• Subtitle
New SV Clean Energy
PowerPoint Template
Item 3
PRESENTATION
SILICON VALLEY
CLEAN ENERGY
Update on Strategic Plan and
Adopt FY24 SVCE Focus Areas
SVCE Board of Directors Meeting
September 13, 2023
May
Enterprise Risk &
Opportunities
Budget
Strategic Focus
Areas
May-Aug
Strategic Plan Input
& Updates
September
Approve Budget,
Strategic Focus
Areas
Oct
Present detailed
work plan and
measures (Oct)
Oct-Sep
Implementation
Strategic Plan & Budget Timeline
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Item 3
PRESENTATION
'S April & May & Q3 - Staff input
May 26 - Executive Committee (strategic plan & budget)
June 14 - Board (strategic plan)
\/ June 23 - Executive Committee (strategic plan & budget) August 1 - Finance Committee (budget)
August 9 - Board (budget)
Item 3
PRESENTATION
CD SVCE Planning & Budgeting Process
Budget
Comprehensive assessment of risks and
opportunities to optimally achieve mission
Organization-wide priorities and
alignment toward achieving the mission
Funding in alignment with achieving
the strategic focus areas
SVCE Mission: Reduce dependence on fossil fuels by
providing carbon-free, affordable, and reliable
electricity and innovative programs for the SVCE
community.
3 Item 3
PRESENTATION
No Changes to Mission & Measure
MISSION:
Reduce dependence on fossil fuels by providing carbon free, affordable, and reliable electricity and innovative programs for the SVCE community MEASURE:
SVCE, working with SVCE member agencies, aspires to achieve energy and transportation GHG reductions of 30% from the 2015 baseline by 2021, 40% by 2025, and 50% by 2030 4 Item 3
PRESENTATION
Updated FY 24 Focus Areas
(1 more change under #5)
FY 24 FY 23
1. Expand Clean and Reliable Grid Actions
2. Expand Customer Base & Interaction
3. Accelerate Building & Transportation Electrification
4. Implement Innovative Financing Solutions
5. Attract & Retain Employees
1. 24x7 Clean Energy
2. Customer Base and Electrification
3. Inflation Reduction Act
4. Finance
5. Employee
SILICON VALLEY
CLEAN ENERGY 5
Item 3
PRESENTATION
5 Strategic Focus Areas - FY 24*
Synergy & Overlap
funding
opportunities
Expand Clean &
Reliable Grid
Actions
Expand Customer
Base & Interaction
Accelerate Building
& Transportation
Electrification
Implement
Innovative
Financing Solutions
Attract & Retain
Employees
Explore 24x7 clean
energy delivery at
scale; evaluate
SVCE role in
enhancing
distribution and
transmission
reliability
Grow non-residential
customer base;
Expand Offerings &
emphasize
electrification to all
customers
Accelerate
deployment of
currently adopted
decarbonization
strategies and
goals; evaluate and
capitalize on
federal and state
Implement
innovative financing
solutions to
increase impact of
decarbonization
program offerings,
especially to lower-income customers
Be the Employer of
Choice, and
Increase Staffing;
Hire CEO**
* Detail under each Focus Area is in the Appendix
** Only addition since June 14, 2023 board meeting
6 Item 3
" Strategic Plan
PRESENTATION
Combines Focus Areas and Work Plan
Board drives
Strategic Focus Areas
Expand Clean
and Reliable Grid
Actions
Expand
Customer Base &
Interaction
Accelerate
Building &
Transportation
ElectrificationI
Implement
Innovative
Financing
Solutions
Attract & Retain
Employees
Staff drives detailed Work Plan
(25 goals
May
Enterprise Risk &
Opportunities
Budget
Strategic Focus
Areas
May-Aug
Strategic Plan Input
& Updates
September
Approve Budget,
Strategic Focus
Areas
Oct
Present detailed
work plan and
measures (Oct)
Oct-Sep
Implementation
Strategic Plan & Budget Timeline
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❑
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Item 3
PRESENTATION
April & May & Q3 - Staff input
May 26 - Executive Committee (strategic plan & budget)
June 14 - Board (strategic plan)
June 23 - Executive Committee (strategic plan & budget) August 1 - Finance Committee (budget)
August 9 - Board (budget)
Recommendation
Approve staff’s recommendation to adopt the proposed FY24 Strategic Focus Areas:
• Expand Clean and Reliable Grid Actions
• Expand Customer Base & Interaction
• Accelerate Building & Transportation Electrification
• Implement Innovative Financing Solutions
• Attract & Retain Employees
Item 3
PRESENTATION
9 Item 3
PRESENTATION
APPENDIX
Explore 24x7
clean energy
delivery at scale,
evaluate SVCE
role in enhancing
distribution and
transmission
reliability
• Explore pathways to measure & achieve carbon free
24x7 for the entire portfolio and aligned with SVCE’s
mission
• Implement Google’s Carbon Free Energy (CFE)
framework and explore opportunities to offer
expanded clean offerings to other customers
• Explore VPP opportunities and how we can
demonstrate the “grid of the future”
• Explore targeted SVCE role to enhance distribution
and transmission reliability
Item 3
PRESENTATION
($) 1. EXPAND CLEAN & RELIABLE GRID ACTIONS
Grow non-residential
customer base;
Expand Offerings
& emphasize
electrification to
all customers
• Be the Supplier of Choice; attract and retain DA
customers
• Maintain competitive rates; increase customer
offerings and demand side programs
• Expand value proposition emphasizing
electrification
Item 3
PRESENTATION
02. EXPAND CUSTOMER BASE & INTERACTION
Accelerate
deployment of
currently adopted
decarbonization
strategies and goals;
evaluate and
capitalize on federal
and state funding
opportunities to
further improve
programs
• Grow our capacity and deploy programs at a much larger scale
• Operationalize equity into programs
• Assist member agencies evaluating federal and state
