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New SV Clean Energy
PowerPoint Template
Item 2
PRESENTATION
SILICON VALLEY
CLEAN ENERGY
SVCE Board of Directors
August 13, 2025
Vacancies, Recruitment &
Retention
(Compliance with AB 2561)
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Item 2
PRESENTATION
Assembly Bill (AB) 2561(McKinnor) amended the Myers-Milias-Brown Act (MMBA) to add Government Code Section 3502.3.
Requirements:
Public agencies shall hold a public hearing to present:
Status of vacancies
Recruitment and retention efforts
Any identified changes to policies, procedures or recruitment activities Additionally:
The hearing should be held once per fiscal year before budget adoption Employee bargaining units are entitled to present (SVCE has none) The new law took effect on January 1, 2025, and applies to all public agencies. 2 •
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Vacant Role Department Status Approval
Associate Finance, Data, Risk Analyst Finance & Administration Final Interviews Mid-year Budget 3/12/2025 Energy Services Specialist (Key Accounts) Customer Success Developing Job Description Mid-year Budget 3/12/2025 Energy Services Specialist (Demand Flex
Manager) Customer Success Panel Interviews Mid-year Budget 3/12/2025 Resource Planner
Regulatory, Policy, Planning, and
Legislative Re-posting / realignment Mid-year Budget 3/12/2025 Senior Energy Specialist Customer Success Panel Interviews Backfill - employee moved to new
mid-year budgeted role - June 9th
Item 2
PRESENTATION
Vacancies and Recruitment
Vacancy:
Currently, SVCE holds an 7.5% vacancy rate for Full Time roles (5 vacant /67 FTEs) - Those vacant are based on the new roles approved in mid-year budget Recruitment:
SVCE supports a comprehensive selection process with a recently (2024) modernized recruitment system which streamlines selection, improves candidate and hiring team experience, and automates job postings to both free and paid job sites to broaden exposure to qualified candidates 3
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Item 2
PRESENTATION
Fiscal Year: 2024 / 2025 Retention
Retention - Full-Time Employees
Period Starting Headcount Ending Headcount Retention Rate FY 2024/2025 58 62 100%
No turnover Fiscal Year 2024-25 to date
Retention efforts include competitive compensation and benefits, and a culture of connection, development, and balance
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Item 2
PRESENTATION
Hiring timelines, vacancy rates, and retention percentages are acceptable when compared with industry trends and business needs.
Staff will continue to optimize the below recruitment strategies:
Use of Linkedln, Government Jobs, other niche recruitment marketing, and external recruiters when required for hard-to-fill roles
Regular evaluations of benefits and compensation to ensure competitive total rewards No change in Board-approved policies and/or internal practices are required that would lead to obstacles in the hiring process.
5 • Subtitle
New SV Clean Energy
PowerPoint Template
Item 4
PRESENTATION
Prepay Transaction
Request for Approval
SILICON VALLEY <3/ CLEAN ENERGY
Amrit Singh
SVCE Board of Directors
August 13, 2025
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Item 4
PRESENTATION
Purpose
Action: Adopt Resolution 2025-16
to Authorize CEO to Execute or
Approve Prepay Agreements
1. 2.
3. 4.
Recap of Prepay Goal and
Structure
Board-authorized parameters for
execution of the deal
Next Steps
Appendix
Summary of Transactional
Documents
Estimated Fees
Details of Prior Prepays and Cost
Breakdown
Overview of Prepay Structure and
Background Information
Main Areas of Discussion
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 4
PRESENTATION
Recap 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.
"Refer to the appendix for a more detailed overview of prepay structure 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 3
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• Execution Contingent on:
• Aggregate principal amount of bonds will not
exceed $1.25 billion
• Bonds issued by California Community Financing
Authority (CCCFA) are not guaranteed
obligations of SVCE
• Overall energy savings to SVCE shall be at least
8 percent during the initial term of the bonds
Item 4
PRESENTATION
Adopt Resolution to Authorize the CEO to Execute Prepay Transactional Agreements Contingent on Board-Authorized Parameters
Transaction expected to cover about 12%
of SVCE’s load and combined with first
three deals covers "51% of load
Actual realized discount will depend on
the spread between taxable and tax-exempt rates (net of transaction costs) Savings expected to be about $4 to $6
million during the initial term of the bonds
30-year bonds will reset after the initial
period expected to be 5-10 years and
discount on future reset periods will
depend on the then prevailing market
conditions.
Repricing agreement will set a minimum
discount threshold for future bond reset
periods, expected to be at energy savings
of about 4%.
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Item 4
PRESENTATION
O Next Steps
Seek California Community Choice Financing Authority
(CCCFA) Board Approval thereafter
Target bond issuance for August/September 2025. Timing
will depend on market conditions.
Staff recommends that the Board of Directors adopt Resolution 2025-16 authorizing the CEO to execute the Power Supply Contract with the California Community Choice Financing Authority (CCCFA) and execute or approve the related supporting agreements to enable SVCE to enter an approximately 30-year energy prepayment transaction with authority to make any minor clarifying modifications to the contracts and agreements as necessary that do not change the intent or economics of the transaction. Staff also requests the Board authorize the CEO to enter into agreements with credit rating agencies, generally, to provide a credit rating for the bonds.
The Board’s authorization will be subject to the following parameters.
Item 4
PRESENTATION
Recommendation
1. The Bonds, issued by CCCFA, will not be guaranteed obligations of SVCE but will be limited obligations of CCCFA payable solely from the revenues and other amounts pledged under the Indenture as the Trust Estate, including amounts owed by SVCE under the Power Supply Contract.
2. The aggregate principal amount of the Bonds shall not exceed $1,250,000,000.
3. The energy savings to SVCE under the Power Supply Contract for the initial Bond Reset Period, including the Annual Refund (as defined in the Power Supply Contract), shall be at least 8 percent.
4. The energy Service Revenue fee in the transaction shall not exceed $1.10 per MWh.
5. The commodity swap counterparty fee in the transaction shall not exceed $0.50 per MWh.
6. If any floating rate bonds are issued, Morgan Stanley shall charge no more than six basis points on the interest rate swap spread to mid-market.
7. The 8 percent saving is relative to a fixed price for energy deliveries under the power supply contract that will be established at the time of the pricing of the bonds using available energy market prices and other information that will be reviewed and approved by SVCE’s financial advisor, PFM Financial Advisors LLC. 6 Item 4
PRESENTATION
Thank you! / Questions?
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Item 4
PRESENTATION
Summary of Transaction Documents
Agreements that will be executed by SVCE:
1. Power Supply Contract
Between SVCE and CCCFA
Provides for the sale of clean energy from CCCFA to SVCE
2. Assigned PPA Payments Custodial Agreement
Between SVCE, CCCFA, Morgan Stanley, MSCG and the Custodian Bank Specifies the terms on handling cashflows among the parties and making required payments to the Energy/PPA Supplier
3. Form of Limited Assignment Agreement
Between SVCE, Morgan Stanley, and Third-party Energy Supplier Details the terms of partially assigning SVCE’s energy contracts to Morgan Stanley Future PPAs will include this agreement
4. Letter Agreement Regarding PPA Assignments
Between SVCE, CCCFA, MSCG, and the Prepaid Supplier
Details the terms of assigning PPAs that SVCE has with a current of future energy Supplier
5. Project Administration Agreement
Between SVCE and CCCFA.
Sets the terms for SVCE to act on behalf of the CCCFA such as scheduling for the energy.
6. Memorandum of Understanding
Between SVCE, Morgan Stanley and CCCFA.
