New SV Clean Energy
PowerPoint Template
Subtitle
Item 3
PRESENTATION
Budget Update, 2024 Customer Rate
Setting, and Additional Funding Items
Amrit Singh
Board of Directors
December 13, 2023
Item 3
PRESENTATION
Purpose
1. 2.
3. Updated Reserve Projection
4. Additional Funding Items
5. Main Areas of Discussion
Accounting True-Up of
Programs Fund Balance
Recap of assumptions used in
setting the adopted budget
and an update on the budget
forecast using the recent
PG&E Rate forecast
Adopt new customer generation
rate discounts and fund additional
budget items given improved
budget projections.
Comparison of Adopted and
Updated Budget
Item 3
PRESENTATION
FY23-24 Budget Development Timeline
May May/June August 1 August 9
BOD adopts the budget and
agrees to revisit additional
expenditures later in the
year when there would be
more certainty on PG&E
rates
Executive Committee and Finance
and Admin Committee review the
updated budget based on the
revised PG&E rate filing and
provide feedback on any
additional expenditures
BOD reviews and adopts
amendments to the budget
incorporating any additional
expenditures
Mid-Year Budget
Review / Adjustment
3 Recap of Adopted Budget Assumptions
• Conservative assumptions used in estimating revenues
• CPUC’s updating of RA and RPS prices in setting the Market Price Benchmark (MPB) was highly uncertain
• MPB prices are used in calculating PCIA and PG&E generation rates • Staff had estimated a potential increase in revenues of $100 million if higher RPS and RA prices were adopted in MPB • Budget maintained the current 4% discount to the end of December 2023
• Budget set the initial discount starting in January 2024 to 1 %, with an additional 1% offered as bill credits to low-income customers • The board agreed to revisit the customer discount and any additional expenditures, including those for programs and an SVCE office building, when there would be more
certainty on PG&E rates
Highlights of the Updated Budget Using PG&E’s Recent
ERRA Forecast that Incorporates the New MPBs
• CPUC’s updated MPB account for a substantial
increase in RA and RPS prices
• SVCE’s forecasted revenues are higher by about $127
million
• Updating for revenues and power supply expenses, the
net contribution to reserves increases from the adopted budget forecast of $7.7 million to $127.9 million
• Without any additional expenditures, the reserve
projection increases above the target days of cash on
hand of 300 to 334 but below the maximum target of
490
Item 3
PRESENTATION
Key Messages
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Item 3
PRESENTATION
CPUC issued Market Price
Benchmarks (MPB) reflecting higher
RPS and RA prices relative to budget
assumptions.
RPS prices for 2023/2024 have
increased 140%/154%.
RA prices for 2023/2024 have
increased 94%/79%.
PG&E’s updated rate forecast,
incorporating MPB prices, shows
rates in January increasing on
average by 8% from current rates
and then dropping in July by ~ 4.5%.
PCIA up from 0.28 to 0.55 (t/kWh.
Relative to budget assumptions,
SVCE’s margins on average,
improved by ~44%. Resulting in a
~$127 million increase in revenues.
Rates are not final until CPUC’s
decision at the 12/14 meeting.
CPUC may prefer one blended rate
increase and moderate or remove
some of the proposed rate increases.
Significant changes from CPUC are
not expected.
CPUC issued a Proposed Decision
on11/28, which is aligned with
PG&E’s filing.
PG&E ERRA Rate Forecast Update**
PG&E Gen Rate:
5 Average Jan-Sep 2024 Rate
Higher PG&E Rate Forecast Improving SVCE
Revenue Projections by ~$127 million
PG&E Gen Rate:
15.48 <t/kWh
Adopted
Budget 2024
Rate***
* Source: PG&E 2023 Average Rate, effective January 7, 2023 (Weighted for SVCE Portfolio Load) PG&E 2024 ERRA Forecast Update, released in October,2023 (Weighted for SVCE Portfolio Load) *** Using NewGen Model with 7/7/2023 Forward Curves and 10% modeling error haircut Above margin analyses ignores minor reductions for franchise fees (0.09 <t/kWh) PG&E Gen Rate:
16.20 e/kWh
Tl^SVCEdiscount
Jul-Dec 2024
Rate
Current 2023
Rate*
Jan-Jun 2024
Rate
($ in thousands)
FY 2023-24 FY 2023-24
ADOPTED Updated
DESCRIPTION BUDGET BUDGET $ %
Energy Revenues 440,404 567,585 127,181 28.9%
Power Supply Expense 391,624 399,546 7,922 2.0%
Operating Margin 48,780 168,038 119,259 244.5%
Operating Expenses 32,361 32,361 0 0.0%
Non-Operating Revenue (Expense) 5,498 6,431 932 17.0%
Annual Transfers and Other Expenses
Program Fund 8,874 8,874 0 0.0%
Nuclear Allocation 2,188 2,188 0 0.0%
Multi Family Direct Install Program 0 0 0 -
Electrification Discount Program 0 0 0 -
Customer Bill Relief 3,136 3,136 0 0.0%
Building Fund 0 0 0 -
Other 50 50 0 0.0%
BALANCE AVAILABLE FOR RESERVES $7,669 $127,860 $120,191 1567.1% Change
Item 3
PRESENTATION
O FY 24 Adopted and Updated Budget
Primarily Revenues and Power Supply Expenses are Updated The updated budget
projections are before
accounting for any
additional expenditures.