decarbonization policies and program impacts
• Explore opportunities to influence and partner with other organizations on supporting a clean energy workforce
Item 3
PRESENTATION
3. ACCELERATE BUILDING AND
TRANSPORTATION DECARBONIZATION
Leverage Balance
Sheet for Structured
Financing and use
financing solutions to
increase impact of
decarbonization
program offerings,
especially to lower-income customers
• Continue building strong financial reserves
• Attract and retain DA customers
• Implement innovative financing solutions to
customers, particularly to reach those with
barriers to conventional programs (e.g., low
income, renters)
Item 3
PRESENTATION
(£) 4. IMPLEMENT INNOVATIVE FINANCE
SOLUTIONS
14 Be The Employer
of Choice, &
Increase Staffing
• Hire CEO
• Attract and Hire New Employees, passionate
about our mission and with excellent job
knowledge
• Build and maintain a high-performance
agency; preserve start-up culture of employee
innovation, engagement, and collaboration
• Continue enhancing remote, hybrid and in-person work
Item 3
PRESENTATION
0 5. EMPLOYEES
15 Item 3
PRESENTATION
Last Year’s 5 Strategic Focus Areas - FY 23
Synergy & Overlap
24x7 Clean
Energy
Customer Base
& Electrification
Inflation
Reduction Act Finance Employee
Explore 24x7 clean
energy delivery at
scale, to improve
on the current 100%
clean energy goal
Grow Customer
Base & Offerings,
Emphasize
Electrification
Accelerate
deployment of
currently adopted
decarbonization
strategies and
goals; evaluate and
capitalize on the
Inflation Reduction
Act to further
improve programs
Leverage Balance
Sheet for
Structured
Financing and use
financing solutions
to increase impact
of decarbonization
program offerings,
especially to lower-income customers
Be the Employer of
Choice, and
Increase Staffing
Synergy & Overlap
16 Explore 24x7
clean energy
delivery at scale,
to improve on the
current 100%
clean energy goal
• Explore pathways to measure & achieve
carbon free 24x7 for the entire portfolio
• Implement 24/7 service with Google and
explore with other customers
• Explore VPP opportunities and how we can
demonstrate the “grid of the future”
Item 3
PRESENTATION
0 1. 24x7 CLEAN (FY23)
17 Grow Customer
Base, Offerings, &
Emphasize
Electrification
• Be the Supplier of Choice; attract and retain DA
customers
• Maintain competitive rates; increase customer
offerings and demand side programs
• Expand value proposition emphasizing
electrification
Item 3
PRESENTATION
02. CUSTOMER BASE & ELECTRIFICATION
JFY221
Accelerate
deployment of
currently adopted
decarbonization
strategies and goals;
evaluate and
capitalize on the
Inflation Reduction
Act to further
improve programs
• Evaluate clean energy asset ownership to structurally lower costs and lower risk
• Grow our capacity and deploy programs at a much larger scale
• Operationalize equity into programs; utilize SEVI framework in double-down programs
• Assist member agencies evaluating IRA decarbonization policies and program impacts
• Evaluate policies related to the utilization of organized labor in utility-scale projects and decarbonization programs and present options to the Board
Item 3
PRESENTATION
03. INFLATION REDUCTION ACT (FY23)
Leverage Balance
Sheet for Structured
Financing and use
financing solutions to
increase impact of
decarbonization
program offerings,
especially to lower-income customers
• Continue building strong financial reserves
• Attract and retain DA customers
• Strategically use balance sheet to advance
our mission; providing innovative financing
solutions to customers, particularly to reach
those with barriers to conventional
programs (e.g., low income, renters)
Item 3
PRESENTATION
0 4. FINANCE (FY23)
20 Be The Employer
of Choice, &
Increase Staffing
• Attract and Hire New Employees, passionate
about our mission and with excellent job
knowledge
• Build and maintain a high-performance
agency; preserve start-up culture of employee
innovation, engagement, and collaboration
• Develop plans for remote, hybrid and in-person work
Item 3
PRESENTATION
05. EMPLOYEES (FY23)
New SV Clean Energy
PowerPoint Template
Subtitle
Item 4
PRESENTATION
SILICON VALLEY
CLEAN ENERGY
FY 23-24 Operating
Budget
Amrit Singh
Board of Directors
September 13, 2023
Item 4
PRESENTATION
1. 2. Recap of Key Messages
Purpose
Main Areas of Discussion
Adopt Fiscal Year 2023-2024 (FY
24) Operating Budget and the
Revised Reserves Policy.
Recap of Budget Process and
Timeline
3. Recommended Budget
Item 4
PRESENTATION
0 SVCE Planning & Budgeting Process
Budget
Comprehensive assessment of risks and
opportunities to optimally achieve mission
SVCE Mission: Reduce dependence on fossil fuels by
providing carbon-free, affordable, and reliable electricity and innovative programs for the SVCE community.
Organization-wide priorities and
alignment toward achieving the mission
Funding in alignment with achieving
the strategic focus areas
3 Item 4
PRESENTATION
0 FY23-24 Budget Development Timeline
May 12
High-level Budget
Framework Discussion
with the Finance and
Admin Committee
Incorporate
Changes based
on BOD feedback
May/June August 1 August 9
Budget Framework
Discussion with the
Executive Committee
and BOD
Finance & Admin
Committee Review
of the Proposed
Budget
Present Draft
Budget to BOD
Sept. 13
Present Recommended
Budget to BOD. Adopt
updated Strategic Plan
March 2024
Mid-Year Budget
Review / Adjustment
4 1. Results highly uncertain due to the impact of energy price volatility on revenues
• Forecast year-over-year (YOY) revenues decrease ~$84
million.