Indemnifies CCCFA against certain ratings fees should the transaction not close •
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Item 4
PRESENTATION
4. Summary of Transaction Documents - Cont’d
Agreements Executed by CCCFA
1. Trust Indenture
Between CCCFA and the Trustee
Sets forth the terms of bond issuance, the rights of bondholders, and secures the cashflows of CCCFA to ensure principal and interest payments to the bondholders
2. Prepaid Agreement
Between CCCFA and Morgan Stanley
Details the terms of the prepayment by CCCFA to Morgan Stanley and the flow of energy from Morgan Stanley to CCCFA
3. Re-pricing Agreement
Between CCCFA and Morgan Stanley
Sets the terms for remarketing and repricing of bonds at future bond repricing periods and the terms for calculation of future energy price discount that will be offered to SVCE.
4. Commodity Swap Agreement and Related Custodial Agreement Between CCCFA and Swap Counterparty (Morgan Stanley also executes a corresponding agreement with the same swap counterparty)
Converts any index payments by SVCE (variable or floating price) to a fixed price 9 •
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Item 4
PRESENTATION
4. Summary of Transaction Documents - Cont’d
Other Document
Preliminary Official Statement
Used to market the bonds
Provides information on the prepayment transaction including the key terms
Includes background information on SVCE
Formation of SVCE, service area, customers, and sources of clean energy Other information to inform bond holders on the financial and operational strength of the organization
10 Estimated Summary of Transaction Cost
($000)
85 Item 4
PRESENTATION
Firm Expected Cost ($000)
Bond and Tax Counsel: Ballard Spahr
Credit Rating: [Moody’s Investors Service/S&P Global Ratings] Issuer’s Counsel and Disclosure Counsel: Chapman & Cutler LLP Municipal Advisor: PFM Financial Advisors LLC
Swap Advisor: PFM Swap Advisors LLC
Investment Advisor
Trustee: Bank of New York (BNY)
Trustee Counsel: NY Counsel
CCCFA JPA Administrative Fee
Green Bond Second Party Opinion (Kestrel Verifiers)
Printing Cost
Contingency/Other
Total COI
Morgan Stanley Underwriting
Underwriters Counsel
Miscellaneous
Total
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Item 4
PRESENTATION
Leverage the Existing Prepay Structure
Benefit from several years of effort to execute prior three transactions Replicate the third transaction’s structure with the same counterparties plus addition of Special Purpose Vehicle (“SPV”) model to diversify third party funding recipient risk Other CCAs have taken or plan to take advantage of market opportunities to execute Prepays Since the execution of our first Prepay in partnership with Ava Community Energy:
3CE, Ava, CPA, MCE, Pioneer, SCP, SDCP, VCE have executed prepays Par Value of CCCFA transactions is over $18 Billion and savings of $100 million/year 12 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 begins
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 4
PRESENTATION
Timeline of SVCE’s First Prepay Transaction
Details of the First Prepay Transaction
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Item 4
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.
14 First Prepay Transaction Cost Breakdown ($000)
Item 4
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
15 Details of the Second Prepay Transaction
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Item 4
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)
16 300
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 4
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
17 Details of the Third Prepay Transaction
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Item 4
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)
18 250
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 4
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
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Item 4
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)
20 1
Item 5: Authorize the Chief Executive Officer to Execute a Power Purchase Agreement with IP Darden, LLC
SVCE Board Meeting
August 13, 2025
Item 5
PRESENTATION
2 Request
Authorize the Chief Executive Officer to execute an agreement with IP Darden, LLC for the procurement of co-located solar energy and battery energy storage system (BESS) in substantial form and any non-substantive sequential amendments and ancillary agreements as follows:
1. IP Darden LLC (PPA)
a) Up to 93.01 MW, or approximately 250,000-270,000 MWh per year a) 91.48 MW or 365.92 MWh 4-hour battery energy storage b) 10-Year term PPA with expected commercial operation dates (COD) and term from June 1, 2028, through May 31, 2038.
c) Total amount not-to-exceed $330,000,000
Item 5
PRESENTATION
3 Executed Long-Term PPAs
• 9 PPAs Online
• 625 MW of nameplate
capacity online
• 1,571 MW of
nameplate capacity
executed
• 78% RPS expected in
2030
SVCE has 9 of its 24 PPAs
online
Item 5
PRESENTATION
Seller Project Name Technology
Generation
MW Storage MW Storage MWh
Term
(years)
SVCE Board
Approval Status
1 MN8 Slate Solar + Storage 93 46.5 186 17 Oct-18 Online 2 Ormat Casa Diablo Geothermal 7 10 Feb-20 Online
3 Atlantica Coso Geothermal 43.8 15 Mar-20 Online
4 Leeward Rabbitbrush Solar + Storage 40 8 20 15 Apr-20 Online 5 NextEra Yellow Pine Solar + Storage 50 26 104 20 May-20 Online 6 AES Mountain View Wind 33.3 20 Apr-21 Online
7 Clearway Victory Pass Solar + Storage 100 25 100 15 May-21 Online 8 Terra-Gen Cameron Crest Wind 77.7 15 May-21 Online
9 AES Baldy Mesa (RA-only) Storage 0 75 300 10 Sep-22 Online 10 Avantus Aratina Solar + Storage 80 50 200 20 Jun-20 Construction 11 174Power
Global Atlas Solar 50 10 Jan-21 Pre-construction
12 SB Energy Angela Solar + Storage 20 10 40 15 Mar-21 Construction 13 Origis San Luis West Solar + Storage 62.5 15.625 62.5 15 Apr-21 Pre-construction 14 ev Renewable Tumbleed
LongDuration
Storage 15.9375 127.5 15 Feb-22 Construction
15 Ormat GeothermalPortfolio Geothermal 16.75 20 Jun-22 Pre-construction 16 OME Fish Lake Geothermal 1.82 20 Jun-22 Pre-construction 17 Middle River
Power Hanford Thermal+ BESS 99.4 131.4 131.4 12 Apr-23 Construction 18 NextEra Grace Solar 120 15 Aug-23 Pre-construction
19 NextEra Yellow Pine III Storage 0 24 96 15 Aug-23 Pre-construction 20 NextEra Yellow Pine III
LongDuration
Storage 0 9 72 15 Aug-23 Pre-construction
21 Pattern SunZia Wind 100 15 Nov-23 Construction
22 VCI Energy Glossy Garlic Solar + Storage 50 50 200 10 Oct-24 Pre-construction 23, 24 Pattern
SunZia Wind North &
South Wind 25 10 May-25 Construction
4 Summer 2024 Procurement Efforts
SVCE Procurement Goals:
• Renewable Portfolio Standard
(RPS)
• Integrated Resource Plan
(IRP) GHG Reductions
• Mid-term Reliability (MTR)
Procurement Order
• Portfolio Diversity
• Technology
• Geography
• Resource Adequacy
• Carbon Free Energy &
Standalone Storage Projects
• Term: minimum 10 years
June 2024
• Issued RFO – seeking diverse
RPS & MTR Resources
Fall 2024
• Cluster 15 resources
prioritized in short-term
2025
• Darden shortlisted and
negotiated
Item 5
PRESENTATION
5 IP Darden III, LLC
• ~6% of SVCE’s retail sales
• IRP GHG reduction target
• 75% RPS by 2030
• SB100 Clean Energy target
of 100% by 2045
• Meets long-term RPS
requirements
• Supports GreenStart and
GreenPrime
• Provides 70 MW of MTR
capacity
• Provides Resource
Adequacy
• Support future prepays
• Darden III Project
• Fresno County, CA
• Parent Company: Intersect Power, LLC
Project
• 91.48-93.01 MW New Solar, subject to final engineering design • To be confirmed by Intersect Power shortly after execution • 91.48 MW New 4-hour Battery Storage
Project Size
• 250-270 GWh annual PCC1 Renewable Energy Products • MTR and RA countable • 10-year, Mid 2028 Expected Delivery
Term Start
• Fixed price ($/kW-mo) for Resource Adequacy and ($/MWh) for Metered Energy. No Escalator
Contract Price
Structure
Item 5
PRESENTATION
6 Annual RPS Progress
Darden will help SVCE
meet ongoing SB100 RPS
requirements as well as
SVCE’s Agency RPS
target that climbs to 75%
in 2030
SB100 Carbon Neutral
targets per SB 1020
60% by 2030
90% by 2035
95% by 2040
100% by 2045
SVCE RPS and Clean Energy Position with Proposed Darden Volumes Item 5
PRESENTATION
Compliance Year
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RPS Volumes GHG Free Volumes Darden •SVCE Clean Position •SVCE RPS Position •SB1OO Target ©Agency RPS Target ©Agency Clean Target Percent
of
Retail
Load
7 Compliance with Long-Term RPS
Procurement Mandate
• SB350 requires 65% of
RPS to come from long-term (>=10 years)
contracts
• Darden adds to
Compliance Period 6
obligations
CP #6
2028-2030
1. State Mandated RPS per Compliance Period - % of
Retail Sales 57%
2. State Mandated % of Mandated RPS (Row #1) to be
Contracted Under RPS Long-term Contracts 65%
3. State Mandated % of Retail Sales with RPS Long-Term
Contracts (Row 2 * Row 1) 37%
4. SVCE: Current Compliance with Row #3: Existing RPS
Achieved with Long-term Contracts 73.6%
5. SVCE: RPS Achieved with Darden agreement 79.1%
Open Position relative to State Mandate (Row #3)
+Above / (-) Short +42.1%
Item 5
PRESENTATION
8 Energy and Reliability Portfolio
Darden increases Clean
Energy by Solar by 6%
Darden increases Clean
RA peak Capacity by
4%
Darden provides 70
MW of MTR eligible
capacity in 2028
Darden will increase
clean energy and
capacity
Estimated for 2030 Annual Energy
(GWh)
Energy Source as a
Percent of Total Retail
Sales
Capacity Source as a
Percent of Total RA
Requirement
Biomass 0 0% 0%
Geothermal 412 10% 7%
Solar with Darden 2218 51% 12%
Wind 713 16% 10%
Large Hydroelectric 915 21% 0%
Battery Storage with
Darden 0 0% 4%
Natural Gas RA-only 0 0% 52%
Hanford - Natural Gas 70 2% 14%
Total 4,328 100% 100%
Item 5
PRESENTATION
9 Darden Project Risk
All power supply projects carry risk which may be managed through sound contract provisions, proper portfolio oversight and diversification of technology, location, tenor and counterparty.
