1 • Subtitle
New SV Clean Energy
PowerPoint Template
SVCE’s Planning & Budgeting Process
and Financial Stress Tests
February 26, 2025
Finance and Administrative Committee
Amrit Singh
Scott Wrigglesworth
Item 4
PRESENTATION
2 Main Areas of Discussion • FY 25-26 Budgeting & Planning Timeline
• Overview of Enterprise Risk
Management (ERM) and Stress Tests
• Review Key Drivers of Financial
Risks
• Review Planned Financial Stress Test
Scenarios
• Next Steps
Purpose
Information Item:
1. Overview of SVCE’s Planning
and Budgeting Process and
Future Committee Meetings
2. Seek Feedback on the Planned
Financial Stress Test Scenarios
Item 4
PRESENTATION
3 SVCE’s Planning & Budgeting Process
SVCE Mission: Reduce dependence on fossil fuels by
providing carbon-free, affordable, and reliable electricity and innovative programs for the SVCE community.
Comprehensive assessment of risks and
opportunities to optimally achieve mission
Organization-wide priorities and
alignment toward achieving the mission
Funding in alignment with achieving
the strategic focus areas
Budget
Strategic Focus
Areas
Enterprise Risk
Management
Item 4
PRESENTATION
4 FY25-26 Budgeting and Planning Process Timeline
Jan/Feb February 26th
Staff’s
Enterprise Risk
Assessments
Finance & Admin
Committee Reviews
Financial Stress Case
Proposal(s)
May
Finance and Admin Reviews
Stress Case Analyses and
Budget Framework
Board Reviews and
Adopts FY 25-26
Budget and
Reserve Targets
August August 13 &
September 10
Finance and Admin
Committee Reviews
Adjustments to Budget
reflecting updates to
PCIA and PG&E Gen
Rate Assumptions
December
Board
Adopts the
Adjusted
Budget
June 12
Board
Reviews
Financial
Stress Cases
Finance and
Admin Committee
Reviews FY 25-26
Draft Budget and
Reserve Targets
November February
Finance and
Admin
Committee
Reviews Mid-Year Budget
Update
March
Board
Adopts
Mid-Year
Budget
Item 4
PRESENTATION
5 Stress Tests and ERM
Stress Test
An essential component of ERM
• Assess the interrelatedness of risks in the
ERM framework and model extreme but
plausible scenarios that can have major
adverse consequences for SVCE
• Important for commodity trading portfolios
because of the inherent weakness of market
risk measures in assessing black swans, such
as disruptions in markets
A comprehensive organization-wide
assessment of risks and opportunities that
leads to a more disciplined approach to
achieving the organization’s mission and
objectives
• Ensure risks that can be optimally
managed do not derail us from
achieving the organization’s objectives
efficiently and effectively
• Can also aid in identifying opportunities
that affect the organization’s strategic
priorities
ERM
Item 4
PRESENTATION
6 Key Components of the ERM Framework
Risk
Register
• Record of organization’s risks
• Identify current and additional planned mitigations
• Identify risk owner
Risk Matrix
• Risk Rubric. Assess the likelihood and consequence of risk events • Calibrate risks
• Identify risk tolerance – level of acceptance
Stress
Tests
• Model scenarios (financial position, systems, and processes) of interrelated risks that are extreme but plausible
• Develop appropriate risk management strategies, including the adequacy of reserves
Unmitigated With Current Mitigations With Additional Mitigations 1 Financial Economic Recession: Prices Collapse and PCIA goes up and revenues go down Amrit Reserves to withstand the shocks; Stress Tests, Cashflow Modeling Reassess reserve adequacy Extreme (15) Extreme (14) High? (13) (Depends on Reserve Set Aside) 2 Financial Price Collapse leads to insufficient liquidity (collateral postings) Amrit Reserves to withstand the shocks; Stress Tests, Cashflow Modeling Reassess reserve adequacy High (13) Moderate (12) Low (11) 3 Financial Load Loss to due economic recession (may not be immediate financial impact) Amrit Reserves to withstand the shocks Reassess reserve adequacy Moderate (12) Low (11) Low (11) 4 Financial Bad Debt increase due to economic recession Adam Send back to PG&E after 3 months of non-payment; Reserves to withstand the shock Reassess reserve adequacy Moderate (12) Moderate (12) Moderate (12) 5 Financial Price collapse and increase in desire for DA (as PCIA goes up) subject to the DA cap Amrit Reserves to maintain competitive pricing; CPUC Decision not opening DA None Low (22) Low (22) Low (22) 6 Financial Load Loss due to DA and distributed/ behind the meter (generation and storage) Adam Custom Customer Pricing; CPUC Decision not opening DA Moderate (12) Moderate (12) Moderate (12) 7 Financial Significant PPAs default/delay/renegotiate for higher prices Monica Supplier & Technology diversity; plan for contingencies; Contractual language for delay damages and default provisions Moderate (23) Moderate (23) Moderate (23) 8 Financial Counterparty Default - Loss of MS business - Risk of losing prepay Amrit Credit risk management Update credit guidelines Moderate (23) Moderate (23) Moderate (23) 9 Financial Member agency leaving Girish Strong SVCE value proposition; Effective communication and alignment with members Moderate (23) Moderate (23) Moderate (23) 10 Financial Governance Risk (Limited knowledge of key stakeholders resulting in an uneconomic/suboptimal business model/operations; Divergent Board member objectives) Girish Continous training and stakeholder interest alignment Moderate (23) Moderate (23) Moderate (23) 11 Financial PG&E failures affect our cashflows since they are our cash register (high gas prices leading to customer bad debt, billing issues) Adam Seek fair treatment from CPUC; No residential waterfall Moderate (12) Low (11) Low (11) 12 Regulatory/Compliance POLR Proceeding - Large Tie up of Financial Reserves Amrit Hold Adequate Reserves Manage and shape regulatory proceeding against PG&E Pool Proposal Extreme (14) High (13) Moderate (18) 13 Regulatory/Compliance CPE Policy Procurement (Pumped Storage, Ofshore wind etc, more asset