1 • Subtitle
New SV Clean Energy
PowerPoint Template
2025 Clean Power Supply
Recommendation for GreenStart
Board of Directors Meeting
June 12, 2024
Item 3
PRESENTATION
2 What we will discuss today
• Background
• SVCE Product offering for 2024
• Board directive for 2024 procurement of carbon free resources • Continued challenges with carbon-free energy procurement for 2025
• SVCE’s Total Portfolio and Incremental Costs
• Options for GreenStart
• Request to support recommendation to the Board to relax the 100% Carbon-free target for 2025
Item 3
PRESENTATION
3 Ambitious GHG reduction Goals
SVCE’s Mission: Reduce
dependence on fossil fuels by
providing carbon-free, affordable,
and reliable electricity and
innovative programs for the
SVCE community.
SVCE Value Proposition is two-fold.
1. Meet and exceed California’s
ambitious GHG gas
reduction goals for its
customers by “greening” the
grid.
2. Provide “innovative
programs” to help to reduce
SVCE’s customers carbon
footprint
Much of SVCE’s ability to reduce emissions are a direct result of SVCE’s clean power supply.
Item 3
PRESENTATION
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2015 2016 2017 2018 2019 2020 2021 2022
SILICON VALLEY
CLEAN ENERGY
Launched
State
Goals
2040 2045
Net-zero
emissions
50% below All new cars
1999 levels sold are electric
Carbon
neutral
4 SVCE Product Offerings 2024
GreenStart GreenPrime
Clean Energy
Standard
78-85% Clean Energy measured annually 100% Renewable Energy or RPS measured annually
Product Content RPS above California’s RPS or ~50% via
Power Purchase Agreements (PPA) and
Short-term PCC1 RECs
+
Balance from Carbon/GHG-free non-RPS
resources
100% RPS via PPA and Short-term PCC1
RECs. PCC3 RECs only used if necessary
to meet increased participation requirements.
Eligible Resources RPS: CEC defined, solar, geothermal, biomass, small hydro, and wind
Carbon-free: Large Hydro and nuclear
allocations
Portfolio PCC1 RECs.
Rate Set at discount to PG&E GreenStart rate + $0.015 premium Customers 90-95% of retail load 5% of retail load
Emissions Low to zero zero
GreenPrime Direct – Available to only certain commercial industrial customers Item 3
PRESENTATION
5 Board Directive for 2024
SVCE Board relaxed GreenStart Clean target for 2024 due to lack of supply.
Parameters:
1. Continue to seek carbon-free resources within budget parameters for calendar year 2024
2. Approve the procurement of nuclear carbon-free resources, provided:
1. Allocations from PG&E are not available
2. Sufficient volume is available to achieve 100% Clean below budget
3. If carbon-free resources are not available within budget, adjust 100% Clean goal for 2024 to current position of ~78% Clean
Staff was not able to procure sufficient carbon-free resources for 2024 to achieve 100% Clean. Latest estimate for 2024 is 80% Clean.
Item 3
PRESENTATION
6 Procuring Clean Energy is a Challenge for 2025
History of the Carbon Free Market at SVCE
$4.50 $5
$20
$25
$29 $29
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
2021 2022 2023 2024 2025 2026
Change in CF Market Prices
(2021 – 2026)
Carbon Free Prices are High
3 A recent Request for Offers showed limited offers for Carbon Free in 2025 and 2026
This implies that closing the current Net Open Position is unlikely
1 The first transactions that SVCE did for carbon free
attributes were for less than $2
Historically marketers in the PNW would flow power to California 2 These costs have increased as demand has grown
Post Covid years provided some respite but in 2023 prices shot up as available supply has diminished
4 Electricity demand has grown in the PNW the fastest rate in decades
Electricity demand in the PNW is expected to increase by 2.5% annually throughout the next decade, driven by industry Demand for Carbon Free has increased substantially!
Item 3
PRESENTATION
7 SVCE Clean Percentages
SVCE has a high clean
percentage, due to the
large amount of renewable
generation procured.
However, it takes time for
those projects to come
online. Project delays have
impacted SVCEs overall
progress.
Looking forward SVCE has
a very strong portfolio with
a total expected clean
percentage approaching
95% in 2028.
Item 3
PRESENTATION
SVCE RPS and Clean Percentages
Calendar Year
RPS Volume —•—SVCE RPS % —•—SVCE Clean% —•California RPS Standard% 8 2025 Incremental Cost of Carbon Free
80% of retail sales are
projected to be met with
Clean Energy (RPS and
Non-RPS).
For 2025, RPS mandate is
50% 2025 (SB100). This
implies SVCE has at least
30 percent of clean above
the minimum required level.
Incrementally each 5
percent tranche of clean
would cost ~$6 million to
procure (assuming prices
remain constant) and supply
is available.
Portfolio
Percentage Clean
Cost for each additional
Tranche of clean ($/m)
Aprox. PCL Emmission
Intensity (Lbs/CO2)
Metric Tonnes of
Carbon
50% (36) M 472 861,609
80% 0 M 248 452,710
85% 6 M 211 385,168
90% 12 M 164 299,373
95% 18 M 117 213,577
100% 24 M 64 116,828
106% 31 M 60 109,527
The estimated incremental cost to close the 2025
Clean position, assuming supplies are available and at
modeled prices, is $24 million.
Item 3
PRESENTATION
9 Green Start Bookend Alternatives
Option #1
Current Policy
Option #2
No Additional Purchases
Description Maintain 100% Carbon Free for 2025
– assumes SVCE can purchase
additional CF resources
a) Relax the 100 percent clean target
to reflect current portfolio clean
position and market conditions; and
b) Authorize the Chief Executive
Office to procure nuclear, carbon-free, attributes.
Expected Reportable
Emissions on Power
Content Label
~74 lbs of Co2* ~248 lbs of Co2, includes some grid
emissions
Benefits • Low emissions
• Maintains SVCE’s historic product
offering
• Avoided cost of ~$24 million in
2025
Drawbacks • Unlikely to be possible
• Expensive
• No additional emissions
reductions for grid
• Could impact member agencies
Climate Action Plans
* Reflects emissions from the COSO facility, which will change by 2028 Item 3
PRESENTATION
10 Clean Energy Pathways
SVCE’s mission is durable. Shifting market and policy conditions will necessitate a deeper look at how SVCE balances "clean", "affordable" and "innovative programs“.
• Clean Energy Pathways will evaluate:
• How to meet SB100 Clean mandate (100% carbon free retail sales by 2045) and interim targets
• Clean targets and metrics beyond mandates – Example: 24/7 carbon-free at different hourly levels (90%, 95% and 100%); 100% clean annually and what percent from RPS.
• Shift focus to incremental clean projects including local generation • Assess need for a Carbon abatement policy to achieve
sustainable reductions from supply and programs
• Programs to expedite the energy transition
• Alignment and/or enhancements to clean product offerings Item 3
PRESENTATION
11 Green Start: Next Steps
Ability to achieve 100% Clean target through short-term procurement and/or allocations will continue to be a challenge
• Evaluate avoided cost savings from 2024 and 2025
• Clean Energy Pathways assessment is expected to come to the Executive Committee and/or Board in August/September 2024 • Come to board in November/December 2024 with Staff
recommendation of GreenPrime for 2025
• Re-assess GreenStart and GreenPrime holistically with consideration for findings from the above analyses
• Evaluate other “clean” products such as Asset-Controlling Supplier (ACS) power and GHG offsets
Item 3
PRESENTATION
12 Request of Board of Directors
Staff recommends the Board of Directors approve changes to Silicon Valley Clean Energy’s (SVCE) standard retail rate product, GreenStart, for 2025 as follows:
1.Relax the 100 percent clean target to reflect current portfolio clean position and market conditions; and
2.Authorize the Chief Executive Office to procure nuclear, carbon-free, attributes.