• Development Risk – pre on-line
• Intersect has site control for Darden
• Local and other use permits are complete, under CEC "Opt-In Certification" Program • CAISO interconnection underway (Cluster 14)
• Supply-chain and labor cost
• Financing & Tariff Risk
• Contract allows for a level of storage rate adjustment mirroring tariff changes to accommodate uncertainty and developer costs
• Performance Risk – post on-line
• PV generation
• Energy & RA value
• BESS Operations
Item 5
PRESENTATION
10 Summary
Darden III Project diversifies SVCE’s portfolio while meeting clean objectives
• Contributes an additional 6% of RPS-eligible energy on an annual basis • Helps meet clean energy goals, SB 100, SB 350 and SB 1020 • Reduces GHG emissions
• Can provide Resource Adequacy capacity
• Can provide MTR attributes for 2028
• Co-located solar and storage balance hourly clean energy and capacity positions
• Provides net positive portfolio value
• Can support future prepay volume needs
Item 5
PRESENTATION
11 Request
Authorize the Chief Executive Officer to execute an agreement with IP Darden, LLC for the procurement of co-located solar energy and battery energy storage system (BESS) in substantial form and any non-substantive sequential amendments and ancillary agreements as follows:
1. IP Darden LLC (PPA)
a) Up to 93.01 MW, or approximately 250,000-270,000 MWh per year a) 91.48 MW or 365.92 MWh 4-hour battery energy storage b) 10-Year term PPA with expected commercial operation dates (COD) and term from June 1, 2028, through May 31, 2038.
c) Total amount not-to-exceed $330,000,000
Item 5
PRESENTATION
New SV Clean Energy
PowerPoint Template
Subtitle
Item 6
PRESENTATION
SILICON VALLEY
CLEAN ENERGY
FY 25-26 Proposed
Operating Budget Review
Amrit Singh
Board of Directors
August 13, 2025
Item 6
PRESENTATION
Purpose
In preparation for adopting the budget in
September, review and provide feedback on
the Proposed Budget
1. Budget Timeline and Key Highlights
2. Proposed Budget Forecast
3. Revenue Forecast
4. Reserves Projection
5. Reserve Management
6. Review Reserve Targets and Policy
7. Other Operating Expenses
Main Areas of Discussion
Item 6
PRESENTATION
FY 26 Annual Operating Budget Process
Budget Framework
June
Discuss the high-level
budget framework
and stress analysis
with the Finance and
Admin Committee
June
Present the stress test
analysis to the BOD
August
Review the draft
budget with the
Finance & Admin
Committee
Full-Year Update
August
I Present the draft
! budget to the BOD
I for review and
I feedback
September
Present to the BOD the
budget, incorporating
any feedback received
in August
Fiscal Year Review adjustments to the Present the Review the mid-year Present the mid¬ Start budget to reflect updates to adjusted budget with the Finance year budget to PCIA and PG&E gen rate budget to the and Admin Committee the BOD for assumptions with the Finance BOD for 1
1 approval
and Admin Committee approval \
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Item 6
PRESENTATION
Q) Fiscal Year 26 Annual Budget Highlights
1. Negative Margins over 5-yr Outlook
A negative contribution to reserves of $40.1 million for FY 26 Year-over-Year revenues decline significantly (~$165 million) from anticipated high PCIA and lower PG&E generation rates Results are highly uncertain and dependent on CPUC’s
adoption of Market Price Benchmarks (MPBs) in the fall
5-yr financial outlook largely consistent with results
presented in June 2025 as part of the stress test analyses
3. Customer Discount- Revisit in December
Maintain 4% discount through December 2025 and reduce
the discount to 1% starting next year
Continue to provide an additional 1% directed to low-income customers as bill credits
Revisit in December when setting 2026 customer rates
2. No Major Changes Recommended At This Time
Budget consistent with discussions in June
Adjust the budget in December when there’s more
certainty on next year’s rates
Staff will present financial levers in December
Reserves built over time enable SVCE to take
measured and strategic responses to changes in the
market and business operating environment
4. Relatively Minor Increases in Operating Expenses
Personnel: No additional positions; 3% adjustment for the cost of living
Slight increase in power supply expenses (~$19 million), largely from portfolio changes and increases in energy cost Other expenses: Increase by ~$4 million (updated vendor fees; anticipated legal expenses and other minor changes) 4 •
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SILICON VALLEY CLEAN ENERGY
FY25-26 OPERATING BUDGET
($ in thousands)
FY 2024-25 FY25-26
MID-YEAR
ADJUSTED ANNUAL
DESCRIPTION BUDGET BUDGET $ %
Energy Revenues 523,534 358,416 (165,118) -31.5%
Power Supply Expense 349,478 368,896 19,418 5.6%
Operating Margin 174,056 (10,480) (184,536) -106.0%
Operating Expenses 39,284 43,193 3,909 9.9%
Non-Operating Revenue (Expense) 19,743 21,384 1,641 8.3% Annual Transfers and Other Expenses
Capital Outlay 50 512 462 924.0%
Program Fund 10,530 7,251 (3,279) -31.1%
Nuclear Allocation 3,708 0 (3,708) -100.0%
Customer Bill Relief (Existing CARE/FERA) 5,370 0 (5,370) -100.0% Additional One-Time Bill Credit for All Customers 35,000 0 (35,000) -100.0% Hanford Emissions Mitigation Fund 1,800 0 (1,800) -100.0% Other 0 0 0.0%
TOTAL CAPITAL EXPENDITURES, INTERFUND
TRANSFERS & OTHER 56,458 7,763 (48,695) -86.2%
BALANCE AVAILABLE FOR RESERVES 98,057 (40,052) (138,109) -140.8% Change
Item 6
PRESENTATION
Proposed FY 26 vs. FY 25 Mid-Year Adjusted Budget
Lower revenue from
anticipated high PCIA and
lower PG&E Generation rates
Power Supply Cost increases
mainly due to portfolio position
changes, compliance
obligations, and increases in
energy cost
Program Fund allocation is
lower due to reduced revenue
Customer Bill Relief is shown
as a reduction in revenue
Capital Outlay adjusted for
anticipated new office furniture
Forecasted Margins Drop ~40%
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Item 6
PRESENTATION
Current 2025 Rate Projected 2026 Rate
4% SVCE discount
tn
in
in
in
6 PCIA 1.02 <t/kWh
PCIA 2.11 <t/kWh
5 cn
in
in
in
headroom
decrease
01 co
CD
+-<
CD
CC
