Presentations — Silicon Valley Clean Energy Finance & Administration Committee, February 27, 2023

1 New SV Clean Energy
PowerPoint Template
Subtitle
MY 22-23 Adjusted
Operating Budget
Amrit Singh
Finance and Administration Committee
Feb 27, 2023
Item 3

PRESENTATION
2 Main Areas of Discussion
Purpose
Action: Recommend that the Board
Adopt Mid-Year 2022 -2023 (MY
23) Adjusted Operating Budget
• Review the Budget Timeline • Highlight Changes Since the Adoption of the Annual Budget
• Compare Mid-year and Annual
Adopted Budget Key Line Items
• Review Updated SVCE Margin From
December Rate Change
• Review of Updates to Energy
Expenses
• Review Reserve Projections • Provide Staffing Update • Committee Vote Item 3

PRESENTATION
3 Mid Year FY22-23 Budget Approval Timeline
Aug. 10, 2022 Sept. 14, 2022 Dec 14, 2022
Draft Budget
Presented to BOD
FY22-23 Budget
approved by BOD
January 2023 Rate
Change & Program
Funding approved by BOD
Feb. 27, 2023 March 2023
Present MY Budget to
F&A Committee
Present MY Budget for
BOD Approval
Item 3

PRESENTATION
4 Highlights
Good Financial Year
• Healthy contribution to reserves of $73.4 million
• Reduction of ~ $42 Million from $115.5 Million at
budget
• Key Drivers of Reduction:
• December 2022 Board Approvals:
• Additional 2% Customer Discounts
• Increased Program Spending
• Increased Energy Expenses
• Reductions Partially Offset by:
• Increase in Revenues from Improved Margins
• Increase in Investment Income
• Slight Reduction in Other Operating Expenses
Reduction of ~$42 Million:

December Board Approvals
Additional 2% Customer Discount $10
Increased Program Spending $19
Increased Energy Expenses $67
Increase Revenues -$50
Increase Investment Income -$3
Reduction in Other Operating Expenses -$1
$42
Item 3

PRESENTATION
5 Annual Budget vs. Mid -Year Adjusted Budget
• Supports Overall
Customer Discount of
4%
• Additional Monthly
Bill Credits to Low-Income Customers of
$10.50 per month.
• Total Transfer of
$30.7 Million to
Decarbonization
Programs

SILICON VALLEY CLEAN ENERGY
MY 2022-23 OPERATING BUDGET
($ in thousands)
FY 2022-23 MY 2022-23

ADJUSTED
DESCRIPTION BUDGET BUDGET $ %
Energy Revenues 483,910 523,958 40,048 8.3%
Energy Expenses 325,296 392,436 67,140 20.6%
Operating Margin 158,564 131,522 (27,042) -17.1%
Operating Expenses 28,299 27,559 (740) -2.6%
Non-Operating Revenue (Expense) 589 3,867 3,278 553.8%
Balance Available for Reserves 130,904 107,830 (23,074) -17.6% (before Transfers)
Annual Transfers and Other Expenses 9,965 9,965 0 0.0%
Nuclear Allocation 1,900 1,900 0 0.0%
Multi Family Direct Install Program 0 9,500 9,500 -
Electrification Discount Program 0 9,500 9,500 -
Customer Bill Relief 3,600 3,600 0 0.0%
Final Reserve Contribution Balance 115,439 73,365 (42,074) -36.4% ($ in thousands)
Year over Year
Change
Item 3

PRESENTATION
,,
6 Actual PG&E Gen and PCIA Rates Result in
Higher Margin than FY 23 Budget Assumptions
• Relative to Assumptions in the
Annual FY 23 Budget:
• PG&E’s 2023 generation
rate increased by about

15.5%
• PCIA increased from
0¢/kWh to 0.28¢/kWh
• Relative to Budget, SVCE’s
margin improve by about 11%
• The rate changes were effective
Jan 1, 2023.
* Source: PG&E 2023 Average Rate, effective January 1, 2023 (Weighted for SVCE Portfolio Load) ***Using NewGen Model with 7/16/2022 Forward Curves and 10% haircut (Weighted for SVCE Portfolio Load) Above margin analyses ignores minor reductions for franchise fees (0.09 ¢/kWh) SVCE Gen Rate 14.08 ¢/kWh
PCIA
4% SVCE discount
Current Rate*
PCIA 0.28 ¢/kWh
PG&E Gen Rate:

14.96 ¢/kWh
Budget 2023 Rate ** PG&E Gen Rate SVCE Gen Rate 12.69 ¢/kWh PG&E Gen Rate:

12.95 ¢/kWh
2% SVCE Discount
Higher SVCE
Margin
Item 3

PRESENTATION
------..--_______________ {
7 Increase of $67.3 M since budget
• Net Open Position (+)
• CAISO non-energy costs (+)
• Environmental Products (+)
• Resource Adequacy (+)
Power Supply Variance
• Energy Prices are Extremely Volatile
(expanded slide in appendix)
• Currently ~86% Hedged for FY 2023
• Sharp Increase in Prices for
Renewable and Carbon Free
Environmental Products
• Sharp Increase in Resource
Adequacy (RA) Market and
Compliance Costs
Item 3

PRESENTATION
ATC NP15 Historical and Simulated Monthly Prices
$80_0
$70_0
Od-22 Oec-22 Feb-23 Apr-23 Jun-23 Aug-23 Oct-23 Dec-23 Feb-24 Apr-24 Jun-24 Aug-24 $60_0 - NP-1SATC(S/MWh) Historical - NP-15 ATC (S/MWhl MEAN - Budget (07/15/2012 curves) $50_0
$40_0
$31.7
$30_0
$20_0
$10_0
$Q_O
Net Open Position
$1.8
Renewable Energy Supply
Cumulative Delta to Budget
Over/(Under)
Through September 30, 2023
($MM)
■ Increase ■ Decrease ■ Rltal
$6.1
$13.0 -
Resource Adequacy
Environmental Products
$16.6
-$2.0
others
CAISOCosts Net Supply Costs
8 Reserve Projection
Projected End of FY Reserves:
• $305 Million
• 265 Days of Cash on Hand
• Includes Unspent Program
Fund allocations
If all Approved Programs Dollars
were Spent :
• $252 Million in Reserves
• 219 days cash on hand
Item 3