The adjusted budget,
incorporating additional
expenditures, is shown in
the appendix.
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Item 3
PRESENTATION
Reserve Projection
Projected End of FY Reserves
without additional Expenditure:
$405 Million
334 Days of Cash on Hand
(DCOH)
Based on a forecast of
program expenditures
Unspent program dollars
count toward reserves
"292 DCOH if unspent
program dollars are removed
from reserves
SILICON VALLEY
CLEAN ENERGY
Reserve Forecast
$700
$600
490 days
$500
«$400
300 days
^$300
c
$200
120 days
$100
$0
FY 2023-24
Total Adjusted Ending Reserves "Target Reserves Maximum Reserves Minimum Reserves 7 •
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Item 3
PRESENTATION
Balancing Priorities
1% customer discount over 12 months of 2024
is ~$5.7 million*
1% discount over 9 months (Jan -Sep 2024)
~$4.3 million*
Monthly Average Bill Savings of 1%* Discount:
Residential - ^$0.78
Small Commercial - ~$2.80
Medium Commercial -~$30.87
* Based on October PG&E ERRA Forecast
SILICON VALLEY
CLEAN ENERGY
Based on staff proposals, the Executive Committee (EC) and the Finance and Administration Committee (F&A) evaluated the following funding items:
1. Adjusting general customer discount level
a) Keeping the adopted budget level of 1%
b) Increasing to the current level of 4%
c) Increasing to ~7.2% with the intent of keeping customer generation rate, inclusive of PCIA, at current levels
2. Trueing up the intended 1%-dollar bill credit to low-income customers to account for higher rates than anticipated in the original budget
3. Setting aside funds for an SVCE office building
4. Setting aside funds in reserves to maintain higher customer discounts over the next two years
5. Increasing funding for programs that include decarbonization grants for cities
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Item 3
PRESENTATION
CD EC, F&A, and Staff Recommendation
The recommended funding
scenario maintains projected
reserves above the target level
of 300 days cash on hand
(DCOH) and well below the
maximum level of 490 DCOH
over the next 5 years
The EC’s second consideration
was increasing customer
discount (~7.2%) such that,
inclusive of PCIA, the
generation rates stay at current
levels
Greater emphasis on affordability,
given the expected large increases
in PG&E transmission and
distribution charges
Additional funding scenarios are
summarized in the appendix
Funding Items
Additional
Fiscal Impact
($ Million)
Consideration
1. General Customer Discount Level of
4% (in addition to bill credits for low-income customers)
12.9 Provides for a meaningful
discount
2. True-up 1% Bill Credit to Reflect
Higher Rates
1.16 Aligns with original budget
intention
3. Transfer to Building Fund 20 Builds assets and potentially better economics over the
longer term
4. Set Aside, in reserves, to Fund 4%
Discount for 2 Additional Years
34.2 Supports rate stability and
provides direction on future
rate setting
5. Additional Program Funding
Including Grant to Cities
20 Furthers the organization’s
mission
Total 88.26
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Item 3
PRESENTATION
Accounting True-up of Program Dollars
Clarify that unspent program dollars were to roll into the program funds when it was created Program fund was created in the fiscal year 2019-2020
Prior to funds creation, the Board allocated funds in each fiscal year’s operating budget The net amount allocated, including adjustments for some grants received, was $10,125 million When the program fund was created, the intent was to rollover the $10,125 million into the fund Staff requests the Board to explicitly authorize the rollover of $10,125 to the program’s fund After the Board’s approval, the accounting records and the program fund balance shown in the Treasurer’s Report will be updated
SILICON VALLEY
CLEAN ENERGY 10
Item 3
PRESENTATION
Board Approval
Adopt Resolution 2023-20
1) Authorizing the CEO to implement SVCE generation rate changes to establish a 4 % discount to PG&E’s applicable generation rates when PG&E’s updated rates are implemented, expected to be January 1, 2024, or after allocation of the sufficient time window for implementing new generation rates in SVCE’s billing system, expected to be within three weeks of PG&E’s release of the new 2024 rates
2) Adopting the adjusted fiscal year 2023-2024 operating budget that projects depositing $73.8 million into the reserves, considering the above increase in customer discount; updated revenue, power supply, and interest-earning forecasts; and the following additional allocations” a) $1.16 million towards bill credits for CARE/FERA customers, b) $20 million towards the purchase of an SVCE office building, and c) An additional $20 million to the Programs Fund, which includes grants to cities’ decarbonization programs.
