1 • Subtitle
New SV Clean Energy
PowerPoint Template
Fiscal Year 2025 -2026 Budget
Update
Amrit Singh
Finance and Administration Committee
November 24, 2025
Item 3
PRESENTATION
SILICON VALLEY
CLEAN ENERGY
Fiscal Year 2025-2026 Budget
Update
Amrit Singh
Finance and Administration Committee
November 24, 2025
2 Main Areas of Discussion
1. Highlights of the updated financial
forecast
2. Comparison of the adopted and
updated Budget
3. SVCE’s financial reserves outlook and
management
4. Setting SVCE’s rates for 2026
Purpose
1. Review update d fiscal year 2025-2026
(FY 26) budget and 5-year financial
forecast
2. Recommend that the Board approve
the updated budget and the proposed
SVCE rate changes
Item 3
PRESENTATION
Purpose
1. Review updated fiscal year 2025-2026
(FY 26) budget and 5-year financial
forecast
2. Recommend that the Board approve
the updated budget and the proposed
SVCE rate changes
Main Areas of Discussion
1. Highlights of the updated financial
forecast
2. Comparison of the adopted and
updated Budget
3. SVCE’s financial reserves outlook and
management
4. Setting SVCE’s rates for 2026
3 Highlights of Updated Financial Forecast
1. 5-year margins remain negative - Under business -as-usual* scenario • Largely similar to the September 2025 Budget (Adopted Budget) Outlook • Days Cash on Hand declines to ~150 at the end of the 5 -year forecast period (below the target level of 350 but above the minimum level of 120 DCOH)
2. FY 26 draw on reserves increases to $60 million from $40 million (Adopted Budget)
3. 2026 Customer Discount - 1% and an additional $12 bill credit for low - income customers
• Reserves built for such financial outcomes enable SVCE not to make any abrupt changes • Analyses support no significant impact from a one -year delay in implementing any changes • Staff will continue the work on Financial Levers Analyses and will engage further with the Board, the Executive Committee, and the Finance and Administration Committee * Business -as-usual here is defined as all SVCE rates set at a competitive advantage to comparable PG&E rates.
Item 3
PRESENTATION
Highlights of Updated Financial Forecast
1. 5-year margins remain negative - Under business-as-usual* scenario Largely similar to the September 2025 Budget (Adopted Budget) Outlook Days Cash on Hand declines to ~150 at the end of the 5-year forecast period (below the target level of 350 but above the minimum level of 120 DCOH)
2. FY 26 draw on reserves increases to $60 million from $40 million (Adopted Budget)
3. 2026 Customer Discount - 1% and an additional $12 bill credit for low-income customers Reserves built for such financial outcomes enable SVCE not to make any abrupt changes Analyses support no significant impact from a one-year delay in implementing any changes Staff will continue the work on Financial Levers Analyses and will engage further with the Board, the Executive Committee, and the Finance and Administration Committee * Business-as-usual here is defined as all SVCE rates set at a competitive advantage to comparable PG&E rates. 3 4 FY 26 Adopted vs. Adjusted Budget
~$40 million decrease in
revenue projection
Reflecting CPUC -adopted market
price benchmarks and a
continued decline in energy
prices
Offset by ~$25 million
decrease in Power Supply
Costs
Primarily from a decline in energy
prices and also from a favorable
regulatory outcome, reducing
interim procurement in meeting
compliance obligations
Transfer of $5.5 million to the
building fund because of higher -
than-expected expenditures
FY25-26 FY25-26
ADOPTED ADJUSTED
($ in thousands) BUDGET BUDGET $ %
Energy Revenues 358,416 319,324 (39,092) -10.9%
Power Supply Expense 368,896 344,221 (24,675) -6.7%
Operating Margin (10,480) (24,897) (14,417) 137.6%
Operating Expenses 43,193 43,193 0 0.0%
Non-Operating Revenue (Expense) 21,384 20,854 (531) -2.5% Annual Transfers and Other Expenses
Capital Outlay 512 512 0 0.0%
Additional Transfer to Building Fund 0 5,500 5,500 100.0% Program Fund 7,251 7,251 0 0.0%
TOTAL CAPITAL EXPENDITURES, INTERFUND