PRESENTATION
$600
$500
$400
"' C:
,Q
:E $300
.!:
~
$200
$100
$0
MY 2022-23 FY 2023-24
- Total Adjusted Ending Reserves
(incl unspent program funds)
Reserves Forecast
490 days
120 days
FY 2024-25 FY 2025-26 FY 2026-27
- Target Reserves Maximum Reserves - Minimum Reserves
9 Personnel Update
Budgeted Staff
• 49 FTEs
• 7 PTEs
Current Staff
• 35 FTEs
• 5 PTEs
No New FTE Headcount Additions in MY Budget
Recruiting Progress:
• Staff engaged multiple outside recruitment firms
• 2 additional staff hired in late 2022
• 3 new staff hired – start dates in March / April
• 14 FTE vacancies remain
• 2 offers currently being considered by candidates
DPP anticipates additional hiring later in 2023, once new hires are fully integrated, and gaps identified
Item 3

PRESENTATION
10 Title of the Page Summary - Despite ongoing
uncertainty, the overall financial
picture looks good for FY22 -23
Reserves
• Despite uncertainties, good operating margin
and contribution to reserves
• Taking favorable conditions to:

1. Build reserves to withstand future adverse events

2. Further serve our mission with an additional $19
million in funding for decarbonization programs

3. Encourage all-electric rate adoption by residential
customers with additional discounts

4. Provide additional bill relief for lower-income
customers

5. Increase overall customer discount to 4%
• Staff will conduct additional stress tests as part
of next year’s budget to prepare for adverse
events and assess the adequacy of reserves.

Item 3

PRESENTATION
Many Risks can Deplete Reserves
Market Prices
Reduced Revenues
via Higher PCIA and
Lower PG&E Rates;
Increased Power
Supply Expense
SUPPLY
Project delays;
PPAs Default or
Renegotiate for
Higher Prices

L&R ISSUES

IRP, RPS, RA
Reform/Penalties.

PCIA, POLR

PAYMENTS LOAD LOSS
Customer Defaults Direct Access and Potential for
Expansion

CYB ER-RISK
Hardware, Software,
and Training to combat
Ransomware and
Phishing
RATE
Rate Increases due
to socialized wildfire
costs, Energy Price
Increases will
ultimately impact
usage and
electrification
11 Recommendation
Recommend that the Board of Directors adopt the
Mid-year (MY) 2022-23 Adjusted Operating
Budget that projects contributing $73.4 million to
the reserves.

Item 3

PRESENTATION
12 Thank you! / Questions?
Item 3

PRESENTATION
13 2022-2023 Mid-Year
Adjusted Operating
Budget

SILICON VALLEY CLEAN ENERGY
MY 2022-23 OPERATING BUDGET
($ in thousands)
FY 2022-23

ADJUSTED

DESCRIPTION BUDGET

ENERGY REVENUES
Energy Sales 522,853
Green Prime 1,055
Other Income 50
TOTAL ENERGY REVENUES 523,958

ENERGY EXPENSES
Power Supply 392,436
OPERATING MARGIN 131,522

OPERATING EXPENSES
Data Management 3,413
PG&E Fees 1,470
Salaries and Retirement 11,285
Professional Services 8,016
Marketing & Promotions 862
Notifications 131
Lease 525
General & Administrative 1,857
TOTAL OPERATING EXPENSES 27,559
OPERATING INCOME (LOSS) 103,963

NON-OPERATING REVENUES
Interest Income 3,870
Grant Income0
TOTAL NON-OPERATING REVENUES 3,870

NON-OPERATING EXPENSES
Financing3
Interest0
TOTAL NON-OPERATING EXPENSES3

TOTAL NON-OPERATING INCOME
(EXPENSES) 3,867
CHANGE IN NET POSITION 107,830

CAPITAL EXPENDITURES, INTERFUND

TRANSFERS & OTHER
Capital Outlay 200
Transfer to CRCR Fund0
Transfer to Program Fund 9,765
Nuclear Allocation 1,900
Multi Family Direct Install Program 9,500
Electrification Discount Program 9,500
Customer Bill Relief 3,600
Other0

TOTAL CAPITAL EXPENDITURES, INTERFUND
TRANSFERS & OTHER $34,465
BALANCE AVAILABLE FOR RESERVES $73,365
Item 3

PRESENTATION
14 Operating Expenses
FY Budget MY Budget Changes Notes
Updated
Costs
• Data Management (Calpine)
• $3.25MM
• Billing (PG&E)
• $1.4MM
• G&A / Lease
• $2.4MM
• Staffing
• $12.02MM
• Professional Services
• $8MM
• Communications / Noticing
• $1MM
• Unchanged
• Unchanged
• Unchanged
• Reduced by ~$740k due to vacancies
• Unchanged
• Unchanged
• Actual expenditures (Oct – Dec) tracking
within Budgets across most operating
expense categories
• No major shifts in program / project priorities
• No new FTE headcount at MY
• Staffing costs reduced due to lengthy
recruitment processes
• Anticipate additional DPP staffing later in
2023
Item 3