procurement); Loss of procurement autonomy thru backstop procurement (@ governers office) Monica Manage and shape regulatory proceeding (add more specifics?) Moderate (23) Moderate (23) Moderate (23) 14 Regulatory/Compliance RA reform, uncertainties on design and procurement targets and penalties for market structural imbalances Monica Manage and shape regulatory proceeding (add more specifics?) High (13) High (13) High (13) 15 Regulatory/Compliance Loss of PG&E hydro and Nuclear allocation Monica Manage and shape regulatory proceeding (add more specifics?) Moderate (12) Moderate (12) Moderate (12) 16 Regulatory/Compliance CPUC rejects some of our MTR contracts - especially if it's out of money Monica Manage and shape regulatory proceeding (add more specifics?) Low (17) Low (17) Low (17) 17 Regulatory/Compliance CPUC imposed hedges that may not be optimal for our portfolio Monica Manage and shape regulatory proceeding (add more specifics?) High (19) High (19) High (19) 18 Regulatory/Compliance Potential for deregistration (CPUC No longer lets us operate as an LSE) Monica Manage and shape regulatory proceeding (add more specifics?) High (25) High (25) High (25) 19 Regulatory/Compliance Green Regulatory Risk - Change in the accounting of green. REC has a definition today, Green e / Green prime - VREP has some exchange between REC and Cap/Trade, this could increase our costs in the long term. Monica Low (22) Low (22) Low (22) 20 Reputational Risk of Relevancy - IOUs power portfolio just as green. How do we distinguish ourselves? What's our value proposition?Justin Cheaper (competitive advantage thru tax exempt financing) and community benefits from programs Moderate (18) Moderate (18) Moderate (18) 21 Reputational Emissions on PCL increase; Impact on our mission and customers perception of our value proposition Adam Effective customer communications Moderate (23) Moderate (23) Moderate (23) 22 Reputational Customer Activism & Unfavorable Political scenarios derailing our mission - High PG&E T&D costs and high energy prices resulting in more customer activism and movement against electrification; customer affordability - Political environments ("Make Coal Great Again!")
- Lobbying from natural gas industry Adam Effective customer communications Moderate (23) Moderate (23) Moderate (23) 23 Reputational Aggressive SVCE electrification efforts creates customer backlash ("Let go of my gas stoves!") Justin Moderate (23) Moderate (23) 24 Reputational Daisy and 3rd Party (Calpine, other Vendors) System Failures and Data Breach - Customer Identifiable data compromised; Mandatory customer communication - Customers Opt Out
- CPUC Compliance Risk
Justin CPUC Data audit; Contract provisions Moderate (18) Moderate (23) Moderate (18) 25 Reputational Risk of not spending program dollars well (impact on the reserves - give back the reserves) Justin Moderate (23) Moderate (23) Moderate (23) 26 Reputational Grid Readiness to support our mission Justin Moderate (23) Moderate (23) Moderate (23) 27 Reputational Stranded Program Assets (technology changes, hydrogen cheaper than electricity) Justin Moderate (23) Moderate (23) Moderate (23) 28 Reputational Major Disruption of the T&D/Grid operator, Grid Reliability - affects our mission Girish Moderate (18) Moderate (18) Moderate (18) 29 Operational and Business Continuity Natural Disaster Recovery (Earthquake, flooding) - Cover key business functions (procurement, scheduling, collateral calls …) Monica Key Desk Procedures Low (22) Low (22) Low (22) Operational and Business Continuity Staff turnover Amrit - Employer of Choice Initiatives -benefits,Comp, Hybrid Work, Team Buildings Key Desk Procedures; BPO Moderate (18) Moderate (18) Moderate (18) 30 Operational and Business Continuity Cyber risks (wire fraud, social engineering, ransomware) Amrit IT IRP Plans and Tabetop exercises, VCISO, Human Firewall Trainings Moderate (18) Moderate (18) Moderate (18) 31 Operational and Business Continuity Insider Threat/Rogue Employee Amrit Code of Conduct, Risk Controls Moderate (23) Moderate (23) Moderate (23) 32 Operational and Business Continuity Physical Security/Active Shooter Amrit Staff Training Moderate (23) Moderate (23) Moderate (23) 33 Operational and Business Continuity Scheduling system failure Monica Schedule remotely Low (22) Low (22) Low (22) 34 Operational and Business Continuity Calpine system failure Adam Moderate (23) Moderate (23) Moderate (23) 35 Operational and Business Continuity Daisy Failures (Quality of data impact on Revenue forecasting) Justin Low (22) Low (22) Low (22) Proposed Stress Tests (Modeled Scenarios) Economic Recession (Price Collapse -5th percentile) Coupled with Adverse Regulatory Outcomes (POLR) Extreme (20) Extreme (20) High(19) Draft Confidential Initial Placement to Get Discussions Going Risk Matrix Placement (Impact over 5-years) Risk ID Risk Category Risk Description Risk Owner (Initial Straw Proposal) Current Mitigations (High level right now to get discussions going) Any Additional Planned Mitigations/Actions (High level right now to get discussions going) Item 4
PRESENTATION
Impact/Consequence
Frequency/Likelihood
Insignificant Minor Moderate Major Catastrophic
Risk Easily
Mitigated
through Day-to-Day Operations
Riskis
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 Extreme (3) Extreme (4) Extreme (5) Ukely 5O%- 90% Chance Moderate (6) High (7) ppi Extreme (9) Extreme (10) Moderate 10%-50% Chance low (11) Extreme (14) Extreme (15) Unlikely but Plausible 5%-10% Chance Low (16) Low ( 17) Moderate (18) (191 Extreme (20) Rare <=5% Chance low (21) low (22) Moderate (23) **<»> । Past, Current, and Stress Case Modeled Commodity Prices • Forward prices are at all time
high.
• Extreme case of runup in
prices
• Most of the increase occurred
in the last 12 months.
• Can't predict future but price
trends could reverse, and
prices could drop equally or
more.