• High RA and RPS prices increase forecast uncertainty
• Power Supply Costs almost flat YOY (-0.2%)
• Lower prices and favorable PPAs coming online help offset the increase in costs resulting from higher load, RPS, and RA prices • Contribution to reserves remains positive at $7.7 million
2. Customer Discount
• Continue the 4% discount until the new 2024 PG&E
rates are in effect
• Rest of fiscal year
• 1% discount for all customers
• An additional 1% offered as $ bill credits to low-income customers • Primarily for setting the budget. Revisit (likely in
December) once there’s more certainty on PG&E rates
4. Other Changes
• 9 additional positions; Adjustment of employee
compensation for the cost of living and merit (~7.5%)
• Delay decision on additional funding for programs or
set aside for a building fund
3. Update Reserve Target Level
• Target increased from 285 days of cash on hand to 300 days of cash on hand (DCOH)
• Supported by the stress test analysis
• Aligns with one of Moody’s key criteria
Item 4
PRESENTATION
Recap of Key Messages
SILICON VALLEY CLEAN ENERGY
FY 2023-24 OPERATING BUDGET
($ in thousands)
MY 2022-23 FY 2023-24
ADJUSTED PROPOSED
DESCRIPTION BUDGET BUDGET $ %
Energy Revenues 523,958 440,404 (83,554) -15.9%
Power Supply Expense 392,436 391,624 (812) -0.2%
Operating Margin 131,522 48,780 (82,742) -62.9%
Operating Expenses 27,559 32,361 4,802 17.4%
Non-Operating Revenue (Expense) 3,867 5,498 1,631 42.2% Annual Transfers and Other Expenses
Program Fund 9,765 8,874 (891) -9.1%
Nuclear Allocation 1,900 2,188 288 15.2%
Multi Family Direct Install Program 9,500 0 (9,500) -100.0% Electrification Discount Program 9,500 0 (9,500) -100.0% Customer Bill Relief 3,600 3,136 (464) -12.9%
Other 200 50
BALANCE AVAILABLE FOR RESERVES $73,365 $7,669 ($65,696) -89.5% Year over Year
Change
Item 4
PRESENTATION
Recommended FY 24 vs FY 23 Mid-Year Adjusted Budget
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•
•
•
•
• Delay decisions on additional funding for programs or set aside for a building fund.
• More funding for programs is needed over time but is
currently well funded to engage staff fully.
• Staff will continue assessing opportunities to purchase a building and will later update the Board on the next steps.
Item 4
PRESENTATION
Summary-Potentially Positive Year
But Results are Highly Uncertain
Biggest risks include late-year adjustments to PCIA /
PG&E Gen Rate and significant volatility in energy prices.
Keep the current customer discount rate of 4% until new PG&E rates are enacted.
Budget 1% for the rest of the fiscal year and an additional 1% towards bill credits for low-income customers.
Revisit once there’s more certainty on PG&E rates.
Update Reserve Target DCOH to 300
Many Risks can Deplete Reserves
Market Prices
Reduced Revenues
via Higher PCIA and
Lower PG&E Rates;
IncreasedPower
Supply Expense
SUPPLY
Project delays;
PPAs Default or
Renegotiate for
Higher Prices
L&R ISSUES PAYMENTS
IRP, RPS, RA Customer Defaults
Reform/Penalties.
PCIA. POLR
LOAD LOSS CYBER-RISK
DirectAccess Hardware, Software.
and Potentialfor and Training to combat
Expansion Ransomware and
Phishing
Rate Increasesdue
to socialized wildfire
costs.Energy Price
Increases will
ultimately impact
usage and
electrification
7 • Approve the following:
• Resolution 2023-16, Adopting the FY 2023-2024 Operating Budget
• Updated Financial Reserves Policy
Item 4
PRESENTATION
Board Approval
8 Item 4
PRESENTATION
Thank you! / Questions?
9 ($ in Thousands)
FY22-23 FY23-24 FY24-25 FY25-26 FY26-27 FY27-28
Operating Revenue (Adjusted Budget) (Budget) (Forecast) (Forecast) (Forecast) (Forecast) Electricity Sales, Net1
$ 531,561 $ 435,206 $ 471,956 $ 503,130 $ 515,879 $ 517,916 GreenPrime Electricity Premium 1,055 2,012 2,322 2,334 2,351 2,371 Total Operating Revenues 532,616 437,218 474,278 505,464 518,230 520,287 Operating Expense
Power Supply $ 391,261 $ 391,624 $ 400,877 $ 416,343 $ 450,677 $ 439,648 Operating Margin 141,355 45,594 73,401 89,122 67,553 80,639 Data Management 3,413 3,413 3,583 3,762 3,950 4,148
PG&E Service Fees 1,470 1,470 1,544 1,621 1,702 1,787
Staff Compensation 11,285 15,406 16,176 16,985 17,834 18,726 Consultants and other Professional Fees 8,016 8,084 8,570 9,084 9,629 10,206 Communications and Noticing 993 1,370 1,439 1,511 1,586 1,666 General and Administration 2,382 2,618 2,749 2,886 3,031 3,182 Transfers to Programs Fund 34,265 11,062 9,486 10,109 10,365 10,406 Total Operating Expenses 453,085 435,047 444,422 462,300 498,773 489,769 Operating Income 79,531 2,171 29,856 43,164 19,457 30,518 Nonoperating Revenue (Expense)
Other Income 182 50 51 51 52 52
Investment Income - 5,501 5,251 5,683 6,389 6,635
Capital Outlay & Financing Costs (200) (53) (53) (53) (53) (53) Grant Income - - - - - -
Total Non-Operating Revenue (Expense) (18) 5,498 5,249 5,681 6,387 6,634 Change in Net Position/Available for Reserves 79,513 7,669 35,104 48,845 25,844 37,152 Begin, Net Position 212,684 320,082 307,579 329,143 364,448 376,752 Adjustment for Program Expenditure2
27,886 (20,173) (13,540) (13,540) (13,540) 0
End, Net Position $ 320,082 $ 307,579 $ 329,143 $ 364,448 $ 376,752 $ 413,904
Days Cash On Hand (DCOH) at Year End $ 297,561 $ 285,058 $ 306,622 $ 341,927 $ 354,230 $ 391,383 Days of cash on hand 255 229 244 262 252 292
Each year the Board transfers funds from the Operating Budget to the Decarboniztion Programs Fund as shown in the above forecast u nder line item Transfers to Programs Fund. The line item Adjustment for Program Expenditure accounts for the difference between forecasted spend for programs versus the amount transfered to the fund. This adjustment is needed because program spending to date has been less than the amount transferred to the programs fund.