PRESENTATION
15 5-year forecast
For forecast years
FY23-24 onward:
- Revenues are based
on GWh Sales from
the CEC IEPR load
forecast and CalCCA
NewGen Model for
SVCE margin analysis
using latest market
data
- Power Supply Costs
are based on updated
portfolio positions and
latest market data
- Operating Expenses
are assumed to grow
5% / year
- Staffing Headcount is
unchanged from
proposed FY22-23
level
($ in Thousands)
2023 2024 2025 2026 2027
Operating Revenue (Budget) (Forecast) (Forecast) (Forecast) (Forecast) GWh Sales 3,784 3,749 3,769 3,917 3,792
Electricity Sales, Net $ 522,853 $ 458,368 $ 482,080 $ 493,546 $ 478,176 Available for PCIA/Gen Rate/Power Supply Cost Changes - - (40,000) (129,000) (221,000) Other Income 50 51 51 52 52
GreenPrime Electricity Premium 1,055 862 853 858 863
Total Operating Revenues 523,958 459,280 442,984 365,455 258,092 Operating Expense
Power Supply $ 392,436 $ 328,263 $ 319,711 $ 323,460 $ 279,812 Operating Margin 131,522 131,017 123,274 41,996 (21,720) Data Management 3,413 3,413 3,583 3,762 3,950
PG&E Service Fees 1,470 1,544 1,621 1,702 1,787
Staff Compensation 11,285 12,447 12,852 13,269 13,701
Consultants and other Professional Fees 8,016 8,417 8,838 9,280 9,744 Communications and Noticing 993 1,043 1,095 1,150 1,207 General and Administration 2,382 2,501 2,626 2,758 2,895 Programs 34,265 9,185 9,659 9,888 9,581
Total Operating Expenses 454,260 366,812 359,984 365,269 322,677 Operating Income 69,698 92,468 83,000 187 (64,586)
Nonoperating Revenue (Expense)
Investment Income 3,870 5,609 8,306 10,059 10,214
Capital Outlay & Financing Costs (203) (53) (53) (53) (53) Grant Income - - - - -
Total Non-Operating Revenue (Expense) 3,667 5,556 8,253 10,006 10,161 Change in Net Position/Available for Reserves 73,365 98,024 91,253 10,192 (54,424) Begin, Net Position 212,684 286,049 384,073 475,326 485,518 End, Net Position $ 286,049 $ 384,073 $ 475,326 $ 485,518 $ 431,094 Item 3

PRESENTATION
r r r r ,..

I
16 Power Market Price Volatility
Prices in recent months have settled much higher than normal NP15 ATC $/Mwhr FY2023 FY2024
Budget $ 79.4 $ 68.1
MY Budget $ 94.0 $ 75.0
Item 3

PRESENTATION
ATC INIPlS Historical and Simulated Monthly Prfoes
$300
r
$250
$200 ...
8 ,:

A.
j $150 + + +
:E
:;;;:
$100
$50
$0
Oct-22 De,c-22 Feb-23 Apr-23 Jun-23 Aug-23 Ort-23 Dec-23 Felb-24- Apr-24 hm-24- A!ug-24- - NP-15 ATC ($/MWh) Historical - NP-15 ATC (S/MWh) MEAN - Bu:clget (07/15/2022 curve-st 17 Energy Risk Management Min/Max Bands
We hedge to manage market price risk. 86% of Fiscal Year 23 load is hedged; 80% of Calendar Year 23 is hedged.

Item 3

PRESENTATION
ERM Min ERM Max
Period Year Tolerance - LRB Tolerance LRB SVCETotal
" " Hedge% ll
Net open Position 11 erance and IPasitioos
Balance
2023
of Year
80% 110% 80%
10 Year 2 -
2023
2024 70% 90% 83%
Year 3 -
2024
2025 55% 80% 69%
Year 4 -
2025
2026 50% 80% 63%
m,t,
Year 5 -
2026
2027 50% 80% 60%
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Item 3

PRESENTATION
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Item 3

PRESENTATION
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VAc.ANT
Sen r Pr-o!l]'..rn~
Sp., rn ,
20 Decarb Programs and Policy Staffing
Current Staff
• Director
• Programs-focused team (3
staff)
• Policy and government
support team (3 staff)
• Data team (2 staff)
Starting Spring 2023
• Portfolio Management
Analyst
• Senior Programs Specialist
(Community Programs)
• Programs Lead (Policy)
Ongoing Program Expansion:
• Need to go from ~$2M/year to ~20M/year for next three years
• Need to go from hundreds of rebates to thousands
• Need to meet more with local agencies to explore options and provide support
More Staff Required; New Tools Required
• DPP anticipates additional hiring later in 2023, once new hires are fully integrated
• New positions likely focused on financing, program expansion • Search for / evaluate new tool to manage program portfolio Item 3

PRESENTATION
21 $-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
>120 Days 31+ Days
Since March 2020, the overall arrearage amounts have grown roughly 3x.

SVCEs Arrearage Total for customers 31+ days late, 120+ days late Date Amount
High 11/29/2021 $7.99M
Low 4/17/2020 $2.54M
Current 1/30/2023 $7.45M
• Green arrow indicates receipt of
$1.3M in Federal CAPP funds
• An additional $750k in CAPP
funding provided winter ’23
• Growth at red arrow indicates short-term PG&E billing-hold issue in fall ’22 that was quickly resolved.

