1 • Subtitle
New SV Clean Energy
PowerPoint Template
Affordability Study
Session
August 14, 2024
Study Session
PRESENTATION
2 Purpose and Agenda
Key Goals for Attendees
• Deeper understanding of:
• Rates, bills, and cost drivers
• What SVCE is doing and how you can help
Agenda
• Rates Overview
• What is in our rates?
• What are customers paying for energy?
• What are the cost drivers?
• Affordability and SVCE
• What is SVCE doing through rates and programs?
• How can Board Members help?
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3 Why We Care: SVCE’s decarbonization mission is
at risk if energy is not affordable.
This is a challenging balancing act.
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RELIABILITY
CLEAN ENERGY
INNOVATIVE
PROGRAMS
r i
AFFORDABILITY
4 Rates Overview
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5 Rates vs. Bills and how California compares
While California rates in general, and PG&E's rates in particular, are high relative to the national average, mild weather in the area and decades of energy efficiency measures help reduce rate impact.
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Average Rates and Bills
6 What comprises the overall rate a customer pays
for electricity?
Residential Electricity Rate
45.4 cents / kWh
33% SVCE
Generation
67% PG&E
Distribution, Transmission, Other
Source: PG&E E-1
residential rate,
non-baseline
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f
cents/kWh I
I
V
0 5 10
Generation
Distribution
PCIA
15 20
1 25 30 35 40 45 50
Transmission
Public Purpose Programs
Other Non-Bypassable Charges
7 Capital investment is a key driver of IOU
profitability.
PG&E’s rates are determined by the company’s revenue requirement, which is comprised of both “pass through costs” and capital expenditures; the utility’s share holders only earn on the capital expenditures – “steel in the ground”.
Revenue
Requirement Operating Expenses Return on capital,
Return of capital
• O&M (e.g. vegetation
management)
• Business operating costs
(e.g. staff, offices)
• Procurement costs for
non-IOU owned resources
(e.g. PPAs)
• Taxes
• Depreciation on capital
assets
• Rate of Return (ROR)
Where ROR = Rate base * Weighted
Average Cost of Capital (WACC)
PG&E shareholders receive revenues
from ROR after debt costs are
covered.
𝑅𝑎𝑡𝑒𝑠 =
𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑅𝑒𝑞𝑢𝑖𝑟𝑒𝑚𝑒𝑛𝑡
𝑇𝑜𝑡𝑎𝑙 𝐿𝑜𝑎𝑑
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8 Bundled Residential Electric Rates Over Time
• Transmission and distribution
rates increased 4x compared to
generation for the same period.
• Generation rates have remained
relatively stable while subject to
market pressures.
0.0 5.0
10.0 15.0
20.0 25.0
30.0 35.0
40.0 45.0
50.0 2019 2020 2021 2022 2023 2024 2025
Cents per kWh, 2019-2025
T&D/NBC Generation Total
PG&E’s bundled (Generation + T&D) residential electricity rates have increased 80% since 2019.
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9 Since 2020, the number of SVCE customers in arrears has grown by ~50%, as has the amount owed.
SVCE Arrearage Summary
Customers Total Owed Average
61+ days, as of 1/27/20 11,755 $ 2,390,396.29 $ 203.35
61+ days, as of 7/22/24 16,373 $ 5,235,660.60 $ 319.77
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Delinquencies (61+ days)
$9,000,000
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
1/19 1/20 1/21 1/22 1/23 1/24
10 ~10% of SVCE customers are enrolled in CARE/FERA.
till 50% higher than pre-COVID
California Alternate Rates for Energy
(CARE)
• The program is a monthly discount of 20% or
more on gas and electricity (for all
customers).
Family Electric Rate Assistance (FERA)
• The program helps eligible households of
three or more pay their energy bill. It offers
an 18% monthly discount on electric rates.
On average, CARE enrollment is at 77% of capacity across the SVCE service area. (PG&E estimate)
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Number of persons in household Total gross annual household income* Number of persons in household Total gross annual household income* 11 Lower-income customers pay more for energy as a percent of their total income.
Socioeconomic Vulnerability Index (SEVI)
• Census tract metric calculated from CalEnviroScreen 3.0 scores for poverty, linguistic isolation, education attainment, housing burden, unemployment • Regionalized, ranked into quartiles (SEVI 1 - 4) | SEVI 1 = lowest SEVI scores, most affluent | SEVI 4 = highest SEVI scores, most underserved/vulnerable Average Monthly Electricity and Gas Bills by
Socioeconomic Vulnerability Index - Census Tracts
SEVI
Quartile
Average
Gas Cost
Average
Electricity Cost
Average
Energy Bill
1 $143 $238 $381
2 $112 $194 $306
3 $88 $176 $263
4 $80 $173 $253
Area Median
Income
$166k
$145k
$116k
$79k
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12 Policy
(Legislative &
Regulatory)
Impacts on Rates
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Mocha's
ROWN
13 How Policy Impacts Rates
• Policy decisions are the primary driver of rates in California. • Many of the policy decisions that lead to rate increases are for issues SVCE supports.
• However, we must balance clean goals and technology
innovation with affordability.