Option 2, Slide 9
Item 3
PRESENTATION
13 • Subtitle
New SV Clean Energy
PowerPoint Template
Questions & Discussion
Item 3
PRESENTATION
14 Glossary
• CARB: California Air Resources Board is the California agency charged with protecting the public from the harmful effects of air pollution and developing programs and actions to fight climate change.
• Cap and Trade Auction: The Cap-and-Trade Regulation establishes a declining limit on major sources of GHG emissions throughout California, and it creates a powerful economic incentive for significant investment in cleaner, more efficient technologies. • PCC1 RECs: Portfolio Content Category 1 (PCC1) Renewable Energy Certificates (RECs) resource with a first point of interconnection within a California balancing authority. Allows for some firm imports to also be counted. PCC 1 RECs are the most valuable.
• PCC2 RECs: imported from outside of California allows for firming and shaping of energy which may have reportable emissions associated with energy. • PCC3 RECs: energy and RECs are completely unbundled and emissions from energy are reported based on system emission factor.
Item 3
PRESENTATION
New SV Clean Energy
PowerPoint Template
Subtitle
Item 4
PRESENTATION
Stress Test Analyses
SILICON VALLEY
CLEAN ENERGY
Amrit Singh
Board of Directors
June 12, 2024
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Item 4
Purpose
PRESENTATION
Recap of ERM Framework
Presentation Highlights
Present findings of the
stress test analyses
Construction of Stress Tests
5-yr Financial Stress Test
Long-Term Load Uncertainty
Financial Stress Tests and
Implied Reserve Targets
Portfolio and Risk
Management with Load
Growth Uncertainty
Next Steps
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PRESENTATION
Recap of the ERM Framework
Comprehensive organization-wide assessment of risks
Optimally manage enterprise risks to achieve the organization’s mission and goals.
1. Risk Register
Record of organization’s risks
Lists current and additional risk mitigations
Identifies a risk owner
2. Risk Matrix
Assess the likelihood and consequence of risk
Calibrate risks
Identify risk tolerance levels
3. Stress Tests
An essential component of ERM
Model scenarios of interrelated risks that are
extreme but plausible
Important for commodity trading portfolios
because of the inherent weakness of market risk
measures in assessing black swans, such as
disruptions in markets
Impact/Consequence
Frequency/Likelihood
Insignificant Minor Moderate Major Catastrophic
Risk Easily
Mitigated
through Day-to-Day Operations
Risk is
Manageable/Low
Impact on Mission
Moderate Erosion
of
Reserves/lmpact
on Mission
Significant
Erosion of
Reserves/lmpact
on Mission
Risk of
Existence
Certain >90% chance High(l) High (2) Extreme (3) Extreme (4) Extreme (5) Likely 50%- 90% Chance Moderate (6) High (7) High (8) Extreme (10) Moderate 10%-50% Chance Low (11) Moderate ( 12) High (13) 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) Additional review slides are in the appendix (28-30).
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Item 4
PRESENTATION
0 Past Stress Test Learnings
Examined both increases
and decreases in market
prices for energy
Among them, the price
collapse scenario was the
most consequential
Price collapse
scenario remains one
of the most significant
financial risks in the
near term
First Set of Stress Tests
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
• Collateral calls from counterpartiesand CAISO
• Increasein POLR (Provider of Last Resort)funding (called FSR - FinancialSecurity Requirement)
3. PPAs default, renegotiate for higher prices, and/or delay start • RPS non-compliance penalty
• Replacement at higher prices
4. Load loss due to direct access and distributed load
5. Threat to Public Services or Facilities
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Item 4
PRESENTATION
Stress tests are extreme but plausible scenarios
CD This Year’s Stress Tests
Financial Stress Test
Continue to model the price collapse scenario over the next 5 fiscal years for adequate reserve planning
Additional Stress Tests -Load Growth Uncertainty
Explore longer-term load growth uncertainty and its strategic implications
5 Item 4
PRESENTATION
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Item 4
PRESENTATION
Financial Stress Test Description
Forward Energy Prices Collapse to the one percentile level Economic Recession Creates Load Loss
Customer Uncollectables Increase
Additional Financial Liquidity Stress
In the past, we modeled the draw on reserves from a new potential requirement from the POLR Proceeding POLR decision significantly mitigates the previously modeled risk that would have required posting collateral or cash equivalent of two highest months of procurement
For the current stress test, staff continued to model the requirement of a one-time cash draw equivalent to two months of procurement under the very low-price scenario as a proxy for other potential business operating and regulatory risks Larger counterparty collateral postings from collapse in prices
SILICON VALLEY
CLEAN ENERGY 7
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Item 4
PRESENTATION
Stress Test and Reserve Planning
Continue with the current methodology
Manage reserve targets to ensure the ability to withstand price collapse risk
Maintain competitive rates over the next two fiscal years without drawing down reserves below 120 days of cash on hand (DCOH) Set the upper reserve target by ensuring SVCE’s reserves stay above 90 DCOH over the next five fiscal years
Other considerations include feedback from rating agencies 8 •
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PRESENTATION
Financial Projections - More Uncertainty Than Past
Background:
Energy prices have always been highly volatile
Fairly liquid forward energy prices are available
Now RA, CF, and RPS* prices are also highly
volatile
Limited forward RA, CF, and RPS prices are
available
CPUC’s market price benchmarks (MPB)
Used in computing PCIA
Forecast Energy Prices - uses market forwards
Forecast RA and RPS - based on past LSE’s**
transactions
CPUCwill publish MPBs in fall
Issue:
Revenue forecast has become extremely difficult
Last Fiscal Year
Adjusted budget in December 2023 was higher by ~$120
million than the initial budget
Main driver: higher MPBs from higher RA and RPS prices
Next fiscal year’s revenue forecast ranges:
$600 million -using incremental market observed RA
and RPS Prices
$2^ n $400 million - adjusting incremental prices per
million implied adjustment observed in last year’s MPBs $385 million - using NewGen consultant’s model
prices -based on last year’s MPBs
* RA: Resource Adequacy, CF: Carbon Free, RPS: Renewable Portfolio Standard 9
** LSE: Load-serving entity
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2025 2026 2027 2028 2029
Days Cash on Hand 279 99 55 10 (36)
Item 4
PRESENTATION
Base Case versus Financial Stress Scenario
Base Case
Uses the lower end of the revenue projections
If modeled assumptions prevail:
Reserves fall from the current forecast level of $420 million at the end of the current fiscal year to $368 million at the end of the next fiscal year.
Reserves continue to fall in subsequent years and then rise to $360 million towards the end of the 5-year forecast period 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 future rate impacts
Uncertainty increases further out in time
Focus on the delta of the base case to stress test
results
Stress Case
If the modeled stress scenario were to occur,
reserves would drop to $240 million at the end of
FY2025 (A drawdown of $181 Million)
Projected Days Cash on hand will also be below
the minimum target of 120 DCH
1 II 1 l__
Below minimum
target of 120 DCOH.
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Item 4
PRESENTATION
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 will collaborate with CCAs who
have recently come to the same
conclusion
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 Illustrative Implied
Targets
Minimum 120 120
Goal (Target) 300 315
Maximum (Upper
Target)
490 420
The stress test analysis will likely be updated using prices consistent with those used to construct next year’s fiscal budget.
The above table will then be revised and used to update the targets in the reserves policy.