Assumptions: 4% overall discount relative to comparable PG&E rates for Oct-Dec 2023 and 1% for Jan-Sept 2024. FY 23-24 includes additional bill credit to low income customers totaling $3.14 million (1% of Jan-Sept 2024 Revenue). 1% discount for FY24-25, FY25-26, FY26-27 and FY27-28.
Item 4
PRESENTATION
5-Year Forecast
1 2
10 •
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Item 4
PRESENTATION
Recap: Revenue Forecast Depends on PG&E Generation and PCIA Rates
Issue: Rate Uncertainty Staff Recommendation Implications/Reasons PG&E issued the 2023 ERRA forecast on May 15
with preliminary 2024 PG&E generation and PCIA
rate forecasts
Shows negative PCIA and about 3% lower PG&E
generation rate leading to an overall ~3%
improvement in SVCE revenues (at current discount
level)
Results already outdated, given the high volatility
in energy prices
Based on 7/7 prices, revenues could be lower by
an estimated "31%
PG&E will update this forecast in the fall. CPUC
normally adopts the rate in December based on
this update
Use the latest market data in
the Cal-CCA NewGen model
after calibrating the model to
PG&E’s forecasted rates and
accounting for modeling error
(10% downward adjustment on
headroom)
Likely aligns revenues closer
to rates that PG&E will later
update
Better aligns revenues with
power supply costs
Primarily for budget-setting
purposes
Additional expenditures based
on headroom projections can
be made by the Board in
December when actual PG&E
and PCIA rates are known
11 •
•
•
•
•
•
•
•
Margins Highly Uncertain
Item 4
PRESENTATION
PG&E filed its forecast of
2024 Rates on 5/15/23
PG&E Gen Rate down ~3%
PCIA down from positive
0.28 c/kWh to negative -
0.62 c/kWh
SVCE margin up ~6% due
to negative PCIA
PG&E used 3/27 forward
prices
Prices since have decreased
"18% for 2023 and "14% for
2024
SVCE 2024 Margins since
ERRA forecast dropped -31%
SVCE Margins Y-o-Y
dropped -27%
Current 2023 ERRA Forecast 2024 Rate** Recommended
Rate* Budget 2024 Rate
***
PG&E Gen Rate:
14.96 C/kWh PG&E Gen Rate:
‘ Source: PG&E 2023 Average Rate, effective January 1, 2023 (Weighted for SVCE Portfolio Load) " PG&E 2024 ERRA Forecast, released on 15th of May,2023 (Weighted for SVCE Portfolio Load) *** Using NewGen Model with 7/7/2023 Forward Curves and 10% haircut Above margin analyses ignores minor reductions for franchise fees (0.09 cf/kWh) •
•
•
•
•
Projected margins are declining
Item 4
PRESENTATION
Prices since the initial 2024
budget run for the June
2023 Executive Committee
Meeting have decreased
^5% for 2023 and "1% for
2024
SVCE 2024 Margins since
dropped -4%
The initially proposed 2%
SVCE Customer discount for
Jan -Sep 2024 was divided:
1% to all SVCE customers
1% as an additional bill credit
distributed to low-income
customers
***
‘ Source: PG&E 2023 Average Rate, effective January 1, 2023 (Weighted for SVCE Portfolio Load) " PG&E 2024 ERRA Forecast, released on 15th of May,2023 (Weighted for SVCE Portfolio Load) *** Using NewGen Model with 7/7/2023 Forward Curves and 10% haircut Above margin analyses ignores minor reductions for franchise fees (0.09 cf/kWh) PG&E Gen Rate:
14.96 e/kWh
Initial Budget 2024
Rate (EC
Presentation)
Recommended
Budget 2024 Rate
Current 2023
Rate*
Item 4
PRESENTATION
PG&E 2024 ERRA Forecast vs NewGen Model Run
Using 3/27/2023 Forward Prices
ERRA Forecast 2024 Rate* NewGen Model 2024 Rate**
NewGen Model
has approximately
3 - 5% modeling
error
PG&E Gen Rate:
14.54 C/kWh
4% SVCE discount
(Illustrative)
‘PG&E 2024 ERRA Forecast, released on 15th of May,2023 (Weighted for SVCE Portfolio Load)
"Using NewGen Model (version 3.4) with 3/27/2023 Forward Curves (Weighted for SVCE Portfolio Load)
Above margin analyses ignores minor reductions for franchise fees (0.09 <t/kWh) PG&E Gen Rate:
15.28 C/kWh
5%-
•
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•
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•
Item 4
PRESENTATION
Current 2023 Rate vs PG&E 2024 ERRA Forecast
PG&E filed it’s forecast of 2024
Rates on 5/15/23 Current 2023 Rate* ERRA Forecast 2024 Rate** PG&E Gen Rate decreased
3%
PCIA reduced from positive
0.28 c/kWh to negative -0.62
C/kWh
PG&E ERRA forecast is based
on 3/27/2023 forward market
prices
Represents weighted average
customer billing rate decrease
of -3% from 14.36 C/kWh to
13.95 C/kWh
SVCE gen rate is higher than
Customer Billing Rate due to
negative PCIA
SVCE gen rate up ~3.5%
E
2 5
o 15
• Source: PG&E 2023 Average Rate, effective January 1, 2023 (Weighted for SVCE Portfolio Load) " PG&E 2024 ERRA Forecast, released on 15th of May.2023 (Weighted for SVCE Portfolio Load) Above margin analyses ignores minor reductions for franchise fees (0.09 c/kWh) PG&E Gen Rate:
14.96 C/kWh
4% SVCE discount
PG&E Gen Rate:
14.54 <t/kWh
4% SVCE discount
(Illustrative)
PCIA -0.62
C/kWh
SVCE
Gen
Rate
14.57 C/kWh
Forward Energy Prices (NP15)
2023 2024 2025 2026 2027 2028 2029
7/7 (Budget run)
On-Peak 75.14 77.99 74.06 74.30 74.55 75.91 71.67
Off-Peak 65.89 69.57 74.04 78.05 79.30 77.57 81.93
ATC (Around-the-Clock) 71.06 74.29 74.05 75.95 76.63 76.64 76.18 3/27 (ERRA run)
On-Peak 91.92 90.37 87.25 83.00 75.90 71.15 65.15
Off-Peak 79.11 81.17 85.80 82.68 83.04 78.15 79.79
ATC (Around-the-Clock) 86.27 86.33 86.61 82.86 79.04 74.23 71.58 ATC Price % change
-18% -14% -15% -8% -3% 3% 6% 50
55 60
65 70
75 80
85 90
2023 2024 2025 2026 2027 2028 2029
Forward Energy Prices (NP15)
7/7 (Budget run) 3/27 (ERRA run)
Item 4
PRESENTATION
Budget Run (7/7/2023) vs ERRA Forecast Run (3/27/2023)
O Forward Energy Price Comparison
16 •
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•
Item 4
PRESENTATION
Power Supply Expenses
(>90% of Expenses)
Issue: Volatile Power Prices Staff Recommendation Implications/Reasons Power prices are very volatile
In addition to PG&E Gen Rate and PCIA
uncertainty, power price volatility makes
energy budget projections highly uncertain
Contract delays/renegotiations further add
uncertainty
Continue hedging to current ERM
(Energy Risk Management) targets
Continue with SVCE’s 100% clean policy
Purchasing remaining carbon free
allocations expected to cost about
$2.1 million to $9.6 million depending
on PG&E allocations.
Resource adequacy requirements are
changing, and costs are high, but more
hedged next year
Maintain a high customer value
proposition with 100% clean
energy and serve SVCE’s
mission
Furthers SVCE focus toward
24x7 clean energy goal
17 •
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•
Item 4
PRESENTATION
Power Supply Costs
FY 2024 Budget Forecast vs. MY FY2023 Power Supply costs FY 24 costs, forecasted at 392 million dollars,
are estimated to be in line with FY 23 at the
Mid-Year Budget
Favorable Drivers
Drop in forward prices
More favorably priced PPAs coming online
resulting in lower need for energy supply
and environmental products
Lower CAISO non-energy costs in
FY2024 compared to MY FY2023. High
costs in MY FY2023 due to prior period
adjustments from the winter's disruption in
the natural gas market.
Offset by
Increase in load YOY (1.5%)
Increase in direct access load
Recovery from COVID
Increase in RA costs
Item 4
PRESENTATION
O Current Energy Hedge Levels
Hedged 82% for FY24
Calendar
Period
ERM Min
Tolerance
ERM Max
Tolerance
Current
Prompt
Quarter (Q3
2023)
85% 110% 92%
BoY (June-Dec 2023)
80% 110% 86%
2024 70% 90% 78%
2025 55% 80% 65%
2026 50% 80% 57%
2027 50% 80% 55%
Net Open Position Tolerance and Positions
140%
120%
100%
30%
60%
40%
20%
0%
2023 Q3 2023 2024 2025 2026 2027
Base ^■Tolerance Range -o—Contracted
19 •
•
Item 4
PRESENTATION
1 Power Supply Costs -Variance to June EC
7/8/2023 FY 2024 Budget Forecast vs. 6/9/2023 FY2024 Power Supply costs Increase Decrease Total
FY 24 costs, forecasted at 392 million dollars,
are estimated to be $7M higher than
projected at 6/9/2023 ($385M)
RA Costs have increased by $7M due to
increased RA market prices, new Q2-Q3 2024
deal.
Despite the forward prices decreasing, the
open position costs are offset by lower
revenues from supplies
20 •
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•
•
Item 4
PRESENTATION
Power Supply Costs -Variance to FY2024
Projections at 2023 Mid-Year Budget
FY 2024 Budget Forecast vs. Projected FY 2024 Costs at MY Budget 2023 Increase Decrease Total
450
FY 24 costs, forecasted at 392 million dollars,
are estimated to be $62M higher than
projected at 2023 Mid-Year Budget ($328M)
Increase in load forecast increases open
position, CAISO costs
Increased hedging since mid-year budget has
increase energy supply
New PPA Rio Bravo Fresno increases PPA costs
Market prices for PCC1, CF, and RA costs have
increased from mid-year budget
Product MYB Price
2/2/2023 Budget
PCC1 ($/MWh) $40.00 $45.00
CF ($/MWh) $5.00 $9.00
RA ($ kW-Month)
$7.50 $12.75
21 0
500
1000
1500
2000
2500
3000
3500
4000
4500
FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 Retail Sales GWh
Retail Sales Forecast
Actual 2023 OF 2022 OF
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Item 4
PRESENTATION
Medium-Term Load Forecast
In 2023, SVCE began forecasting
load in-house after using a third-party
service since inception.