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14 Key Regulatory and Legislative Decisions
Both legislative and regulatory decisions impact costs to ratepayers. • SB 100 – 100% clean retail sales by 2045 • SB 1020 – Interim SB100 Requirements • AB 32 – Established GHG emissions targets • AB 1373 – Department of Water Resources centralized procurement
Clean Energy Goals and Decarbonization
Reliability Requirements
• Resource Adequacy: Slice of Day • Integrated Resource Planning: Procurement Orders
Public Policy on Electricity Bills
• NEM – 12-15% of total customer bill for non-NEM customer is due to NEM subsidies• Wildfire Safety – 22.5% of total customer bill from wildfire safety (largely embedded in T&D)
• Energy Efficiency • Electric Program Investment Charge (EPIC) Pilots • Low Income Programs • Gas infrastructure transition (potential future) Study Session
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15 Electricity Customers Pay Significant Wildfire Recovery Charges ~20% of total bill.
• 'Wildfire recovery'
revenue
requirements
are embedded in
PG&E T&D Rate
components and
have fluctuated
month to month.
• In recent years,
wildfire recovery has
grown to become
roughly 20% of the
total electricity rate.
Source: California Public Utility Commission. 2023 Senate Bill 695 Report. May, 2023. https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/office-of-governmental-affairs-division/reports/2023/2023-sb-695-report---final.pdf Study Session
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Figure 10: PG&E 2022 Year-End Total System Revenue Requirement by Rate Component with Additional Wildfire-Related Revenue Requirement Breakout Transmission Non Wildfire Related, 16.5%
Generation, 31.9%
Transmission Wildfire Related [Table 7),3.0%
Distribution - Wildfire Related (Table?), 16.0% Distribution - Non-WildfireRelated, 25.7% Nhvj System Generation, 1.1%
Public PurposePrograms,S.2%
Wildfire Fund Charge (Table 7), 3.0%
Wildfire Securitization (Table 7),0.5%
16 An additional ~12-15% of bill for non-NEM customers is due to cost shifts resulting from NEM
• Recent changes to
NEM policy should
reduce this cost shift
over time.
• However, “grand-fathering” and
continued subsidy
under “NEM 3.0” or
Net Billing Tariff
(NBT) ensure it will
exist for many years.
Source: Borenstein, Severin. “California’s Exploding Rooftop Solar Cost Shift” Energy Institute Blog, April 22, 2024, https://energyathaas.wordpress.com/2024/04/22/californias-exploding-rooftop-solar-cost-shift/ Study Session
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17 What are SVCE’s energy-related costs, and how are they trending?
Costs continue to
fluctuate with changing
commodity prices.
Annual budget includes
costs such commodity
costs as Environment
Products, Resource
Adequacy, Renewable
Energy Supply, Energy
Supply and the Net cost
of Demand.
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SVCE Annual Budget
($MM)
18 Clean Goals: Getting to 2045
• To achieve SB 100 goals, resource build for CA is expected to more than double relative to 2020. • SVCE has supported the state in aiming for such aggressive climate goals.
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Planned & Selected Capacity
(GW) Gas Capacity Not Retained
Shed DR
Long Duration Storage
Pumped Hydro Storage
Li-ion Battery (8-hr)
Li-ion Battery (4-hr)
Solar
Offshore Wind
Out-of-State Wnd
In-State Wind
Hydro
Biogas
Biomass
Geothermal
Nuclear
CHP
Natural Gas
Coal
Annual Gross Generation and Imports
(TWh) Curtailment
GrossImports
600 Shed DR
Long Duration Storage
Pumped Hydro Storage 500
Li-ion Battery
Customer Solar
400 Solar
Offshore Wind
300 Out-of-State Wnd
In-State Wind
Hydro
200
Biogas
Biomass
100 Geothermal
Nuclear
—CHP
Natural Gas
Coal
-100 Gross Exports
Generation &Imports
19 Overview of the impacts of transmission and
distribution needs
Analyses suggest significant investment in infrastructure at great expense to CA ratepayers Given large uncertainties in assumptions these are very rough estimates – and are very likely conservative! Generation Transmission Distribution Public Policy
• 120 GW new build
• Load growth largely
keeps pace with cost
of new generation
Source: 2023 CPUC Preferred System
Plan
• Upgrades to existing
system plus offshore and
out of state integration
• $30.5 Billion+
• Costs are only capital
costs – Operations &
Maintenance not included
• Some estimates
significantly higher (3-4x
current costs)
Source: CAISO 20-Year Transmission
Outlook (2022).
• Studies for 2035 range
from $8B - $51B
• Scaling to 2045 load, a
mid-point estimate is
similar to Tx
projections
Sources: Public Advocates Office
Distribution Grid Electrification Model/
CEC IEPR Forecast
Examples:
• Offshore Wind
• Gas System Transition
Charges
• Moving costs to general fund/
alternate funding sources
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20 Key Drivers May Evolve Over Time
• The major cost drivers today are wildfire mitigation and rooftop solar. • The major cost drivers tomorrow will likely include distribution and transmission infrastructure investments.
• Public Policy decisions are likely to remain a key determinate of rates.
