• Subtitle
New SV Clean Energy
PowerPoint Template
Item 3
PRESENTATION
Item 3
PRESENTATION
CD Governor’s Budget Trailer Bill/AB 1373
Two vehicles for energy policy discussion. Both proposals share major provisions:
Key Provisions
1) Central Procurement: Would allow the CPUC to direct the lOUs or Dept, of Water Resources to centrally procure resources.
Challenge'. Very broad CPUC authority to order central procurement of any resources. 2) Expanded CPUC Authority: Broad expansion of CPUC’s authority over CCAs.
Challenge: Infringes on CCA Board governance.
3) Capacity Payments: Additional payment on top of CPUC’s RA penalties and CAISO backstop payments for when state back-up resources are used for reliability.
Challenge: Additional penalty doesn’t change behavior - impacts affordability. 2 •
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Item 3
PRESENTATION
CD SVCE Actions & Next Steps
Conversations on-going
Working closely with CaICCA on developing both strategy and policy in response to the Budget Trailer Bill and AB 1373.
Conversations about both the Budget Trailer Bill and AB 1373 continue with policymakers.
Will keep Board informed.
3 • Subtitle
New SV Clean Energy
PowerPoint Template
Item 4
PRESENTATION
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Discussion
6 1
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New SV Clean Energy
PowerPoint Template
Enterprise Risk Management (ERM)
Framework and Stress Testing
Amrit Singh
Executive Committee
April 28, 2023
Item 5
PRESENTATION
2 Main Areas of Discussion • Timeline • Quick Review of Last Year’s Stress Tests
• ERM and Stress Test Distinction • Components of ERM Framework • Risk Matrix • Risk Register • Stress Tests Purpose
Information Item:
Present Enterprise Risk
Management (ERM) Framework
Item 5
PRESENTATION
3 FY23-24 Risk Assessment Timeline
Jan 31 Feb 9 Feb 27 March/April 22
Enterprise Risk
Assessment
Framework &
Brainstorming
Initial Management
Discussion &
Calibration of Risks
Presented
Framework to
Finance & Admin
Committee
Present
Framework to
Risk Oversight
Committee
April
Complete Analyses.
Present Stress Test
Analyses to the
Executive Committee
Present Stress Test
Analyses to the
Finance and Admin
Committee.
Present Stress
Test Analyses to
Board
May June 14 August 9 &
September 13
Incorporate Stress Test
Analyses for Reserves
Planning as part of the
Annual FY23- 24 Budget
Item 5
PRESENTATION
4 Background – Last Year’s Stress Tests
• Conducted 5 Stress
Test Scenarios
• Expanded Towards
ERM
• Enhancing Towards
a Comprehensive
ERM Program
Item 5
PRESENTATION
5 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 5
PRESENTATION
6 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 5
PRESENTATION
7 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 5
PRESENTATION
8 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.
Draft and illustrative
Risk ID Risk Category Risk Description Risk Owner Current Mitigations Additional Planned Mitigations
Risk Matrix Placement (Impact over 5-years)
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)
13 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)
26 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)
.
29 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)
30 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)
.
35 Operational and Business
Continuity Calpine system failure Adam Moderate (23) Moderate (23) Moderate (23) Proposed Stress Tests (Modeled Scenarios)
Economic Recession (Price Collapse -1 percentile) Coupled with Adverse Regulatory Outcomes (POLR); Increase RA/procurement costs; MTM Losses on Investments
Reserves; Strong Advocacy
Additional Reserves;
Revist Hedging
Strategy
Extreme (20) High(19) Moderate (18)
Item 5
PRESENTATION
9 Thank you! / Questions?
Item 5
PRESENTATION
10 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)
13 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)
26 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)
.
29 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)
30 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)
.
35 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 -1 percentile) Coupled with Adverse Regulatory Outcomes (POLR); Increase RA/procurement costs; MTM Losses on Investments
Draft and illustrative
Risk Matrix Placement (Impact over 5-years)
Risk ID Risk Category Risk Description Risk Owner Current Mitigations Additional Planned
Mitigations
Item 5
PRESENTATION
New SV Clean Energy
PowerPoint Template
Subtitle
Item 6
PRESENTATION
Stress Test Analyses
SILICON VALLEY
CLEAN ENERGY
Amrit Singh
Executive Committee
April 28, 2023
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Item 6
Purpose
PRESENTATION
Present findings of the
stress test analyses
Presentation
Highlights
Construction of Stress Test
Scenario
Overview of Modeled Price
Collapse
Results and Implied
Reserve Targets
Discussion -Only Have
Min and Max Reserve
Thresholds
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Item 6
PRESENTATION
Stress Test
Extreme but plausible scenarios that can deplete reserves and make SVCE uncompetitive.