Estimated 2025 final and 2026
forecast RPS MPBs are 10%
and 38% lower vs 2025
forecast RPS MPBs
CD
+-<
CD
or
CD
+-•
CD
DI CD
CD
or
CD
0 CD
0 V
01 CN
00 Prices for RA and RPS have
dropped significantly
PG&E 2026 Gen Rate is
estimated to decrease by
^30% Year over Year
SVCE margin is estimated to
decrease by ^40% YoY
Customer billing rates drop
on average by ^30%
Estimated 2025 final and 2026
forecast system RA MPBs are
65% and 64% lower vs 2025
forecast RA MPBs
CD
0 LU
0 CD
0 LU
0 CD
E
o
<n
0 LU
0 PG&E Gen Rate:
15.17 e/kWh
CD
E
o
cn
0 LU
0 PCIA estimated to increase
from 1.02 4/kWh to 2.11
(t/kWh (from ~$41M in CY2025
to over $81M in CY2026)
PG&E Gen Rate:
10.50 c/kWh
7l%SyCEdJscount
* Source: CaICCA NewGen Model analysis using market data as of 6/27/2025 and estimated CPUC attribute benchmarks for CY 2025-2026 (Weighted for SVCE Portfolio Load) ** PG&E 2025 Average Rate, effective January 1, 2025 (Weighted for SVCE Portfolio Load) Above margin analyses ignores minor reductions for franchise fees (0.1 cf/kWh) •
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430
345
271
218
149
366
303
245
204
148
0 100
200
300
400
500
600
FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 DCOH Days Cash on Hand (DCOH)
DCOH (Inc. Unspent Earmarked Funds)* DCOH (Excl. Unspent Earmarked Funds)* Max Reserves (500 DCOH) Target Reserves (350 DCOH)
Min Reserves (120 DCOH)
* Earmarked funds are unspent SVCE Program Funds and Building Funds.
Item 6
PRESENTATION
Reserve Projection
Projected End of FY 26
Reserves:
366 Days of Cash on Hand
(DCOH)
Excludes Unspent Program Funds
and Building Fund
430 Days of Cash on Hand
(DCOH)
If unspent Program Funds and
Building Fund were included in the
reserve calculation
Relevant metric for assessing
financial liquidity
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Item 6
PRESENTATION
1 Reserve Management
5-yr outlook projects drawing ^$75
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
($37.5 million over 5 years)
The current earmarked funds, mostly for
programs, currently around ~$93 million, are
spent over the next 5 fiscal years
Financially, SVCE is well-positioned
DCOH above the minimum threshold of 120
over 5 years
DCOH at 345 is close to the target level of
350 through the end of Sept. 2027
Staff Recommendation (same as discussed in June 2025):
No major changes recommended yet
Adjust the budget in December when there’s more
certainty on next year’s rates
Staff will assess the financial levers
Reassess rate discounts and rate design along
with customer product offerings
Consider increasing financial liquidity
Bank Line of Credit
8 •
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Item 6
PRESENTATION
CD Review Reserve Targets and Policy
Ensure SVCE maintains sufficient
reserves to manage risks such as those
modeled in the Stress Test analysis.
Set the goal target such that if the
stress scenario were to occur, DCOH
stays above120 for the next two fiscal
years.
Set the maximum target (upper target)
such that over the next five fiscal years,
reserves do not fall below 90 DCOH
under the modeled stress scenario
Reserve Targets (DCOH) Current Implied
Targets*
Proposed
Minimum 120 120 120
Goal (Target) 350 380 350
Maximum (Upper Target) 500 800 500
Staff Recommendation:
No changes to reserve targets or policy
Changing the targets has no practical implication,
given that the financial outlook does not support
contributing to reserves
Current targets support guidance from credit rating
agencies
Implied targets based on the stress test analyses presented in June 2025. 9 Item 6
PRESENTATION
1 Operating Expenses and Transfers
Operating Expenses* Change (000s)* Implications/Reasons Personnel Costs** $66
No additional FTE positions requested, COLA 3%, accounting recategorization of consultant fees, other position adjustments, promotions, and actual vacancies.
Other Expenses $3,843 Add’l Data Management, PG&E fees, Professional Services, Marketing, and G&A ★Amounts include 5% operating expense contingency
** Proposes no changes to current benefits. Ongoing benefits include SVCE coverage for employees’ out-of-pocket premiums for dental and vision expenses. Staff informed the Board at the December 11, 2024, meeting to provide this benefit in 2025, which resulted from expected cost savings from lower rates for other benefits.
Capital Outlay Amount (000s) Implications/Reasons
New Office Space Expenditures $462 Estimated new office space expenditures, in preparation for potential office move in FY25-26
Transfers Amount (000s) Implications/Reasons
Programs Transfer $7,251 2% of projected revenues
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Item 6
PRESENTATION
Summary -Negative Financial
Outlook; Results are Highly Uncertain
The biggest risks include:
late-year adjustments to PCIA / PG&E Gen Rate
significant price volatility, especially for RA and RPS resources
regulatory uncertainty on PCIA and balancing account
true-ups from 2025 in 2026
Revisit customer discounts for 2026 later in the year
when there’s more certainty on PG&E and PCIA rates
4% customer discount remains for the first three months of the fiscal year (Oct 2025 to Dec 2025)
An additional 1% towards bill credits remains for low-income customers Staff to assess additional financial levers for managing the 5-year reserve outlook
No changes to reserve targets or reserves policy
Many Risks can Deplete Reserves
Market Prices
Reduced Revenues
via Higher PCIA and
Lower PG&E Rates;
IncreasedPower
Supply Expense
SUPPLY
Project delays;
PPAs Default or
Renegotiate for
Higher Pnces
L&R ISSUES
IRP. RPS. RA
Reform/Penalties,
PCIA. POLR
PAYMENTS LOAD LOSS CYBER-RISK
Customer Defaults DirectAccess Hardware, Software,
and Potential for and Trainingto combat
Expansion Ransomware and
Phishing
Rate Increasesdue
to socialized wildfire
costs. Energy Price
Increaseswill
ultimately impact
usage and
electrification
11 Provide feedback on the Proposed FY 2025-26 operating budget and staff’s recommendation to maintain the
current reserve targets with no changes to the current
Reserves Policy.
Item 6
PRESENTATION
Recommendation
12 Item 6
PRESENTATION
Thank you! / Questions?
