• Subtitle
New SV Clean Energy
PowerPoint Template
Item 3
PRESENTATION
SILICON VALLEY
CLEAN ENERGY
Execute Agreements to
Enable Fourth Prepay
Transaction
Amrit Singh
Board of Directors
June 11, 2025
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Item 3
PRESENTATION
Purpose
Action: Adopt Resolution 2025-13 to
Authorize CEO to Approve or Execute
Agreements with Firms Providing
Services to Enable SVCE to Execute
its Fourth Prepay
Main Areas of Discussion
1. Prepay background information
2. Prepay goal and structure
3. Prepay structure overview diagram
4. Overview of the request
5. Next Steps
6. Appendix
Timeline of First Prepay
Details of First Three Prepays and
Cost Breakdown
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Item 3
PRESENTATION
Goal: Reduce the cost of power purchases
CD Review of Prepay Background Information
Savings achieved by leveraging SVCE/CCCFA’s ability to fund low-cost tax-exempt interest rates Used since the 1990s for natural gas transactions
Codified in the US Tax law
Part of the National Energy Policy Act of 2005
Seasoned professionals will help guide, negotiate, and structure the transactions. Fees for professionals are contingent on the completion of the deal and are paid from the deal proceeds. 3 Goal
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How
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• California Community Financing
Authority (CCCFA)
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Minimal Risks
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Item 3
PRESENTATION
Review of Prepay Goal and Structure
Substantial savings with minimal risks
Reduce the cost of power
purchases by leveraging SVCE’s
ability to fund low-cost tax-exempt
debt
Gain competitive advantage
relative to Investor Owned Utilities
(lOUs)
Benefit from the spread between taxable and tax-exempt
interest rates
Use of financially engineered prepay structure*
Bonds not guaranteed by SVCE or
Bonds secured by the contractual rights and transaction cashflows Seasoned team of professionals helps guide, negotiate, and structure the transactions.
Fees (except rating agency) are contingent on the execution of the deal and paid from the bond proceeds Bonds issued are non-recourse to SVCE
SILICON VALLEY
CLEAN ENERGY
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Item 3
PRESENTATION
Overview of Prepay Structure
Term: 30-year with bonds repricing every 5-10 years, depending on the optimal spread between taxable and tax-exempt interest rates.
1. SVCE partially assigns, using a Limited
Assignment Agreement, an energy contract to
Energy Supplier (ES). ES agrees to pay the
contract price to the PPA provider.
2. CCAs created CCCFA, a separate legal entity
that can issue tax-exempt debt.
3. CCCFA issues non-recourse tax-exempt bonds.
Bonds not guaranteed by SVCE or CCCFA.
Bonds secured by the contractual rights and
transaction cashflows; Bonds carry FR credit ratings.
4. CCCFA pays bond proceeds, net of transaction
fees, to as prepayment for energy and related
products that ES will provide over the 30-year
term. Executes Prepaid Agreement.
5. SVCE and CCCFA execute a Power Supply
Agreement, where SVCE pays CCCFA the
contract price less a discount for the energy
delivered by CCCFA.
6. CCCFA uses payments from SVCE to pay
interest and principal payments to bondholders.
7. ES and Funding Recipient (FR) execute a
funding agreement where FR receives upfront
funds and makes monthly payments to ES,
which they use to pay PPA provider.
Upfront Funds
Prepayment $$$
MWhs + RECs
MWhs+ RECs
MWhs4- RECs
SVCE CCCFA
Monthly
Payments
Existing PPA
Counterparty
Contract Price
Less Discount
Energy Supplier
(ES, Morgan
Stanley)
Non-Recourse
Tax-Exempt Bonds
Bond
Proceeds
Contract
Price
Debt
Service
Existing
PPA - Partially
Assigned
Funding
Recipient (FR)
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Except for Moody’s all payments are contingent on
the execution of the transaction.
The agreement with Moody’s will be executed later
when there’s more certainty on the likelihood of a
transaction.
Item 3
PRESENTATION
Authorize Agreements to Initiate Fourth Prepay Transaction Staff will later seek Board
authorization on the parameters of
the transaction:
Size of Bonds
Savings Threshold
Execution of Transactional
Agreements
Agreements
1. PFM Financial Advisors LLC & PFM Swap Advisors - $275,000
2. Chapman & Cutler (Disclosure/lssuer’s Counsel) - $175,000
3. Ballard Spahr (Bond and Tax Counsel) - $250,000
4. Moody’s Investor Service Inc (Credit Rating) - $321,500 Morgan Stanley Fee Structure (same as that of First Three Prepays):
• Bond underwriting fee of $5.50/bond plus underwriter expenses not to exceed $0.50/bond.