Insight from 2022 analyses
Last year, SVCE conducted five
stress test scenarios -four of
them were impacted by market
price uncertainties
Among them, the price collapse
scenario was the most
consequential
Price collapse scenario under an
economic recession remains as
one of the most significant risks
® Stress Test Scenarios
Extreme but plausible scenarios that can deplete reserves and make SVCE uncompetitive. • Ensure adequacy of
reserves and
organizational resiliency
* Guide development of
strategic plan
* Shape FY 22-23 budget
and reserve targets
• Price uncertainty Drives
the first 4 scenarios
Stress Scenarios for CY 2023 to CY2027 (five-year horizon):
1. Significant drop in energy prices including REC
• Higher PCIA and lower PG&E Gen Rate
2. Insufficient financial liquidity
• Price collapse triggers credit downgrade
Collateralcalls from counterpartiesand CAISO
• Increase in POLR (Provider of Last Resort)Hinding (called FSR-Financial Security Requirement)
3. PPAs default, renegotiate for higher prices, and/or delay start • RPS non-compliance penalty
• Replacemenialhigher prices
4 Load loss due to direct access and distributed load
5 Threat to Public Services or Facilities
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Item 6
PRESENTATION
CD 2023 Stress Test Scenario Description
Economic Recession
Forward Energy Prices Collapse to the one percentile level Economic Recession Creates Load Loss
Customer Uncollectables Increase
Additional Financial Liquidity Stress
Increase in POLR (Provider of Last Resort) funding (called FSR -Financial Security Requirement)
Large Counterparty Collateral Postings
MTM Losses on Investments
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Item 6
PRESENTATION
Past, Current, and Stress Case Modeled Commodity Prices Forward prices are at all time
high.
Extreme case of runup in prices
110
Can’t predict future but price
trends could reverse, and
prices could drop equally or 55 80
more.
60 Prices were trading closer to
the modeled stress test levels
as recently as 15 to 18 months
ago.
2023 2024 2025 2026 2027 2028 / \
1st Percentile Prices Modeled $ 45.0 $ 46.9 $ 48.0 $ 46.3 $ 41.4 -18 -15 -12 -9 -6 -3 0 3 6 9 12 15 18
Months Relative to Now
5 Source: http://epis.com/powermarketinsights/index.php/2017/05/18/how-good-is-the-eia-at-predicting-henry-hub/ 70% during the 2008 financial crisis
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Item 6
PRESENTATION
Modeled Price Collapse Comparison to Past Prices
Volatility in Natural Gas Markets Translates to Volatility in Electricity Markets 2008 financial crisis natural
gas prices dropped ~70%
with a corresponding drop in
power prices
Stress test modeled price
drop from base case to the
one percentile level is about
a 44%
Depended on assessment of
current market volatility
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Item 6
PRESENTATION
Base Case versus Stress Scenario
Base Case
High forward prices result in low PCIA and high
PG&E Gen rates resulting in healthy SVCE Margins
If current forward prices are realized and other
model assumptions prevail:
Significant growth in reserves from FY2023 level of $219 million to $390 million at the end of FY2024
Continued strong growth in margins over the next 5 years Caveats:
PCIA and PG&E Gen Rate portfolio assumptions based on
public data as best modeled by NewGen Consultants
PG&E’s portfolio management strategy and portfolio contents may change from those modeled
CPUC may moderate rate impacts
Uncertainty increases further out in time
Focus on delta of base case to stress test results
Stress Case
If the modeled stress scenario were to occur,
reserves would drop from $224 million at the end
of FY2023 to only $39 million at the end of
FY2025 (A drawdown of $185 Million from our
reserves)
Projected Days Cash on hand will also be below
the minimum target of 120 DCH
Days Cash on Hand
2024 2025 2026 2027 2028
157 ^41 (14) (62} (1Z3>
Below minimum
target of 120 DCOH.
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Item 6
PRESENTATION
1 Risk Mitigations
Best Mitigation
Hold Sufficient Reserves
Other Mitigations
Revisit the current energy hedging
strategy
Allow for loss in revenues from price
collapse to be mitigated by a reduction in
power supply costs
Challenge: Determining the level of
hedging given the uncertainty in
modeling PCIA and PG&E Generation
Rates
SVCE is spearheading analysis jointly
with CaICCA consultant, NewGen
Strategies
Use the results of these analyses to propose a reserve target for the next fiscal year’s budget
Build reserves such that if the stress scenario were to occur, reserves do not fall below the minimum reserve threshold of holding 120 DCOH over the next 2 years and 90 DCOH over the years 3 to 5
Current New Targets
Minimum 120 120
Goal (Target) 285 270
Maximum (Upper
Target)
490 390
The stress test analysis will be updated using prices consistent with those used to construct next year’s fiscal budget. The above table will then be revised and will be used to update the targets in the reserves policy.
