affordability, immediately reduce all rates, instead of waiting until annual rate-setting process in July 2025 • Positively received by customers and helps offset PG&E’s non-generation rate increase Increasing discount to 10% through July would reduce Net Position forecast by ~$13 million
• Increases typical household savings by ~$3/month
• Re-allocating all rate classes to a consistent discount also eliminates large C&I rate allocation “issue”
Rates to be re-set again in July 2025 based on the FY25-26 Budget as part of the “normal” rate-setting process
32 Peninsula Clean Energy
Key Considerations
2025 PCIA rates may have been set too low due to market factors • This creates risk of a PCIA true-up which moves costs into 2026 • Potentially could swing rates by ~$0.03/kWh in 2026
Risk mitigation through liquidity
• Carrying additional revenue into the next fiscal year will offset PCIA increases in 2026
33 Peninsula Clean Energy
Action Item
• Staff seeks Executive Committee feedback for a recommendation to PCE’s Board on January 23, 2025
• Any rate adjustments recommended by Executive Committee/ approved by the Board will take effect in February 2025 34 Committee Members’ Reports
Adjournment