11 Item 4
PRESENTATION
MW
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Item 4
PRESENTATION
Fairly Stable CA Load Over the Last Few Decades
Load changes year-over-year are mainly due to
weather
Longer-term load growth in
the past was largely
moderated by energy
efficiency measures
PER CAPITA ELECTRICITY CONSUMPTION
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PRESENTATION
CD Future Load Growth is Highly Uncertain
The future, while highly uncertain,
will be unlike the past
Over the longer term, significant
load growth is expected
Electric Vehicles
Building Electrification
Data Center Load - Al
Energy efficiency, behind-the-meter PV, and batteries will continue to lessen the impact of
the above drivers
SVCE’s load growth scenarios
range from cumulative base case
growth of 46% to high case of
86% over the period from 2024
to 2050
Total Load Forecast
Basecase
Low Load
IGFC
High Load
High Electrification
Actual
2024-2050 Base Case IGFC HE HL LL
CAGR 1.5% 1.9% 1.9% 2.4% 0.7%
Cumulative 46% 62% 65% 86% 21% 14
Item 4
PRESENTATION
Load Growth Scenario Assumptions
Scenario
BTM PV EV EE
Load Modifier
BE BTM ESS Opt-Out Others
Base 12% CAGR 61% by 2035 12% CAGR 68% space heating
and 19% water
heater by 2035
13% CAGR No No
IGFC 11% 67% by 2035 Base 75% space heating
and 55% water
heater by 2035
Base No No
High
Electrification
Base 90% by 2035 Base 86% space heating
and 81% water
heater by 2035
Base No No
High Load Base 90% by 2035 Base 86% space heating
and 81% water
heater by 2035
Base No Data Center
3*Current large
sized load by 2035
Low Load Base 30% by 2035 Base 53% space heating
and 14% water
heater by 2035
Base 4% DA Open "400
GWh by 2035
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Item 4
PRESENTATION
Long-Term Portfolio Management Risks
SVCE’s planning is based on its base case scenario
If these
load
scenarios
prevail in
the future
i
Higher Future Prices Lower Future Prices
High load
High portfolio costs;
Uncompetitive rates if
other suppliers hedged a
greater portion of their
load; Procurement
Compliance Penalties
Procure additional volumes
at lower prices
Base Case
Regret or Opportunity
Cost- could have
procured more volumes
Regret or Opportunity Cost
- could have procured at
lower costs
Low load
Sell excess volumes at
higher prices
High stranded costs;
Uncompetitive rates if
other suppliers hedged a
lower portion of their load
or from new entrants.
Factors that can affect future
market prices:
Resource Development
CAISO
Interconnection
Transmission
Supply Chain Issues
Load growth uncertainty
Technology
Similar to the lOU’s predicament with load departure to CCAs. However, PCIA protects the lOUs, but CCA’s do not have such protection. 16 •
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Item 4
PRESENTATION
Current Risk Management Strategy
1. 5-yr short-term laddered energy hedges per
the Energy Risk Management Policy
Period ERMP
Min
ERMP
Max
Prompt
Quarter 85% 110%
2024
(balance) 80% 110%
2025 70% 90%
2026 55% 80%
2027 50% 80%
2028 50% 80%
2. Longer-term hedges through Power Purchase Agreements (PPA) Meet SVCE target of 75% RPS by 2030
Meet CPUC procurement orders for reliability
Comply with SB 350
65% RPS from long-term contracts of 10 years or longer
Comply with SB 100 and SB 1020
60% RPS by 2030; 90% clean by 2035; 95% clean by 2040;100% clean by 2045 SVCE RPS Resources vs Load
6,000,000
2022202320242025202620272028202920302031203220332034203520362037203820392O4O20412042204320442O45 17 •
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Item 4
PRESENTATION
CD Current Plan and Future Considerations
1. Assess long-term pathways to 2045
Conducting analyses with consultant Energy Environmental Economics (E3) for use in developing long-term clean targets
Expect to present results to the Board in late summer/early fall Monitor Central Procurement Entity (CPE) activity and fair cost allocation
2. Continue with laddered procurement of long-term resources Reduces risks from advances in technology, changes in resource cost, and load uncertainty Focus on resources coming online after 2030 as those currently under contract roll-off
3. Work with CC Power to assess the economics and risks of direct ownership versus PPA
Take advantage of Inflation Reduction Act (IRA) benefits and further diversity portfolio
4. Revisit hedging targets
Take account of PCIA and PG&E generation rate impact on revenues Will reduce the amount of hedges needed
18 Item 4
PRESENTATION
Next Steps
June August
Finance Committee and Board
reviews and provides staff
feedback on the proposed
budget and any changes to
reserves targets
Staff presents stress
analysis to the Board
September TBD
Board approves FY 2024 -
2025 budget with updated
reserves targets
Staff completes
hedge target
analyses and
proposes new
hedging targets
19 New SV Clean Energy
PowerPoint Template
Subtitle
Item 4
PRESENTATION
Item 4
PRESENTATION
Recap -Price Uncertainty
Biggest contributor to financial risk: PCIA and PG&E Generation Rate Uncertainty.
PG&E Gen Rate
SVCE
Discount
O
Q.
(D
+-•
(U
or
CD
0 LU
O
>
cn
PCIA and PG&E Gen Rate determine SVCE Rates and,
therefore, Revenues
Revenues
PG&E Rate 'T'
PG&E Rate 4-
PCIA increases and PG&E generation rates decrease when energy prices decline Because of hedging, power supply costs are locked
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Item 4
PRESENTATION
Past, Current, and Stress Case Modeled Commodity Prices Forward prices have fallen 13-
41% from their recent highs.
Traded prices were at the
modeled stress test levels as
recently as three years ago.
