Peninsula Clean Energy
Board of Directors Meeting
January 23, 2025
This meeting will begin shortly. Thank you!
Agenda
Call to Order / Roll Call
Public Comment (for items not on the Agenda)
• Please note, send any chats to Administrative Assistant, Brianna Arroyo Action to set the Agenda and Approve Consent Items 1-3
• Consent - Public Comment
Regular Agenda
Adjournment
Chair Report (Discussion)
CEO Report (Discussion)
CEO Report: Welcome 8 New Board Members!
5 County of San Mateo
County of San Mateo
Foster City
Half Moon Bay
Los Banos
Pacifica
Portola Valley
Woodside
Lisa Gauthier
Jackie Speier
Stacy Jimenez
Patric Bo Jonsson
Mike Amabile
Christine Boles
Craig Taylor
t.b.d.
Board Orientation Plan
• Briefings with Exec. Team, Board Orientation
on Feb. 27, Board Mentors/Buddies
Committee Members
• Executive Committee – 3 openings
• Audit and Finance – 1 opening
*Please let Nelly know if your Alternate has changed.
CEO Report: "Top 5" 2024 Highlights – Thank you!
6 1. Shift to Cost-of-Service Rate Setting; customer savings nearly double from 2023! - $24.5M in 2023 → ~$48M by end of 2024
2. Launch of new Turnkey Home Upgrade Service,In-House Customer Call Center
3. 45 GWh of new load – Caltrain, San Mateo Community College District, Google, etc
4. First Prepay transaction yielding ~$6M annually in power cost savings
5. Innovation and Strategy function underway
- Self Generation Incentive Program - $7M- 9.2M in state funding to install solar+battery storage for 300-400 low income customers; Equitable Decarb Program - Awarded $16M for home upgrade incentives to serve an additional 700 customers through 2030; strategic plan update kicked off.
CEO Report: 2025 Agency Goals
7 1. Continue to offer 100% carbon free products for all customers and make steady progress toward PCE’s 100% annual renewable goal while balancing the need for customer affordability and sound fiscal management.
2. Successfully engage and educate new Board members and alternates to ensure continued Board/Staff mission and policy alignment, high level of participation and trust, and effective Board and Committee operations.
3. Continue to put our customers first by implementing and scaling a range of value-add customer programs and services that result in increased GHG reductions, growth in program participation, customer satisfaction and retention, use of new on-line tools, and positive feedback from customer surveys and media outlets.
4. Report on results to close out current 2020-2025 Strategic Plan and adopt new five-year plan (2026-2030) that is aspirational, achievable and adaptable to Agency needs and market conditions over time.
CEO Report: 2025 Agency Goals (cont.)
8 5. Demonstrate state, national and federal policy leadership and subject-matter expertise in the areas of customer affordability, rightsizing to support electrification, cost effective decarbonization and procurement, DEAI, and innovative DER strategies.
Advocate for PCE and CCAs generally and manage policy and cost risks associated with a changing Federal administration.
6. Further develop and formalize PCE’s strategy and innovation function focused on program revenue diversification, DER and other local advanced energy strategies, strategic partnerships and pilots, new generation resources, emergent technologies, and knowledge-sharing to encourage replication and market scale.