• Prices were trading at the
modeled stress test levels as
recently as 12 months ago
7 PCIA and PG&E Gen Rate determine SVCE Rates and
therefore Revenues
Review of Key Financial Risk Drivers SVCE Gen Rate
SVCE
discount
PG&E Gen Rate: PCIA
Biggest contributor to revenue risk: PCIA and PG&E Generation Rate Uncertainty.
Revenues
PCIA
PCIA
Revenues
PG&E Rate
PG&E Rate
Revenues decline when prices decline
Item 4
PRESENTATION
8 Price Uncertainty– Cont’d
Price collapse continues to pose biggest financial risk. • Revenues drop significantly
• Loss of revenues far exceed
savings from lower power
procurement costs
• Power procurement savings
dampened by existing hedges
• SVCE is adjusting its energy
portfolio to mitigate this impact to
the extent possible and as best
estimated by SVCE
Item 4
PRESENTATION
2026 Prices
2025 Prices^
PCIA
PG&E Rate "T
SVCE Revenues
2025 Prices \k
2026 Prices xU
PG&E Rate
SVCE Revenues xL
9 2025 Financial Stress Tests
• Forward Energy Prices Collapse to the one
percentile level
• Economic Recession Creates Load Loss
• Customer Uncollectables Increase
• Reduction in Financial Liquidity
• Model the requirement of a one-time cash draw equivalent to two months of procurement as a proxy for potential business operating and regulatory risks
• Large counterparty collateral postings from collapse in prices Item 4
PRESENTATION
Dollars per Million Btu
— Henry Hub Natural Gas Spot Price
10 Additional Stress Tests
• The Enterprise Risk Matrix fuels continuous evaluation of risks and opportunities large and small.
• We are considering several of the risks/opportunities raised by staff for additional stress testing.
• Staff will update the Finance Committee on any additional stress scenario(s) at a future meeting, likely in May 2025 Item 4
PRESENTATION
11 Next Steps
• Present financial stress test scenario analysis results at the May 2025 meeting
• Present to the Board in June 2025
• Use the analyses to determine the adequacy of reserve-holding targets • Update the Committee at a future meeting, most likely in May 2025, on any other stress scenario(s)
• Other risks and opportunities identified from the ERM framework will help shape next fiscal year’s strategic focus areas, measures, and department work plans
Item 4
PRESENTATION
12 Thank you! / Questions?
Item 4
PRESENTATION
13 Risk Matrix
Impact/Consequence
• Assess the likelihood (frequency of
occurrence) and consequence (impact)
• Calibrate risks and optimally direct
resources
• Identify risk tolerance or acceptable level
of risk
• Most risks assessed based on the subject
matter expert’s (SME) judgment
• Will continue to refine further and attempt
to quantify risks
• Significant financial risks will be explicitly
quantified and used for reserve planning,
like last year’s stress test analyses
Insignificant Minor Moderate Major Catastrophic
Risk Easily
Mitigated
through Day-to-Day Operations
Risk is
Manageable/Low
Impact on Mission
Moderate Erosion
of
Reserves/Impact
on Mission
Significant
Erosion of
Reserves/Impact
on Mission
Risk of
Existence
Certain >90% chance High (1) High (2) Extreme (3) Extreme (4) Extreme (5) Likely 50%- 90% Chance Moderate (6) High (7) High (8) Extreme (9) Extreme (10) Moderate 10%-50% Chance Low (11) Moderate (12) High (13) Extreme (14) Extreme (15) Unlikely but Plausible 5%-10% Chance Low (16) Low (17) Moderate (18) High (19) Extreme (20) Rare <=5% Chance Low (21) Low (22) Moderate (23) High (24) High (25) Frequency/Likelihood
Item 4
PRESENTATION
14 Risk Register
• Risk Register:
• Record of risks
• Briefly describes each risk
• Lists existing and planned mitigations
• Ranks risks
• Identifies risk owner
• Cross-functional teams brainstormed and
identified an initial set of critical risks
• Bucketed the risks into the following initial
categories:
• Financial
• Regulatory and Compliance
• Reputational
• Operational and Business Continuity
An expanded view is also shown in the appendix.
Unmitigated With Current Mitigations
With Additional Mitigations
1 Financial
Prices Collapse; PCIA
Increases; Revenues Decrease Amrit
Reserves to withstand the
shocks; Stress Tests, Cashflow modeling
Reassess reserve
adequacy Extreme (15) Extreme (14) High (13)
.
7 Financial
Significant Number of PPAs
Default/Delay/Renegotiate for
higher prices
Monica
Supplier & Technology Diversity;
Plan for Contingencies;
Contractual language for delay
damages and default provisions
Moderate (14) Moderate (12) Moderate (12)
12 Regulatory/Compliance POLR Proceeding - Large Tie Up of Financial Reserves Amrit Hold Adequate Reserves
Manage and shape
regulatory
proceeding
Extreme (14) High (13) Moderate (18)
25 Reputational
Ineffective or sluggish
spending of approved program
dollars
Justin
Program plans developed with
stakeholders, ongoing feedback
during design/management,
increased staff/resources, and
emphasizing larger-scale
programs.
Additional staffing,
new supporting
systems, and public
reporting on impacts.
Moderate (23) Moderate (23) Moderate (23)
.
28 Reputational
Major disruption of the
T&D/Grid operator, Grid
Reliability - affects our mission
Girish Shape Regulatory and Legislative
Initiatives Moderate (18) Moderate (18) Moderate (18)
29 Operational and
Business Continuity
Natural Disaster Recovery
(Earthquake, flooding)
- Cover key business
functions (procurement,
scheduling, collateral calls …)
Monica System backups and desk
procedures
Add'l Desk
Procedures and
Continuity Plans
Low (22) Low (22) Low (22)
.