Past Future Stressed Prices
22 Item 4
PRESENTATION
Price
($/kW-month)
Cm Past MPB, Current, and Stress Case Modeled RPS and System RA Prices
System RA Prices RPS Prices
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Calendar Year
Stressed Prices: Modeled 1st
Percentile Prices $50.0 $55.0 $40.0 $28.0 $7.0 $8.4 $8.2 2024 2025 2026 2027 2028 2029 2030
0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Calendar Year
23 Operating Load | Mean Costs| Old Revenue Components 2025 2026 2027 2028 2029 Revenues $ 384 $ 459 $ 416 $ 450 $ 438
Power Supply Costs $ 397 $ 485 $ 360 $ 370 $ 360
Operating Margin $ (13) $ (26) $ 56 $ 80 $ 78
Other Costs $ 40 $ 66 $ 47 $ 41 $ 43
Net Contribution to Reserves $ (53) $ (91) $ 9 $ 39 $ 35 Reserve Balance $ 368 $ 277 $ 286 $ 325 $ 360
Days Cash on Hand 307 183 257 289 326
Item 4
PRESENTATION
Summary of Base Case Results
Using NewGen Consultant's Model Prices as RA & RPS MPB Estimates $ millions
Constructed for stress analysis. Does
not account for additional expenditures
for programs and customer discounts
beyond the 1 % level. 24
Operating with period of 5% load loss | P1 Costs| P1 - Adj. Old (FO Ratio) Revenue Components 2025 2026 2027 2028 2029 Revenues $ 167 $ 225 $ 239 $ 288 $ 308
Power Supply Costs $ 274 $ 308 $ 249 $ 282 $ 309
Operating Margin $ (97) $ (73) $ (10) $ 6 $ (1)
Other Costs $ 40 $ 66 $ 47 $ 41 $ 43
Counterparty Collateral Outflow $ (10) $ (11) $ - $ - $ - Net Contribution to Reserves $ (137) $ (138) $ (57) $ (35) $ (43) Reserve Balance $ 295 $ 156 $ 99 $ 64 $ 21
Reserve after Risk Adjustment $ 240 $ 101 $ 44 $ 9 $ (34) Days Cash on Hand 279 99 55 10 (36)
Item 4
PRESENTATION
Summary of Stress Test Results
The 2025 numbers are slightly different due to a modeling error than the results presented at the 5/13/2024 Finance and Administration Committee meeting. The results for 2025 are higher by about $3 million. 25 Item 4
PRESENTATION
Days Cash on Hand Comparison
SVCE Target Days Cash on Hand is 300
CCA Published Targets
SCP 280
MCE 240
EBCE 183
PCE 180
SJCA 180
26 Source: http://epis.com/powermarketinsights/index.php/2017/05/18/how-good-is-the-eia-at-predicting-henry-hub/ 70% during the 2008 financial crisis
Item 4
PRESENTATION
Volatility in Natural Gas Markets Translates to Volatility in Electricity Markets CD Past Price Collapse
2008 financial crisis natural
gas prices dropped ~70% with
a corresponding drop in power
prices
27 Item 4
PRESENTATION
Price
<$/MWh)
2024-2029 Forward Prices Across Time
28 —2024 2025 —2026 2027 2028 2029
Item 4
PRESENTATION
Load Forecast Results -Percentage in Total (2035)
Scenario
BTM PV EV EE
Load Modifier
BE BTM ESS Opt-Out Others
Base 6.3% 15.5% 2.0% 4.5% 0.1%
IGFC 5.6% 15.7% 2.3% 10.6% 0.1%
High
Electrification
5.3% 19.5% 2.3% 14% 0.1%
High Load 4.6% 17% 2% 12.3% 0.1% 12% Data
Center
Low Load 8.2% 8.9% 2.7% 5.8% 0.2% 4% 10% goes to
DA
29 Unmitigated With Current Mitigations With Additional Mitigations 1 Financial Economic Recession: Prices Collapse and PCIA goes up and revenues go down Amrit Reserves to withstand the shocks; Stress Tests, Cashflow Modeling Reassess reserve adequacy Extreme (15) Extreme (14) High? (13) (Depends on Reserve Set Aside) 2 Financial Price Collapse leads to insufficient liquidity (collateral postings) Amrit Reserves to withstand the shocks; Stress Tests, Cashflow Modeling Reassess reserve adequacy High (13) Moderate (12) Low (11) 3 Financial Load Loss to due economic recession (may not be immediate financial impact) Amrit Reserves to withstand the shocks Reassess reserve adequacy Moderate (12) Low (11) Low (11) 4 Financial Bad Debt increase due to economic recession Adam Send back to PG&E after 3 months of non-payment; Reserves to withstand the shock Reassess reserve adequacy Moderate (12) Moderate (12) Moderate (12) 5 Financial Price collapse and increase in desire for DA (as PCIA goes up) subject to the DA cap Amrit Reserves to maintain competitive pricing; CPUC Decision not opening DA None Low (22) Low (22) Low (22) 6 Financial Load Loss due to DA and distributed/ behind the meter (generation and storage) Adam Custom Customer Pricing; CPUC Decision not opening DA Moderate (12) Moderate (12) Moderate (12) 7 Financial Significant PPAs default/delay/renegotiate for higher prices Monica Supplier & Technology diversity; plan for contingencies; Contractual language for delay damages and default provisions Moderate (23) Moderate (23) Moderate (23) 8 Financial Counterparty Default - Loss of MS business - Risk of losing prepay Amrit Credit risk management Update credit guidelines Moderate (23) Moderate (23) Moderate (23) 9 Financial Member agency leaving Girish Strong SVCE value proposition; Effective communication and alignment with members Moderate (23) Moderate (23) Moderate (23) 10 Financial Governance Risk (Limited knowledge of key stakeholders resulting in an uneconomic/suboptimal business model/operations; Divergent Board member objectives) Girish Continous training and stakeholder interest alignment Moderate (23) Moderate (23) Moderate (23) 11 Financial PG&E failures affect our cashflows since they are our cash register (high gas prices leading to customer bad debt, billing issues) Adam Seek fair treatment from CPUC; No residential waterfall Moderate (12) Low (11) Low (11) 12 Regulatory/Compliance POLR Proceeding - Large Tie up of Financial Reserves Amrit Hold Adequate Reserves Manage and shape regulatory proceeding against PG&E Pool Proposal Extreme (14) High (13) Moderate (18) 13 Regulatory/Compliance CPE Policy Procurement (Pumped Storage, Ofshore wind etc, more asset procurement); Loss of procurement autonomy thru backstop procurement (@ governers office) Monica Manage and shape regulatory proceeding (add more specifics?) Moderate (23) Moderate (23) Moderate (23) 14 Regulatory/Compliance RA reform, uncertainties on design and procurement targets and penalties for market structural imbalances Monica Manage and shape regulatory proceeding (add more specifics?) High (13) High (13) High (13) 15 Regulatory/Compliance Loss of PG&E hydro and Nuclear allocation Monica Manage and shape regulatory proceeding (add more specifics?) Moderate (12) Moderate (12) Moderate (12) 16 Regulatory/Compliance CPUC rejects some of our MTR contracts - especially if it's out of money Monica Manage and shape regulatory proceeding (add more specifics?) Low (17) Low (17) Low (17) 17 Regulatory/Compliance CPUC imposed hedges that may not be optimal for our portfolio Monica Manage and shape regulatory proceeding (add more specifics?) High (19) High (19) High (19) 18 Regulatory/Compliance Potential for deregistration (CPUC No longer lets us operate as an LSE) Monica Manage and shape regulatory proceeding (add more specifics?) High (25) High (25) High (25) 19 Regulatory/Compliance Green Regulatory Risk - Change in the accounting of green. REC has a definition today, Green e / Green prime - VREP has some exchange between REC and Cap/Trade, this could increase our costs in the long term. Monica Low (22) Low (22) Low (22) 20 Reputational Risk of Relevancy - IOUs power portfolio just as green. How do we distinguish ourselves? What's our value proposition?Justin Cheaper (competitive advantage thru tax exempt financing) and community benefits from programs Moderate (18) Moderate (18) Moderate (18) 21 Reputational Emissions on PCL increase; Impact on our mission and customers perception of our value proposition Adam Effective customer communications Moderate (23) Moderate (23) Moderate (23) 22 Reputational Customer Activism & Unfavorable Political scenarios derailing our mission - High PG&E T&D costs and high energy prices resulting in more customer activism and movement against electrification; customer affordability - Political environments ("Make Coal Great Again!")