7. Adopt standards of excellence and continuous improvement across Agency operations and support functions.
GovPV1: Status and Interconnection
GovPV1 scope: solar + battery retrofits
Size: 10 agencies, 12 sites, 1.7MW solar
Status
• 5 / 12 systems commissioned and operating
• 11 / 12 systems fully constructed and waiting on
PG&E to complete PG&E-specific work (more
details next slide)
Observed interconnection timelines
• Systems below 30kW, with no PG&E upgrades:
approx. 6-9 months
• Systems above 30kW with no PG&E upgrades:
approx. 9-15 months
• Systems above 30kW with upgrades: approx. 15-
24+ months
San Bruno Aquatic Center
Gov PV1: Substantially Complete Projects
10 Project Current Status Substantial Completion Date PG&E’s Projected Timeline Atherton Town Hall Waiting on PG&E to upgrade its equipment Dec 2024 Feb 2025 Colma Community Center Waiting on PG&E to upgrade its
equipment
Sep 2024 March 2025
Hillsborough Public Works
Yard
Waiting on PG&E to upgrade its
equipment
Nov 2023 January 2025
Pacifica Community Center Waiting on PG&E line-side connection May 2024 January 2025 San Bruno Aquatic Center Waiting on PG&E to schedule final inspection
Aug 2024 January 2025
Los Banos Wastewater
Plant
Waiting on PG&E to schedule final
inspection
Dec 2024 None yet provided
Millbrae Chetcuti Complex In construction Expected Jan 2025 N/A pending completion of construction
CEO Report: Legislative Update
Senator Josh Becker – Chair, Senate Committee on Energy, Utilities and Communications
Assemblymember Diane Papan – Committee Member, Assembly Committee on Utilities and Energy
Rep. Kevin Mullin – Member of Committee on Energy and Commerce January Calendar
January 1: Governor’s Executive Order Deadline
January 6: Legislature Reconvened
January 10: Governor's 2025-26 Budget Proposal
January 24: 2025 Leg Counsel Bill Deadline
11 CEO Report: Federal Update
Energy-Related Executive Orders Signed This Week:
1. Declared National Energy Emergency
2. Halted permitting and leasing for new on-shore and off-shore wind projects on Federal Land
3. Freeze on unspent Inflation Reduction Act (IRA) funding
4. Decision on tariffs and ITC forthcoming – proposed 25% tarrif on Canadian and Mexican goods and likely 60% on Chinese goods 12 • PG&E has started sending emails to
~1.6M customers across their service
territory to encourage enrollment in
“Budget Billing” (BB)
• BB ‘levels out’ monthly/seasonal
swings in energy bills
• BB only applies to PG&E charges;
however, in order to mitigate opt outs,
PCE is working with Calpine to offer
this for PCE charges for enrolled
customers
CEO Report: PG&E Budget Billing Campaign
13 CEO Report: Credit Rating Increase
The benefits of our recent credit rating increase (A3 by Moody’s) are already being realized
Reduction in cash collateral posted with Calpine of $2.14M and returned to PCE
Additional earnings on $2.14M at an assumed interest rate of 4% results in ~$85,000 in additional income per year
14 CEO Report: PCE in the Community
15 January 25 – Lunar New Year, Millbrae
January 25 – Youth Climate Ambassadors Mid-Year Retreat, East Palo Alto January 28 – Community Workshop with Climate Resilient Communities, East Palo Alto January 29 – Thrive Alliance Home Upgrade Program, San Mateo County February 5 – Tu B'shevat, Foster City
February 5 – CAELI Green Career Webinar, San Mateo County February 6 - Bayshore Community Center Workshop, Daly City February 6 - Sustainable SMC Happy Hour on Home
Upgrade Program, San Mateo County
CEO Report: Staffing Updates
New Hires!
Legislative Senior Manager – Michael Mielke starting January 27 Power Resources Specialist – Lauren Dineen starting February 18 No other positions currently posted
16 Upcoming Meetings – February 2025
Audit and Finance Committee:
• Monday, February 10 at 8:30 a.m.
Executive Committee:
• Monday, February 10 at 10:00 a.m.
Community Advisory Committee:
• Thursday, February 13 at 6:30 p.m.
New Board Member Orientation:
• Thursday, February 27 at 5:00 p.m.
Board of Directors Meeting:
• Thursday, February 27 at 6:30 p.m.
CAC Report
Peninsula Clean Energy
Board Meeting
January 23, 2025
Agenda
▪ Process Overview
▪ Organizational Strategy
Strategic Policy 1: Procurement
Policy Proposal
Strategic Policy 2: Serving Equity
Customers Policy Proposal
Strategic Policy 3: Additional Priority
Areas of Work Policy Proposal
▪ Foundational Tools
Future Value Proposition
Decision-Making Criteria
▪ Discussion
▪ Vote on Resolution
20 Process Overview
21 Engagement to Date
Phase 1: Organizational Strategy
22 23
▪ 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 milestones 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 Milestones?
24 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 Strategy establishing goals and milestones to implement the strategic policy positions (Spring-Summer 2025)
Process to Come
Deliverables
25 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 with the Risk Oversight Committee while maintaining cost competitiveness with PG&E 26 Strategic Policy 1: Procurement
27 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 Greatest Need for Support: PCE is striving towards supporting vulnerable customers under its self-funded programs. At this time, there is no standard definition available to identify such customers, therefore, these customers will be identified on a program-by-program basis. For example, a potential resiliency program may focus on a coastal area with frequent outages.
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
28 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 a range of PCE 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:
▪ 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 ▪ Ensuring that equity efforts truly focus on customers with the greatest need for support on a program -by-program basis ▪ Seeking third-party funding for equity programs through a variety of channels ▪ Supporting policy initiatives specifically designed to benefit equity customers ▪ Engaging and supporting equity customers and communities through partnerships with community-based organizations
Strategic Policy 2: Equity
29 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 prioritize efforts to accelerate the development of carbon-free 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
▪ Expanded consulting and technical assistance
▪ Drive relevant policy development and advocacy
Strategic Policy 3:
Additional Priority Areas of Work
30 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 purpose that is not profit-driven and that mandates a focus on dramatically reducing emissions, lowering electricity rates, and investing 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
31 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?