34 Operational and
Business Continuity
Calpine system failure Adam Moderate (23) Moderate (23) Moderate (23) Proposed Stress Tests (Modeled Scenarios)
Reserves; Strong Advocacy
Additional Reserves;
Revist Hedging
Strategy
Extreme (20) High(19) Moderate (18) Economic Recession (Price Collapse -5th percentile) Coupled with Adverse Regulatory Outcomes (POLR); Increase RA/procurement costs Draft and illustrative
Risk Matrix Placement (Impact over 5-years)
Risk ID Risk Category Risk Description Risk Owner Current Mitigations Additional Planned Mitigations Item 4
PRESENTATION
New SV Clean Energy
PowerPoint Template
Subtitle
Item 5
PRESENTATION
Amrit Singh
Finance and Administration Committee
February 26, 2025
VALLEY
ENERGY
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Item 5
PRESENTATION
Action: Recommend that the Board
Adopt Mid-Year 2024-2025 (MY
25) Adjusted Operating Budget
Review the Budget Timeline
Highlight Changes Since the
Adoption of the Adjusted Budget in
December
Compare Mid-year and Adjusted
Budget Key Line Items
Review 5-yr Reserve Projections
Provide Staffing Update
Committee Vote
Purpose
Item 5
PRESENTATION
Mid Year FY24-25 Budget Approval Timeline
May June August August
The BOD adopted the
budget and agreed to revisit
additional expenditures later
in the year when there
would be more certainty on
PG&E rates
The Executive Committee and
Finance and Admin Committee
reviewed the updated budget
based on the revised PG&E rate
filing and provided feedback on
any additional expenditures
The BOD reviewed and
adopted amendments to the
budget
Mid-Year Budget
Review / Adjustment
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An Increase of ~$36.4 Million vs Adjusted Budget
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Item 5
PRESENTATION
Mid-Year Budget Highlights
Excellent FY25 But Negative Margins over 5-yr Outlook
Healthy contribution to reserves of $133.2 million
An increase of ~ $36.4 million from $96.8 million at the adjusted Budget (approved in December 2024)
Revenue forecast mostly remains unchanged
A slight reduction due to several minor adjustments
Key Drivers of the Increase to Reserve Contribution:
Sharp drop in energy market prices contributing to lower power supply expenses
Reduction in staff’s assessment of resource adequacy (RA) needed to comply with the newly adopted market framework Operating expenses increased by ~ $2.8 million
Request for five additional positions
Additional professional services, marketing expenses, and general and administrative costs
Negative contribution to reserves
forecasted for the upcoming two fiscal
years due to declining market prices for
energy, renewable portfolio standard (RPS),
and RA prices
Description Variance Mid-Year Budget vs.
Adjusted Budget
Revenues -$2.98M
Power Supply Cost -$40.6M
Other Operating Expenses +$2.8M
Investment Income +$0.6M
Capital Transfers -$0.95M
Reserve Balance +$36.4M
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SILICON VALLEY CLEAN ENERGY
FY 2024-25 OPERATING BUDGET
($ in thousands)
FY 2024-25 FY 2024-25
ADJUSTED MID-YEAR
ADJUSTED
DESCRIPTION BUDGET BUDGET $ %
Energy Revenues 526,513 523,534 (2,979) -0.6%
Power Supply Expense 390,091 349,478 (40,613) -10.4%
Operating Margin 136,422 174,056 37,634 27.6%
Operating Expenses 36,433 39,284 2,851 7.8%
Non-Operating Revenue (Expense) 19,168 19,854 686 3.6%
Annual Transfers and Other Expenses
Capital Outlay 1,002 50 (952) -95.0%
Program Fund 10,530 10,530 0 0.0%
Nuclear Allocation 3,708 3,708 0 0.0%
Customer Bill Relief 5,370 5,370 0 0.0%
Hanford Emissions Mitigation Fund 1,800 1,800 0 0.0%
BALANCE AVAILABLE FOR RESERVES 96,746 133,167 36,421 37.6% Change
Item 5
PRESENTATION
Annual Adjusted Budget vs. Mid-Year Budget
Revenues slightly lower
Slightly higher final rates (+)
Power Supply Cost decrease
Sharp decline in market prices
Adjustments for franchise fee (-
Reduction in resource
adequacy (RA) needs
Capital Outlay adjusted due to
change in office building strategy
Program Fund, Nuclear Allocation,
Customer Bill Relief, and Handford
Fund all unchanged
Realized lower sales to date
and lower sales from custom
deals (-)
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506
434
410 418
381
427
381 376 393
372
0 100
200
300
400
500
FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 DCOH Days Cash on Hand (DCOH)
DCOH (Inc. Unspent Earmarked Funds)* DCOH (Excl. Unspent Earmarked Funds)* Max Reserves Target Reserves
Min Reserves
Item 5
PRESENTATION
Reserve Projection
Projected End of FY Reserves:
427 Days of Cash on Hand
(DCOH)
Excludes Unspent Program
Funds and Building Fund
506 Days of Cash on Hand
(DCOH)
If unspent Program Funds and
Building Fund were included
in the reserve calculation
* Earmarked funds are unspent SVCE Program Funds and Building Funds. 6 •
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Item 5
PRESENTATION
CD Staffing
Current Budgeted
Staffing
62 Full-time Employees (3 Vacancies)
3 intern positions (3 Open)
4 Part-time Employees (1 Open)
3 Climate Corps Fellows
1 Long-term Independent Consultant
Proposed Staffing
67 Full-time Employees (8 Vacancies)
3 intern positions (3 Open)
4 Part-time Employees (1 Open)
3 Climate Corps Fellows
1 Long-term Independent Consultants
The proposed budget requests approval for 5 additional position Customer Success (CS) (2)
Energy Lead (1) - the upcoming demand flex program (deploying and controlling batteries, HVAC, EVs, etc.) will require specific expertise and significant bandwidth. This role will also increase the capacity to engage with various dynamic rate pilots and the implementation of CPUC-required load management standards Sr. Energy Specialist (1) - in order for SVCE to pursue energy efficiency program funding from the state, a skilled resource to manage the application and ongoing reporting for the funds would be reguired (this funding would also eventually be able to pay for this resource) Regulatory, Policy, Planning & Legislative (RPPL) (1)