3) Authorize previously budget-allocated but not explicitly approved rollover of $10,125 million to the Program Funds from reserves
SILICON VALLEY
CLEAN ENERGY 11
Item 3
PRESENTATION
Thank you! / Questions?
12 Item 3
PRESENTATION
Comparison of
Adopted and
Adjusted 2023-2024
Operating Budget
SILICON VALLEY CLEAN ENERGY
FY 2023-24 OPERATING BUDGET
($ in thousands)
FY 2023-24 " FY 2023-24
ADOPTED ADJUSTED Change
DESCRIPTION BUDGET BUDGET $ %
ENERGY REVENUES
Energy Sales 438,342 552,667 114,325 26.1%
GreenPrime 2,012 1,968 (44) -2.2%
OtherIncome 50 50 0 0.0%
TOTAL ENERGY REVENUES 440,404 554,685 114,281 25.9%
ENERGY EXPENSES
Power Supply 391,624 399,546 7,922 2.0%
OPERATING MARGIN 48,780 155,138 106,359 218.0%
OPERATING EXPENSES
Data Management 3,413 3,413 0 0.0%
PG&E Fees 1,470 1,470 0 0.0%
Salaries and Retirement 15,406 15,406 0 0.0%
ProfessionalServices 8,084 8,084 0 0.0%
Marketing & Promotions 1,349 1,349 0 0.0%
Notifications 21 21 0 0.0%
Lease 551 551 0 0.0%
General & Administrative 2,067 2,067 0 0.0%
TOTALOPERA TING EXPENSES 32,361 32,361 0 0^0%
OPERATING INCOME (LOSS) 16,419 122,778 106,359 647.8%
NON-OPERATING REVENUES
Interest Income 5,501 6,434 932 16.9%
Grant Income 0 0 0 -
TOTAL NON-OPERATING REVENUES 5,501 6,434 932 16.9%
NON-OPERATING EXPENSES
Financing 3 3 0 0.0%
Interest 0 0 0 -
TOTAL NONOPERATING EXPENSES 3 3 0 O%
TOTAL NONOPERATINGINCOME
(EXPENSES) 5,498 6,431 932 17.0%
CHANGE IN NETPOSIT1ON 21,917 129,208 107,291 489.5%
CAPITAL EXPENDITURES, INTERFUND
TRANSFERS & OTHER
Capital Outlay 50 50 0 0.0%
Building Fund 0 20,000 20,000 0.0%
Transferto CRCR Fund 0 0 0 -
Program Fund 8,874 28,874 20,000 225.4%
NuclearAllocation 2,188 2,188 0 0.0%
Multi FamilyDirectInstall Program 0 0 0 -
Electrification Discount Program 0 0 0 -
CustomerBill Relief 3,136 4,300 1,164 37.1%
Other 0 0 0 -
TOTAL CAPITAL EXPENDITURES, INTERFUND
TRANSFERS & OTHER $14,248 $55,412 $41,164 288.9%
BALANCE AVAILABLE FOR RESERVES $7,669 $73,796 $66,127 862.2% 13 •
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Item 3
PRESENTATION
With the recommended
4% customer discount,
SVCE’s customer
generation rates, on
average, are expected to
increase by about 3.5%,
inclusive of PCIA.
A 7.2% discount on
average is
expected to keep
SVCE’s customer
generation rates
unchanged,
inclusive of PCIA.