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Item 6
PRESENTATION
0 Discussion- Only Min and Max Reserve Thresholds?
Current Policy:
Replenishment of Reserves: Should SVCE
draw down reserves below the Minimum
Operating Reserve level, SVCE will
implement plans to return reserves to their
minimum targets within two (2) fiscal years.
Excess Reserves: If reserve funds are
projected to exceed the maximum level, the
CEO shall present options for consideration
by the Board of Directors for proper
disposition of those reserves.
Reserves between Minimum and Maximum:
To the extent that reserves are above target
and below the maximum, no other action by
SVCE would be required.
Proposal for Consideration:
Remove the reserve target threshold
No action is required once the target is reached
9 Item 6
PRESENTATION
Next Steps
May 12, 2023
Staff presents stress analysis to
the Finance Committee
August
Finance Committee and Board reviews and
provides staff feedback on the proposed
budget
June 14, 2023
Staff presents stress analysis to the
Board
September 13, 2023
Board approves FY 2023 - 2024 budget with
updated reserves targets
10 New SV Clean Energy
PowerPoint Template
Subtitle
Item 6
PRESENTATION
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Item 6
PRESENTATION
CD Stress Test Scenario Construction -2023
Economic Recession
Price Drop
Increase in POLR
Resource Adequacy (RA)
reform and market
uncertainties, along with
increased procurement
targets and potential
penalties, increase
procurement costs
Bad Debt @ 1%
Potential Load Loss
Large Counterparty
Collateral Postings
MTM Losses on
Investments
Scenario Construction (revenue side)
Bad Debt @ 1%
4% Discount until Dec 2023 and
1% thereafter
5% Load Loss
10% modeling error adjustment to
NewGen model forecast based on
past trends
Scenario Construction (cost side)
Energy: Statistical 1 percentile low
case prices (extreme but plausible
scenario)
RA : Fundamental Forecast based
Term : Balance of fiscal year 2023 to
FY2028 (5+years)
Price drops for all forward months to
the 1 percentile level taking into
account current forward prices
Hedges and MTR executed per ERM
thresholds (hedge to max targets)
Evaluation of Collateral postings at
stress price levels
12 Item 6
PRESENTATION
Load
(Twh)
Load Assumptions and Forecast
Historical Load (Twh) Forecasted Load Scenarios
13 Item 6
PRESENTATION
CD Days Cash on Hand CCA Comparable
SVCE Target Days on Hand is 285
CCA Published Targets
SCP 280
MCE 240
3CE 183
EBCE 183
PCE 180
SJCA 180
14 Item 6
PRESENTATION
Summary of Base Case Results
High forward prices result in low PCIA and high PG&E Gen Rates resulting in healthy SVCE Margins.
Base Case $ millions
Revenues
Power Supply Cost
Operating Margin
Other Costs
Net Contribution to Reserves
Reserve Balance
Days Cash on Hand
Fiscal Year (BY)
1 2023 2024 2025 2026 2027 20281
$ 251 $ 573 $ 574 $ 525 $ 498 $ 471
$ 212 $ 364 $ 377 $ 387 $ 379 $ 372
$ 39 $ 210 $ 196 $ 138 $ 119 $ 98
$ 29 $ 39 $ 32 $ 32 $ 32 $ 33
$ 10 $ 170 $ 164 $ 106 $ 86 $ 66
s 219 S 390 S 554 $ 660 S 746 $ 812
353 494 575 662 732
Less uncertainty
More uncertainty
15 Item 6
PRESENTATION
Summary of Stress Test Results
Base Case Fiscal Year (BY)
2023 2024 2025 2026 2027 2028
Revenues $ 251 $ 573 $ 574 $ 525 $ 498 $ 471
Power Supply Cost $ 212 $ 364 $ 377 $ 387 $ 379 $ 372
Operating Margin $ 39 $ 210 $ 196 $ 138 $ 119 $ 98
Other Costs $ 29 $ 39 $ 32 $ 32 $ 32 $ 33
Net Contribution to Reserves $ 10 $ 170 $ 164 $ 106 $ 86 $ 66 Reserve Balance $ 219 $ 390 $ 554 $ 660 $ 746 $ 812
Days Cash on Hand 353 494 575 662 732
Stress Case Pl
BY 2023 2024 2025 2026 2027 2028
Revenues $ 242 S 333 $ 228 $ 289 $ 294 $ 280
Power Supply Cost $ 198 S 322 $ 313 $ 308 $ 306 $ 303
Operating Margin $ 44 $ 11 S (85) $ (19) $ (12) $ (23)
Other Costs $ 29 $ 39 S 32 $ 32 $ 32 $ 33
Net Contribution to Reserves $ 15 $ (29) S (117) $ (51) $ (45) $ (55) Reserve Balance $ 224 $ 196 $ 79 $ 27 $ (18) $ (73)
Reserve Balance after POLR Adjustment $ 224 $ 156 $ 39 $ (13) $ (58) $ (113) Days Cash on Hand 157 41 (14) (62) (123)| 16
Item 6
PRESENTATION
Key Takeaways-Price Uncertainty
Biggest contributor to risk: PCIA and PG&E Generation Rate Uncertainty.