Resource Planner (1) - bringing more of SVCE's resource planning in-house will improve efficiency and effectiveness for long-term planning, strategic policy development, and gaining long-term market insights Finance & Administration (F&A) (1)
Data Analyst (1) - to achieve efficient and effective maturity in data analyses and modeling, SVCE needs to expand staffing at a lower level to ensure data and analytical needs are met while allowing experienced staff to meet new data and modeling goals
Power Policy Planning Procurement Regulatory and Operations (PRO) (1) Power Program Analyst (1) - to ensure strong long-term business continuity, this role will be trained to support front, middle, back office, and regulatory functions, allowing for cross-training, coverage, and succession planning in key roles
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Item 5
PRESENTATION
Summary - While Declining Energy
Prices Improve FY25 Results, Outlook
Over Next Two Fiscal Years are Negative
Many Risks can Deplete Reserves
Market Prices
ReducedRevenues
via Higher PCIA and
Lower PG&E Rates;
IncreasedPower
Supply Expense
SUPPLY
Project delays;
PPAs Default or
Renegotiate for
Higher Prices
L&R ISSUES LOAD LOSS CYBER-RISK
IRP, RPS, RA
Reform/Penalties,
PCIA. POLR
Customer Defaults DirectAccess Hardware, Software,
and Potential for and Trainingto combat
Expansion Ransomware and
Phishing
Next Steps
Staff will conduct financial stress test analyses and
recommend any updates to the reserve targets
Rate Increasesdue
to socialized wildfire
costs.Energy Price
Increaseswill
ultimately impact
usage and
electrification
Stress test results will be presented to the Finance
and Admin Committee in May and to the Board in
June
Staff will present the framework for developing the
next fiscal year’s budget to the Finance and Admin
Committee in May
Draft budget for FY25-26 will be presented to the
Finance and Admin Committee in August
Final FY25-26 budget will be presented to the
Board in September 8
Recommend that the Board of Directors adopt the
Mid-year (MY) 2024-25 Adjusted Operating
Budget that projects contributing $133.2 Million
to the reserves.
Item 5
PRESENTATION
Recommendation
9 Item 5
PRESENTATION
Thank you! / Questions?
10 SILICON VALLEY CLEAN ENERGY
FY 2024-25 OPERATING BUDGET
($ in thousands)
FY 2024-25
MID-YEAR
ADJUSTED
DESCRIPTION BUDGET
ENERGY REVENUES
Energy Sales 521,650
Green Prime 1,884
TOTAL ENERGY REVENUES 523,534
ENERGY EXPENSES
Power Supply 349,478
OPERATING MARGIN 174,056
OPERATING EXPENSES
Data Management 3,549
PG&E Fees 1,516
Salaries and Retirement 18,805
Professional Services 7,797
Marketing & Promotions 1,885
General & Administrative 5,733
TOTAL OPERATING EXPENSES 39,284
OPERATING INCOME (LOSS) 134,771
NON-OPERATING REVENUES
Interest Income 19,866
TOTAL NON-OPERATING REVENUES 19,866
NON-OPERATING EXPENSES
Financing 12
TOTAL NON-OPERATING EXPENSES 12
TOTAL NON-OPERATING INCOME (EXPENSES) 19,854
CHANGE IN NET POSITION 154,625
CAPITAL EXPENDITURES, INTERFUND
TRANSFERS & OTHER
Capital Outlay 50
Program Fund 10,530
Nuclear Allocation 3,708
Customer Bill Relief 5,370
Hanford Emissions Mitigation Fund 1,800
TOTAL CAPITAL EXPENDITURES, INTERFUND
TRANSFERS & OTHER 21,458
BALANCE AVAILABLE FOR RESERVES 133,167
Item 5
PRESENTATION
2024-2025 Mid-Year
Adjusted Operating
Budget
11 ($ in Thousands)
FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29
Operating Revenue (Budget) (Forecast) (Forecast) (Forecast) (Forecast) Electricity Sales, Net1 $521,650 $368,559 $412,040 $451,239 $460,998 GreenPrime Electricity Premium $1,884 $2,532 $2,561 $2,373 $2,340 Total Operating Revenues $523,534 $371,091 $414,601 $453,612 $463,338 Operating Expense
Power Supply $349,478 $377,921 $379,686 $385,358 $415,503 Operating Margin $174,056 $(6,830) $34,915 $68,254 $47,835 Data Management $3,549 $3,726 $3,913 $4,108 $4,314
PG&E Service Fees $1,516 $1,592 $1,672 $1,755 $1,843
Salaries and Retirement $18,805 $19,745 $20,732 $21,769 $22,857 Professional Services $7,797 $8,187 $8,596 $9,026 $9,477 Marketing & Promotions $1,885 $1,979 $2,078 $2,182 $2,291 General and Administration $5,733 $5,871 $5,695 $6,754 $7,092 Transfers to Programs Fund $21,408 $7,422 $8,292 $9,072 $9,267 Total Operating Expenses $410,170 $426,443 $430,663 $440,024 $472,644 Operating Income $113,363 $(55,352) $(16,062) $13,588 $(9,306) Nonoperating Revenue
Investment Income $19,866 $20,529 $14,966 $16,528 $16,683 Total Non-Operating Revenues $19,866 $20,529 $14,966 $16,528 $16,683 Nonoperating Expense
Financing Cost $12 $26 $26 $26 $26
Capital Outlay $50 $50 $50 $50 $50
Total Non-Operating Expense $62 $76 $76 $76 $76
Non-Operating Income $19,804 $20,453 $14,890 $16,452 $16,607 Change in Net Position/Available for Reserves $133,167 $(34,899) $(1,172) $30,040 $7,301 Begin, Net Financial Position $485,197 $598,841 $536,760 $513,324 $533,257 Adjustment for Program Expenditure and Building Fund2
$(19,524) $(27,182) $(22,264) $(10,108) $(17,950)
End, Net Financial Position $598,841 $536,760 $513,324 $533,257 $522,607
Days Cash On Hand (DCOH) at Year End $569,156 $507,075 $483,639 $503,572 $492,922 Days of cash on hand 506 434 410 418 381
Each year the Board transfers funds from the Operating Budget to the Decarbonization Programs Fund as shown in the above forecast under line item Transfers to Programs Fund. The line item Adjustment for Program Expenditure accounts for the difference between forecasted spend for programs versus the amount transferred to the fund. This adjustment is needed because program spending to date has been less than the amount transferred to the programs fund. The $20 million in building Fund is assumed to be spent between FY24-25 to FY26-27.
