Audit & Finance
Committee
Meeting
June 9, 2025
The 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 Item 1
• Consent - Public Comment
Regular Agenda
Adjournment
Chair Report
Staff Report
Appointment of Audit and Finance
Committee Chair
FY25-26 Budget
Nick Bijur, Chief Financial Officer
Updates Since Last Audit & Finance Committee Meeting
7 • No material changes to budgeted costs since last Audit & Finance Committee meeting on May 10
o Total costs of $394 million, a 5% decrease from FY25 due to lower energy costs • PCIA Proposed Decision (Track 1) issued on May 23
o Adjusts methodology for calculating the Resource Adequacy (RA) Market Price Benchmark (MPB), which is utilized to determine the PCIA o Proposed Decision, if adopted, will result in significantly lower RA prices and a higher PCIA in 2025 and 2026
o 2025 adjustment to be captured/trued-up in 2026, which compounds the impact on 2026 rates
o As a result, $23 million reduction in electricity sales vs prior budget to maintain 10% discount to PG&E
Ilustrative Impact of PCIA
8 $0.140
$0.040
$0.086
$0.000
$0.020
$0.040
$0.060
$0.080
$0.100
$0.120
$0.140
$0.160
$0.180
PG&E Customers PCE Customers
2026
PCIA PCE Gen Rate
$0.160
$0.010
$0.134
$0.000
$0.020
$0.040
$0.060
$0.080
$0.100
$0.120
$0.140
$0.160
$0.180
PG&E Customers PCE Customers
2025
PCIA PCE Gen Rate
10% Discount ($0.144)
10% Discount ($0.126)
35% Decline
2025 2026
9 Mo. Act + Fcst Budget $ %
Energy 226,064,375 238,179,849 12,115,474 5%
Capacity 121,200,377 59,912,279 (61,288,098) -51%
REC/GHG-Free 12,311,495 7,625,369 (4,686,126) -38%
Other 3,700,889 3,207,043 (493,846) -13%
Contingency 5,575,469 30,928,025 25,352,556 455%
Cost of Energy 368,852,605 339,852,565 (29,000,040) -8% Variance vs FY25
Cost of Energy
$29 million decrease (-8%) in cost of energy vs FY25
• Significantly lower Resource Adequacy (RA) prices (~$12 vs ~$33) • Lower REC/GHG-Free prices, nuclear allocation and increased PPA generation • Offset in part by a full year of contingency at 10% and forecasted load growth 9 2025 2026
Budget Refresh Budget $ %
Buildings 6,472,453 13,300,000 6,827,547 105%
EV 3,345,586 3,700,000 354,414 11%
DER 578,564 2,350,000 1,771,436 306%
Grants/ Govt 7,010,709 2,150,000 (4,860,709) -69%
Other 115,176 200,000 84,824 74%
Total 17,522,488 21,700,000 4,177,512 24%
Variance vs FY25
Programs - Expense
$4.2 million increase (24%) in Programs expense
• Buildings
• Direct install (home upgrade) ramp-up after initial “startup” phase
• Increased marketing efforts should drive higher spend • Grants
• Wind down of Surplus Fund allocation; seven outstanding agencies due to timing issues and slower approval process • Distributed Energy Resources (DER)
• Surplus Funds for GovPV storage
• Residential DERM platform subscription
costs
• Electric Vehicles (EV)
• Program stability
10 2025 2026
Programs Capital Budget Refresh Budget $ %
GovPV 11,880,077 20,000,000 8,119,923 68%
On Bill Financing 5,032,515 6,000,000 967,485 19%
GovBE 1,800,000 600,000 (1,200,000) -67%
Resi ESS 400,000 3,000,000 2,600,000 650%
Total 19,112,592 29,600,000 10,487,408 55%
2025 2026
Programs Revenues Budget Refresh Budget $ %
GovPV 53,777 400,000 346,223 644%
On Bill Financing 1,153,863 1,500,000 346,137 30%
CPUC Revenues 86,909 1,000,000 913,091 1051%
Menlo Pk CEC Grant 608,000 1,000,000 392,000 64%
Other - 450,000 450,000 -
Total 1,902,549 4,350,000 2,447,451 129%
Variance vs FY25
Variance vs FY25
Programs - Capital Expense and Revenues
$10.5 million increase in Programs capital
• Largely due to GovPV (note that GovPV3 is currently not included in forecast) • Residential solar and storage program launched
11 Operating Expenses
• Compensation: Salary increase (~5.5%) and additional headcount (5) • Consultants: Additional support for Power Resources and HR • Legal: Innovation Strategies department
• Communications: Paid advertising, increased promotions/branding, and additional direct mail to support DEAI efforts
• G&A: Increased software, subscription costs, and customer emergency fund 12 2025 2026
9 Mo. Act + Fcst Budget $ %
Compensation 14,087,390 16,391,740 2,304,350 16%