- Lobbying from natural gas industry Adam Effective customer communications Moderate (23) Moderate (23) Moderate (23) 23 Reputational Aggressive SVCE electrification efforts creates customer backlash ("Let go of my gas stoves!") Justin Moderate (23) Moderate (23) 24 Reputational Daisy and 3rd Party (Calpine, other Vendors) System Failures and Data Breach - Customer Identifiable data compromised; Mandatory customer communication - Customers Opt Out
- CPUC Compliance Risk
Justin CPUC Data audit; Contract provisions Moderate (18) Moderate (23) Moderate (18) 25 Reputational Risk of not spending program dollars well (impact on the reserves - give back the reserves) Justin Moderate (23) Moderate (23) Moderate (23) 26 Reputational Grid Readiness to support our mission Justin Moderate (23) Moderate (23) Moderate (23) 27 Reputational Stranded Program Assets (technology changes, hydrogen cheaper than electricity) Justin Moderate (23) Moderate (23) Moderate (23) 28 Reputational Major Disruption of the T&D/Grid operator, Grid Reliability - affects our mission Girish Moderate (18) Moderate (18) Moderate (18) 29 Operational and Business Continuity Natural Disaster Recovery (Earthquake, flooding) - Cover key business functions (procurement, scheduling, collateral calls …) Monica Key Desk Procedures Low (22) Low (22) Low (22) Operational and Business Continuity Staff turnover Amrit - Employer of Choice Initiatives -benefits,Comp, Hybrid Work, Team Buildings Key Desk Procedures; BPO Moderate (18) Moderate (18) Moderate (18) 30 Operational and Business Continuity Cyber risks (wire fraud, social engineering, ransomware) Amrit IT IRP Plans and Tabetop exercises, VCISO, Human Firewall Trainings Moderate (18) Moderate (18) Moderate (18) 31 Operational and Business Continuity Insider Threat/Rogue Employee Amrit Code of Conduct, Risk Controls Moderate (23) Moderate (23) Moderate (23) 32 Operational and Business Continuity Physical Security/Active Shooter Amrit Staff Training Moderate (23) Moderate (23) Moderate (23) 33 Operational and Business Continuity Scheduling system failure Monica Schedule remotely Low (22) Low (22) Low (22) 34 Operational and Business Continuity Calpine system failure Adam Moderate (23) Moderate (23) Moderate (23) 35 Operational and Business Continuity Daisy Failures (Quality of data impact on Revenue forecasting) Justin Low (22) Low (22) Low (22) Proposed Stress Tests (Modeled Scenarios) Economic Recession (Price Collapse -5th percentile) Coupled with Adverse Regulatory Outcomes (POLR) Extreme (20) Extreme (20) High(19) Draft Confidential Initial Placement to Get Discussions Going Risk Matrix Placement (Impact over 5-years) Risk ID Risk Category Risk Description Risk Owner (Initial Straw Proposal) Current Mitigations (High level right now to get discussions going) Any Additional Planned Mitigations/Actions (High level right now to get discussions going) Item 4
PRESENTATION
Key Components of the ERM Framework
Stress
Tests
• Record of organization’s risks
• Identify current and additional planned mitigations
• Identify risk owner
• Risk Rubric. Assess the likelihood and consequence of risk events • Calibrate risks
• Identify risk tolerance -level of acceptance
• 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
30 •
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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) Item 4
PRESENTATION
Risk Matrix
Assess the likelihood (frequency of
occurrence) and consequence (impact)
Calibrate risks/opportunities and optimally
Significant financial risks will be explicitly
quantified and used for reserve planning,
like last year’s stress test analyses 31
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Draft and
Illustrative
Risk ID Risk Category Risk Description Risk Owner Current Mitigations Any Additional Planned Mitigations/Actions
Risk Matrix Placement (Impact Over 5Yrs)
(Initial Placement to Get Discussions Going)
Unmitigated With Current Mitigations With Additional Mitigations 1 Financial
Prices Collapse (insufficient liquidity,
collateral postings; MTM losses on
investments); PCIA Increases; Revenues
Decrease (under current rate
methodology); Credit downgrade;
insufficient liquidity, Increase DA load
Amrit
Reserves to withstand the shocks; Stress Tests,
Cashflow Modeling; Reserves to maintain
competitive pricing; CPUC Decision not
opening DA
Reassess reserve adequacy; Hedging
Strategy Extreme (20) High (19) High (19)(Depends on Reserve Set Aside) 7 Financial Significant Number of PPAs
Default/Delay/Renegotiate for higher prices Kris
Supplier & Technology diversity; plan for
contingencies; Contractual language for delay
damages and default provisions; credit
provisions
Renegotiated several PPAs; reserve
litigation path for some PPAs. Over
procure relative to compliance
requirements.
Moderate (14) Moderate (12) Moderate (12)
15 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 (12)
30 Customer Opt-Out 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. SVBEST, additional Study
Sessions, systematizing processes.
High (19) Moderate (18) Low (17)
34 Customer Opt-Out Major Disruption of the T&D/Grid operator, Grid Reliability - affects our mission Monica Shape Regulatory and Legislative Initiatives Moderate (18) Moderate (18) Moderate (18) 37 Operational and Business
Continuity
Natural Disaster Recovery/Pandemic/War
(Earthquake, flooding)
-Cover key business functions
(procurement, scheduling, collateral calls
…)
Amrit System backups and desk procedures Add'l Desk Procedures and Continuity Plans Low (22) Low (22) Low (22)
43 Operational and Business
Continuity
Calpine system failure; issues that SVCE
has to pay to resolve (such as billing issues) Adam
Verify Calpine/third party security risks,
compliance status and mitigation strategy.
eg.SOX compliance
Moderate (23) Moderate (23) Moderate (23)
Item 4
Risk Register
PRESENTATION
Risk Register:
Records risks/opportunities
Briefly describes each
risk/opportunity
Lists existing and planned
mitigations
Ranks risks/opportunities
Identifies risk owner
Cross-functional teams
brainstormed and identified risks
and opportunities
Bucketed the risks into the
following categories:
Financial
Regulatory and Compliance
Customer Opt-Out Risk
Operational and Business
Continuity
Opportunities
New SV Clean Energy
PowerPoint Template
Subtitle
Item 5
PRESENTATION
SILICON VALLEY
CLEAN ENERGY
Amrit Singh
Board of Directors
June 12, 2024
FY 24-25 Budget
Framework
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Item 5
Purpose
PRESENTATION
Discuss Budget Framework
1. 2. Reserve Targets
3. 4. Power Supply Costs
5. Other Cost Drivers
Seeking high-level feedback/validation
on principles and assumptions
Customer Discount Rate,
Additional Funding for Programs,
and Set Aside for Reserves
Revenue Modeling
PCIA and PG&E Gen Rate
Uncertainty
Budget numbers to be computed in
July based on feedback
Methodology could be tweaked if
results from actual numbers in July do
not align with expectations
Item 5
PRESENTATION
FY24-25 Budget will be ready for Review in August
May 13 June 12 August (tbd) August 14
September 11 November (tbd)
Present the draft
budget to the BOD
Discuss the high-level
budget framework with
the Finance and Admin
Committee
Review the draft
budget with the
Finance & Admin
Committee
Discuss the high-level
budget framework with
the BOD
December 11 February (tbd) March 12, 2025
Review the mid¬
year budget with
the Finance and
Admin Committee
Present the mid¬
year budget to the
BOD for approval
Present the
recommended budget
to the BOD for approval
Review adjustments to the
budget to reflect updates
to PCIA and PG&E gen
rate assumptions with the
Finance and Admin
Committee
Present the
adjusted budget
to the BOD for
approval
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Item 5
PRESENTATION
Revenue Forecast Depends on PG&E Generation and PCIA Rates Jan-Jun 2024
Rate**
PG&E Gen Rate:
16.99 C/kWh
I 4% SVCE discount
PCIA 1.01 0/kWh
(/)
co
in
U
LU
U
0)
ro
£
Jul-Dec 2024
Rate***
PG&E Gen Rate:
5.03 C/kWh
* Power Charge Indifference Adjustment (PCIA) is a
charge our customers pay to PG&E such that they can
recover commitments made on behalf of the customer
when they were part of PG&E’s portfolio. 4
Issue: Rate Uncertainty Staff
Recommendation
Implications/Reasons
PG&E issued the 2024
ERRA forecast on May
15 with preliminary
2025 PG&E generation
and PCIA rate forecasts
PG&E will update this
forecast in the fall.
CPUC normally adopts
the rate in December
based on this update
Given the high volatility
in energy, RA, and RPS
prices, when staff
prepares the budget in
July, the PG&E estimate
may be outdated
Update the Cal-CCA NewGen
model using lasted
energy price data
after calibrating
the model to
PG&E’s forecasted
rates and making
any adjustments to
account for
potential modeling
errors
Likely aligns revenues
closer to rates that PG&E
will update in October
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 there’s more
information on likely 2025
PG&E gen and PCIA rates
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Item 5
PRESENTATION
Current Rate Projections - Highly Uncertain
Higher uncertainty in forecasting CPUC’s fall market price benchmarks (MPBs) due to volatile Resource Adequacy (RA) and Renewable Portfolio Standard (RPS) prices will continue to make revenue projections difficult.