Assumptions: 4% overall discount relative to comparable PG&E rates for FY 24-25 and FY 25-26. FY 24-25 includes additional bill credit to low income customers totaling $5.37 million. 1% discount for FY26-27, FY27-28 and FY28-29.
Item 5
PRESENTATION
—
5-Year Forecast
For forecast years FY24-25 onward:
Revenues are based on SVCE’s load
forecast and CaICCA NewGen Model
for SVCE margin analysis using
market data as of 1/31/2025
Power Supply Costs are based on
updated portfolio positions and latest
market data
- Operating Expenses are assumed to
grow 5% I year
1 2
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Item 5
PRESENTATION
Relative to Assumptions
in the December
Adjusted Budget:
PG&E’s average
2025 generation rate
increased by about
2.8%
PCIA increased from
0.70d:/kWh to
1.02d:/kWh
Relative to Adjusted
Budget, SVCE’s 2025
margin improved by
about 0.5%
The rate changes were
effective Jan 1, 2025.
Final PG&E Rate Improved SVCE Margins
Jul-Dec 2024
Rate*
Adjusted Budget
2025 Rate*
Current 2025
Rate**
PG&E Gen Rate:
15.08 <t/kWh
4% SVCE discount
PG&E Gen Rate:
14.76 <r/kWh
PG&E Gen Rate:
15.17 C/kWh
‘ Source: PG&E 2024 ERRA Forecast Update, released in October,2024 (Weighted for SVCE Portfolio Load) ** PG&E 2024 Average Rate, effective January 1, 2025 (Weighted for SVCE Portfolio Load) 13 Above margin analyses ignores minor reductions for franchise fees (0.1 cf/kWh) 2024 2025** 2024 2025** 2024 2025** 2024 2025** 2024 2025** Rate Schedule (as of Oct, 2024) E-TOUC Est. Avg E-TOUCL Est. Avg B-1 Est. Avg B-10S Est. Avg B-19S Est. Avg PG&E Bundled Gen Rate ($/kWh) $ 0.150 $ 0.160 $ 0.150 $ 0.157 $ 0.150 $ 0.151 $ 0.158 $ 0.159 $ 0.144 $ 0.153 SVCE Gen Rate ($/kWh) $ 0.132 $ 0.142 $ 0.132 $ 0.139 $ 0.132 $ 0.134 $ 0.140 $ 0.141 $ 0.127 $ 0.136 PG&E Delivery Rate ($/kWh) $ 0.281 $ 0.265 $ 0.124 $ 0.090 $ 0.283 $ 0.285 $ 0.211 $ 0.211 $ 0.161 $ 0.161 PG&E PCIA/FF ($/kWh) $ 0.012 $ 0.012 $ 0.012 $ 0.012 $ 0.012 $ 0.011 $ 0.012 $ 0.012 $ 0.011 $ 0.011 Total Electricity Cost ($/kWh) $ 0.425 $ 0.418 $ 0.269 $ 0.241 $ 0.427 $ 0.430 $ 0.363 $ 0.364 $ 0.300 $ 0.308 SVCE CARE/FERA Monthly Credit* $ (12.50) $ (17.50)
Est. Average Usage (kWh/month) 491 491 491 491 1,851 1,851 22,540 22,540 148,625 148,625 SVCE Gen Rate Discount vs PG&E 4% 4% ~21%* ~27%* 4% 4% 4% 4% 4% 4% Est. Av. Monthly Savings vs PG&E $ 3.09 3.14 $ 15.59 20.59 $ 11.16 11.18 $ 143.54 143.64 $ 902.81 910.60 Residential Res CARE* Small Commercial Medium Commercial Large Commercial Item 5
PRESENTATION
Estimated Customer Billing Rate Breakdown and
Comparison Y-o-Y
‘Estimated, based on PG&E average rates at the and of 2024 and as of Jan.lst 2025, also, average historic residential usage and number of CARE/FARE customers at the end of 2024. “Estimated, based on PG&E Advice Letter 7469E filed with the CPUC on 12/30/2024.
Total CARE bill discount (including T&D) vs average residential customer, assuming the same usage (491 kWh/month) is about -51%.
On average, CARE usage is about 11% lower than that of an average E-TOUC customer. 14 SVCE PG&E SVCE PG&E SVCE PG&E SVCE PG&E SVCE PG&E
Rate Schedule (eff. Jan 1, 2025) B-1 B-1 B-10S B-10S B-19S B-19S Average Usage (kWh/month) 491 491 491 491 1,851 1,851 22,540 22,540 148,625 148,625 Annual Peak Demand (kW) 499 499
PG&E Electric Delivery $ 129.94 $ 129.94 $ 44.30 $ 44.30 $ 527.07 $ 527.07 $ 5,130.33 $ 5,130.33 $29,053.22 $29,053.22 Electric Generation $ 69.66 $ 78.59 $ 68.39 $ 77.27 $ 247.63 $ 279.48 $ 3,183.04 $ 3,591.07 $20,204.56 $22,764.89 PG&E Added Fees (PCIA, Franchise) $ 5.78 $ - $ 5.78 $ 20.68 $ - $ 264.39 $ - $ 1,649.74 $ - CARE/FERA monthly bill credit $ (17.50)
Average Total Cost $ 205.39 $ 208.53 $ 100.98 $ 121.57 $ 795.38 $ 806.55 $ 8,577.76 $ 8,721.40 $50,907.51 $51,818.11 Average Monthly Savings vs PG&E $ 3.14 $ 20.59 $ 11.18 $ 143.64 $ 910.60 *Estimated, based on PG&E Advice Letter 7469E filed with the CPUC on December 30, 2024, average residential customer usage, and a number of CARE/FERA customers at the end of 2024.