PCIA and PG&E Gen Rate determine SVCE Rates and
therefore Revenues
Revenues Revenues
Revenues decline when prices decline
PG&E Gen Rate:
cn
(D
+-•
CO
o:
SVCE
discount
CD
0 LU
O
o
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Item 6
PRESENTATION
Key Takeaways - Price Uncertainty - Cont’d
Big contributor to PCIA and PG&E Generation Rate Uncertainty is Market Prices.
Next Year’s PCIA & Current Year’s actual O. Forecast of Next PG&E Gen Rate // realized Prices OC Year’s Market Prices Can’t fully bank current year’s margin
Deviations between actual and forecast costs are tracked in balancing accounts and trued up next year If prices drop, then there can be substantial draw from reserves PCIA2023 = PCIA Balancing Account2022 + Forecast Balance Balancing Account = (Prior Year’s Forecast Prices2022 - Actual Prices2022)* PCIA Portfolio Forecast Balance = (Legacy Contract Costs -Forecast Prices2023)* PCIA Portfolio PG&E Gen Rate Set Similarly
PG&E Gen Rate = ERRA Balancing Account + Forecast Costs * Simplified representation of concepts
18 •
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Item 6
PRESENTATION
Key Takeaways -Price Uncertainty - Cont’d
Price collapse poses biggest financial risk.
Revenues drop significantly
Loss of revenues far exceed
savings from lower power
procurement costs
Power procurement savings
dampened by existing hedges
2024 Prices 2024 Prices xp
2023 Prices "T
PCIA >p
PG&E Rate 'T
SVCE Revenues
2023 Prices 4^
^cia \
PG&E Rate
\^VCE Revenues
19 • Subtitle
New SV Clean Energy
PowerPoint Template
Item 7
PRESENTATION
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Item 7
PRESENTATION
Expanding EV Charging Access for Low-Income
Multifamily Residents
Incentives for EV charging equipment at new construction affordable housing developments
Program Goals
Help affordable developments meet local
EV reach code standards
Maximize EVI installed in new construction
affordable housing
Program Budget: $7.5M
Program Launched: February 2023
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Item 7
PRESENTATION
Design Decisions
Eligible properties are new construction
affordable housing developments that:
Are in an SVCE jurisdiction with a 2019 or 2022 EVI
reach code, or
Exceed state CALGreen code minimums.
Integrated into SVCE’s existing EV charging
incentive program for multifamily (CH1 1P)
3 Item 7
PRESENTATION
Applications are open
Incentives Available
for EV Charging at
Affordable Housing
$1,000-$2,000 per charger
APPLY TODAY
svcleanenerqy.org/multifamilv-charqinq
’Incentives available for chargers installed
above CALGreen code minimum to meet
reach code requirements
New affordable housing
developments in SV
Clean Energy's service
area are eligible
SILICON VALLEY
CLEAN ENERGY
$1,000 per Level 1 or 2 Outlets
$2,000 per Level 2 Charging Station
SVCIeanEnergy.org/multifamily-charging
Item 7
PRESENTATION
Appendix
5 Item 7
PRESENTATION
SVCE EVI Incentives for All Multifamily
Property
Category Property Type Port Type Port Incentive Applicable Cap Existing
Multi-Unit Dwelling
L1 outlet
Smart L1
L2 EVSE port
Pre-wiring
$1,500
$2,500
$5,500
$3,000
75% of costs, up to $50k
Affordable Housing Multi-Unit
Dwelling
L1 outlet
Smart L1
L2 EVSE port
Pre-wiring
$1,500
$2,500
$5,500
$3,000
100% of costs, up to $60k
New
Construction
Affordable Housing Multi-Unit
Dwelling
L1 or L2 outlet
L2 EVSE port
$1,000*
$2,000*
100% of costs*
incentives available for EVI installed above CALGreen Code 6