Staff’s current 2025 rate projection scenarios, illustrated below, correspond to revenue projections ranging from about $385 to $600 million.
NewGen Model RA/RPS Prices*
PG&E Gen Rate:
* SVCE Load weighted Rates
Market RA/RPS adjusted based on
2024 implied adjustment factor*
PG&E Gen Rate:
12.63 0/kWh
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Item 5
PRESENTATION
PG&E’s ERRA Forecast and Staff Proposal
PG&E proposes the CPUC use lower of RA MPB
computed using the current methodology and
last year’s forecast of 2024 RA MPB
The ERRA forecast Issued two sets of rate
projections
Rates using existing common cost allocation
methodology (ERRA A)
Rates using PG&E’s new proposed
methodology (ERRA B)
Staff’s 2025 revenue projections using these
rates range from $440 million to $420 million
Projected 2025 Rate- PG&E ERRA A* Projected 2025 Rate- PG&E ERRA B* PG&E Gen Rate:
14.39 0/kWh
1% SVCE discount
PCIA 2.51 0/kWh
PG&E Gen Rate:
13.95 C/kWh
For initial budget setting, Staff proposes to use
last year’s MPB prices
The December budget update will incorporate
final CPUC-published MPB prices
* SVCE Load weighted Rates 6
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Item 5
PRESENTATION
Issue: Update Reserve Targets Staff Recommendation Implications/Reasons Ensure SVCE maintains sufficient
reserves to manage risks such as those
modeled under the stress test analyses
Staff will likely update the stress test
analyses in July using market prices
consistent with those used to develop the
annual budget
Target to keep reserves above 120 Days
of Cash On Hand (DCOH) for FY 2024-
2025 and FY 2025-2026 under the
modeled stress scenario
Reset upper reserve target such that
over the next 5 fiscal years, reserves do
not fall below 90 DCOH under the
modeled stress scenario
FY 25 margins not guaranteed
given true-up in 2024 for PCIA
and PG&E Gen rate
If adverse conditions
materialize, need 120 days to
reshape strategy and secure
additional liquidity
The upper reserve target
enables the agency to take
advantage of good margin
years to manage risks over a
5-year period
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Item 5
PRESENTATION
Additional Funding for Programs and Customer Discounts
1% customer discount over 12 months of
2024 is ~$5.5 million
Monthly Average Bill Savings of 1%*
Discount:
Residential - "$0.80
Small Commercial - "$2.80
Medium Commercial -"$30.85
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
To be developed later after
completing the budget analysis
Likely to keep current discount
through the end of this year
Set a preliminary discount for
next year
Board can change the budgeted
discount rate once actual PG&E rates
are known towards the end of the
year
Staff will likely present several
options to the Board on different
levels of discount rates, additional
spending on programs, and set aside
for reserves
Keeping reserves at or
above target levels
ensures SVCE can
withstand adverse risk
scenarios and helps
maintain/improve credit
ratings
Keeping the discount
rate at 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
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Item 5
PRESENTATION
Power Supply Expenses
(>90% of Expenses)
Issue: Volatile Prices Staff Recommendation Implications/Reasons Power prices are very volatile and have
declined significantly.
In addition to power price volatility, recent
volatility in RA and RPS prices makes
budget projections highly uncertain
Budget will be developed based on a
snapshot of market prices in July 2024
Contract delays/renegotiations further add
uncertainty
Continue hedging to current ERM (Energy Risk
Management) targets
Staff to develop additional analysis to revisit
the hedging targets to account for impacts
from PCIA and PG&E Gen Rate
SVCE’s 100% clean policy will be addressed as a
separate item on the agenda
The budget projection for power
supply costs will reflect any
changes to SVCE’s clean policy
approved by the Board
Resource adequacy requirements are
changing, and costs are high. Slice of Day
methodology is expected to be
implemented in January 2025, and the
portfolio is well positioned for its
implementation.
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Item 5
PRESENTATION
Other Costs
(Staffing, Cost of living/Merit, Operations)
Status Staff Recommendation Implications/Reasons
Review and assess staffing in all
areas of the organization
13 new budgeted positions
added in FY23-24
14 new staff hired since Sept
2023
4 vacancies
Adjust employee salaries for
cost-of-living and
merit/promotions
Review existing employee
benefits to remain competitive
with peer CCAs
Develop recommendations for
buying versus leasing office
space
Current budgeted headcount of 62
Expect staffing levels to stabilize
Currently anticipate 4 headcount additions:
2 in the Decarbonization Area, 1 in
Risk Management, and 1 in Power
Procurement.
Adjustment for COLA
Propose to continue using the 6-month (Jan
- June 2024) rolling average of SF Bay Area
CPI- current trailing 6-mo average is 2.9%
CEO discretion applied depending on
employee pay relative to market range,
performance, and date of hire
Any additional increases for merit and
promotions based on CEO discretion
Budgeted at 3%
Employee benefits - under review
Evaluate staffing levels to:
Scale up decarbonization programs
Reduce the 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 continue
10 •
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Item 5
PRESENTATION
Next Steps
Prepare the budget using the latest energy market
data
Develop/finalize recommendations:
Customer discount levels
Any additional funding for programs
Reserve targets and set aside
Final staffing needs
Employee cost of living, merit, and benefits adjustments Buying versus leasing office space
May 13 June 12 August (tbd) August 14
September 11 November (tbd)
Present the draft
budget to the BOD
Discuss the high-level
budget framework with
the Finance and Admin
Committee
Review the draft
budget with the
Finance & Admin
Committee
December 11 February (tbd) March 12,
a
2025।
Discuss the high-level
budget framework with
the BOD
Present the
recommended budget
to the BOD for approval
Review adjustments to the
budget to reflect updates
to PCIA and PG&E gen
rate assumptions with the
Finance and Admin
Committee
Present the
adjusted budget
to the BOD for
approval
Review the mid¬
year budget with
the Finance and
Admin
Committee
Present the mid¬
year budget to the
BOD for approval
Present draft budget for Finance Committee review in early August and then to the Board The board adopts the budget in September
11 Item 5
PRESENTATION
Thank you! / Questions?
12 Item 5
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
13 Item 5
PRESENTATION
2023-2024 Mid¬
Year Operating
Budget
SILICON VALLEY CLEAN ENERGY
FY 2023-24 OPERATING BUDGET
($ in thousands)
FY 2023-24
MD-YEAR
ADJUSTED
DESCRIPTION BUDGET
ENERGY REVENUES
Energy Sales 550,852
Green Prime 1.962
Other Income 50
TOTAL ENERGY REVENUES 552.864
ENERGY EXPENSES
Power Supply 365,617
OPERATING MARGIN 187,247
OPERATING EXPENSES
Data Management 3,413
PG&E Fees 1,470
Salaries and Retirement 14.818
Professional Services 8,210
Marketing
& Promotions 1,250
Notifications 315
Lease 551
General
& Administrative 2.091
TOTAL OPERATING EXPENSES 32,118
OPERATING INCOIVE (LOSS) 155.129
NON-OPERATING REVENUES
Interest Income 12.867
Grant Income
0 TOTAL NON-OPERATING REVENUES 12.867
NON-OPERATING EXPENSES
Financing
3 Interest
0 TOTAL NON-OPERATING EXPENSES
3 TOTAL NON-OPERATING INCOIVE
(EXPENSES) 12,864
CHANGE IN NET POSITION 167,994
CAPITAL EXPENDITURES. INTERFUND
TRANSFERS
& OTHER
Capital Outlay 50
Building Fund 20.000
Transfer to CRCR Fund
0 Program Fund 28.874
Nuclear Allocation 2,188
Multi Family Direct Install Program0
Electrification Discount Program
0 Customer Bill Relief 4.300
Other
0 TOTAL CAPITAL EXPENDITURES. INTERFUND
TRANSFERS
& OTHER $55412
BALANCE AVAILABLE FOR RESERVES S112.582
14 • Subtitle
New SV Clean Energy
PowerPoint Template
Item 6
PRESENTATION
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Item 6
PRESENTATION
CD Overview
Fiscal Year 2024-25 Strategic Planning & Budget process Review existing Strategic Focus Areas (SFA)
Highlight progress on SFAs
Input and recommended direction on SFAs
Receive feedback
Next Steps
2 Item 6
PRESENTATION
O Strategic Work Plan & Focus Areas
SILICON VALLEY
CLEAN ENERGY
STRATEGIC PLAN
OCTOBER 2023
SILICON VALLEY
CLEAN ENERGY
Mission
Reduce dependence on fossil fuels by providing carbon-free, affordable, and reliable electricity and innovative programs for the SVCE community
®®®®®®®®®®®®
® ® ® ® ® ® ® ® ® ® ® ®
®®®®®®@®®®®®
®®®®®®®®®®®®
®®®®®®®®®®®®
3 Item 6
PRESENTATION
0 SVCE Planning & Budgeting Process
Budget
Organization-wide priorities and
alignment toward achieving the mission.