Residential* Residential CARE* Small Commercial* Medium Commercial* Large Commercial* Item 5
PRESENTATION
(^) Typical Customer Bill Savings
(Current Rates)
2025 2026 2027 2028 2029 2025 2026 2027 2028 2029
Forecast On Peak Energy MPB 0% -11% -9% -6% 5%
Forecast Off Peak Energy MPB 0% -11% -16% -11% 1%
Actual On Peak Energy MPB -14% -11% -9% -6% 5%
Actual Off Peak Energy MPB -11% -11% -16% -11% 1%
Forecast RPS MPB 0% -47% -38% -14% 0%
Actual RPS MPB -11% -47% -38% -14% 0%
Forecast System RA MPB 0% -34% -4% -1% 1%
Forecast Local RA MPB 0% -34% 16% 19% 21%
Forecast Flex RA MPB 0% -34% 16% 19% 21%
Actual System RA MPB -3% -34% -4% -1% 1%
Actual Local RA MPB -3% -34% 16% 19% 21%
Actual Flex RA MPB -3% -34% 16% 19% 21%
Total Estimated Impact 0.0% -36.2% -15.6% -7.0% 2.7%
0.0% -9.4% 0.2% 0.4% 0.4%
0.0% -15.2% -9.0% -2.5% 0.0%
0.0% -11.6% -6.8% -4.9% 2.3%
% Change from Adjusted Budget Impact on Estimated SVCE Headroom Item 5
PRESENTATION
Updated Market Price Benchmarks
* **
* Based on CPUC adopted benchmarks for CY2025 and snapshots of market data as of 10/25/2024 and 1/31/2025. ** Based on CaICCA NewGen Model analysis using market data as of 10/25/2024 and 1/31/2025. 16 •
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Item 5
PRESENTATION
CD Operating Expenses
FY24-25 Adjusted Budget MY24-25 Mid-Year Budget Updates Data Management Fees
$3.7M
Slight decrease of ~$0.19M based on better contract rate Billing (PG&E Fees)
$1.5M
Unchanged
Staffing (Salaries & Retirement)
$17.4M Increase of $1.42M due to additional headcounts
Professional Services
$9.4M
Increased by $0.66M due to additional vendors and contracts for data integration (RADar) project support and additional legal and legislative consulting services.
Marketing & Promotions
$1.6M
Slight increase of $0.27M to support board-approved educational non-profit grants and scholarships, and to cover additional outreach marketing materials.
G&A / Lease
$2.8M
Increase of ™$0.69M
Slight increase due to additional headcounts, more in-person meetings, and anticipated insurance expense increase
Not an increase, but ~$1.5M from Professional Services was recategorized to G&A to align with accounting cost categories
17 14
25 27
31 38
49 58
62 67
0 10
20 30
40 50
60 70
80 2017 Sep 2018 Sep 2019 Sep 2020 Sep 2021 Sep 2022 Sep 2023 Sep 2024 Sep FTE Count Historical FTE Count
FTEs
$-
$2
$4
$6
$8
$10
$12
2017 Sep 2018 Sep 2019 Sep 2020 Sep 2021 Sep 2022 Sep 2023 Sep 2024 Sep $M/FTE $M / FTE
Rev ($M) / FTE Cost ($M) / FTE
Item 5
PRESENTATION
Revenue and Energy Costs / FTE have remained fairly flat over time.
CD Revenues/FTE; Energy/FTE
18 Data is based on information available and reported online or from peer agency feedback; the timeline for comparisons may not align because each organization has a different budgeting and planning cycle, but they are meant to provide general patterns for comparison.
Accounts Revenue
($MM)
Net Position
($MM) FY 23-24 FY23-24 Revenue ($MM) Per FTE FY 24-25 Budget Silicon Valley Clean Energy 280,000 $503.7 $324.5 58 $8.7 67 Peninsula Clean Energy 310,000 $431.2 $307.6 50 $8.6 62 Central Coast Community Energy 450,000 $461.3 $241.9 52 $8.9 56 Clean Power Alliance 1,071,800 $1,169.5 $211.6 79 $14.8 86 Ava Community Energy 640,000 $824.0 $361.6 78 $10.6 86
MCE 500,550 $644.8 $244.2 84 $7.7 Unavailable
CCA Comparisons
CCA Name
FY 23-24 Staffing
Item 5
PRESENTATION
O CCA Staffing Comparisons
New SV Clean Energy
PowerPoint Template
Subtitle
Item 6
PRESENTATION
Create an Accounting Rate
Stabilization Fund Under
GASB 62
Amrit Singh
Finance and Administration Committee
February 26, 2025
M'SSILICON VALLEY <3/ CLEAN ENERGY
Item 6
PRESENTATION
Purpose
Recommend the Board establish a Rate
Stabilization Fund under GASB 62
1. 2.
3. 4.
5. 6.
Accounting Rule -GASB 62
Other CCA’s Using Rate Stabilization
Fund
Financial Statement Illustration
Impact on Reader’s of Financial
Statement
Comparison of Reserves and Rate
Stabilization Fund
Criteria for Directing and Recognizing
Revenues to and from the Rate
Stabilization Fund
Main Areas of Discussion
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Item 6
PRESENTATION
Direct Earmarked Funds to a Rate Stabilization Fund
GASB* 62 Enables Creation of a Rate Stabilization Fund
Defer Revenues to Future Period
Enables SVCE’s Board to establish the fund to defer revenue recognition to future periods Impacts the Net Position in the Financial Statements
Lowers net position for the year revenues are deferred and increases it for the future year when revenues are recognized
Revenues for the applicable fiscal year are reduced, and a corresponding liability is created in the Statement of Net Position (balance sheet)
Can record after the end of the fiscal year and can start with FY 2024-2025 *The Governmental Accounting Standards Board (GASB) is the organization that determines and updates generally accepted accounting principles (GAAP) for government entities.