Item 3

PRESENTATION
22 Progression of the SVCE Margin
22 * Source: PG&E 2023 Average Rate, effective January 1, 2023 (Weighted for SVCE Portfolio Load) ** Source: PG&E Initial ERRA Forecast (Weighted for SVCE Portfolio Load) *** Using NewGen Model with 7/16/2022 Forward Curves and 10% haircut (Weighted for SVCE Portfolio Load) Above margin analyses ignores minor reductions for franchise fees (0.09 ¢/kWh) SVCE Gen Rate 14.08 ¢/kWh
4% SVCE discount
Current Rate*
PCIA 0.28 ¢/kWh
PG&E Gen Rate:

14.96 ¢/kWh
PG&E Gen Rate
SVCE Gen Rate 11.06 ¢/kWh
PCIA
PG&E Initial Forecast
2023 Rate**
PG&E Gen Rate:

12.62 ¢/kWh PCIA 1.43 ¢/kWh
Budget 2023 Rate *** PG&E Gen Rate SVCE Gen Rate 12.69 ¢/kWh PG&E Gen Rate:

12.95 ¢/kWh
2% SVCE Discount
1% SVCE Discount
Higher Margin
• PG&E Published the Initial 2023
ERRA forecast in May 2022
projecting 2023 Gen Rates at

12.62 ¢/kWh (Weighted for SVCE
Portfolio Load)
• SVCE set annual budget in July
2022, projecting 2023 Gen
Rates at 12.95 ¢/kWh (Weighted
for SVCE Portfolio Load)
• PG&E Released the official rates
in December 2022, effective
January 1st, 2023
Item 3

PRESENTATION
~ ________ {
1 • Subtitle
New SV Clean Energy
PowerPoint Template
Enterprise Risk Management (ERM)
Framework and Stress Testing
February 27, 2023
Finance and Administrative Committee
Amrit Singh
Item 4

PRESENTATION
2 Main Areas of Discussion • Quick Review of Last Year’s Stress Tests
• ERM and Stress Test Distinction • Components of ERM Framework • Risk Matrix • Risk Register • Stress Tests • Review Planned Stress Test Scenario Purpose
Information Item:

1. Present Enterprise Risk
Management (ERM)
Framework

2. Seek Feedback on the
Planned Stress Test Scenario
Item 4

PRESENTATION
3 Background – Last Year’s Stress Tests
• Conducted 5 Stress
Test Scenarios
• Expanded Towards
ERM
• Enhancing Towards
a Comprehensive
ERM Program
Item 4

PRESENTATION
© Stress Test Scenarios
Extreme but plausible scenarios that can deplete reserves and make SVCE uncompetitive. • Ensu e adequacy of
r,eserves and
o g.aniz.ational iresiliency
• Guide developm,ent of
strategic plan
• Shape FY 22-23, budget
.and rese1rv,e targets
• Price uncertainty Drives
the first 4 scenarios
Strnss 8cenarios for CY 2fl23, to CY2027 (five-year horizon):

1. Significant drop in energy prices including REC
• Higher PCIAand lower PG&E Gen Rate

2. In sufficient financial liquidity
• Price ,calla pse triggers credit downgrade
• Gollateral calls from counterpartiesand CAISO
• Increase in POLR (Provider of Last Resort) funding ( called FS R- Finan c ial Security Requirement)

3. IPPAs default, renegotiate for higher prioes, and/or delay start • RPS non .. compliance penalty
• Replacement at higher prices

4. Load loss due to direct acoess and distributed load

5. Threa.t to Public Services or Facilities
4 Stress Tests and ERM
Stress Test
An essential component of ERM
• Assess the interrelatedness of risks in the
ERM framework and model extreme but
plausible scenarios resulting from one or
more risks that can have major adverse
consequences for SVCE
• Important for commodity trading portfolios
because of the inherent weakness of
market risk measures in assessing black
swans, such as disruptions in markets
A more comprehensive organization-wide
assessment of risks that leads to a more
disciplined approach to achieving the
organization’s mission and objectives
• Ensure risks that can be optimally
managed do not derail us from
achieving the organization’s objectives
efficiently and effectively
• Can also aid in identifying opportunities
that affect the organization’s strategic
priorities
ERM
Item 4

PRESENTATION
5 Key Components of our ERM Framework
Risk
Register
• Record of organization’s risks
• Identify current and additional planned mitigations
• Identify risk owner
Risk Matrix
• Risk Rubric. Assess the likelihood and consequence of risk events
• Calibrate risks
• Identify risk tolerance – level of acceptance
Stress
Tests
• Model scenarios (financial position, systems, and processes) of interrelated risks that are extreme but plausible
• Develop appropriate risk management strategies, including the adequacy of reserves
Unmitigated With Current Mitigations With Additional Mitigations 1 Financial Economic Recession: Prices Collapse and PCIA goes up and revenues go down Amrit Reserves to withstand the shocks; Stress Tests, Cashflow Modeling Reassess reserve adequacy Extreme (15) Extreme (14) High? (13) (Depends on Reserve Set Aside) 2 Financial Price Collapse leads to insufficient liquidity (collateral postings) Amrit Reserves to withstand the shocks; Stress Tests, Cashflow Modeling Reassess reserve adequacy High (13) Moderate (12) Low (11) 3 Financial Load Loss to due economic recession (may not be immediate financial impact) Amrit Reserves to withstand the shocks Reassess reserve adequacy Moderate (12) Low (11) Low (11) 4 Financial Bad Debt increase due to economic recession Adam Send back to PG&E after 3 months of non-payment; Reserves to withstand the shock Reassess reserve adequacy Moderate (12) Moderate (12) Moderate (12) 5 Financial Price collapse and increase in desire for DA (as PCIA goes up) subject to the DA cap Amrit Reserves to maintain competitive pricing; CPUC Decision not opening DA None Low (22) Low (22) Low (22)
6 Financial Load Loss due to DA and distributed/ behind the meter (generation and storage) Adam Custom Customer Pricing; CPUC Decision not opening DA Moderate (12) Moderate (12) Moderate (12) 7 Financial Significant PPAs default/delay/renegotiate for higher prices Monica Supplier & Technology diversity; plan for contingencies; Contractual language for delay damages and default provisions Moderate (23) Moderate (23) Moderate (23) 8 Financial Counterparty Default - Loss of MS business - Risk of losing prepay Amrit Credit risk management Update credit guidelines Moderate (23) Moderate (23) Moderate (23) 9 Financial Member agency leaving Girish Strong SVCE value proposition; Effective communication and alignment with members Moderate (23) Moderate (23) Moderate (23) 10 Financial
Governance Risk (Limited knowledge of key stakeholders resulting in an uneconomic/suboptimal business model/operations; Divergent Board member objectives)
Girish Continous training and stakeholder interest alignment Moderate (23) Moderate (23) Moderate (23) 11 Financial PG&E failures affect our cashflows since they are our cash register (high gas prices leading to customer bad debt, billing issues) Adam Seek fair treatment from CPUC; No residential waterfall Moderate (12) Low (11) Low (11) 12 Regulatory/Compliance POLR Proceeding - Large Tie up of Financial Reserves Amrit Hold Adequate Reserves Manage and shape regulatory
proceeding against PG&E Pool
Proposal
Extreme (14) High (13) Moderate (18)
13 Regulatory/Compliance CPE Policy Procurement (Pumped Storage, Ofshore wind etc, more asset procurement); Loss of procurement autonomy thru backstop procurement (@ governers office) Monica Manage and shape regulatory proceeding (add more specifics?) Moderate (23) Moderate (23) Moderate (23) 14 Regulatory/Compliance RA reform, uncertainties on design and procurement targets and penalties for market structural imbalances Monica Manage and shape regulatory proceeding (add more specifics?) High (13) High (13) High (13) 15 Regulatory/Compliance Loss of PG&E hydro and Nuclear allocation Monica Manage and shape regulatory proceeding (add more specifics?) Moderate (12) Moderate (12) Moderate (12) 16 Regulatory/Compliance CPUC rejects some of our MTR contracts - especially if it's out of money Monica Manage and shape regulatory proceeding (add more specifics?) Low (17) Low (17) Low (17) 17 Regulatory/Compliance CPUC imposed hedges that may not be optimal for our portfolio Monica Manage and shape regulatory proceeding (add more specifics?) High (19) High (19) High (19) 18 Regulatory/Compliance Potential for deregistration (CPUC No longer lets us operate as an LSE) Monica Manage and shape regulatory proceeding (add more specifics?) High (25) High (25) High (25) 19 Regulatory/Compliance
Green Regulatory Risk
- Change in the accounting of green. REC has a definition today, Green e / Green prime - VREP has some exchange between REC and Cap/Trade, this could increase our costs in the long term.