• E.g., For issuance of $1 billion in bonds, with a face value of $1000 a bond, the underwriting fee would be $5.5 million. • At this time SVCE expects the fee to be $4.50/bond with expenses not to exceed $0.20/bond, but is subject to change given deal sizing, structuring and market conditions at the time the bonds are issued. • Energy Service Revenue of $1.10 per MWh
• If floating rate debt is issued, up to a 12 basis point charge on an interest rate swap • Minimal risk to SVCE.
• All costs (underwriting, consultants, and attorneys) are paid from the bond proceeds. • The Board-designated savings target will be net of all costs.
Item 3
PRESENTATION
Approve Engagement with Morgan Stanley as Prepay Supplier Request Continued
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Item 3
PRESENTATION
Leverage the Existing Prepay Structure
Benefit from the efforts to execute prior three transactions Slides in the appendix provide: Enhance the existing Prepay transaction structure Benefit from several years of effort to establish the structure Timeline of the first Prepay
transaction
Successfully executed three prepays using this structure Combined savings of three completed transactions are about $14 million annually
Details of the SVCE’s Three
Prepays transactions and cost
breakdown
Other CCAs have taken or plan to take advantage of market opportunities to execute Prepays
Overview of the Prepay
Structure
Since the execution of our first Prepay in partnership with EBCE:
3CE, Ava (EBCE), CPA, MCE, PCE, Pioneer, SCP, SDCP, VCE, have executed Prepays
Par Value of CCCFA transactions is over $18 Billion and savings of $100 million/year
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Item 3
PRESENTATION
O RFP Process
Financial Advisor and Energy Prepay Supplier/lnvestment Bank Financial Advisor
Required by MSRB
Selected PFM Financial
Advisors who provided most
qualified bid
Worked with PFM on 3 prior
deals
Energy Prepay Supplier
The investment bank that structures
the transaction and underwrites the
bonds
A handful of highly qualified and
competitive firms in this space
Selected Morgan Stanley based on:
(a) their proposal, (b) experience
working with SVCE, (c) continuity of
existing settlement structure for
portfolio management efficiencies
9 Except for Moody’s all payments are contingent on the execution of the transaction.
The agreement with Moody’s will be executed later when there’s more certainty on the likelihood of a transaction.
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Item 3
PRESENTATION
3rd Party Agreements to Initiate Prepay
Expected Cost of 3rd
Party Agreements is
$1,021,500
Firms Role
Proposed Fees for Fourth
Prepav
PFM Financial Advisors
LLC / PFM Swap
Advisors
Municipal Advisor: Advises prepay buyer in
negotiations, required by the Municipal
Securities Rulemaking Board (MSRB), and
on commodity and interest rate swaps.
$275,000
Chapman & Cutler Disclosure and Issuer’s Counsel: Provides legal counsel and prepares official
statement and prospectus
$175,000
Ballard Spahr Bond and Tax Counsel: Represent
bondholders and provide tax opinion on the
transaction
$250,000
Moody’s Investor Service
Inc
Rating Agency: Provides the credit rating for
the bonds $321,500
Total $1,021,500
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0%
10%
20%
30%
40%
50%
60%
% of Load Prepaid - 2021B % of Load Prepaid - 2023B % of Load Prepaid - 2024A % of Load Prepaid - 2025X Item 3
PRESENTATION
Prepay Load Coverage
Can easily cover >50% of load with fourth prepay
% of Load Prepaid
On average:
Prepay 1 covers about 11% of the Load
Prepay 2 covers about 12% of the Load
Prepay 3, covers about 17% of the Load
Total average load coverage is expected to
be around 50-55% of Load
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Item 3
PRESENTATION
CD Fiscal Impact
Actual savings depend on market conditions - the spread between taxable and tax-exempt debt rates
Illustrative:
If we get savings of 8 to 10% for a transaction, this could amount to $4-6 million savings per year
Minimal Risk to SVCE
Fees (except rating agency) are contingent on the execution of the deal and paid from the bond proceeds
Bonds issued are non-recourse to SVCE
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Item 3
PRESENTATION
O Next Steps
Work with parties to structure the transaction (June -August 2025) Seek Board approval on the parameters of the transaction (August 2025)
Size of the Deal and Bond Issuance
Target Minimum Savings Threshold
Seek California Community Choice Financing Authority (CCCFA) Board Approval (August 2025)
Target bond issuance for Q3-Q4 2025. Timing will depend on market conditions.