13 SILICON VALLEY CLEAN ENERGY
FY25-26 OPERATING BUDGET
($ in thousands)
FY25-26
ANNUAL
DESCRIPTION BUDGET
ENERGY REVENUES
Energy Sales 360,057
Green Prime 2,469
Customer Bill Relief (Existing CARE/FERA) (4,110)
Other Income 0
TOTAL ENERGY REVENUES 358,416
ENERGY EXPENSES
Power Supply 368,896
OPERATING MARGIN (10,480)
OPERATING EXPENSES
Data Management 3,764
PG&E Fees 1,569
Salaries and Retirement 18,870
Professional Services 10,902
Marketing & Promotions 2,347
General & Administrative 5,742
TOTAL OPERATING EXPENSES 43,193
OPERATING INCOME (LOSS) (53,673)
NON-OPERATING REVENUES
Interest Income 21,413
TOTAL NON-OPERATING REVENUES 21,413
NON-OPERATING EXPENSES
Financing 29
TOTAL NON-OPERATING EXPENSES 29
TOTAL NON-OPERATING INCOME (EXPENSES) 21,384
CHANGE IN NET POSITION (32,289)
CAPITAL EXPENDITURES, INTERFUND
TRANSFERS & OTHER
Capital Outlay 512
Program Fund 7,251
Nuclear Allocation 0
Customer Bill Relief (Existing CARE/FERA) 0
Additional One-Time Bill Credit for All Customers 0
Hanford Emissions Mitigation Fund 0
Other 0
TOTAL CAPITAL EXPENDITURES, INTERFUND
TRANSFERS & OTHER 7,763
BALANCE AVAILABLE FOR RESERVES (40,052)
Item 6
PRESENTATION
Fiscal Year 2025-
2026 Annual
Operating Budget
14 ($ in Thousands)
FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30
Operating Revenue (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) Electricity Sales, Net1 $360,057 $344,870 $373,562 $385,869 $399,386 GreenPrime Electricity Premium $2,469 $2,510 $2,336 $2,309 $2,361 Reduction in Revenue $(4,110) $0 $0 $0 $0
Other Income $0 $0 $0 $0 $0
Total Operating Revenues $358,416 $347,380 $375,898 $388,178 $401,747 Operating Expense
Power Supply $368,896 $377,056 $390,399 $389,754 $409,179 Operating Margin $(10,480) $(29,676) $(14,501) $(1,576) $(7,432) Data Management $3,764 $3,952 $4,149 $4,357 $4,575
PG&E Service Fees $1,569 $1,647 $1,729 $1,816 $1,907
Salaries and Retirement $18,870 $19,814 $20,805 $21,845 $22,937 Professional Services $10,902 $11,447 $12,019 $12,620 $13,251 Marketing & Promotions $2,347 $2,464 $2,587 $2,717 $2,852 General and Administration $5,742 $5,526 $5,803 $6,093 $6,397 Transfers to Programs Fund $7,251 $6,948 $7,518 $7,764 $8,035 Total Operating Expenses $419,340 $428,854 $445,009 $446,965 $469,134 Operating Income $(60,924) $(81,475) $(69,111) $(58,787) $(67,387) Nonoperating Revenue
Investment Income $21,413 $16,236 $11,990 $10,449 $8,184 Grant Income $0 $0 $0 $0 $0
Total Non-Operating Revenues $21,413 $16,236 $11,990 $10,449 $8,184 Nonoperating Expense
Financing Cost $29 $29 $29 $29 $29
Capital Outlay $512 $50 $50 $50 $50
Total Non-Operating Expense $541 $79 $79 $79 $79
Non-Operating Income $20,872 $16,157 $11,911 $10,371 $8,106 Change in Net Position/Available for Reserves $(40,052) $(65,317) $(57,200) $(48,417) $(59,281) Begin, Net Financial Position $593,981 $523,874 $434,778 $360,355 $296,351 Adjustment for Program Expenditure and Building Fund2
$(30,055) $(23,779) $(17,224) $(15,588) $(16,196)
End, Net Financial Position $523,874 $434,778 $360,355 $296,351 $220,873 Days Cash On Hand (DCOH) at Year End $494,189 $405,094 $330,670 $266,666 $191,188 Days of cash on hand 430 345 271 218 149
1. Assumptions: 4% overall discount relative to comparable PG&E rates for calendar year 2025. FY 25-26 includes additional bill credit to low income customers totaling $4.1 million. 1% discount for 2026-2030.
2. 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 $20 million in building Fund is assumed to be spent between FY24-25 and FY25-26.
Item 6
PRESENTATION
5-Year Forecast
15 •
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2025** 2026*** 2025** 2026*** 2025** 2026*** 2025** 2026*** 2025** 2026*** Rate Schedule E-TOUC Est. Avg E-TOUCL Est. Avg B-1 Est. Avg B-10S Est. Avg B-19S Est. Avg PG&E Bundled Gen Rate ($/kWh) $ 0.150 $ 0.108 $ 0.150 $ 0.1081 $ 0.151 $ 0.105 $ 0.159 $ 0.111 $ 0.145 $ 0.105 SVCE Gen Rate ($/kWh) $ 0.134 $ 0.084 $ 0.134 $ 0.084 $ 0.134 $ 0.083 $ 0.141 $ 0.087 $ 0.128 $ 0.083 PG&E Delivery Rate ($/kWh) $ 0.286 $ 0.273 $ 0.113 $ 0.108 $ 0.299 $ 0.293 $ 0.216 $ 0.234 $ 0.170 $ 0.202 PG&E PCIA/FF ($/kWh) $ 0.012 $ 0.023 $ 0.012 $ 0.023 $ 0.011 $ 0.021 $ 0.012 $ 0.022 $ 0.011 $ 0.021 Total Electricity Cost ($/kWh) $ 0.432 $ 0.380 $ 0.259 $ 0.215 $ 0.444 $ 0.397 $ 0.369 $ 0.343 $ 0.310 $ 0.306 SVCE CARE/FERA Monthly Credit* $ - $ (17.50) $ (12.00)
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% 1% ~28%* ~24% 4% 1% 4% 1% 4% 1% Est. Av. Monthly Savings vs PG&E** $ 2.36 $ 0.53 $ 19.89 $ 12.53 $ 11.18 $ 1.95 $ 143.58 $ 24.95 $ 865.00 $ 156.07 *Estimated, based on average historic residential usage and number of CARE/FARE customers as of 6/16/2025. **Estimated, based on current PG&E rates as of March 1, 2025. **Estimated, based on CalCCA NewGen Model analysis using market data as of 6/27/2025 (for gen rate and PCIA/FF) and PG&E 2026 ERRA forecast, published on May 15, 2025 (for T&D charges).
Residential Res CARE* Small Commercial Medium Commercial Large Commercial Item 6
PRESENTATION
Total CARE bill discount (including T&D) vs average residential PG&E customer, assuming the same usage (491 kWh/month), is about -49% in 2025 and is estimated to be around -50% in 2026 .
The 2025 monthly savings do not include the one-time August 2025 bill credit, which is equivalent to a 6% additional gen rate discount based on average rate class usage.
On average, CARE usage is about 9% lower than that of an average residential (E-TOUC) customer.
Estimated Customer Billing Rate Breakdown and
Comparison Y-o-Y
16 SVCE PG&E SVCE PG&E SVCE PG&E SVCE PG&E SVCE PG&E
Rate Schedule E-TOUC E-TOUC B-1 B-1 B-10 B-10 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) 0 0 0 0 499 499
PG&E Electric Delivery $ 140.60 $ 140.60 $ 55.60 $ 55.60 $ 552.58 $ 552.58 $ 4,879.01 $ 4,879.01 $ 25,303.41 $ 25,303.41 Electric Generation $ 65.57 $ 85.14 $ 65.72 $ 85.32 $ 247.72 $ 320.32 $ 3,176.34 $ 4,104.98 $ 19,068.59 $ 24,832.27 CARE/FERA monthly bill credit $ (17.50)
PG&E Added Fees (PCIA, Franchise) $ 5.78 $ (11.43) $ 5.78 $ (11.43) $ 20.68 $ (40.74) $ 264.39 $ (520.67) $ 1,649.74 $ (3,248.94) Average Total Cost $ 211.95 $ 214.31 $ 109.60 $ 129.49 $ 820.97 $ 832.15 $ 8,319.74 $ 8,463.32 $ 46,021.73 $ 46,886.73 Average Monthly Savings $ 2.36 $ 19.89 $ 11.18 $ 143.58 $ 865.00 *Estimated, based on current PG&E rates as of March 1, 2025 Residential Res CARE/FERA* Small Commercial Medium Commercial Large Commercial Item 6
PRESENTATION
(^) Typical Customer Bill Savings
(Current Rates)
17 Item 6
PRESENTATION
Average Effective Customer Billing Rates
Customer Billing Rate (C/kWh)
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
‘Average effective billing rate inclusive of PCIA, weighted for SVCE portfolio load. The 10% discount for 2025 includes a one-time bill credit, equal to 6% annual discount (up to $35 million in total additional credits). 18 CARE Income Guidelines
(valid through May 31, 2026)
Number of
people in
household
Total gross annual
household income
1-2 $42,300 or less
3 $53,300 or less
4 $64,300 or less
5 $75,300 or less
6 $86,300 or less
7 $97,300 or less
8 $108,300 or less
9 $119,300 or less
10 $130,300 or less
Each
additional
person, add
$11,000
*Before taxes and based on all current income sources.