Monica Low (22) Low (22) Low (22)
20 Reputational
Risk of Relevancy
- IOUs power portfolio just as green. How do we distinguish ourselves? What's our value proposition?
Justin Cheaper (competitive advantage thru tax exempt financing) and community benefits from programs Moderate (18) Moderate (18) Moderate (18) 21 Reputational Emissions on PCL increase; Impact on our mission and customers perception of our value proposition Adam Effective customer communications Moderate (23) Moderate (23) Moderate (23) 22 Reputational
Customer Activism & Unfavorable Political scenarios derailing our mission - High PG&E T&D costs and high energy prices resulting in more customer activism and movement against electrification; customer affordability - Political environments ("Make Coal Great Again!")
- Lobbying from natural gas industry
Adam Effective customer communications Moderate (23) Moderate (23) Moderate (23) 23 Reputational Aggressive SVCE electrification efforts creates customer backlash ("Let go of my gas stoves!") Justin Moderate (23) Moderate (23)
24 Reputational
Daisy and 3rd Party (Calpine, other Vendors) System Failures and Data Breach - Customer Identifiable data compromised; Mandatory customer communication - Customers Opt Out
- CPUC Compliance Risk
Justin CPUC Data audit; Contract provisions Moderate (18) Moderate (23) Moderate (18) 25 Reputational Risk of not spending program dollars well (impact on the reserves - give back the reserves) Justin Moderate (23) Moderate (23) Moderate (23) 26 Reputational Grid Readiness to support our mission Justin Moderate (23) Moderate (23) Moderate (23) 27 Reputational Stranded Program Assets (technology changes, hydrogen cheaper than electricity) Justin Moderate (23) Moderate (23) Moderate (23) 28 Reputational Major Disruption of the T&D/Grid operator, Grid Reliability - affects our mission Girish Moderate (18) Moderate (18) Moderate (18) 29 Operational and
Business Continuity Natural Disaster Recovery (Earthquake, flooding) - Cover key business functions (procurement, scheduling, collateral calls …) Monica Key Desk Procedures Low (22) Low (22) Low (22)
Operational and
Business Continuity Staff turnover Amrit - Employer of Choice Initiatives -benefits,Comp, Hybrid Work, Team Buildings Key Desk Procedures; BPO Moderate (18) Moderate (18) Moderate (18) 30 Operational and
Business Continuity Cyber risks (wire fraud, social engineering, ransomware) Amrit IT IRP Plans and Tabetop exercises, VCISO, Human Firewall Trainings Moderate (18) Moderate (18) Moderate (18) 31 Operational and
Business Continuity Insider Threat/Rogue Employee Amrit Code of Conduct, Risk Controls Moderate (23) Moderate (23) Moderate (23) 32 Operational and
Business Continuity Physical Security/Active Shooter Amrit Staff Training Moderate (23) Moderate (23) Moderate (23) 33 Operational and
Business Continuity Scheduling system failure Monica Schedule remotely Low (22) Low (22) Low (22) 34 Operational and
Business Continuity Calpine system failure Adam Moderate (23) Moderate (23) Moderate (23) 35 Operational and
Business Continuity Daisy Failures (Quality of data impact on Revenue forecasting) Justin Low (22) Low (22) Low (22) Proposed Stress Tests (Modeled Scenarios)
Economic Recession (Price Collapse -5th percentile) Coupled with Adverse Regulatory Outcomes (POLR) Extreme (20) Extreme (20) High(19) Draft
Confidential Initial Placement to Get Discussions Going Risk Matrix Placement (Impact over 5-years)
Risk ID Risk Category Risk Description Risk Owner (Initial Straw Proposal)
Current Mitigations (High level right now to get discussions going)
Any Additional Planned
Mitigations/Actions (High
level right now to get
discussions going)
Item 4

PRESENTATION
Frequency/Likelihood
UMlly SQ%. 90'6 Chance
Modtrala t0%-50')l;Chance
Unllkalvbut Pl a,.lbla S%-l0%(hance
D ! !
rn
© P~urrent, and Stress Case Modeled Commodity Prices
Forward prices are at all time
high.
• Extremecaseofrunup1n
""" Most of the increase occurred
in the last 12 months.