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Item 3
PRESENTATION
Recommend for Approval
Adopt Resolution 2025-13 authorizing the CEO to approve* or execute the following contracts for services these firms will provide to enable SVCE to execute its fourth Prepay transaction for total cost of $1,125,000, which includes about 10 percent contingency.
1. PFM Financial Advisors LLC & PFM Swap Advisors - $275,000
2. Chapman & Cutler (Disclosure/lssuer’s Counsel) - $175,000
3. Ballard Spahr (Bond and Tax Counsel) - $250,000
4. Moody’s Investor Service Inc (Credit Rating) - $321,500 Approve engagement with Morgan Stanley as the Prepay Supplier with the following fee structure:
Bond underwriting fee of $5.50/bond plus underwriter expenses of $0.50/bond Energy Service Revenue of $1.10 per MWh
If floating rate debt is issued, up to 12 basis points charge on interest rate swap * CCCFA may execute
14 Item 3
PRESENTATION
Thank you! / Questions?
15 Oct-2020 SVCE Board Authorizes CEO to enter legal service agreements to finalize Prepayment Transaction (Orrick, Herrington & Sutcliffe and Chapman & Cutler LLP)
Nov-2020SVCE provides Prepay Status Report to Finance and Admin Committee Mar-2021SVCE provides Prepay Status Report to Finance and Admin Committee SVCE provides Prepay Status Report to Executive Committee April-2021SVCE Board Approves Participation in the California Community Choice Financing Authority Joint Powers Authority
Aug-2021The Finance and Admin Committee reviews the Prepay Transaction and votes to recommend Board approval. Board authorizes execution of the first Prepay Transaction subject to parameters including that bonds are not obligations of SVCE, size of the bonds, and minimum savings target.
Sept-2021Sept 9, 2021 bonds priced
Jan-2022 Power delivery under Prepay began
June-2019SVCE presents Prepay Structure Overview Presentation (developed by Goldman Sachs) to Finance and Admin Committee
Aug-2019 SVCE presents a brief verbal update on prepay process to Finance and Admin Committee
Sept-2019SVCE and PFM Financial Advisors provide update on the upcoming RFP process to Finance and Admin Committee
Nov-2019 SVCE provides Prepay RFP Overview to Executive Committee - PFM issues RFP to select Prepay Bank Supplier on behalf of EBCE and SVCE on Nov 12th
- RFP Proposals were due December 5th
Jan-2020 SVCE presents Prepay Structure Overview to Finance and Admin Committee Spring-2020SVCE and EBCE conduct RFP evaluations to select Prepay Bank Supplier July-2020SVCE and EBCE select Morgan Stanley as Prepay Bank Supplier Aug-2020 SVCE provides Prepay Status Report to Finance and Admin Committee Sept-2020SVCE provides Board with Prepay Overview on preparing for a Prepay Transaction
SVCE provides Prepay Status Report to Finance and Admin Committee Item 3
PRESENTATION
Timeline of SVCE’s First Prepay Transaction
16 Details of the First Prepay Transaction
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Item 3
PRESENTATION
Aggregate Principal Bond Amount $1,234,720,000 (SVCE and EBCE combined) Total Bond Proceeds $1,475,895,642.5 (SVCE and EBCE combined) Municipal Bond Rating A1
Green Certification Designated Green Bonds by Kestrel Verifiers Initial Bond Pricing Period
10 years.
After the initial period, bondswill be repriced per the negotiated repricing agreement, and a new discount will be established based on the then prevailing market conditions.
Final Bond Maturity Date February 1, 2052.
Discount Achieved
$4.38 per MWh, about 10% of the energy cost of SVCE’s 3-year transaction initially assigned into the Prepay.
~$1.9 million per year for SVCE during the initial bond pricing period of ten years.
Energy Volume Supported by Bond Proceeds
109 MW, of which SVCE’s share is 50 MW (about 11% of load) and EBCE’s share is 59 MW for approximately the first ten years of the transaction; after that, the same proportional volume split will be maintained between SVCE and EBCE.
17 First Prepay Transaction Cost Breakdown ($000)
Item 3
PRESENTATION
Bond and Tax Counsel: Orrick, Herrington & Sutcliffe 425 Credit Rating: Moody’s
Issuer’s Counsel and Disclosure Counsel: Chapman & Cutler LLP Municipal Advisor: Public Financial Management
Investment Advisor: Public Financial Management Asset Mgmt Trustee: Bank of New York (BNY)
Trustee Counsel: BNY Counsel
Printing Cost
Contingency/Other
Total COI
Morgan Stanley Underwriting
Total
18 Details of the Second Prepay Transaction
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Item 3
PRESENTATION
Aggregate Principal Bond Amount $841,500,000
Total Bond Proceeds $891,418,648.1
Municipal Bond Rating A1
Green Certification Designated Green Bonds by Kestrel Verifiers Initial Bond Pricing Period
6.5 years.