TRANSFERS & OTHER 7,763 13,263 5,500 70.8%
BALANCE AVAILABLE FOR RESERVES (40,052) (60,500) (20,448) 51.1% Change
Item 3
PRESENTATION
FY 26 Adopted vs. Adjusted Budget
"$40 million decrease in
revenue projection
Reflecting CPUC-adopted market
price benchmarks and a
continued decline in energy
prices
Offset by "$25 million
decrease in Power Supply
Costs
Primarily from a decline in energy
prices and also from a favorable
regulatory outcome, reducing
interim procurement in meeting
compliance obligations
Transfer of $5.5 million to the
building fund because of higher-than-expected expenditures 5 Forecasted Margins Drop ~50%
from 2025 Levels
Comparing 2025 Rate
(first bar) to Forecast 2026
Rate (third bar)
• Customer Rate (inclusive
of PCIA) Drops ~ 30% (~24%
if including one -time bill credit)
• SVCE Margin Drops
~50%
• PG&E 2026 Gen
Rate Drops ~30%
• PCIA Increases
230%
• Rates are not final
until late December
PG&E Gen Rate:
10.50 ¢/kWh SVCE Gen Rate 7.03 ¢/kWh
1% SVCE discount
PCIA 3.37 ¢/kWh
SVCE Customer Billing Gen Rate 10.40 ¢/kWh
* Source: CalCCA NewGen Model analysis using market data as of 6/27/2025 and estimated CPUC attribute benchmarks for CY 2025 -2026 (Weighted fo r SVCE Portfolio Load) ** PG&E 2025 Average Rate, effective January 1, 2025 (Weighted for SVCE Portfolio Load) *** Estimated 2026 rates, based on PG&E Fall Update Errata, effective January 1, 2026 (Weighted for SVCE Portfolio Load) Above margin analyses ignores minor reductions for franchise fees (0.1 ¢/kWh) 2025 Rate ** Adopted Budget
Forecast 2026 Rate *
PG&E Gen Rate:
15.17 ¢/kWh SVCE Gen Rate 13.55 ¢/kWh
4% SVCE discount
PCIA 1.02 ¢/kWh
SVCE Customer Billing Gen Rate 14.57 ¢/kWh
PG&E Gen Rate:
10.50 ¢/kWh SVCE Gen Rate 8.29 ¢/kWh
1% SVCE discount
PCIA 2.11 ¢/kWh
SVCE Customer Billing Gen Rate 10.39 ¢/kWh
Updated Budget
Forecast 2026
Rate***
• Energy
• RA
• RPS
• Energy
• RA
• RPS
Item 3
Comparing 2025 Rate
PRESENTATION
(firstbanto Forecast 2026
Rate (third bar)
Customer Rate (inclusive
of PCIA) DrOpS 30% ("24%
if including one-time bill credit)
SVCE Margin Drops
"50%
PG&E 2026 Gen
Rate Drops ~30%
PCIA Increases
230%
Rates are not final
until late December
Rate***
4% SVCE discount
PG&E Gen Rate:
15.17 <t/kWh
Updated Budget
Fprecast2026
2025 Rate** Adopted Budget
Forecast 2026 Rate*
* 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) 5 *" Estimated 2026 rates, based on PG&E Fall Update Errata, effective January 1, 2026 (Weighted for SVCE Portfolio Load) Above margin analyses ignores minor reductions for franchise fees (0.1 cf/kWh) 6 Reserve Projection Under Business -as-Usual Scenario
(Rates Set Relative to Comparable PG&E Rates)
Projected End of FY Reserves:
• 458 Days of Cash on Hand
(DCOH)
• If unspent Program Funds and
Building Fund were included
in the reserve calculation
• 387 Days of Cash on Hand
(DCOH)
• Excludes Unspent Program
Funds and Building Fund
458
357
284
218
151
387
309
254
203
151
(50)
50 150
250
350
450
550
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 3
PRESENTATION
Reserve Projection Under Business-as-Usual Scenario
(Rates Set Relative to Comparable PG&E Rates)
Projected End of FY Reserves:
458 Days of Cash on Hand
(DCOH)
If unspent Program Funds and
Building Fund were included
in the reserve calculation
387 Days of Cash on Hand
(DCOH)
Excludes Unspent Program
Funds and Building Fund
6 7
Business -as-Usual Scenario with Additional
Operating Liquidity
• Additional Operating Liquidity:
1. Lag in customer uptake of
programs
2. Operational flexibility within
operating expenses (other than
power supply expenses)
• Revised reserve projections
assume
• $25 million program fund
balance remains at the end of
the 5 -year period - (Beginning of
FY 26 unspent program fund balance
was ~$100 million)
• $6.5 million a year in
expected underrun of other
operating expenses 469
380
316
258
200
393
322
273
228
181
(50)
50 150
250
350
450
550
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 3
PRESENTATION
Business-as-Usual Scenario with Additional
Operating Liquidity