The past model assumed partial
COVID-19 impacts, while the new
forecast excludes COVID-19 impacts,
assuming 100% recovery. 2023
actuals support this assumption.
FY 2025 and beyond averages 6%
above the previous forecast, largely
due to expected load growth from
electrification in the transportation
and building sectors.
22 * First 3 months of 25% FY2023 are actuals. 25% 25% 25% 25% 37% 37% 37% 37% 37%
36% 36% 36% 36% 36%
3,888 3,945 3,963 3,983 4,011
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
FY2023* FY2024 FY2025 FY2026 FY2027 Retial Sales GWh
Annual Retail Sales Forecast by Sector (GWh)
Small/Medium Commercial Agriculture Large Commercial Lighting and Traffic Control Residential Total Item 4
PRESENTATION
(2) Medium-Term Load Forecast by Sector
0 50
100
150
200
250
300
350
400
450
10 11 12 1 2 3 4 5 6 7 8 9 REtail Sales GWh
Month
Monthly Retail Sales Forecast for FY2024 Compare to Historicals FY2018 FY2019 FY2020
FY2021 FY2022 FY2024
10 11 12 1 2 3 4 5 6 7 8 9 Total
FY2018 325 318 335 336 307 315 298 306 340 355 381 345 3,962 FY2019 324 314 334 336 298 304 276 299 320 337 377 340 3,859 FY2020 329 306 332 324 279 300 275 289 312 336 343 326 3,751 FY2021 310 297 337 321 279 296 275 294 321 327 351 340 3,748 FY2022 306 311 342 334 296 310 286 301 330 354 372 347 3,888 FY2024 332 322 351 335 297 311 287 302 331 355 373 348 3,945 Item 4
PRESENTATION
Medium-Term Load Forecast
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Item 4
PRESENTATION
Additional Funding for Programs, Customer Discounts,
and Building Reserves
1% customer discount over 12 months of
2024 is ~$4.11 million*
1% discount over 9 months (Jan -Sep
2024) ~$3.14 million*
Monthly Average Bill Savings of 1%*
Discount:
Residential - ^$0.59
Small Commercial - ~$2.14
Medium Commercial -^$23.57
Issue: Balancing
Priorities
Staff Recommendation Implications/Reasons
Continue to provide
competitively-priced and
high-valued services to
SVCE customers
Funds not needed to
cover cost-of-service flow
to customers via lower
SVCE rates (discount to
comparable PG&E rates)
Cost-of-service includes
funds needed to cover
operations, meet reserve
targets, and fund
decarbonization programs
Keep current discount through the
end of this year
Set a preliminary discount for
next year of 1% for all
customers and1% translated to
dollar bill credits for low-income
customers
Board can change the budgeted
discount rate once actual PG&E rates
are known towards the end of the
year
Reaching new target
reserve levels ensures
SVCE can withstand
adverse risk scenarios
Keeping the discount
rate to a reasonable
level
Enables additional
funding for valued
customer programs
such as
decarbonization
efforts
Ensures there’s more
organizational
resiliency to respond
to risks over the 5-yr
planning horizon
* Based on 7/7/23 Forward prices 25
SVCE PG&E SVCE PG&E SVCE PG&E SVCE PG&E
Rate Schedule (eff. Jan 1, 2023) E-TOUC E-TOUC B-1 B-1 B-10 B-10 B-19S B-19S Average Usage (kWh/month) 491 491 1,851 1,851 19,390 19,390 148,625 148,625 Annual Peak Demand (kW) 499 499
PG&E Electric Delivery $ 93.36 $ 93.36 $ 334.88 $ 334.88 $ 3,484.91 $3,484.91 $18,457.74 $18,457.74 Electric Generation $ 71.63 $ 76.66 $ 258.55 $ 276.71 $ 3,319.99 $3,550.05 $20,835.80 $22,292.26 PG&E Added Fees (PCIA, Franchise) $ 1.96 $ - $ 7.09 $ - $ 91.06 $ - $ 564.78 $ - Average Total Cost $ 166.95 $ 170.02 $ 600.52 $ 611.59 $ 6,895.96 $7,034.96 $39,858.32 $40,750.00 Average Monthly Savings $ 3.07 $ 11.07 $ 139.00 $ 891.68 Residential Small Commercial Medium Commercial Large Commercial Item 4
PRESENTATION
(^) Typical Customer Bill Savings
(Current Rates)
26 •
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Item 4
PRESENTATION
(Staffing, Cost of living/Merit, Building)
Status Staff Recommendation Implications/Reasons
Review and assess staffing in all
areas of the organization
10 new budgeted positions were
authorized in the FY22-23 budget
7 Current Vacancies
Adjust employee salaries for
cost-of-adjustment and
merit/promotions
Review existing employee
benefits to remain competitive
with peer CCAs
Decarb Programs continue to
ramp -quantity of rebates/
scope of outreach
Current FY22-23 budgeted headcount of 49
Proposed FY23-24 budgeted headcount of 58
9 Add’l Since last Fiscal Year
1 position recently filled and 1 posted
under the CEO Personnel Authority
7 additional positions requested
Budgeted Personnel Costs include:
Salary Ranges adjusted based on 6-month rolling
average of SF Bay Area CPI- currently ~4.5%
(COLA)
Additional 3% Merit increase included in budget
Individual salary adjustments and promotional
recommendations based on CEO discretion
during performance review process
Individual changes based on employee pay relative
to market range, performance, and date of hire
Employee benefits review and update underway -
recommendations later in the year
Evaluate staff levels needed to:
Scale up programs team
Reduce high level of existing employee
workload
Advance strategic focus area goals
Create organizational depth for business
continuity
Sustained investments in cybersecurity
preparedness and business process
optimization projects
27 Item 4
PRESENTATION
1 Operating Expenses and Transfers
Sources of Operating Expense and Transfer Amount Changes Operating Expenses Change (000s)* Implications/Reasons
Personnel Costs**
Increased Staffing
Annualized Positions
COLA
Merit
$4,120
$1,830
$1,490
$500
$300
9 additional PTE positions
Vacancy Savings from MY budget; Promotions/Position Upgrades
4.5% COLA
3% budgeted for merit increases (avg)
Other Expenses $681 Add’l Marketing, G&A, Professional Services *Amounts include a 5% operating expense contingency
** Staff to present potential enhancements to benefits package to promote employee retention later during the fiscal year.