Helps set CEO & Board priorities.
Comprehensive assessment of risks and
opportunities to optimally achieve mission and
helps direct strategic focus areas.
Identifies funds needed to achieve
Strategic Focus Areas and Strategic Work
Plan
SVCE Mission: Reduce dependence on fossil fuels by
providing carbon-free, affordable, and reliable
electricity and innovative programs for the SVCE
community. REMAINS THE SAME!
4 Board Approved 5 Strategic Focus Areas
for FY 2024
SFA1 SFA2 SFA3 SFA4 SFA5
Item 6
PRESENTATION
Synergy & Overlap
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
funding
opportunities
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
5 Item 6
PRESENTATION
CD Focus on Strategic Focus Areas
^9 Scan the Landscape
• New Threats/Risks/Challenges
• Opportunities
• New priorities -Board, customer or staff directed
Review and Reflect on Existing SFAs
• Progress on achieving -is it now operational?
• Priority - top 5 item to focus on for next 12 months? • Is the SFA unachievable or beyond our scope?
• Staff input-March -June -in process
• Executive Committee initial input-done
• Board input-June 2024
Propose modifications, deletions and/or new SFAs
• Existing
• New 6
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Item 6
PRESENTATION
SFA1: Expand Clean & Reliable Grid Actions
Explore 24x7 clean energy delivery at scale; evaluate SVCE role in enhancing distribution and transmission reliability
Key Measures
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
Progress to date
Hired E3 to assess various clean metrics including 24x7, 100% annual and CFE.
Developed enhanced load forecasting capabilities including new load modifiers for long-term forecast
Completed 1st year of Google CFE contract
Internal Tiger Team on SVCE’s role in distribution enhancements Participated in regulatory proceedings and supported legislative efforts on transmission, energization and interconnection enhancements Developed demand Flexibility/VPP team, roadmap development and Load Management Standard compliance report
Challenges
Affordability
Lack of clean, reliable resources
What do customers value
Little influence on distribution and transmission costs Opportunities
Demand flexibility and virtual power plants pilots
Recommendation:
Keep and modify to focus on Pathways study (not just
24/7) and clean value proposition -that is how will we
achieve SB100 carbon neutral requirements and interim
targets in a cost effective, reliable and sustainable
manner.
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Key Measures
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Item 6
PRESENTATION
SFA2: Expand Customer Base & Interaction
Grow non-residential customer base; expand offerings; and 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
Challenges
Lengthy timelines for DA conversion and market
expansion opportunities
Opportunities
Large decarb potential for large commercial
Progress to date
Maintained rate discount 4% w/plan for 4% next two years Maintained opt-out level
Continued to launch new programs to target new customers (e.g. Go Electric Advisor)
Google CFE Framework implementation
New programs (e.g. multifamily and single-family direct install programs)
New C/l Decarbonization program
Recommendation:
Keep and modify to focus on commercial/industrial and
non-residential decarbonization efforts
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Key Measures
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Item 6
PRESENTATION
SFA3: Accelerate Building & Transportation
Electrification
Accelerate deployment of currently adopted decarbonization strategies and goals; and evaluate and capitalize on federal and state funding opportunities
Grow our capacity and deploy programs at a much
larger scale
Operationalize equity into programs
Assist member agencies in evaluating federal and
state decarbonization policies and program
impacts
Explore opportunities to influence and partner with
other organizations on supporting a clean energy
workforce
Challenges
Cost of funding to scale
BAAQMD rule amendments coming
Reach Codes at risk
Affordability and reliability concerns
Opportunities
Lead preparation for BAAQMD rules
Progress to date
New portfolio management tool being deployed
Improvements to internal processes for program design,
launch, and re-launch
Rapid progress on large programs (FFH, GEA, CHAMP, Single Family Install)
Policy and permitting experimentation and reform getting traction with member agencies
Advocacy and analysis around IGFC
Recommendation:
Keep and modify to focus on preparing for BAAQMD
Rule implementation
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Key Measures
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Item 6
PRESENTATION
SFA4: Implement Innovative Financing
Solutions
Implement innovative financing solutions to increase impact of decarbonization program offerings, especially to lower-income customers
Progress to date
Continue building strong financial reserves
Attract and retain DA customers
Evaluation of program funding options for full electrification Tariff On Bill discussions with state/IOUs and developing our Implement innovative financing solutions to
customers, particularly to reach those with barriers
to conventional programs (e.g., low income,
renters)
own pilot plan
Issued third clean power bond prepay - $3.7 B total
Participating in CC Power Build Transfer Ownership RFP to get direct IRA benefits for new renewable projects
Challenges
CPUC moving slowly on TOB approval
California budget deficit
Opportunities
Lead preparation for BAAQMD rules
Recommendation:
Drop, as much progress has been made and many of the
measures have been operationalized or are included
within other SFAs
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Key Measures
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Item 6
PRESENTATION
’
SFA5: Attract & Retain Employees
Be the Employer of Choice; increase staffing; and hire a new CEO Progress to date
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
Hire new CEO
Hired new CEO
Hired new HR Director
Hired new General Counsel
11 new employees - now at 60 total
8 Promotions
Enhanced on-boarding process
Enhanced remote work practices
Challenges
Additional compliance needs with growth
Increasing benefits costs (prices & staff maturation)
Continued competitive environment for talent
Opportunities
Remote/hybrid work
Organizational maturity (SVCE 3.0)
Recommendation:
Keep and modify to focus on employee retention,
preserving culture and establishing optimal workforce
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Item 6
PRESENTATION
Propose New SFA - Affordability
Affordability is a key concern raised by all stakeholders.
What drives costs, rates and affordability?
Competitive and rate discount vs. affordable?
How to balance clean and reliable with affordable?
What is SVCE’s role?
How can SVCE influence advocate for affordability?
Impacts of affordability on SVCE’s decarbonization mission? How to best educate and/or communicate rates and affordability? How can SVCE keep cost down?