Data Manager 3,553,970 3,568,740 14,770 0%
Service Fees - PG&E 1,328,667 1,334,400 5,733 0%
Consultants & Professional Services 1,701,228 2,476,380 775,152 46% Legal 982,719 1,179,917 197,198 20%
Communications and Noticing 2,625,120 3,255,450 630,330 24% General and Administrative 3,575,413 4,329,449 754,036 21% Depreciation 239,805 361,398 121,593 51%
Variance vs FY25
Cost-of-Service Rate Setting
13 ~$380M
Cost-of-Service Revenue Requirement Discount/Premium
10% Discount
Recommendation to maintain rates at 10% discount throughout the fiscal year • Assumes ~35% rate decrease in Feb 2026 to coincide with anticipated PG&E and PCIA rate changes (will return to Board in January 2026 for approval) $ millions FY26 Budget Total Agency Costs $394.4
Non-Electricity Sales (3.9)
Interest Income (14.5)
Net Costs $375.9
9 Mo. Act + Fcst May 12 June 19
Electricity Sales 438,150,989 395,543,301 372,937,422
Non-Electricity Sales, net 13,364,252 3,928,316 3,928,316 Green electricity premium 3,444,679 4,205,296 4,205,296 Total Operating Revenues 454,959,920 403,676,914 381,071,035 Cost of Energy 368,852,605 339,852,565 339,852,565
Revenue less Energy Costs 86,107,315 63,824,348 41,218,469 Programs 17,522,488 21,700,000 21,700,000
Compensation 14,087,390 16,210,565 16,391,740
General & Administrative 14,006,921 16,485,234 16,505,734 Operating Expenses 45,616,799 54,395,799 54,597,474
Operating Income 40,490,516 9,428,549 (13,379,004)
Interest Income 20,330,881 15,547,290 14,520,194
Change in Net Position 60,821,397 24,975,839 1,141,190
Budget
FY26 Budget
14 Recommend approval of FY26
Budget • Only significant change since May
12 meeting is reduced sales due to
updated PCIA assumptions
• Assumes PCE maintains rates at a
10% discount throughout the fiscal
year
• Will return to the Board in January
with “Budget refresh” and
recommendation for a potential
rate decrease of up to 35%
• Budgeted Change in Net Position
of ~$1M
5 Year Forecast
and Rate
Stabilization Fund
Nick Bijur, Chief Financial Officer
2025 2026 2027 2028 2029 2030
9 Mo. Act + Fcst Budget Forecast Forecast Forecast Forecast Revenues 454,959,920 381,071,035 405,964,100 418,740,925 447,878,977 456,946,996 Cost of Energy 368,852,605 339,852,565 351,391,003 363,618,843 386,739,115 398,260,807 Revenue less Energy Costs 86,107,315 41,218,469 54,573,097 55,122,082 61,139,862 58,686,189 Programs 17,522,488 21,700,000 27,050,000 27,650,000 27,650,000 27,150,000 Compensation 14,087,390 16,391,740 18,124,963 19,581,130 20,560,187 21,588,196 General & Administrative 14,006,921 16,505,734 16,791,207 17,621,363 18,000,430 18,478,670 Operating Expenses 45,616,799 54,597,474 61,966,170 64,852,493 66,210,617 67,216,866 Operating Income (Loss) 40,490,516 (13,379,004) (7,393,073) (9,730,411) (5,070,755) (8,530,676) Interest Income 20,330,881 14,520,194 11,893,036 10,081,443 9,926,360 9,731,002 Change in Net Position 60,821,397 1,141,190 4,499,964 351,032 4,855,604 1,200,325 Discount/(Premium) to PG&E ~7% 10% -22% 5% 5% 5%
5-Year Forecast
• PG&E rates are forecasted to decrease and the PCIA to increase significantly in 2026 • As a result, and assuming cost-of-service ratemaking, PCE rates would be at a 22% premium to PG&E in FY27
• Forecast excludes impact from the Rate Stabilization Fund 16 Rate Stabilization Fund Background
17 • Board approved establishment of a Rate Stabilization Fund in May 2024 o Allows PCE to defer revenues in years when financial results are strong to be used in future years to help “stabilize” / supplement rates
o Staff will consider deferral of revenues into the Rate Stabilization Fund when the addition to Net Position is greater than 3% of revenues o Deposits can be made into the Rate Stabilization Fund until the balance equals 15% of revenues
• PCE deferred $68M of revenues in FY24, representing 15% of revenues • Most peers have Rate Stabilization Funds (Ava, Sonoma Clean Power, MCE, Clean Power Alliance, Orange County Power Authority and San Jose Clean Power); Silicon Valley plans to implement this year