Take into account financial impacts to PCE?
Take into account costs to PCE’s customers?
Decision-Making Criteria
Tier One Criteria: Use to Drive Preliminary Decisions
32 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? Decision-Making Criteria
Tier Two Criteria: Use in Planning Processes to Advance Programmatic & Operational Strategy
Discussion
33 ▪ Questions or input into the organizational
strategy (three strategic policies)?
▪ Questions or input into the future value
proposition?
▪ Questions or input into the decision-making criteria? 34 Vote on
Resolution
Thank you! Lester Olmstead-Rose
[email protected]
35 Proposed Rate
Changes
Justin Kudo, Associate Director of Rates &
Strategic Analysis
Nick Bijur, Chief Financial Officer
Leslie Brown, Director of Account Services
PG&E Rates Background
PG&E electric rates
are some of the
highest in the world!
Primary driver is
distribution rates
and required
revenues:
• 2023 - $5.8 billion
• 2025 - $11 billion
• ~$35/month per
household alone
37 $-
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
Generation Distribution Transmission Other National Avg. 2010 National Avg: $0.18*
2010 PG&E Rate: $0.24
2025 PG&E Rate: $0.36
2024 National Avg: $0.18*
*Source: St. Louis Fed Average Electricity Price per kWh in U.S. City Average, Sep 2024 Inflation-Adjusted PG&E Rates 2010-2025 ($/kWh)
PG&E Rates Background (continued)
Generation only represents ~30% of the typical PG&E electric bill • Down from 54% when CCAs were first launched in 2010
PCE customers still pay PG&E for:
• The Power Charge Indifference Adjustment (PCIA)
• Non-generation charges such as transmission and distribution (T&D), programs and more 38 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
Basic household rates without low-income discount
How Do PG&E Rates Affect PCE Customers?
Rate Component Impacts PCE Customer
Bills?
Impacts Cost
Competitiveness?
Generation No Yes
PCIA Yes Yes
Non-Generation Yes No
39 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 Board-approved budget; went into effect August 1, 2024 • Resulted in 5% net discount to PG&E’s then-current generation rates PG&E January 2025 Rate Changes
PG&E’s generationrates and the PCIA essentially unchanged in 2025, resulting in a 4.6% net discount for PCE customers effective January 1, 2025
• Some customer classes and rate components may vary slightly 41 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%
Rate Allocation Updates
PCE serves 85 rate schedules…
• Residential flat, residential TOU, residential EV, small commercial, etc. … with nearly 500 rate components
• Peak, off-peak, demand, connected load, etc.
PG&E typically makes small updates to cost allocations as part of their annual rate change • Allocations determine where revenue is collected from (but not how much) • 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
42 $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
• Favorability due to lower Cost of
Energy and 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
43 Recommended
Rate Changes
44 Recommendation from Executive Committee
Given forecasted financial favorability and focus on affordability, immediately reduce PCE rates and increase discount to PG&E to 10%
• Decrease PCE rates by ~$0.007/kWh
• Should be positively received by customers and helps offset PG&E’s recent non-generation rate increase
Impact of proposed rate change:
• Increase typical household savings by ~$3/month
• Reallocate rates, providing equitable savings to all customer classes and rate components • Reduce FY25 Net Position forecast by ~$13 million
• Sufficient liquidity with ~300 Days Cash on Hand (DCOH) Rates to be re-set again in July 2025 based on the FY25-26 Budget as part of the “normal” rate-setting process
45 Key Considerations
2025 PCIA rates may have been set too low due to market factors • Creates risk of a PCIA true-up, which moves costs into 2026 • Potentially could swing rates by ~$0.03/kWh
Risk mitigation through liquidity
• Carrying additional liquidity and revenue into the next year will help offset a possible increase in the PCIA
• PCE’s board can determine how to apply excess net revenue, such as reducing future revenue requirements and thereby rates
• Rate Stabilization Fund remains fully funded ($68 million) and can be drawn upon in future years to help mitigate rate volatility
46 Recommendation
Approve staff’s proposal to recalculate ECOplus rates to be set at a net 10% discount to PG&E generation rates, which would decrease PCE rates by an average of $0.00696/kWh, effective February 1, 2025, or as soon thereafter as can be implemented
47 Board Members’ Reports
Peninsula Clean Energy
Adjournment
Peninsula Clean Energy