Can't predict future but price
trends could reverse, and
prices could drop equally or
Prices W8fe trading at the
modeled stress test levels as
recently as 12 months ago.
--llllW'llll ..... ~1122)
6 Risk Matrix
Impact /Consequence
• Assess the likelihood (frequency of
occurrence) and consequence (impact)
• Calibrate risks and optimally direct
resources
• Identify risk tolerance or acceptable level
of risk
• Most risks assessed based on the subject
matter expert’s (SME) judgment
• Will continue to refine further and attempt
to quantify risks
• Significant financial risks will be explicitly
quantified and used for reserve planning,
like last year’s stress test analyses
Insignificant Minor Moderate Major Catastrophic
Risk Easily
Mitigated
through Day-to-Day Operations
Risk is
Manageable/Low
Impact on Mission
Moderate Erosion
of
Reserves/Impact
on Mission
Significant
Erosion of
Reserves/Impact
on Mission
Risk of
Existence
Certain >90% chance High (1) High (2) Extreme (3) Extreme (4) Extreme (5) Likely 50%- 90% Chance Moderate (6) High (7) High (8) Extreme (9) Extreme (10) Moderate 10%-50% Chance Low (11) Moderate (12) High (13) Extreme (14) Extreme (15) Unlikely but Plausible 5%-10% Chance Low (16) Low (17) Moderate (18) High (19) Extreme (20) Rare <=5% Chance Low (21) Low (22) Moderate (23) High (24) High (25) Frequency /Likelihood
Item 4

PRESENTATION
7 Risk Register
• Risk Register:
• Record of risks
• Briefly describes each risk
• Lists existing and planned mitigations
• Ranks risks
• Identifies risk owner
• Cross-functional teams brainstormed and
identified an initial set of critical risks
• Bucketed the risks into the following initial
categories:
• Financial
• Regulatory and Compliance
• Reputational
• Operational and Business Continuity
An expanded view is also shown in the appendix.

Unmitigated With Current
Mitigations
With Additional
Mitigations
1 Financial Prices Collapse; PCIA
Increases; Revenues Decrease Amrit
Reserves to withstand the
shocks; Stress Tests, Cashflow
modeling
Reassess reserve
adequacy Extreme (15) Extreme (14) High (13)
.
7 Financial
Significant Number of PPAs
Default/Delay/Renegotiate for
higher prices
Monica
Supplier & Technology Diversity;
Plan for Contingencies;
Contractual language for delay
damages and default provisions
Moderate (14) Moderate (12) Moderate (12)
12 Regulatory/Compliance POLR Proceeding - Large Tie Up of Financial Reserves Amrit Hold Adequate Reserves
Manage and shape
regulatory
proceeding
Extreme (14) High (13) Moderate (18)
25 Reputational
Ineffective or sluggish
spending of approved program
dollars
Justin
Program plans developed with
stakeholders, ongoing feedback
during design/management,
increased staff/resources, and
emphasizing larger-scale
programs.

Additional staffing,
new supporting
systems, and public
reporting on impacts.

Moderate (23) Moderate (23) Moderate (23)
.
28 Reputational
Major disruption of the
T&D/Grid operator, Grid
Reliability - affects our mission
Girish Shape Regulatory and Legislative
Initiatives Moderate (18) Moderate (18) Moderate (18)
29 Operational and
Business Continuity
Natural Disaster Recovery
(Earthquake, flooding)
- Cover key business
functions (procurement,
scheduling, collateral calls …)
Monica System backups and desk
procedures
Add'l Desk
Procedures and
Continuity Plans
Low (22) Low (22) Low (22)
.
34 Operational and
Business Continuity Calpine system failure Adam Moderate (23) Moderate (23) Moderate (23) Proposed Stress Tests (Modeled Scenarios)
Reserves; Strong Advocacy
Additional Reserves;
Revist Hedging
Strategy
Extreme (20) High(19) Moderate (18) Economic Recession (Price Collapse -5th percentile) Coupled with Adverse Regulatory Outcomes (POLR); Increase RA/procurement costs Draft and illustrative
Risk Matrix Placement (Impact over 5-years)
Risk ID Risk Category Risk Description Risk Owner Current Mitigations Additional Planned Mitigations
Item 4

PRESENTATION
I I
I I
8 Economic Recession
• Current:
• Reserves to withstand the shocks
• Strong advocacy and engagement with
regulatory stakeholders (CPUC, CEC,
Legislature) through multiple channels
(Direct, CalCCA)
• Additional
• Additional reserves
• Consider revising the hedging strategy to
account for PCIA / Gen-rate variability to
energy prices
Mitigation Strategies
• Economic Recession - Price Drop, Load Loss,
Bad Debt Increase
• Increase in POLR (Provider of Last Resort)
funding (called FSR – Financial Security
Requirement)
• Resource Adequacy (RA) reform and market
uncertainties, along with increased procurement
targets and potential penalties, increase
procurement costs
Current Stress Test Scenario Plan
Extreme but plausible scenarios that can deplete reserves and make SVCE uncompetitive.