After the initial period, bondswill be repriced per the negotiated repricing agreement, and a new discount will be established based on the then prevailing market conditions.
Final Bond Maturity Date July 1, 2053.
Discount Achieved
$9.77 per MWh, about 10% of the price established for energy deliveries under the power supply contract.
~$4.7 million per year during the initial bond pricing period of 6.5 years.
Energy Volume Supported by Bond Proceeds
~55 MW (about 12% of load; a slight escalation in the latter half of the transaction)
19 300
232.5
200
175
35 30.9
30 3.3
22 16.8
1,045.5
4,359.2
5,404.7
Second Prepay Transaction Cost Breakdown ($000)
Item 3
PRESENTATION
Cost of Issuance (COI) $ in 000’s
Bond and Tax Counsel: Ballard Spahr
Credit Rating: Moody’s
Issuer’s Counsel and Disclosure Counsel: Chapman & Cutler LLP Municipal Advisor: PFM Financial Advisors LLC
Investment Advisor: PFMAM (US Bank)
Trustee: BNY Mellon Corporate Trust
Trustee Counsel: Ballard Spahr
Printing Cost: ImageMaster
Green Bond Second Party Opinion: Kestrel
Contingency/Other
Total COI
Morgan Stanley Underwriting
Total
20 Details of the Third Prepay Transaction
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Item 3
PRESENTATION
Aggregate Principal Bond Amount $1,101,625,000
Total Bond Proceeds $1,165,919,381.75
Municipal Bond Rating A1
Green Certification Designated Green Bonds by Kestrel Verifiers Initial Bond Pricing Period
~8 years.
After the initial period, bondswill be repriced per the negotiated repricing agreement, and a new discount will be established based on the then prevailing market conditions.
Final Bond Maturity Date May1, 2054
Discount Achieved
$11.32 per MWh, about 13.1% of the price established for energy deliveries under the power supply contract.
~$7.7 million per year during the initial bond pricing period of 8 years.
Energy Volume Supported by Bond Proceeds
~77 MW (about 17% of load; a slight escalation in the latter half of the transaction)
21 250
273
175
155
30 41.4
30 4
66 1,041.3
5,712.1
$6,753.4
Third Prepay Transaction Cost Breakdown ($000)
Item 3
PRESENTATION
Cost of Issuance (COI) $ in 000’s
Bond and Tax Counsel: Ballard Spahr
Credit Rating: Moody’s
Issuer’s Counsel and Disclosure Counsel: Chapman & Cutler LLP Municipal Advisor: PFM Financial Advisors LLC
Investment Advisor: PFMAM (US Bank)
Trustee: BNY Mellon Corporate Trust
Trustee Counsel: Ballard Spahr
Printing Cost: ImageMaster
Contingency/Other
Total COI
Morgan Stanley Underwriting
Total
22 New SV Clean Energy
PowerPoint Template
Subtitle
Item 4
PRESENTATION
Amrit Singh
Board of Directors
June 11, 2025
SILICON VALLEY <1/ CLEAN ENERGY
Stress Test Analyses
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Item 4
PRESENTATION
Purpose
1. Main Areas of Discussion
Present findings of the stress test
analyses
Review of the enterprise risk
management (ERM) framework and
2. 3.
4. 5.
key drivers of financial risks
5-yr Financial Base Case Forecast
Update
Updated projections compared to
Mid-Year
Uncertainties surrounding the
financial projections
Stress test construction
By design, extreme but plausible
Compare the updated base case with
the stress test scenario
Recap key messages and discuss
staff recommendations
Item 4
PRESENTATION
1. Review the
Enterprise Risk
Management
(ERM) framework
and Key Drivers of
Financial Risks
Item 4
PRESENTATION
CD SVCE’s 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.
Funding in alignment with achieving
the strategic focus areas
Organization-wide priorities and
alignment toward achieving the mission
4 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
Risk
Register
Risk Matrix
Stress
Tests
• Record of the organization’s risks and opportunities -“Living Document”
• 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
Past, Current, and Stress Case Modeled Commodity Prices 5 •
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Item 4
PRESENTATION
Review of Key Financial Risk Drivers
Biggest contributor to revenue risk: PCIA and PG&E Generation Rate Uncertainty.