o Balances as a percentage of revenues range from 9 – 20%, however, likely that peers will add to their Rate Stabilization Funds this year due to favorable financial results Rate Stabilization Fund Recommendation
18 • Providing a minimum 5% discount to customers in FY27 requires recognition of ~$105M of deferred revenues, which exceeds PCE’s current Rate Stabilization Fund of $68M • As a result, staff recommends a temporary waiver of our Rate Stabilization Fund limit, which will allow us to defer additional revenues in FY25 (exact amount to be determined) • Deferring $37M of revenues will increase the Rate Stabilization Fund to $105M, which represents ~23% of revenues (current limit of 15%)
• As a reminder, a Rate Stabilization Fund has no impact on cash 10%
-22%
5% 5% 5%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
FY26 FY27 FY28 FY29 FY30
No Rate Stabilization Fund
10%
5% 5% 5% 5%
0%
2%
4%
6%
8%
10%
12%
FY26 FY27 FY28 FY29 FY30
Rate Stabilization Fund
2025 2026 2027 2028 2029 2030
9 Mo. Act + Fcst Budget Forecast Forecast Forecast Forecast Operating Revenues 454,959,920 381,071,035 300,964,100 418,740,925 447,878,977 456,946,996 Rate Stabilization Fund (37,000,000) - 105,000,000 - - - Total Revenues 417,959,920 381,071,035 405,964,100 418,740,925 447,878,977 456,946,996 Cost of Energy 368,852,605 339,852,565 351,391,003 363,618,843 386,739,115 398,260,807 Revenue less Energy Costs 49,107,315 41,218,469 54,573,097 55,122,082 61,139,862 58,686,189 Programs 17,522,488 21,700,000 27,050,000 27,650,000 27,650,000 27,150,000 Staff Compensation 14,087,390 16,391,740 18,124,963 19,581,130 20,560,187 21,588,196 General & Administrative 14,006,921 16,505,734 16,791,207 17,621,363 18,000,430 18,478,670 Operating Expenses 45,616,799 54,597,474 61,966,170 64,852,493 66,210,617 67,216,866 Operating Income (Loss) 3,490,516 (13,379,004) (7,393,073) (9,730,411) (5,070,755) (8,530,676) Interest Income 20,330,881 14,520,194 11,893,036 10,081,443 9,926,360 9,731,002 Change in Net Position 23,821,397 1,141,190 4,499,964 351,032 4,855,604 1,200,325 Discount/(Premium) to PG&E ~7% 10% 5% 5% 5% 5%
5-Year Forecast
Forecast includes utilization of Rate Stabilization Fund 19 Target DCOH
Nick Bijur, Chief Financial Officer
Days Cash on Hand (DCOH) Target
21 371
325
265
232
0 50
100
150
200
250
300
350
400
FY25 DCOH FY25 Adjusted DCOH FY25 Adj DCOH less Current RSF FY25 Adjusted DCOH less Recommended RSF
• In December 2023, PCE established an annual reserve target of 250 adjusted DCOH, above which the Board would consider a surplus fund allocation
• Adjusted cash = cash balance less Board-approved capital spending • At the time, PCE had not contemplated a Rate Stabilization Fund (RSF), which should also be considered in adjusted DCOH calculation as cash to be used to lower future rates Assumes $52M of Board-approved capital but not yet spent, $68M current RSF and $105M recommended RSF 250 Days
Forecasted DCOH Target
$420
$393
$286 $281
371 364
253 240
0 50
100
150
200
250
300
350
400
450
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
2025 2026 Fcst 2027 Fcst 2028 Fcst
DCOH
Cash ($M)
Cash DCOH Target DCOH
22 • In addition to “adjusted” DCOH, Staff also considers forecasted DCOH when making rate setting recommendations
o Looking only at the current year could lead to ill-advised decisions given year-to-year variability o Three years is an appointment time horizon that balances forecast accuracy and anticipated events o Not necessary to adjust DCOH for Board-approved capital and the Rate Stabilization Fund given the forecast includes disbursement of such funds
DCOH / Surplus Funds Approach
23 • As part of the budget process, staff calculates adjusted DCOH and forecasted DCOH to determine recommended PCE rates
• If DCOH exceeds target, either adjusted or forecasted DCOH, Staff may recommend further reduced customer rates
• A rate reduction is the preferred method to allocate “surplus funds” vs rebates o Rebates are very administratively burdensome for what will likely be a small dollar amount
o Bill credits are quickest, but less “PR benefit”
o Checks very logistically challenging and expensive to mail Committee Member Reports
24 Adjournment
Peninsula Clean Energy