PG&E Gen Rate:
14 Average Jan-Sep 2024 Rate
Rate Comparison with the Recommended 4%
Customer Discount
* Source: PG&E 2023 Average Rate, effective January 1, 2023 (Weighted for SVCE Portfolio Load) " PG&E 2024 ERRA Forecast Update, released in October,2023 (Weighted for SVCE Portfolio Load) *** Using NewGen Model with 7/7/2023 Forward Curves and 10% modeling error haircut Above margin analyses ignores minor reductions for franchise fees (0.09 cf/kWh) Adopted
Budget 2024
Rate***
PG&E ERRA Forecast Update**
Jul-Dec 2024
Rate
Current 2023
Rate*
Jan-Jun 2024
Rate
Units 2023 2024 2023 2024 2023 2024
On-Peak Energy MPB* $/MWh 75.14 77.99 68.28 72.88 -9% -7% Off-Peak Energy MPB* $/MWh 65.89 69.57 62.23 65.77 -6% -5% Average ATC Energy MPB* $/MWh 71.08 74.29 65.62 69.76 -8% -6% RPS MPB** $/MWh 12.63 12.50 30.30 31.73 140% 154%
System RA MPB** $/kW-Month 7.39 8.50 14.37 15.23 94% 79% Local RA MPB** $/kW-Month 6.93 8.46 8.38 9.52 21% 13%
Flex RA MPB** $/kW-Month 7.15 8.38 7.82 9.12 9% 9%
** Based on PG&E's 2024 forecast update testimony, released on October 16th, 2023 Adopted Budget Revised Budget % Change
*CY 2023 rates are based on average NP-15 market prices (actual+forward); 2024 rates were set as Market Benchmarks for 2024 per PG&Es October 16th, 2023 filing.
Item 3
PRESENTATION
CD Updated Market Price Benchmark
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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 3
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 evaluate property
and financing options
Staff to continue
assessing market
opportunities and return
to the Board with a
purchase or lease
analysis
$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
16 $ Million
Additional Expenditures
1. General Customer Rate Discount Level 1% - 4% 12.90 4% 12.90 4% 12.90 7.2% 26.66 7.2% 26.66
2. True-up 1% Bill Credit to Reflect Higher Rates 1.16 1.16 1.16 1.16 1.16 1.16
3. Transfer to Building Fund 20.00 20.00 20.00 20.00 20.00 20.00
4. Set Aside to Fund at least 4% Discount for 2 Additional Years 34.20 34.20 34.20 34.20
5. Additional Program Expenditures Including Grant to Cities 20.00 6.24 20.00
21.16 34.06 68.26 88.26 88.26 102.02
**Resulting Financial Forecast Reserve Level (DCOH*)
- End of Fiscal Year 333 322 322 322 311 311
- High-Level Estimate*** Reserve 3 years out 350 340 312 312 300 300 - High-Level Estimate*** Reserve 5 years out 379 369 341 324 324 313 * Days cash on hand.
*** High-level estimates derived from the annual budget 5-year forecast with current fiscal year cash burn rate.
Funding Scenarios
A. Build
Reserves
E. Keep Rates
Unchanged
F. Rates Unchanged with
Lower 5th Yr Reserves
B. Increase
Rate Discount
C. Longer-term
Affordability
D. Add'l Set Aside
for Programs
**Not expected to have any significant impact on forecast of the current fiscal year financialreserves since expenditure is likely delayed to future years.
Item 3
PRESENTATION
Funding Scenarios
All scenarios maintain projected reserves at or above the target level of 300 DCOH* and well below the maximum level of 490 DCOH over the next 5 years
SILICON VALLEY
CLEAN ENERGY 17
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Item 3
PRESENTATION
CD Program Fund Budget Allocation
Programs Fund Over Time
FY23 Snapshot
Future / Still Planning ($11M)
Planned to Go Live in Coming
~6 Months ($20M)
Live I Available Now to
Customers ($31M)
Customer-Reserved
Incentives ($11M)
Spent ($12M)
18 1
• Subtitle
New SV Clean Energy
PowerPoint Template
Multifamily Direct Install
Program
Board of Directors Meeting
December 13, 2023
Item 5
PRESENTATION
2 Direct installation is a one-stop solution for
electrification
Item 5
PRESENTATION
Currently, a property owner must take these steps to electrify:
A direct installation program addresses these pain points . ..
Property
interest
A -e ectnc
building
Assess
upgrades
needed
SVCE
contractor
insta s
upgrades
SVCE pays
for
upgrades &
pursues
incentives
.. . but requires a high level of investment.
3 The program budget is a fraction of the investment
needed to electrify all affordable multifamily units
Still, this “first of its kind” program can identify solutions for scalability Affordable multifamily
units in SVCE
8,000
Per unit cost to fully
electrify*
$27,000
Investment needed to
electrify all units
$200-250M
Multifamily Direct Install
program budget
$12.5M
*Association for Energy Affordability's estimated average gross costs. Does not include potential third-party incentives. Actual costs may vary.