PG&E Gen Rate:
SVCE
discount
O
CD
+-•
CO
Ct
CD
0 LU
O
>
cn
PCIA and PG&E Gen Rate impact SVCE Rates and therefore Revenues Revenues
Revenues decline when prices decline
Loss of revenues far exceeds savings from power purchases Power procurement savings dampened by existing hedges
SVCE has adjusted its energy portfolio to mitigate this impact to the extent possible, and as best estimated by SVCE
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Item 4
PRESENTATION
0 Big Contributor to PCIA and PG&E Generation Rate -
Uncertainty in Market Prices
For the most part, this year’s actual prices and the forecast of next year’s market prices will impact next year’s rates.
Next Year’s PCIA
& PG&E Gen Rate »
Current Year’s actual
realized Prices &
Forecast of Next
Year’s Market Prices
Can not bank the current year’s margin
Current year’s gain may be returned the following year
through higher PCIA and lower PG&E generation rates
Deviations between actual and forecast costs
are tracked in balancing accounts and trued
up the following year
For financial/reserve planning, greater focus
is placed on the next two years’ projections
2026 Prices 4^ 2026 Prices Jz
2025 Prices^
PCIA
PG&E Rate 4"
SVCE Revenues 4^
2025 Prices nU
^CIA 4^ \
PG&E Rate
SVCERevenues^/
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Item 4
PRESENTATION
t
2. 5-yr Financial Base
Case Forecast
Update
Updated projections
compared to Mid-Year
Uncertainties
surrounding the
financial projections
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$ Millions FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 Updated Base Case Reserve Balance 556 494 388 321 252 197 Mid-Year Budget Reserve Balance 534 471 446 465 453
Change 22 23 -58 -144 -201
Item 4
PRESENTATION
Reserve Outlook Change from Mid-Year Budget
Comparing Base Cases
Forward market price changes
contribute to major differences
between the Mid-Year Budget
and the Updated Base Case
Forward Price: Reflects the current
market price for future delivery of
products (Energy, RPS, RA).
Forward price data is from external
sources
Days Cash on Hand (DCOH)
Mid-Year Budget - DCOH (Inc. Unspent Earmarked Funds)*
Updated Base Case - DCOH (Inc. Unspent Earmarked Funds)* *
Earmarkedfundsare unspentSVCEProgram Funds andRemainingBuilding Funds. The earmarkedfundsare projectedto be nearly zero by the endof FY 2028-2029. 9 Market Price Change: Mid Year Budget (1/31) vs Updated Base Case (4/18) 2025 2026 2027 2028 2029 2030
Energy Price Change -6% 0% -5% -7% -5% -2%
Renewable Portfolio Standard (RPS) Price Change -44% -47% -46% -44% -19% -10% Resource Adequacy (RA) Price Change 0% -40% -4% 0% 0% 0% •
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Item 4
PRESENTATION
Market Price Change
Forward prices further out in
time are less liquid
Less volume traded
Higher Bid/Ask Spread
These uncertainties are present in our financial projections In recent years, uncertainty worked in our favor by producing higher-than-expected financial results Realized prices came in higher than expected
10 Item 4
PRESENTATION
Financial
Position
(Millions)
Growing Reserves in High Price Conditions
$600.0
$500.0
$400.0
$300.0
$200.0
$100.0
$0.0
($100.0)
The uncertainty in
RPS and RA prices in
recent years worked
in our favor.
FiscalYear
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Item 4
PRESENTATION
Other Uncertainties: Modeling & Other Risks
Financial projections are made with the best available data and information Market (Forward) Prices
NewGen Strategies & Solutions model to forecast PCIA and PG&E Generation Rates PCIA is a “black box”
PG&E generation portfolio data needed to forecast PG&E generation rates are not available SVCE power supply portfolio positions and other operating expenses can change PG&E, with PCIA and its generation portfolio data, cannot accurately predict next year’s rates when it issues its mid-May ERRA forecast Regulatory and Legislative changes have a significant impact PCIA Order Instituting Rulemaking (OIR) Proceeding
Track One decision can have a significant impact on next year’s rates Track Two decision could further introduce changes affecting future year’s rates 12 •
Item 4
PRESENTATION
3. Stress Test
Construction
By design, they are
extreme, but
plausible scenarios
•
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•
Item 4
PRESENTATION
Financial Stress Test Description & Key Assumptions
Forward Energy Prices Collapse
Around one percentile level or less
Reasonable in terms of relative comparison to
observed commodity prices resulting from the
2008 financial crisis (explained further in later slides) Renewable Portfolio Standard
(RPS) and Resource Adequacy
(RA) Prices Drop as well
Power Price Base Case and Stress Case
{025 2026 2027 2028 2029
—- NP15 Historical Spot Settle NP15 Base Forward —NP15 Stress Test Forward RPS $/MWh
RA $/MW-Day 2025 2026 2027 2028 2029 2030
Base Case RPS MPB ^—Stress Case RPS MPB
Base Case RA MPB Stress Case RA MPB 14
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Item 4
PRESENTATION
* Financial Stress Test Description- cont’d
PCIA Uncertainty
A proceeding reopened this year, which further increases financial uncertainty Both stress and base case are based on the current methodology Customer Discount for both the Base Case and Stress Case Current 4% customer discount continues to the end of Dec. 2025 (this includes 3 months of the next fiscal year), along with monthly low-income customer bill credits