3 Item 6
PRESENTATION
0 Other CCAs Are Using GASB 62
CCA Fund Amount ($ Million)
Clean Power Alliance (CPA) 135
Ava Community Energy (East Bay) 79.2
Marin Clean Energy (MCE) 70
Peninsula Clean Energy (PCE) 68
Sonoma Clean Power (SCP) and Orange County Power Authority (OCPA) plan to contribute to a rate stabilization fund.
4 Item 6
PRESENTATION
Financial Statement Impact
MARIN CLEAN ENERGY
STATEMENTS OF REVINUIS, EXPENSES
AND CHANGES IN NET POSITION
Y EARS ENDED MARCH 31, 2024 AND 2023
2024 2023
OPERATING REVENUES
Ilcctrkity safes, net $ 770,344,682 $ 633.836,160
| Rale stabilization (40,000,000) (19,000.0001)1
Grunt revenue 11,360,450 10,532,421
liquidated damages 26,074,259 7,219,945
Total operating revenues 767,779,391 636,588,526
OPERATING EXPENSES
Cost of electricity 571,404,901 559,107,368
Contract services 21,157,869 19.389,252
Stall'compensation 20,936,409 17,193,096
Other operating expenses 9,002,600 6.935,136
Depreciation and amortisation 955,278 996,241
Total operating expenses 623,457,057 603,621,093
()perating income 144,322,334 32,967,433
NONOPERATING REVENUES (EXPENSES)
(irunt revenue • 4,226,302
Interest and investment returns 15,420,160 4,007,603
Finance costs (228,825) (236,468)
Nonoperating revenues (expenses), net 15,191,335 7,997,437 CHANGE IN NET POSITION 159,513,669 40,964,870
Net position at beginning of year 244,171,846 203,206,976 Nel position at end of year $ 403,685,515 $ 244,171,846
MARIN CLEAN ENERGY
STATEMENTS OF NET POSITION
MARCH 31, 2024 AND 2023
2024 2023
ASSETS
Current assets
Cash and cash equivalents - lairvstnctcd S 101.027.404 $ 73.348.263 Accounts receivable. net ol'aloxvancc 61.447.640 66,401.473 Accrued revenue 31.912.468 31.180.447
Other receivables 5,822.709 1.985.508
Prepaid expenses 972.203 651.310
Restricted cash 40.322.101 33.782.947
Investments 115.763.550 68.841.532
DcposMs 14.108.352 10.924.834
Total current assets 371.376.427 287.116.314
Noncurrent assets
Cash and cash equivalents - unrcstnclcd 70.000.000 30.000.000 Investments 149.588.819 45,538.694
CapMal assets, net ofdeprecation and amortizauon 863.432 1.818,709 DcposMs 203.498 203.499
Total noncurrcnt assets 220,655.749 77.560.902
Total assets 592,032.176 364.677.216
LIABILITIES
Current kibihtics
Accrued cost ofclectricty 67.950.289 45.803.423
Accomts pavablc 4.552.442 4.071.832
Other accrued labthtcs 2,713.413 1.845,922
User taxes and energy surcharges due to other governments 1.288.372 3.112.581 Securlv deposits - energx suppers 983.400 578.400
Lease habiiocs 536.644 773.620
Advances from grantors 40.322.101 33.782.947
Total current kibihlics 118.346.661 89.968.725
Noncurrvnt kibibues
Lease habtlurs - 536.645
Total habites 1 18,346,661 90.505.370
DEFERRED INHXM'S OF RESOURCES
Operating Reserve Fund 70,000.000 30.000.000
NET POSITION
Net posuon
Net investment n capital assets 326.788 508.444
Univsineled 403.358.727 243.663.402
Total net position $ 403.685,515 $ 244.171.846
Item 6
PRESENTATION
Potential Impact on Readers of Financial Statement
Readers Pros Cons Staff’s Overall
Assessment
Public Net position statement reflects
unspent but earmarked funds.
Shows unspent funds
as liabilities but the
Board can redirect to
other uses inthefuture.
Positive
Credit RatingAgencies
(S&P and Moody’s)
Demonstrates greater Board
commitment to separately set
aside funds to promote rate
stability.
Potential confusionthat
these liabilities reduce
financial liquidity.
CCAs, staff consulted
with have not
experienced this.
Positive
Counterparties(Energy
Suppliers,Financial
Institutions)
More stableyearly financial
statement of Revenues and
Expenses (Income Statement).
Potential confusionthat
these liabilities reduce
financial liquidity.
Positive
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Item 6
PRESENTATION
Reserves and Rate Stabilization Fund
Reserves (Internally tracked balance; Non-GAAP)
Board adopts Reserve targets in the Financial Reserves Policy Reserve targets are designed to withstand plausible risk events Board reviews the reserves policy each year along with the operating budget Staff recommends reserve targets based on risk analyses following the agency’s Enterprise Risk Management process
Not impacted by the creation of a Rate Stabilization Fund Rate Stabilization Fund (GAAP)
Can use this GAAP accounting to defer revenues on the financial statements and recognize them later when expenditures occur that correspond to the Board’s direction on the utilization of those revenues
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Item 6
PRESENTATION
Criteria for Deferring & Recognizing Revenues
At the end of the fiscal year, staff working with SVCE’s Accountant may defer Revenues such that total deferred revenues do not exceed the balance of earmarked funds and the GAAP addition to net position does not fall below 2% of the revenues.
Unspent or unutilized Program Dollars, along with funds set aside to purchase an SVCE office building, was about $100 million at the beginning of the fiscal year 2024-25.
If the addition to the GAAP net position falls below 2% of the revenues for any fiscal year and/or to adjust the Rate Stabilization balance to the outstanding balance of all earmarked budgeted funds, revenues may be recognized from the rate stabilization fund.
8 Item 6
PRESENTATION
® Recommendation
Recommend that the Board of Directors establish a rate
stabilization fund under GASB 62
9 Item 6
PRESENTATION
Thank you! / Feedback / Questions?
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