How will new rates, for example demand flexibility and/or dynamic pricing help? New SFA: Affordability- DRAFT
Expand rate-related education, legislative and regulatory advocacy, and rate-setting principles to support all-electric as the most affordable and competitive option for customers, which is essential for meeting SVCE’s decarbonization mission. •
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Item 6
PRESENTATION
Summary of changes to SFAs
SFA1: Expand Clean & Reliable Grid Actions
Keep and modify to focus on Pathways study (not just 24/7) and clean value proposition SFA2: Expand Customer Base Interaction
Keep and modify to focus on C/l decarbonization efforts SFA3: Accelerate Building Transportation and Electrification Keep and modify to focus on preparing for BAAQMD Rule implementation SFA4: Implement Innovative Financing Solutions
Drop, as much progress has been made and operationalized SFA5: Attract and Retain Employees
Keep and modify to focus on employee retention and establishing optimal workforce New SFA5: Affordability
Finalize language and key measures/goals in support of affordability as an SFA 13 Feb-May
Review current
SFAs
New Opportunities
& Threats
Propose changes to
SFAs
May-Aug
Introduce Strategic
Plan, SFAs &
Budget and
receive Fin Com,
EC and Board
input
September
Board Approval
of Budget &
Strategic Focus
Areas
Oct
Board Approval of
Strategic Plan &
work plan and
measures to the
Board
Oct-Sep
Implement new
Strategic Plan and
Budget
FY 24-25 Strategic Plan & Budget Process
Item 6
PRESENTATION
Item 6
PRESENTATION
Thank you
15 New SV Clean Energy
PowerPoint Template
• Subtitle
Item 7
PRESENTATION
June 2024
Resources to support the transition to
pollution-free buildings and transportation.
2024 Local Agency Action
Planning
SILICON VALLEY
CLEAN ENERGY
Item 7
PRESENTATION
Objective
1. Provide status update on BAAQMD rule
2. Provide status update agency readiness planning
SILICON VALLEY <3/ CLEAN ENERGY 2
Item 7
PRESENTATION
SVCE and Member Agency Partnership
SVCE rebates and federal tax credits can reduce the financial cost of electrification. Local codes and permitting can increase adoption at the best time and with less friction.
SVCE is launching two complementary programs to provide our member agencies $4M in technical resources and grants to enable sensible local policies and smoother local permitting. $4M
For sensible policies
and smooth
permitting
SILICON VALLEY 1
CLEAN ENERGY
$3M
Permit Modernization
$1M
Policy
Experimentation
3 Item 7
PRESENTATION
BAAQMD Update
1. BAAQMD will report to the Board in December on market readiness, including costs, technology, workforce, and tenant protections.
2. SVCE is coordinating the 7 Bay Area CCAs to develop scalable solutions that support our communities.
3. Rules are under development for South Coast Air Quality Management District and CA Air Resources Board -the current proposal would make phaseout gas water heaters statewide starting in 2027.
Local governments also play a critical role in this transition.
SILICON VALLEY
CLEAN ENERGY
Item 7
Each
PRESENTATION
agency selects from a menu of options to help
their community more easily make this transition.
There are three tiers of action.
Certificate of quality inspection
Foundational Practices Advancing Practices Leading Practices Complete required practices* + choose 2
additional from below
Implement 3 advancing practices Foundational + Advancing + Choose 2 from below *Review EVI code, update if needed Incorporate Mechanical Siting best practices Minimize barriers to inspections (blinders, virtual inspections)
*Review New Construction Reach Code (if
applicable) and make compliant with Berkeley
decision
Require Bi-Directional HVAC at time of AC
replacement
BAAQMD ramp up (includes electrification
readiness)
Provide staff training for expedited permitting Establish HPWH permitting equivalency Require disclosures about gas appliances at time of sale
Develop pre-application support materials Implement Contractor Certification Program Free permit pilot Incentive-based remodels for electrification Implement Permit Concierge
Item 7
PRESENTATION
Member agencies have already demonstrated the
success of policies and permitting.
1. Monte Sereno can approve online permits and complete inspections in 1 business day for HPWH and HVAC upgrades!
2. Sunnyvale’s Green Building Program incentivizes all-electric new construction by offering higher lot coverage (e.g., 5%) or higher building height (e.g., 5 feet) for all-electric buildings and by removing design review practices.-This approach could be used for existing buildings too!
Remember, codes and policies aren’t just sticks but can incorporate carrots that make it easier to electrify.
SILICON VALLEY <3/ CLEAN ENERGY <
•
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Member Agency
Director
Meeting Staff Meetings Action Plan Status
Progressing Towards
Foundational, Advancing,
or Leading
Campbell 1/17 2/2 Staff Finalizing Advancing
Cupertino 1/19 2/14 SVCE Drafting TBD
Gilroy 1/30 2/26 SVCE Drafting TBD
Los Altos 1/26 2/7, 2/29 SVCE Drafting TBD
Los Altos Hills 1/19 2/24* SVCE Drafting Leading
Los Gatos 1/9 2/6 SVCE Drafting Leading
Milpitas 2/5 2/5 SVCE Drafting TBD
Monte Sereno 1/9 4/29 SVCE Drafting TBD
Morgan Hill 2/9 5/1 SVCE Drafting TBD
Mountain View 2/13, 2/16 2/27, 4/3 SVCE Drafting Leading Saratoga 2/1 3/8, 5/29 Staff Reviewing Foundational
Sunnyvale 2/5 2/14, 3/12 Staff Reviewing Leading
Santa Clara County 2/9 TBD TBD TBD
*In lieu of meeting with staff, SVCE met with Environmental Commission.
PROGRESS UPDATE
Item 7
PRESENTATION
Three jurisdictions have stated a
commitment to adopt leading practices.
Strategies with the
most interest:
Bi-directional AC
requirements
Certified contractor
program (if SVCE
orchestrates)
Electrification at
remodel
7 •
•
Item 7
PRESENTATION
The Impact of Local Government Action
Sensible action now can make this transition easier and cheaper. For example, if every jurisdiction...
Adopted prewiring requirements it could lead to tens of thousands of electric-ready homes by 2030.
Required bidirectional AC at the time of replacement, it could add ~20,000 heat pumps by 2029 and save residents $ millions in redundant costs. 8 Note: These are meant to be illustrative examples. Assumptions in the appendix.
SILICON VALLEY
CLEAN ENERGY
Item 7
PRESENTATION
Thank you!
SILICON VALLEY <3/ CLEAN ENERGY
TO svcleanenergy.org
|^| [email protected]
Item 7
PRESENTATION
Appendix
SILICON VALLEY <3/ CLEAN ENERGY 10
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Item 7
PRESENTATION
The Impact of Your Leadership - Assumptions
Sensible action now can make this transition easier and cheaper. For example, if every jurisdiction...
Adopted prewiring requirements it could lead to tens of thousands of electric-ready homes by 2030.
There are at least 5000 permits drawn per year in our service territory that could reasonably require pre-wiring. This could mean at least 25,000 electric-ready homes by 2030. Given the variety of ways these policies could be written, we are not stating a certain number, but rather an order of magnitude.
Required bi-directional AC at the time of replacement, it could add "16,000 heat pumps by 2029 and save residents $ millions in redundant costs.
According to the market saturation study that SVCE conducted, there are "100,000 ducted AC systems in our territory and they last "20 years. Assuming an even annual turnover, that is "5 replacements per year and "20,000 by 2029 if policies went into effect in 2025.
SILICON VALLEY
CLEAN ENERGY 11
Item 7
PRESENTATION
SVCE is providing a comprehensive set of resources
to help each agency meet its goals.
Resources Available Permit
Modernization
Policy
Experimentation
1:1 consultation w/SVCE staff (Board member & agency
staff) X X
Available
to All
Tailored action plan for each jurisdiction
X X
Technical, legal, and staff support resources
X X
Access to national-level climate change trainings
X X
Available
to
Leadership
Stipend for part-time, one-year fellow
X X
Cohort
silico
Expanded consultant support to implement leading-edge
initiatives X X
VS7CLEAN ENERGY 12