After Dec. 2025, the customer discount is modeled at 1% One-time bill customer credit, approved for the current fiscal year, of $35 million is issued in August 2025 Other Potential Business Operating and Regulatory Risks As modeled in prior stress tests, 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 -- $70 million
Customer Un-collectables Increase
Bad debt is 0.75% in base case and 2% in stress case
15 •
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•
Item 4
PRESENTATION
Modeled Stress Energy Prices
Demonstrating the reasonableness of modeled stress prices by comparing to the relative observed natural gas price collapse from the 2008 financial crisis During a relatively short period of time, commodity prices (oil, natural gas, and electricity prices) collapsed (both on the forward and spot markets) A more relevant comparison for stress testing would appear to be comparing forward electricity prices prior to the collapse to the actual spot market prices Forward electricity prices were not as liquid as natural gas Staff could not obtain these prices for this comparison Natural gas prices are highly correlated with electricity prices 16 Item 4
PRESENTATION
$/MMBtU
Financial Crisis Period Natural Gas Price Collapse
Forward as of Dec 2007 Forward as of Dec 2006 Forward as of May 2008 HH Historical Spot Settle 17 Item 4
PRESENTATION
CD Modeled Energy Price Collapse
The modeled 47% energy price collapse is within the observed 50-65% decline in natural gas prices during the 2008 financial crisis period.
47%
Drop
NP15 Historical Spot Settle NP15 Base Forward NP15 Stress Test Forward 18 Item 4
PRESENTATION
QfJ Past MPB, Current, and Stress Case Modeled RPS and System RA Prices
Modeled stress test price declines relative to the modeled current forward prices, on average, for RPS is 62%, and for RA is 31%
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
—Historical RPS MPB Base Case RPS MPB —Stress Case RPS MPB System RA MPBs
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Historical RA MPB Base Case RA MPB —Stress Case RA MPB
19 Item 4
PRESENTATION
4. Comparing the
Updated Base
Case with the
Stress Test
Scenario
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•
$ Millions FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 Stress Test Scenario Reserve Balance 560 449 253 103 -48 -180 Updated Base Case Reserve Balance 556 494 388 321 252 197 Change 4 -45 -135 -217 -300 -377
Item 4
PRESENTATION
Reserve Outlook Under Base and Stress Scenario
Updated Base Case - Draws ^$70 million a
year on average from reserves under the
current operating framework
All customer rates are at a competitive advantage (1%)
relative to PG&E Rates
Programs are funded at 2% of revenues
The current earmarked funds, mostly for programs,
currently around ~$100 million, are spent by the end of fiscal year 2028-29
Financially, SVCE is well-positioned
Under Base Case:
DCOH above the minimum threshold of 120
DaysCashon Hand(DCOH)
-350
Updated Base Case - DCOH (Inc. Unspent Earmarked Funds)* StressTest - DCOH (Inc. Unspent Earmarked Funds)* * Earmarkedfundsare unspentSVCEProgram FundsandRemainingBuilding Funds. The earmarkedfundsare projectedto be nearly zero by the endof FY 2028-2029.
DCOH ~350 through the end of Sept. 2027
Under the stress test scenario
DCOH remains above the minimum through the
end of Sept. 2027, and starting late 2028 or around
the start of 2029, funds start getting depleted 21
Item 4
PRESENTATION
5. Recap Key
Messages and
Discuss Staff
Recommendations
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Item 4
PRESENTATION
CD Recap of Key Messages
1. SVCE regularly assesses and prioritizes risks and opportunities ERM, Strategic Focus Areas, Budget
2. PCIA and PG&E generation rates have a big impact on SVCE’s financial health Uncertain market prices significantly impact them
3. Lots of uncertainty in financial planning, especially further out in time Market prices, more illiquid RA and RPS markets, modeling with limited data, regulatory and legislative changes, including PCIA OIR
4. Can not bank on the current year’s margin
Because rates are based on forecasted market prices, gains in one year could be returned the following year via higher PCIA and lower PG&E generation rates when market prices are trued up 23 o
o
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Item 4
PRESENTATION
CD Recap of Key Messages Continued
5. Greater focus on the next two years’ financials
6. Stress tests by design are extreme but plausible
7. Stress test appears plausible in comparison to data from the financial crisis period
8. Financially, SVCE is well-positioned
Under the base case, reserves at or above the target of 350 DCOH over the next two fiscal years Through the end of the 5-year forecast period (Sept 2030), at 153 is above the minimum target of 120 DCOH Under the stress test scenario, reserves are at 193, above the minimum threshold of 120 DCOH through the end of the next two fiscal years
24 •
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Item 4
PRESENTATION
CD Recommendations
5-year outlook indicates a shift from
contributing to drawing from reserves
Adjust the budget in December when there’s
more certainty on next year’s rates
No major changes recommended for
developing the budget for approval in Sept.