Risk Matrix Placement (Impact over 5-years)
Unmitigated With Current
Mitigations
With Additional
Mitigations
Extreme (20) High(19) Moderate (18)
Draft
Item 4

PRESENTATION
9 FY23-24 Risk Assessment Timeline
Jan 31 Feb 9 Feb 27 March 22
Enterprise Risk
Assessment
Framework &
Brainstorming
Initial Management
Discussion &
Calibration of Risks
Present
Framework to
Finance & Admin
Committee
Present
Framework to
Risk Oversight
Committee
April
Complete
Analyses
Present Stress Test
Analyses to Finance
and Admin and
Executive Committee
Present Stress
Test Analysesto
Board
May June 14 August 9 &
September 13
Incorporate Stress Test
Analyses for Reserves
Planning as part of the
Annual FY23- 24 Budget
Item 4

PRESENTATION
10 Thank you! / Questions?
Item 4

PRESENTATION
11 Title of the Page Unmitigated With Current
Mitigations
With Additional
Mitigations
1 Financial Prices Collapse; PCIA
Increases; Revenues Decrease Amrit
Reserves to withstand the
shocks; Stress Tests, Cashflow
modeling
Reassess reserve
adequacy Extreme (15) Extreme (14) High (13)
.
7 Financial
Significant Number of PPAs
Default/Delay/Renegotiate for
higher prices
Monica
Supplier & Technology Diversity;
Plan for Contingencies;
Contractual language for delay
damages and default provisions
Moderate (14) Moderate (12) Moderate (12)
12 Regulatory/Compliance POLR Proceeding - Large Tie Up of Financial Reserves Amrit Hold Adequate Reserves
Manage and shape
regulatory
proceeding
Extreme (14) High (13) Moderate (18)
25 Reputational
Ineffective or sluggish
spending of approved program
dollars
Justin
Program plans developed with
stakeholders, ongoing feedback
during design/management,
increased staff/resources, and
emphasizing larger-scale
programs.

Additional staffing,
new supporting
systems, and public
reporting on impacts.

PRESENTATION
I I
I I
1 • Subtitle
New SV Clean Energy
PowerPoint Template
Review of Completed
Prepay Transaction
Amrit Singh
Finance and Administration Committee
February 27, 2023
Item 5

PRESENTATION
2 Main Areas of Discussion • Goals of Prepay • Board Authorized Execution Parameters
• Summary of Executed
Transactions
• Next Steps
Purpose
Information Item: Report Out of
the Completed Second Prepay
Transaction
Item 5

PRESENTATION
3 • Goal
Reduce the cost of power purchases by leveraging SVCE’s ability to fund low-cost tax-exempt debt • Prepays grant CCA’s competitive advantage relative to IOUs • Target Benefits
 Savings over the 30-year term around 8% - 10% per year on power quantities delivered under the pre -pay structure compared to spot market purchases / current contracts  Approximately 3 MM to $4 MM per year in savings
 Favorable risk allocation where SVCE only pays for energy that is delivered (same as contracts today)
 Debt is non-re course to SVCE
Review of Prepay Goal and Benefits
Item 5

PRESENTATION
rA, s1L1coN VALLEY ~ CLEAN ENERGY
4 • Aggregate Principal Amount of bonds to not exceed $1.0 billion • Execution contingent on achieving savings of at least 8 percent under the power supply contract for the initial bond reset period • Bonds not be guaranteed obligations of SVCE
Board Authorized Execution Parameters
Item 5

PRESENTATION
rA, s1L1coN VALLEY ~ CLEAN ENERGY
5 Summary of Executed Transaction
Aggregate Principal Bond Amount $841,550,000
Total Bond Proceeds $891,418,648.10
Municipal Bond Rating A1
Green Certification Designated Green Bonds by Kestrel Verifiers Initial Bond Pricing Period • 6.5 years.
• After the initial period, bonds will be repriced per the negotiated repricing agreement and a new discount will be established based on the then prevailing market conditions.

Final Bond Maturity Date • July 1, 2053.

Discount Achieved • $9.77 per MWh, which is about 10%of the price established for energy deliveries under the power supply contract.
• ~$4.7 million per year for SVCE during the initial bond pricing period of 6.5 years.

Energy Volume Supported by Bond Proceeds ~55 MW (about 12% of load; with slight escalation in the latter half of the transaction)
Power Delivery Start Date June 1, 2023
Item 5

PRESENTATION
rA, s1L1coN VALLEY ~ CLEAN ENERGY
6 Next Steps
• Work with CCCFA on ongoing annual disclosure requirements • Assign existing or new Power Purchase Agreements (PPA) into the Prepay prior to the end of the 2-year term of the assigned contract • Analyze the Power Procurement Portfolio and Continue to monitor the Prepay Market for Additional Opportunities
• Two completed transactions provide combined savings of about $6.5 million annually
• Two transactions cover ~25% of our load
Item 5

PRESENTATION
rA, s1L1coN VALLEY ~ CLEAN ENERGY
7 Thank you! / Questions?
Item 5

PRESENTATION
8 Paid from Bond Proceeds; Savings are Net of These Costs Summary of Cost of Issuance
Cost of Issuance (COI) $ in 000’s
Bond and Tax Counsel: Ballard Spahr 300
Credit Rating: Moody’s 232.5
Issuer’s Counsel and Disclosure Counsel: Chapman & Cutler LLP 200 Municipal Advisor: PFM Financial Advisors LLC 175
Investment Advisor: PFMAM (US Bank) 35
Trustee: BNY Mellon Corporate Trust 30.9
Trustee Counsel: Ballard Spahr 30
Printing Cost: ImageMaster 3.3
Green Bond Second Party Opinion: Kestrel 22
Contingency/Other 16.8
Total COI 1,045.5
Morgan Stanley Underwriting 4,359.2
Total 5,404.7
Item 5

PRESENTATION
rA, s1L1coN VALLEY ~ CLEAN ENERGY
9 Summary of Transaction Documents
Agreements Executed by SVCE

1. Power Supply Contract
• Between SVCE and CCCFA
• Provides for the sale of clean energy from CCCFA to SVCE

2. Letter Agreement Regarding PPA Assignments
• Between SVCE, CCCFA, and Morgan Stanley
• Details the terms of assigning PPAs that SVCE has with a current of future energy Supplier

3. Form of Limited Assignment Agreement
• Between SVCE, Morgan Stanley, and Third-party Energy Supplier • Details the terms of partially assigning SVCE’s energy contracts to Morgan Stanley • Future PPAs will include this agreement

4. Project Administration Agreement
• Between SVCE and CCCFA.
• Sets the terms for SVCE to act on behalf of the CCCFA such as scheduling for the energy.