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21 What is SVCE
doing?
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22 The CARE/FERA discount and SVCE's CARE/FERA credit offer ~40% savings to lower-income customers.
Socioeconomic Vulnerability Index (SEVI)
• Census tract metric calculated from CalEnviroScreen 3.0 scores for poverty, linguistic isolation, education attainment, housing burden, unemployment • Regionalized, ranked into quartiles (SEVI 1 - 4) | SEVI 1 = lowest SEVI scores, most affluent | SEVI 4 = highest SEVI scores, most underserved/vulnerable SEVI
Quartile
Average Monthly
Energy Bill
1 $381
2 $306
3 $263
4 $253
Area Median
Income
$166k
$145k
$116k
$79k
CARE/FERA
Enrollment
by SEVI
CARE/FERA
Total Energy
Bill
6% $191
8% $173
13% $158
25% $158
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23 Rates programs are offering customers more ways to
save.
New opportunities for customers to take control of their energy use, and new rates that encourage electrification.
E-Elec Rate
- Electric Home rate for
customers with heat pump
equipment or EV
charging.
- SVCE offers a "super
discount" of 20% for off-peak rates.
- Seeing an average of
$20 in monthly savings.
Dynamic rate pilots
- SVCE is participating in
upcoming pilots to test
hourly rates.
- Opportunity for customers
to lower bills if they shift
significant usage.
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24 New programs are helping customers easily respond to rates, and limit future T&D, gen cost increases.
Lowering customer bills and shifting/reducing peak demand to minimize overall system costs.
GridShift: EV Charging
App
- Automatically shifts
charging into lowest-cost
hours to reduce customer
bill.
- Shifts EV load out of peak
hours for CA grid.
- Could even help avoid
local distribution system
upgrades.
Push to Avoid
Unnecessary Panel
Upsizing
- Electrify using 100A
panels if possible with
circuit splitters, 120V
equipment, etc.
- SVCE programs
emphasize this pathway.
- Fewer service upgrades
mean lower T&D system
costs.
Energy Efficiency when
Electrifying
- More efficient buildings
have lower bills.
- SVCE's upcoming "direct
install" programs include
efficiency measures,
particularly helping low-income customers.
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25 What can SVCE
Board Members
Do?
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I CLEAN ENERGY
silicon valley CLEAN ENERGY
fj^p’’?45
26 Help us communicate with customers and the public.
1. Direct customers to existing resources and
programs.
2. Inform customers of SVCE actions, for
example $117M in bill savings.
3. Educate customers and community
stakeholders about root challenges and the
balancing act needed.
svcleanenergy.org/payment-assistance
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Clean energy. Same payment assistance programs
Payment Plans Medical Baseline Monthly Discount Programs One-Time Bill Relief As an SVCE customer, your energy assistance programs remain the same and continue to apply to your monthly electricity bill, but with a greater discount as an added benefit of being an SVCE customer.
Through SVCE’s partnership with PG&E, new and existing SVCE customers still receive their discounts and can participate in payment assistance programs administered by PG&E.
SILICON VALLEY
CLEAN ENERGY ABOUT U5 - GOELECTRIC - REBATES & OFFERS RATES A BILLING Use the buttons below to leam more about how to enroll in these programs for monthly bill assistance, one-time bill assistance, payment plans and medical baseline
27 Help us communicate with policymakers
We can’t do this alone – the IOUs, the Governor, legislature, and CPUC are our partners.
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28 State Policy Priorities and Actions
Energy affordability is top policy issue for Governor, legislature, and CPUC.
Major Cost Driver Action or Anticipated Action
Wildfire Costs Legislature authorized wildfire mitigation securitization. $170M in Nov. 2024 Climate Bond Measure.
Rooftop Solar CPUC adopted Net Energy Metering 3.0 rules to reduce non-rooftop solar customer subsidies for rooftop solar.
Distribution Grid
Investments
CPUC's High DER and Timely Energization proceedings are examining ways to improve distribution grid planning and build out processes.
Transmission
Investments
Legislature pursuing permit streamlining for transmission projects and encouraging grid-enhancing technologies. California received $600M in federal funds for grid-enhancing technologies. $325M in Nov. 2024 Climate Bond.
Generation Costs Legislature potentially considering environmental streamlining for renewable projects and regionalization.
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29 Key advocacy points with policymakers
• Rising electricity bills are bad for customers and hurt our ability to reach our emission reduction goals.
• Focus on key areas:
• Remove costs from bills and fund through other sources. • Reduce total grid build out costs through shifting load, smart technologies, and process streamlining for grid infrastructure. • Support assistance for customers who struggle to pay utility bills.
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30 Affordability is a priority Strategic Focus
Area for SVCE
Goal is to support all-electric as the most affordable and competitive option for customers. • Education: Help stakeholders and customers understand key affordability issues and customer outreach to reduce bills and enroll eligible customers in CARE and FERA programs.
• Advocacy: Refine affordability policy platform and advocate for priorities at regulatory bodies and legislature.
• Internal Rate Analysis: Create dedicated rate analysis and cross-functional team to work on a rates strategy for SVCE.
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31 Questions?
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