Forecast reserves remain at or above 350 DCOH
over the next two fiscal years,
Staff will assess the financial levers
Potential financial levers and areas of
focus:
Further increase financial liquidity given
greater uncertainty
Bank Line of Credit
Reassess rate discounts and rate
design along with customer product
offerings
25 • Subtitle
New SV Clean Energy
PowerPoint Template
Planning, Architecture, &
Design Services for
SVCE Headquarters
June 11, 2025
Item 5
PRESENTATION
SILICON VALLEY <3/ CLEAN ENERGY
2 Request:
Delegate authority to the CEO to
negotiate, execute, and administer
changes to a contract for Planning,
Architecture, and Design Services with
a vendor to-be-determined in an
amount not-to-exceed $660,000.
Item 5
PRESENTATION
SILICON VALLEY <3/ CLEAN ENERGY
3 Request for Proposal (RFP) Process
May 5 Published RFP
May 21 Proposal deadline
May 28 – 30 Held interviews
Present Finalizing scope and contract
Item 5
PRESENTATION
SILICON VALLEY \3/ CLEAN ENERGY
REQUEST FOR PROPOSALS
FOR
Planning, Architecture, & Design Services for SVCE
Headquarters
298 S.Sunnyvale Ave.. Sunnyvale. CA 94086
RFP Release Date: May 05, 2025
RFP Submittal Deadline: May 21, 2025 @5pm
4 Scope of Work Includes Design, Engineering
Permitting, and Construction Support
Phase 1 Office Space and Board Chambers
• Develop a schematic design that includes final floor plans, defines all work, teams, and amenity spaces, and specifies a general direction for finishes and furnishings. • Cost estimation and value engineering work with SVCE’s Project Manager. • Create construction documents that SVCE will use to solicit public bids on the construction. • Coordinate permitting and code interpretations.
• Provide support during construction: help resolve design-related field issues and review / approve all materials / equipment that will be used.
Phase 2 Community Space
• Develop updates as needed to the permit set to finalize the community space.
Item 5
PRESENTATION
5 Updated Headquarters Timeline (Subject to Change)
Outline of the building’s next steps
• Ready for
move-in
2025 Q4 2026 Q1 2026 Q3
• Permits
issued
• Construction
begins
• Update
designs as
needed for
community
space
2025 Q2
• Finalize design
and submit for
permits
• Release RFP for
construction
services
(tentative)
• Return to BOD
with options for
community
space.
2025 Q3
• BOD/public input on
meeting space
• Onboard PM
• Solicitation and
selection for design
and architecture
firm
• Board delegates
approval of
architecture firm
to CEO
• Start
detailed
design of
workspace,
Board
Chambers,
and build
flow
2026 Q2
• Construction
Item 5
PRESENTATION
Next Steps
• Finalize contract for
Planning, Architecture,
& Design Services
6 Item 5
PRESENTATION
7 Request:
Delegate authority to the CEO to
negotiate, execute, and administer
changes to a contract for Planning,
Architecture, and Design Services with
a vendor to-be-determined in an
amount not-to-exceed $660,000.
Item 5
PRESENTATION
SILICON VALLEY <3/ CLEAN ENERGY
New SV Clean Energy
PowerPoint Template
• Subtitle
Item 6
PRESENTATION
Resources to support the transition to
pollution-free buildings and transportation.