Transfers Amount (000s) Implications/Reasons
Programs Transfer $8,874 2% of projected revenues
Nuclear Allocation $2,188 2022 PG&E Carbon Free Allocation Customer Bill Credit $3,136 1% of projected revenues for January -September 2024 28 •
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Item 4
PRESENTATION
Staffing - 9 Additional Positions Since Last FY
Current Staffing
44 full-time employees
7 current vacancies (including Senior
Regulatory Analyst position)
3 intern positions (2 open)
3 part-time employees
3 Climate Corps Fellows
2 long-term independent
consultants
Personnel Authority
CEO can approve job titles, salary ranges,
and org chart positions
Positions can be swapped/changed and
added within Board-approved budget
Additions will not exceed 10% of
authorized number shown in budget
Changes/hires communicated in next CEO
report to Board
Per CEO personnel authority, the Associate Data Scientist position is filled, and the Senior Regulatory Analyst is currently being recruited.
Proposed budget requests approval for the remaining 7 positions.
ESCR (3)
Program Marketing Specialists (3) -focused marketing efforts on program growth and adoption Decarbonization Programs and Policy (2)
Programs Specialist-Community Programs (1)- to design and implement decarbonization programs
Associate Data Scientist (1) -to support data use, visualization, and communication across the organization. (Already filled per CEO personnel authority). 4PRO (3)
Senior Regulatory Analyst (1) -to support engagement at CPUC, CAISO, and CEC (unfilled during FY22-23 and swapped for another position - currently being recruited under CEO personnel Authority)
Data Engineer (1) -to integrate the various wholesale and operational data streams within 4PRO Management Analyst /Admin (1) -to coordinate and effectively manage 4PRO team efforts Finance & Admin (1)
Senior Financial Analyst (1)- to support the organization with budgeting, accounting, and financial analysis
* Intern: 2 other vacancies pending
Item 4
PRESENTATION
CD Organization Chart (F&A / 4PRO)
CEO
Chief Financial
Officer/Director
of
Administrative
Services
Board
Clerk/Executive
Assistant
Chief Operating
Officer/Director of Power
Resources
Director of
Government
and
Legislative
Affairs
Manager
of
Finance
& Risk
Controls
Senior
Financial
Analyst
Senior
Risk
Manager
Administrative
Assistant
Project
Coordinator
Senior
Financial
Analyst
Senior
Quantitative
Analyst
Senior
Manager of
IT and
Admistrative
Services
Information
Technology
Analyst
Director
Human
Resources
HR Analyst
Power Power Wholesale Power Senior Power Power
Resource Resource Energy Resource Manager Supply Supply Manager Planner Markets Manager of Program Program
Manager Operations Manager Manager
Senior
Manager of
Energy
Policy and
Regulatory
Coordination
Management
Analyst/Admin
Associate
Power
Analyst
Climate
Corps
Fellow
Power
Data
Analyst
Power
Settlements
and
Compliance
Analyst
Data
Engineer
Senior
Regulatory
Advisor
Regulatory
&
Compliance
Manager
Power
Resources
Planner
Senior
Regulatory
Analyst
30 * Intern: 2 other vacancies pending
Item 4
PRESENTATION
CO Organization Chart (ESCR / DPP)
CEO
Director of
Energy
Services
and
Director of
Strategic
Development
Community
Relations
Internal
Operations
Program
Manager
Director of
Decarbonization
Programs and
Policy
Communications
Consultant
Energy
Services
Specialist
Deputy Director
of Marketing and
Communications
Energy
Services
Lead
Energy
Services
Principal
Deputy Director
of
Decarbonization
Programs &
Policy
Decarbonization
Management
Analyst
Manager of
Decarbonization
Programs and
Policy
Programs
Lead
Manager of
Data and
Analytics
Community
Outreach
Specialist
Principal
Communications
Specialist
Climate
Corp
Fellow
Program
Marketing
Manager
Energy Communications
Services Specialists
Intern
Senior Marketing Marketing
Marketing
Specialist
Specialist Specialist
Senior
Manager
of Public
Sector
Programs
Lead
Senior
Programs
Specialist
Senior
Programs
Specialist
Senior
Programs
Specialist
Senior
Programs
Specialist
Programs
Specialist
-Community
Programs
Services
Associate Data
Data Engineer
Scientist
Climate Corp
Fellow
31 14
21 25 25 27 27
31 32
38 39
49 49
0 10
20 30
40 50
60 0
2 4
6 8
10 12
14 16
18 Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21
Mar-21
May-21
Jul-21
Sep-21
Nov-21
Jan-22
Mar-22
May-22
Jul-22
Sep-22
Nov-22
Jan-23
Mar-23
$MM / FTE
Rev ($MM) / FTE Cost ($MM) / FTE FTEs
Item 4
PRESENTATION
CD Revenues/FTE; Energy/FTE
Revenue and Energy Costs / FTE have remained fairly flat over time.