Additional Operating Liquidity:
1. Lag in customer uptake of
programs
2. Operational flexibility within
operating expenses (other than
power supply expenses)
Revised reserve projections
assume
$25 million program fund
balance remains at the end of
the 5-year period - (Beginning of
FY 26 unspent program fund balance
was ~$100 million)
$6.5 million a year in
expected underrun of other
operating expenses
7 8
Keeping DCOH Above 250
( Under Business -as-Usual Scenario with Additional Operating Liquidity) To keep DCOH above 250,
on average, SVCE rates
would need to be about
1.8% higher than PG&E
starting in CY 2026 (including
CARE/FERA)
479
401
347
299
250
403
343
303
268
230
(50)
50 150
250
350
450
550
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.
Recommended Reserve
Management Goal: Keep
DCOH Above: 250 (under
these financial conditions)
Item 3
PRESENTATION
Keeping DCOH Above 250
( Under Business-as-Usual Scenario with Additional Operating Liquidity) Recommended Reserve
Management Goal: Keep
DCOH Above: 250 (under
these financial conditions)
To keep DCOH above 250,
on average, SVCE rates
would need to be about
1.8% higher than PG&E
starting in CY 2026 (including
CARE/FERA)
8 9
Implementing Rate Premium in 2027 to Keep
DCOH Above 250
On average, SVCE rates
would need to be about
2.7% higher than PG&E
starting in CY 2027 (including
CARE/FERA)
Same as the scenario in previous slide but instead of charging a premium in 2026 the premium starts in 2027. In 2026, rates are at the proposed levels of 1% lower than those of PG&E, and low -income customers receive an additional $12 monthly bill credit. 469
390
340
295
250
393
332
296
264
229
(50)
50 150
250
350
450
550
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 3
PRESENTATION
Implementing Rate Premium in 2027 to Keep
DCOH Above 250
Same as the scenario in previous slide but instead of charging a premium in 2026 the premium starts in 2027. In 2026, rates are at the proposed levels of1% lower than those ofPG&E, and low-income customers receive an additional $12 monthly bill credit.
On average, SVCE rates
would need to be about
2.7% higher than PG&E
starting in CY 2027 (including
CARE/FERA)
9 10
Staff Recommendation
• For Calendar Year 2026:
• 1% discount to all customers
• Additional $12 monthly bill credit for CARE/FERA customers • Basis for the recommendation:
• Additional premium in 2027 is 0.9% from not charging a premium starting in 2026 •
(The impact of 1% premium on the residential rate on average is about $0.53 a month.) • Delaying any changes to the pricing methodology by one year enables staff to:
• Finalize the financial levers analysis
• Work with the Finance and Executive Committees and the Board to design any changes to SVCE’s products and services, along with rates that continue to promote the agency’s mission and balance customer value and the agency’s finances Item 3
PRESENTATION
For Calendar Year 2026:
CD Staff Recommendation
1% discount to all customers
Additional $12 monthly bill credit for CARE/FERA customers Basis for the recommendation:
Additional premium in 2027 is 0.9% from not charging a premium starting in 2026 (The impact of 1% premium on the residential rate on average is about $0.53 a month.) Delaying any changes to the pricing methodology by one year enables staff to:
Finalize the financial levers analysis
Work with the Finance and Executive Committees and the Board to design any changes to SVCE’s products and services, along with rates that continue to promote the agency’s mission and balance customer value and the agency’s finances 10 11
Recommendation
Recommend that the Board of Directors approve the updated Fiscal Year 2025 -26 operating budget that includes:
1. Implementing SVCE generation rates to establish a 1% discount to PG&E’s applicable generation rates,
2. Providing a monthly bill credit of $12 for CARE/FERA customers,
3. Approving the new GreenPrime rate of $0.0074/kWh ($7.40/MWh) starting in January 2026, and transferring
4. $5.5 million to the building fund.