Item 6
PRESENTATION
Objective
Provide the Board with a status update on agency electrification readiness planning
SILICON VALLEY
CLEAN ENERGY 2
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Item 6
PRESENTATION
Despite Legal Changes, Reach Codes Drove
Electrification, while Reducing Cost
A few of the benefits in our territory 2020-2023
>11,000 HPWHs
~$34M in on-bill savings
>$71M in avoided retrofit costs
Thousands of EV Chargers
Thousands of induction cooktops
Item 6
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. ©
SILICON VALLEY
CLEAN ENERGY
Prioritise Your Resources
→
→
→
Item 6
PRESENTATION
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Item 6
PRESENTATION
Sensible Retrofit Policies Can Reduce Friction, Lower
Cost, and Transform the Market
Key 2025 Policy AC > HP Could Lead To:
15,000 new HPs 2026-2029
$120M saved in redundant equipment costs
>$54M in on-bill savings
Item 6
PRESENTATION
Proposed Agency Commitments by 2025
AC-to-HP Flex Path Code
(electrify at remodel)
Electric Readiness
Code (prewire)
Training & Permit
Modernization
Campbell • •
Cupertino • • •
Gilroy •
Los Altos • • •
Los Altos Hills • • •
Los Gatos • • •
Milpitas • • •
Monte Sereno • • •
Morgan Hill • • •
Mountain View • • • •
Saratoga • • • •
Sunnyvale • • •
County of Santa Clara • • •
Even with AB306, we can still make
progress!
→
→
→
Item 6
PRESENTATION
Item 6
PRESENTATION
Member agencies are leading the way!
1. Santa Clara County completed training most development staff on general building electrification approaches and provided more intensive training on avoiding the need for service upgrades specifically for permit reviewers.
2. Gilroy has implemented permitting communication improvements and is now integrating information on heat pumps and heat pump water heaters into their building permitting information services.
3. Saratoga staff is on track to move all three codes options forward this year.
4. Mountain View is actively considering approaches to ending the flow of gas and is taking steps to quantify the grid impacts and remedies associated with full building electrification.
SILICON VALLEY
CLEAN ENERGY 9
Item 6
PRESENTATION
Your Efforts Matter
SVCE will continue to work with your staff to develop sensible actions and continue to pivot as circumstances evolve.
SILICON VALLEY
CLEAN ENERGY 10
Item 6
Each agency selects
PRESENTATION
from a menu of options to help their
community more easily make this transition.
There are three tiers of action.
Foundational Practices Advancing Practices Leading Practices Choose 3 Foundational + Choose 3 Advancing Advancing + Choose 4 Leading Distribute info about BAAQMD, incentives, etc.
with each permit
Train on avoiding unnecessary service
upgrades
Allow plumbers to perform minor electrical work
to streamline HPWH installations per CSLB
Implement Permit Concierge Participate in meeting(s) on certified contractors network
BAAQMD ramp up (includes electrification
readiness) on remodels
Provide staff training on building electrification
technologies
Free permit pilot with outreach campaign Require disclosures about gas appliances at time of sale
Enhance pre-application support materials Insert comments in plans encouraging prewiring during other work
Implement certified contractors program
Incentive-based remodels for electrification
Adopt real-time permitting for HPWHs
Require heat pumps at time of AC install or
replacement
Item 6
PRESENTATION
Thank you! M svcleanenergy.org
|^| [email protected]
SILICON VALLEY
CLEAN ENERGY 12
Item 6
PRESENTATION
Appendix
SILICON VALLEY
CLEAN ENERGY 13
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Item 6
AB
PRESENTATION
306 (Schultz/Rivas) - State and local building codes
Imposes 6-year moratorium on state and local building codes for residential Limited exemptions for emergencies related to health and safety and hardening SVCE issued concerns letter with amendment suggestions:
1. Clarify that the state can adopt the 2025 State Building Code and local governments can adopt that code.
2. Limit the pause to only new construction; allow local governments to pursue existing building policies like ACs to heat pumps
Advocating on these amendments
SILICON VALLEY
CLEAN ENERGY 14
Member Agency Action Plan Status Actions Planned
Foundational Advancing Leading
Campbell Finaled 2 2 5
Cupertino Finaled 1 3 3
Gilroy Finaled 2 2 2
Los Altos Finaled 3 3 4
Los Altos Hills Finaled 2 2 4
Los Gatos Finaled 2 3 4
Milpitas Finaled 2 4 4
Monte Sereno Finaled 1 1 5
Morgan Hill Finaled 1 3 5
Mountain View Finaled 3 5 4
Saratoga Finaled 2 1 5
Sunnyvale Finaled 1 4 7
County of Santa Clara Finaled 3 3 6
Item 6
PRESENTATION
All 13 Jurisdictions Have a Final Action Plan
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Item 6
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 16
Item 6
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. South Coast Air Quality Management District passed similar phase out rules, but starting with larger water heaters and including new construction.
4. CA Air Resources Board -the current proposal would make phaseout gas water heaters statewide starting in 2027.
SILICON VALLEY
CLEAN ENERGY 17
Item 6
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 18