Accounts Revenue ($MM) Net Position
($MM) FY21-22 FY22-23 FY23-24 Budget
Revenue
($MM/FTE) FY 23
Silicon Valley Clean Energy 280,000 $365.4 $212.7 39 49 58 $7.5 Peninsula Clean Energy 300,000 $233.6 $167.7 32 39 Unavailable $6.0 Central Coast Community Energy 449,500 Unavailable Unavailable 43 43 56 Unavailable Clean Power Alliance 1,029,800 $867.6 $141.2 59 69 75 $12.6 East Bay Community Energy 640,000 $563.5 $232.5 49 68 78 $8.3 MCE 470,000 $487.7 $203.3 63 76 84 $6.4
FY22-23
CCA Comparisons
CCA Name
Staffing
Item 4
PRESENTATION
CCA Comparisons
— —
*n/a -not available
33 Year COLA
FY17-18 3.00%
FY18-19 4.00%
FY19-20 4.00%
FY20-21 0.00%
FY21-22 5.00%
FY22-23 5.30%
FY23-24 4.33%
Item 4
PRESENTATION
Cost-of-Living & Adjustment (COLA) & Merit Increase
Proposals
Current 4.33% COLA based on SF Bay Area CPI; smoothed over trailing months; Add’l Merit/promotional increases at CEO discretion
Chart 1. Over-the-year percent change in CPI-U, San Francisco-Oakland-Hayward, CA, June 2020-June 2023
Source: U S Bureau of Labor Statistics
Consumer Price Index, San Francisco Area — U.S. Bureau of Labor Statistics (bls.gov) 34 •
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Currrent Lease Details
Monthly Lease Cost 5.30 $/sf
Size 7,900 sf
New Lease Assumptions
New Monthly Lease Cost 7.50 $/sf (est)
Purchase Assumptions
Purchase Cost 700 $/sf (est)
Improvement Cost 100 $/sf (est)
Office Assumptions
Size 20,000 sf (est)
Location for Comps*
* further analyses to include broader service territory Sunnyvale, Mtn View, Santa
Clara, San Jose
Item 4
PRESENTATION
SVCE Office Space - Lease vs Buy
Issue: Financial Stewardship Staff Recommendation Implications/Reasons SVCE’s current lease runs
through Sept. 2025
Need time to explore
the alternatives of
buying or leasing new
space
SVCE should be prepared to
pursue attractive property
opportunities as they arise
Research alternatives
and establish an ad hoc
Committee to advise staff
and evaluate property
and financing options
Staff to continue
assessing market
opportunities and return
to the Board at a later
time to Earmark a portion
of reserves for a potential
building purchase
$16MM (based on
current
assumptions) + 25%
contingency =
$20MM set aside
Buying may be a cheaper
longer-term option
Initial back-of-the-envelope analysis
indicates a roughly 10-
year breakeven period
compared to leasing
SVCE is growing and requires
more space for employees and
expanded programs
Purchasing also enables
customization to suit the hybrid
work environment
Flexible workspace for
collaborative work
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Item 4
PRESENTATION
Issue: Review Reserve Targets Staff Recommendation Implications/Reasons Ensure SVCE maintains sufficient
reserves to manage risks such as those
modeled under the Stress Test analyses
Staff updated the stress test analyses in
using market prices consistent with those
used to develop the annual budget
Target to keep reserves above 120 Days
Cash On Hand (DCOH) for FY 2023-
2024 and FY 2024-2025
Reset Upper Reserve Target such that
over the next 5 fiscal years reserves do
not fall below 90 DCOH
FY 24 margins not guaranteed
given true-up in 2023 for PCIA
and PG&E Gen rate
If adverse conditions
materialize, need 120 days to
reshape strategy and secure
additional liquidity
Increase upper reserve target
to take advantage of good
margin years to manage risks
over 5-year period
36 •
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“Maintenance of strong liquidity position through sound financial management with days cash on hand in excess
of 300 days” was listed by Moody’s* as one of several
factors that could lead to a rating upgrade.
On July 26th, Moody’s Investor Service, a credit rating agency, upgraded SVCE’s issuer rating from Baa2 to Baa1 with a stable outlook. Strong liquidity and adopting a more stringent reserves policy were cited as credit-positive elements.
Item 4
PRESENTATION
’ Update Reserve Targets
Prices collapse reducing revenues and
there’s an additional draw on reserves from
an increase in financial posting requirements
to the Provider of Last Resort (PG&E).
Ensure SVCE maintains sufficient reserves
to manage risks such as those modeled in
the Stress Test analysis.
Reserve Targets (DCOH) Current New
Minimum 120 120
Goal (Target) 285 300
Maximum (Upper Target) 490 490
Set the reserve target such that if the stress
scenario were to occur, Days Cash On Hand
(DCOH) stays above 120 for the next two fiscal
years
Set the upper target such that if the stress
scenario were to occur, DCOH stays above 90
for the next five fiscal years
Recommendation:
Increase the target DCOH to 300 from 285
Supported by the stress test analysis
Aligns with one of Moody’s key criteria
The stress test analysis was updated with assumptions
consistent with those used to develop the proposed
budget.
37 •
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Item 4
PRESENTATION
Reserve Projection
Projected End of FY Reserves:
$285 Million
229 Days of Cash on Hand
SILICON VALLEY
CLEAN ENERGY
Reserves Forecast
38 Item 4
PRESENTATION
Programs capacity is increasing
$85M allocated over the last
"5 years
~$50M within last 1.5 years
Making progress in opening
funds to customers
Some programs take time to
spend budget, once open
SILICON VALLEY
CLEAN ENERGY
Programs Fund Availability
Spent: already paid out to customer or vendors
Available Now: program currently open to customers -includes available and reserved customer incentives (e.g.
FutureFit Homes), or funds contracted with a vendor (e.g. eHub, fleet electrification support) Available Soon: currently in a planning phase, but will launch by ~June 2024 Future/Still Planning: programs that won’t launch until after June 2024 and funds not currently earmarked for a program 39