5. Energy Supply/PPA Custodial Agreement
• Between SVCE, Morgan Stanley and the Custodian Bank
• Specifies the terms on handling cashflows among the parties and making required payments to the Energy/PPA Supplier Item 5

PRESENTATION
10 4. Summary of Transaction Documents – Cont’d
Agreements Executed by CCCFA

1. Prepaid Agreement
• Between CCCFA and Morgan Stanley
• Details the terms of the prepayment by CCCFA to Morgan Stanley and the flow of energy from Morgan Stanley to CCCFA

2. Trust Indenture
• Between CCCFA and the Trustee
• Sets forth the terms of bond issuance, the rights of bondholders, and secures the cashflows of CCCFA to ensure principal and interest payments to the bondholders

3. Re-pricing Agreement
• Between CCCFA and Morgan Stanley
• Sets the terms for remarketing and repricing of bonds at future bond repricing periods and the terms for calculation of future energy price discount that will be offered to SVCE.

4. Commodity Swap Agreement and Related Custodial Agreement • Between CCCFA and Swap Counterparty (Morgan Stanley also executes a corresponding agreement with the same swap counterparty)
• Converts any index payments by SVCE (variable or floating price) to a fixed price Item 5

PRESENTATION
11 Details of the First Prepay Transaction
Aggregate Principal Bond Amount $1,234,720,000 (SVCE and EBCE combined) Total Bond Proceeds $1,475,895,642.5 (SVCE and EBCE combined) Municipal Bond Rating A1
Green Certification Designated Green Bonds by Kestrel Verifiers Initial Bond Pricing Period
• 10 years.
• After the initial period, bonds will be repriced per the negotiated repricing agreement, and a new discount will be established based on the then prevailing market conditions.

Final Bond Maturity Date • February 1, 2052.

Discount Achieved
• $4.38 per MWh, about 10% of the energy cost of SVCE’s 3-year transaction initially assigned into the Prepay.
• ~$1.9 million per year for SVCE during the initial bond pricing period of ten years.

Energy Volume Supported by Bond Proceeds
109 MW, of which SVCE’s share is 50 MW (about 11% of load) and EBCE’s share is 59 MW for approximately the first ten years of the transaction; after that, the same proportional volume split will be maintained between SVCE and EBCE.

Item 5

PRESENTATION
(t ~~ SILICON VALLEY .... ·~ CLEAN ENERGY -
12 Term: 30-year with bonds repricing every 5-10 years
depending on the optimal spread between taxable
and tax-exempt interest rates.

Process:

1. SVCE partially assigns, using Limited Assignment
Agreement, energy contract to Morgan Stanley
(MS), Prepay Supplier. MS agrees to pay contract
price to energy supplier.

2. CCAs created CCCFA, a separate legal entity that
can issue tax-exempt debt.

3. CCCFA issues non-recourse tax-exempt bonds.
• Bonds not guaranteed by SVCE or CCCFA.
• Bonds secured by the contractual rights and transaction cashflows; Bonds carry MS credit ratings.

4. CCCFA pays bond proceeds, net of transaction
fees, to MS as prepayment for energy and related
products that MS will provide over the 30-year
term. Executes Prepaid Agreement.

5. SVCE and CCCFA execute Power Supply
Agreement, where SVCE pays CCCFA contract
price less discount for energy delivered by
CCCFA.

6. CCCFA uses payments from SVCE to pay interest
and principal payments to bondholders.

Overview of Prepay Structure
Item 5

PRESENTATION
Morgan Stanley
(Bank
Supplier)
Contract
Price
Prepayment $$$
MWhs+ RECs
•
Debt
Service
•
CCCFA
Contract •Price
Less Discount
MWhs + RECs
Bond •
Proceeds
0 MWhs+ RECs
Energy
Supply/PPA
Counterparty
Non-Recourse
Tax-Exempt
Bonds
0 Energy Supply/PPA
to be "Partially
Assigned"
13 Review of Prepay Background Info.

Goal: Reduce the cost of power purchases
• Savings achieved by leveraging SVCE/CCCFA’s ability to fund low-cost tax-exempt interest rates • Used since the 1990s for natural gas transactions
• Over 100 transactions totaling over $55 billion completed in the US • Over 95% of them for natural gas
• 14 prepayments totaling over $8.7 billion completed in California • Codified in the US Tax law
• Part of the National Energy Policy Act of 2005
• Seasoned team of professionals will help to guide, negotiate and structure the transactions. Fees for professionals are contingent on the completion of the deal and paid from the deal proceeds.

Item 5

PRESENTATION
14 History and Tax Law Behind Municipal Prepaid
Energy Transactions
• Municipal electric and gas utilities (and tax-exempt entities such as CCAs) in the US can prepay for a supply of electricity or natural gas from a taxable (corporate) entity and fund that prepayment with tax-exempt municipal bonds:
o Must sell that commodity to their retail end-users that reside within their traditional service area.
• Prepayment transactions are legal and Codified in US Tax Law: Since first prepayments of natural gas were done in the early 1990’s, the IRS issued rules allowing tax-exempt prepayments and Congress enacted legislation specifically allowing the transactions (National Energy Policy Act of 2005; Section 1327).

Item 5

PRESENTATION
rA, s1L1coN VALLEY ~ CLEAN ENERGY

Silicon Valley Clean Energy Finance & Administration CommitteeFebruary 27, 2023

Silicon Valley Clean Energy Finance & Administration Committee
February 27, 2023