FERA Income Guidelines
(valid through May 31, 2026)
Number of
people in
household
Total gross annual
household income*
1-2 $42,301 - $52,875
3 $53,301 - 66,625
4 $64,301 - $80,375
5 $75,301 - $94,125
6 $86,301 - $107,875
7 $97,301 - $121,625
8 $108,301 - $135,375
9 $119,301 - $149,125
10 $130,301 - $162,875
Each
additional
person, add
$11,000 - $13,750
*Before taxes and based on all current income sources.
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Item 6
PRESENTATION
CARE and FERA Customer Eligibility Criteria
Eligible low-income customers
who are enrolled in the CARE
program receive a 30-35%
discount (not including additional
SVCE discount and bill credits) on
their total electric bills and a 20%
discount on their natural gas bills.
FERA offers an 18% discount
on total electric rates but not
on gas rates. CARE and FERA
share one application. If
applicants do not qualify for
CARE, they might still qualify
for FERA.
Eligibility for California Alternate Rates for Energy
(CARE) or Family Electric Rate Assistance (FERA) is
based on household income and size.
For CARE, eligibility can also be obtained through
enrollment in one of the qualifying public assistance
programs*
* To qualify through other public assistance programs:
Someone in a household must take part in any of the following public assistance programs:
Low Income Home Energy Assistance Program (LIHEAP)
Women, Infants, and Children (WIC)
CalFresh/SNAP (Food Stamps)
CalWORKs (TANF) or Tribal TANF
Head Start Income Eligible (Tribal Only)
Supplemental Security Income (SSI)
Medi-Cal for Families (Healthy Families A & B)
National School Lunch Program (NSLP)
Bureau of Indian Affairs General Assistance
Medicaid/Medi-Cal (under age 65)
Medicaid/Medi-Cal (age 65 and over)*
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Item 6
PRESENTATION
1% customer discount over 12 months of 2026 is ~$3.7 million Monthly Average Bill Savings of 1% Discount:
Residential - ^$0.53
Small Commercial - ~$1.95
Medium Commercial -^$24.95
Continue to provide competitively priced and high-value services to SVCE customers Funds not needed to cover cost-of-service flow to
Customers Via lower SVCE rates (discount to comparable
PG&E rates)
Cost-of-service includes funds needed to cover
operations, meet reserve targets, and fund
decarbonization programs
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Item 6
PRESENTATION
CD Power Supply Costs
Fiscal Year 2026 (Oct ‘25- Sep ‘26) costs, forecasted at $368.9 million dollars, are estimated to be $19.4M higher than the FY2025 (Oct '24- Sep ’25) forecast at mid-year budget ($349.5MM) Favorable Drivers:
$1.4MM lower ISO charge costs based on forecast updates from historical data Offset by Additional Costs:
$3.9MM higher RA costs due to increased contract costs to procure MTR products at a premium to system RA $7.1MM higher cost of Environmental products due to increased procurement costs with PPA at-risk, expected higher 2026 RPS MPB
$9.8MM higher cost of energy supply due to an increase in energy market prices, and a higher energy net open position
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Item 6
PRESENTATION
1 Reserve Target Definitions
Current Reserve Targets:
Minimum Reserve Level: 120 DCOH
If reserves fall below the minimum level, develop plans to restore them to the minimum level within two fiscal years.
Reserve Goal: 350 DCOH
No action required if the reserves are above the minimum and below the maximum levels.
Maximum Reserve Level: 500 DCOH
If reserve funds are projected to exceed the maximum level, present the Board of Directors with options for disposition of those reserves during the next budget cycle.
22 512
430
345
271
218
149
495
456
352
284
205
153
0 100
200
300
400
500
FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 DCOH Days Cash on Hand (DCOH)
FY25-26 Proposed Budget vs. Stress Test (Base Case)
FY25-26 Proposed Budget DCOH (Inc. Unspent Earmarked Funds)* Stress Test - Base Case - DCOH (Inc. Unspent Earmarked Funds)* * Earmarked funds are unspent SVCE Program Funds and Remaining Building Funds.
Item 6
PRESENTATION
DCOH Compared to Stress Tests (Base Case)
512
430
345
271
218
149
498
423
193
34 -114
-238 -300
-200
-100
0 100
200
300
400
500
FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 DCOH Days Cash on Hand (DCOH)
FY25-26 Proposed Budget vs. Stress Test (Stress Case)
FY25-26 Proposed Budget DCOH (Inc. Unspent Earmarked Funds)* Stress Test - Stress Case - DCOH (Inc. Unspent Earmarked Funds)* * Earmarked funds are unspent SVCE Program Funds and Remaining Building Funds.
Item 6
PRESENTATION
DCOH Compared to Stress Tests (Stress Case)
Item 6
PRESENTATION
Programs Capacity is Increasing
$130M allocated over the
last 6 years
$75M allocated over the last
3 years
Some programs are open
multiple years so may take
time to ramp up spending
Programs Fund Availability
Spent: Already paid out to customer or vendors
Available Now: Open to customers -includes available and reserved customer incentives (e.g. FutureFit Homes), or funds contracted with a vendor (e.g. eHub, fleet electrification support) Available Soon: In a planning phase, but will plan to launch in 2025 Future/Still Planning: Won’t launch until 2026 or after and funds not currently allocated to a program •
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Item 6
PRESENTATION
1 Staffing
Current Budgeted
Staffing
62 Full-time Employees (5 Vacancies)
3 intern positions
3 Part-time Employees
3 Climate Corps Fellows
1 Long-term Independent Consultant
No additional headcount request for FY25-26.