Item 5
PRESENTATION
4 Clean & Healthy Affordable Multifamily Properties
(CHAMP), a direct install program
Target Market
Existing deed-restricted affordable multifamily properties (5+ units)
Budget
$12.5M
Goals
• 300 – 1,000 all-electric dwelling units
• 125 electric vehicle charging ports
Objectives
• Property owners: Easy installation option for
building & transportation electrification
• Tenants: Healthy, all-electric housing with
lower energy costs
CHAMP
No-cost
upgrades
Program
contractor
Tenant
education
Quality
equipment
Item 5
PRESENTATION
5 Properties can participate based on the support they
need
Gap Funding Grants
Budget $1.5M
Services
provided:
• Incentives to “fill the gap” after third-party funding sources are exhausted
• Must have prevailing wage contractor & project under design Direct Installation
Budget: $11M
Services
provided:
• Conduct outreach to property owners
• Develop electrification plans & technical assistance
• Design & install building & transportation electrification equipment • Educate tenants & building staff on installed equipment • Enroll properties in E-ELEC rate
White glove
support
Financial
support
Item 5
PRESENTATION
6 Each consultant on this team brings unique skills
& resources to deliver CHAMP
Program operator & building electrification
Transportation
electrification
Electrical
engineering
Standardized
retrofit packages
Tenant
engagement
Subconsultants
Item 5
PRESENTATION
ASSOCIATION FOR
ENERGY
AFFORDABILITY^
7 Stakeholders & experts informed key design
decisions
AEA will finalize program design with stakeholder focus group Needs & Considerations
Address non-energy barriers
Maximize properties served
Develop sustainable workforce
Tenant protections
Program Elements
Pay for ancillary upgrades (e.g., asbestos/lead abatement) Pursue third-party incentives
Pay prevailing wage
Ensure no “renovictions” & explore bill
protection
Item 5
PRESENTATION
8 Program launch
Jul 2023 Dec 2023 Jan 2024 May 2024
RFP released
Consultant selection
Contract negotiations
Host stakeholder
focus groups
Final program design
BOD approval of
contract
Contract executed
Mar 2023
Informational
interviews with
experts & property
owners
Preliminary program
design
Timeline & next steps
Item 5
PRESENTATION
9 Authorize the CEO to execute an agreement with the Association for Energy Affordability Inc. (“AEA”) for program design and implementation support services for SVCE’s multifamily
residential electrification program for a period of five years for an amount not to exceed $11 million.
Recommendation
Item 5
PRESENTATION
10 • Subtitle
New SV Clean Energy
PowerPoint Template
Appendix
Multifamily Data
Item 5
PRESENTATION
11 Number of Affordable
Housing Units
SEVI Quartiles
Data Source: Only includes multifamily properties funded through the Low Income Housing Tax Credit (LIHTC).
SVCE Affordable Housing Stock
City # Low
Income Units
#
Properties
Campbell 565 5
Cupertino 65 2
Gilroy 1,770 23
Los Gatos 222 3
Milpitas 550 5
Morgan Hill 1,576 25
Mountain View 1,434 17
Saratoga 148 1
Sunnyvale 1,299 14
Total 7,629 95
Item 5
PRESENTATION
1 2
3 4
O Insufficient Data
19 - 50
o 50 - 100
O 100 - 150
O 150- 200
O 200- 250
Q 250- 300
Q300 - 303
• Subtitle
New SV Clean Energy
PowerPoint Template
2024 SVCE Board Elections
Information
Item 6
PRESENTATION
Item 6
PRESENTATION
(2) Purpose
Review the selection process and timeline for 2024 SVCE appointments of Chair, Vice Chair, and committees.
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Item 6
PRESENTATION
O Selection Process
January BOD Meeting
Chair/Vice Chair
Appointments
Executive Committee
Appointments
December 15th:
Letters of Interest requested for Chair/Vice
Chair
Notification of Executive Committee interest
requested
Selections made at annual meeting on January
10, 2024
Item 6
PRESENTATION
O Selection Process (Cont.)
February
All other Committee
Appointments (Audit,
Finance and
Administration, 2024
Legislative Ad Hoc
Committee)
January 11th:
Request for members to notify Board
Clerk of interest in serving on
remaining Committees
Selections made at February 14, 2024
Board of Directors Meeting.
Item 6
PRESENTATION
CD Timeline Snapshot
Dec
Jan
Feb
13th: SVCE BOD Meeting Info item
15th: Requests for Chair/Vice Chair letters and Executive Committee interest emailed
3rd: Chair/Vice Chair Interest Letters & Executive Committee notification of interest due
10th: Selections made at BOD meeting
11th: Written information for committee interests distributed 2nd: Interest responses for committees due
14th: Remaining committee assignments made at BOD meeting 5 Item 6
PRESENTATION
Thank you
6