FY FTE Request Summary FTE
Authorized in the FY24-25 Annual Budget 62
Authorized in the Midyear 24-25 Budget +5
Current Authorized FTE Total 67
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Spent (~$11.6M),
58%
Remaining (~$8.4M),
42%
Office Building Fund
Spent (~$11.6M) Remaining (~$8.4M)
Item 6
PRESENTATION
SVCE New Office Space Budget Update
SVCE Closed the Purchase of 298 S. Sunnyvale Ave. Office Space in Feb 2025 BOD approved allocation of $20M to the Office Building Fund during FY23-24 Midyear Budget in 2024 Since closing of the purchase, staff has been working through design, permitting, and constructions for an anticipated office move around 2026 Q3
Remaining building fund will continue to be allocated for construction and renovation of the office space, Board Chamber, and a “warm shell” for the community space
Staff will return to the Board with full options for the community space including associated budget Other capital costs such as office furniture and on-going facility operating costs have been included in the Proposed FY25-26 budget
2025 02 # 2025 Q3 2025 Q4 2026 Q1 2026 Q2 2026 Q3
BOD/public input on • Start • Finalize design • Permits • Construction • Ready for meeting space detailed and submit for issued move-in
Onboard PM design of permits • Construction
Solicitation and workspace, • Release RFP for begins
selection for design Board construction • Update
and architecture Chambers, services designs as
firm and build (tentative) needed for
Board delegates flow • Return to BOD community
approval of with options for space
architecture firm to community
CEO space. 27
*Timeline subject to change
Item 6
PRESENTATION
Medium-Term Load Forecast by Sector
Annual Retail Sales Forecast by Class
5,000
4,500
4,000
3,500 39% 39% 38% 38%
3,000
5 2,500
2,000 28% 28% 27% 27%
1,500
1,000
500
FY2025 FY2026 FY2027 FY2028 FY2029
Residential Small/Medium Commercial Large Commercial Agricultural Light 28 Item 6
PRESENTATION
Residential Sales Small Commercial Sales
500
0 29
Sales by Class
Share of SVCE Sales by Class
w/oEVandPV Res //o EV and PV SCom
2025 2030 2035 2045 Driver
Residential 31% 35% 40% 47% Load Modifiers
Small
Medium
22% 20% 19% 18% Near-term: BTM PV, Long-term: public EV charging Large 38% 35% 32% 28% Economy (no new data centers)
Agriculture 1% 1% 1% 1% Held Constant
Lighting 0% 0% 0% 0% Change in Residential Customers, but minimal impact • RPS – Renewable Portfolio Standard - The RPS program requires investor-owned utilities (IOUs), publicly owned utilities (POUs), electric service providers (ESPs), and community choice aggregators (CCAs) to increase procurement from eligible renewable energy resources to 60% of total procurement by 2030. RPS eligible resources include solar, wind, small hydro, biomass and geothermal. • RA – Resource Adequacy - Under its Resource Adequacy (RA) program, the California Public Utilities Commission (CPUC) requires load-serving entities—including investor-owned utilities (IOUs), electric service providers (ESPs), and community choice aggregators (CCAs)—to demonstrate in both monthly and annual filings that they have purchased capacity commitments to contribute their share of system reliability.
• MTR – Mid-Term Reliability – Procurement order issued by the CPUC to focus on securing sufficient online resources to ensure reliability through at least 2028.
• PCIA – Power Charge Indifference Adjustment - Designed to recover the above market cost of long-term power purchased on behalf of customers who later departed the IOU to be served by a CCA. The calculation methodology is set by the CPUC, and the amount is calculated annually, with vintages set for each year of customer departures. • OIR –Order Instituting Rulemaking - A procedural document that is issued by the CPUC to start a formal proceeding. A draft OIR is issued for comment by interested parties and made final by vote of the five Commissioners of the CPUC. • ERRA – Energy Resource Recovery Account - ERRA proceedings are used to determine fuel and purchased power costs which can be recovered in rates. The utilities do not earn a rate of return on these costs, and only recover actual costs. The costs are forecast for the year ahead, and actual costs are retroactively trued-up via balancing accounts. • MPBs – Market Price Benchmarks - estimated values per unit associated with key components of energy portfolios, such as the Energy Index, Renewable Portfolio Standard (RPS) Adder, and Resource Adequacy (RA) Adder.
Item 6
PRESENTATION
CD Glossary
30 Item 6
PRESENTATION
0 SVCE Planning & Budgeting Process
Budget
Comprehensive assessment of risks and
opportunities to optimally achieve mission
SVCE Mission: Reduce dependence on fossil fuels by
providing carbon-free, affordable, and reliable electricity and innovative programs for the SVCE community.
Funding in alignment with achieving
the strategic focus areas
Organization-wide priorities and
alignment toward achieving the mission
31 • Subtitle
New SV Clean Energy
PowerPoint Template
Introduction to FY 2025-26 Strategic
Focus Areas and Strategic Plan
Item 7
PRESENTATION
•
•
•
•
•
Item 7
PRESENTATION
CD Overview
Review Fiscal Year 2025-26 Strategic Plan & Budget process and timeline
Overview of Strategic Plan and Strategic Focus Areas
Existing Strategic Focus Areas (SFA)
Initial Feedback on Strategic Focus Areas and
Recommendation
Next Steps
2 Item 7
PRESENTATION
SVCE Planning & Budgeting Process
Budget
Organization-wide priorities and alignment toward
achieving the mission. Helps set CEO & Board priorities.
Comprehensive assessment of risks and
opportunities to optimally achieve mission and helps
direct strategic focus areas.
SVCE Mission: Reduce dependence on fossil fuels by
providing carbon-free, affordable, and reliable
electricity and innovative programs for the SVCE
community.
Identifies funds needed to achieve Strategic
Focus Areas and Strategic Work Plan
3 Item 7
PRESENTATION
Strategic Plan-SFA & Goals
0 FY 2025-2026 Timeline
May 2025 Sep 2025
April 2025
May 2025
June 2025 Sep 2025
•Fin & Admin Com
& Board Reviews
Draft Budget &
Reserves Target
•Staff reviews cost,
drivers, needs
•Fin & Admin
Com Review
Stress Test &
Budget
Framework
•Board Reviews
Stress Test &
Budget
Framework
August
2025 •Board
Approves FY 25-
26 Operating
Budget &
Reserves Target
Mar -Apr
2025
August
2025
Executive Com
Feedback on
SFAs
Board
Approval of FY
25-26
Strategic Plan
Board
Discussion on
SFAs & Goals
EC Review SP
ERM
Internal Staff
Review of SP
Operating Budget & Reserve
Targets
4 Item 7
PRESENTATION
O Strategic Plan & Focus Areas
Mission
Reduce dependence on fossil fuels by providing carbon-free, affordable, and reliable electricity and innovative programs for the SVCE community
©
SILICONVALLEY
CLEAN ENERGY
Item 7
PRESENTATION
CD Focus on Strategic Focus Areas
Scan the Landscape -Key Drivers
• New Threats/Risks/Challenges
• Opportunities
• New priorities -Board, customer or staff directed
Review and Reflect on Existing SFAs
• Progress on achieving -is it now operational?
• Priority - top 5 item to focus on for next 12 months? • Is the SFA unachievable or beyond our scope?
• Staff input-March -June -in process
• Executive Committee initial input-May 2025
• Board input-August 2025
Propose modifications, deletions and/or new SFAs
• Existing
• New 6
•
•
•
•
•
•
Item 7
PRESENTATION
Executive
Orders
New Tariffs
New Legislation B Los Angeles Times
Regulatory
Change
Budget Deficit
growth
bl preparation plant near Welch, W.Va. States tht
Jig are still very reliant on the fuel. Evelyn Hockste
Leftover
allowance
for sale m
Excess
CO, ...
Trump Wants to Reverse Coal’s Long
Decline. It Won’t be Easy.
Coal has been displaced by cheap and plentiful natural gas and the rapid growth of wind and solar energy — forces that President Trump will struggle to do away with.
^oney
Macro Events & Uncertainty
WALL
California
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Item 7
PRESENTATION
O Key Drivers
Market fluctuations, regulatory changes and pending legislatives bills create planning challenges
Challenges/Threats:
Compressed margins due to PCIA and PG&E
gen rate
Regulatory changes to PCIA
Overall high rates
Cost of procuring long-term renewable
resources
Load growth uncertainty
Procurement Mandates
Restrictions on local reach codes
Decarbonization cost-less tax credits and
subsidies
Opportunities/Strengths:
Regionalization, could reduce costs
Reliable and Clean Power Procurement
Program (RCPPP) to avoid procurement
mandates
All focused on Affordability
Extensive program offerings
Clean Energy & Capacity portfolio
Customer and stakeholder support and
relationships
Healthy reserves
Engaged, smart and productive staff
8 Item 7
PRESENTATION
FY 2025 Strategic Focus Areas
SFA1
Expand
Affordability
Efforts
Expand rate-related
education,
legislative and
regulatory
advocacy, and rate¬
setting principles to
support all-electric
as the most
affordable and
competitive option
for customers.
SFA2
Expand Clean &
Reliable Grid
Actions
Develop a pathway
to 2030, 2035 and
2045 for clean
energy delivery at
scale; evaluate
SVCE product
offerings to ensure
the agency
provides customers
a sustainable
balance of clean,
reliable and
affordable energy.
Engage
commercial and
industrial
customers in
new/expanded
SVCE offerings,
including
electrification and
demand-side
management
programs, and
customized
generation
services.
Inform and prepare
for upcoming
requirements such
as BAAQMD and
CARB rules to
ensure they are
implemented
sensibly,
successfully and
equitably; continue
scaling SVCE
efforts.
SFA3 SFA4
Expand Offerings
to C/l Customers
Prepare Region
for Electrification
at Scale
SFA5
Attract & Retain
Employees
Be the Employer of
Choice and
maintain culture of
innovation,
collaboration, high
performance, and
passion for our
mission.
9 9
•
•
•
•
•
Item 7
PRESENTATION
(^) Initial Thoughts -SFAs
Strategic Focus Areas represent the Board's priorities for the upcoming year SFA1: Expand Affordability Efforts
SFA2: Expand Clean and Reliable Grid Actions
SFAS: Expand Offerings to C/l Customers
SFA4: Prepare Region for Electrification at Scale
SFA5: Attract & Retain Employees
RED- Active but still more to be done
YELLOW -In progress, work continues
GREEN -In a good place
•
•
•
Item 7
PRESENTATION
CD Initial Feedback
SFAs Feedback, Executive Committee May 2025
Existing SFAs are still relevant and there is additional work to be done Given the challenges/opportunities ahead, would be good to include a reference to adaptability somewhere in the plan
Suggestion to move to a biennial review cycle, given the focus areas and goals remain relevant
11 Item 7
PRESENTATION
Proposed SFA Amendments
SFA1: Expand Affordability Efforts
Expand rate-related education, legislative and regulatory advocacy, and rate¬ setting principles to support all-electric as the most affordable and competitive option for customers.
SFA2: Expand Clean & Reliable Grid Actions
Develop a pathway to 2030, 2035 and 2045 for clean energy delivery at scale Design and assess scenarios which align with SVCE’s long-term clean targets to determine most affordable, viable and low risk pathways; evaluate SVCE product offerings to ensure the agency provides customers a sustainable balance of clean, reliable and affordable energy.
SFA3: Expand Offerings to C/l Customers
Engage commercial and industrial customers in new/expanded SVCE offerings, including electrification and demand-side management programs, and customized generation services; track and serve new large loads. 12 Item 7
PRESENTATION
CD Proposed SFAs
SFA4: Prepare Region for Electrification at Scale
Inform and prepare for upcoming requirements such as Bay Area Air District AAQMD and California Air Resources BoardARB rules to ensure they are implemented sensibly, successfully, and equitably; continue scaling SVCE efforts.
SFA5: Attract & Retain Employees
Be the Employer of Choice and maintain culture of innovation, collaboration, high performance, and passion for our mission.
13 Item 7
PRESENTATION
(D FY 2025 Strategic Plan - Goals
1. Advance policies which support SVCE’s mission to reduce dependence on fossil fuels.
2. Long-term, target for 100% clean energy annually by building a balanced portfolio with consideration for both affordability and reliability while exploring long-term pathways to clean power supply.
3. Create a long-term decarbonization plan that integrates supply and demand changes, opportunities, and challenges.
4. Acquire power supply resources in a cost-effective manner to meet legislative and regulatory obligations, Board directives and customer specific products.
5. Manage and optimize load and power resources to meet affordability, GHG reduction and reliability objectives.
6. Maintain healthy financial position; avoid failures in management of market risk, credit risk, liquidity risk, operational risks, and enterprise risks.
7. Support all SVCE communities to decarbonize through local investments that reduce barriers and demonstrate sensible, scalable, and equitable solutions.
8. Engage customers and community stakeholders to build trust of SVCE and advance decarbonization.
9. Implement industry best practices to enable data-driven decision making across the organization; enhance systems, standards and procedures to streamline business processes and improve operational effectiveness and reliability (aka SVCE
3.0).
10. Hire, retain and develop high-performing talent via competitive benefits and rewarding work culture. 14 Item 7
PRESENTATION
Request and Next Steps
Request:
Receive feedback on the proposed changes to SFAs and request to move to a biennial Strategic Plan starting in fiscal year 2025-26 Next Steps
1. Based on Board feedback, modify Strategic Plan -SFAs and Goals
2. Seek Executive Committee support in August
3. Seek Board approval in September
4. Implement in October with continued quarterly progress reports 15 Item 7
PRESENTATION
Strategic Plan-SFA & Goals
May 2025 Sep 2025
April 2025
May 2025
June 2025 Sep 2025
•Fin & Admin Com
& Board Reviews
Draft Budget &
Reserves Target
•Staff reviews cost,
drivers, needs
•Fin & Admin
Com Review
Stress Test &
Budget
Framework
•Board Reviews
Stress Test &
Budget
Framework
August
2025 •Board
Approves FY 25-
26 Operating
Budget &
Reserves Target
Mar -Apr
2025
August
2025
Executive Com
Feedback on
SFAs
Board
Approval of FY
25-26
Strategic Plan
Board
Discussion on
SFAs & Goals
EC Review SP
ERM
Internal Staff
Review of SP
Operating Budget & Reserve
Targets
16 Item 7
PRESENTATION
Thank you
17 New SV Clean Energy
PowerPoint Template
• Subtitle
Item 8
PRESENTATION
Updated 8/12/25
Resources to support the transition to
pollution-free buildings and transportation.
August 2025
VALLEY
ENERGY
Item 8
PRESENTATION
Updated 8/12/25
Objective
Provide the Board with a status update on agency electrification readiness planning
SILICON VALLEY
CLEAN ENERGY 2
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•
Item 8
PRESENTATION
Updated 8/12/25
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 8
PRESENTATION
Updated 8/12/25
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
•
•
Item 8
PRESENTATION
Updated 8/12/25
Passage of AB130 limits the ability of local
jurisdictions to adopt reach codes September 2025
- December 2031.
There are some exceptions
Only impacts residential - commercial reach codes
remain a go
Carve out for jurisdictions where electrification
codes are linked to their general plan
requirements/goals - if general plan was adopted
before June 10, 2025.
Even with AB130, we can still make
progress!
→
→
→
Item 8
PRESENTATION
Updated 8/12/25
Item 8
PRESENTATION
Two agencies working
Updated 8/12/25
to adopt before October; four
working to adopt before December 1; five evaluating.
Jurisdiction AC-to-HP Flex Path Code
(electrify at remodel)
Electric Readiness
Code (prewire)
Campbell October 0 TBD
Before Oct 1
Cupertino TBD TBD TBD
Before Dec 1
Gilroy TBD TBD TBD
No Go
Los Altos October TBD October
Los Altos Hills November 0 TBD
Los Gatos TBD TBD TBD
All agencies are
also moving
forward to
increase training
and modernize
Milpitas 0 0 0
Monte Sereno TBD TBD TBD
Morgan Hill 0 0 0
permitting. Mountain View September 0 September
Saratoga October 0 October
Sunnyvale August 0 August
County of Santa Clara TBD TBD TBD
Item 8
PRESENTATION
Updated 8/12/25
SVCE is here to support Board members and member
agency staff.
1. Staff in communication with all13 jurisdictions
2. Available for Board 1:1s as needed
3. Technical resources,Special Counsel resources, communications resources
SILICON VALLEY
CLEAN ENERGY 8
Item 8
PRESENTATION
Updated 8/12/25
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 9
Item 8
PRESENTATION
Updated 8/12/25
Thank you! M svcleanenergy.org
|^| [email protected]
SILICON VALLEY
CLEAN ENERGY 10
Item 8
PRESENTATION
Updated 8/12/25
Appendix
SILICON VALLEY
CLEAN ENERGY 11
Item 8
PRESENTATION
Each agency selects
Updated 8/12/25
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 8
PRESENTATION
Updated 8/12/25
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 13
•
•
•
•
Item 8
PRESENTATION
Updated 8/12/25
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
Note: These are meant to be illustrative examples. Assumptions in the appendix. 14