Item 3
PRESENTATION
® Recommendation
Recommend that the Board of Directors approve the updated Fiscal Year 2025-26 operating budget that includes:
1. Implementing SVCE generation rates to establish a 1% discount to PG&E’s applicable generation rates,
2. Providing a monthly bill credit of $12 for CARE/FERA customers,
3. Approving the new GreenPrime rate of $0.0074/kWh ($7.40/MWh) starting in January 2026, and transferring
4. $5.5 million to the building fund.
11 12
Thank you! / Questions?
Item 3
PRESENTATION
Thank you! / Questions?
12 13
Fiscal Year 2025 -
2026 Annual
Operating Budget
($ 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 $321,123 $301,154 $357,822 $385,564 $402,578 GreenPrime Electricity Premium $2,469 $2,510 $2,336 $2,309 $2,361 Reduction in Revenue1
$(4,268) $(957) $0 $0 $0
Other Income $0 $0 $0 $0 $0
Total Operating Revenues $319,324 $302,706 $360,158 $387,872 $404,939 Operating Expense
Power Supply $344,221 $347,583 $363,375 $384,686 $406,000 Operating Margin $(24,897) $(44,877) $(3,218) $3,186 $(1,061) 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 $6,054 $7,203 $7,757 $8,099 Total Operating Expenses $394,665 $398,487 $417,671 $441,890 $466,018 Operating Income $(75,342) $(95,781) $(57,513) $(54,018) $(61,079) Nonoperating Revenue
Investment Income $20,882 $15,222 $10,803 $9,477 $7,405 Grant Income $0 $0 $0 $0 $0
Total Non-Operating Revenues $20,882 $15,222 $10,803 $9,477 $7,405 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 $20,342 $15,144 $10,724 $9,399 $7,327 Change in Net Position/Available for Reserves $(60,500) $(80,637) $(46,789) $(44,619) $(53,752) Begin, Net Financial Position $585,328 $495,287 $389,499 $324,886 $263,808 Adjustment for Program Expenditure and Building Fund2
$(29,542) $(25,151) $(17,824) $(16,459) $(17,368)
End, Net Financial Position $495,287 $389,499 $324,886 $263,808 $192,687
1. Assumptions: 4% discount relative to comparable PG&E rates for CY 2025 and 1% discount for CY 2026-30. FY 2025-26 includes additional discount in the form of CARE/FERA bill credit estimates to low-income customers for $4.3 million and FY 2026-27 for $1 million (through Dec 2026 only). No CARE/FERA bill credit is assumed for CY 2027-30.
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 and the additional $5.5 million to be allocated in FY25-26 are expected to be spent by end of FY25-26.
Item 3
PRESENTATION
Fiscal Year 2025-
2026 Annual
Operating Budget
13 14
Average Effective Customer Billing Rates
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
PCIA & Franchise Fee* ( ₵/kWh) 3.29 4.76 1.97 0.37 1.14 1.12 3.47 3.01 2.30 2.20 2.16 SVCE Gen Rate* ( ₵/kWh) 7.59 6.10 12.41 13.99 14.22 12.53 6.93 7.83 9.30 9.48 9.61 SVCE gen rate discount vs PG&E 4% 1% 1% 4% 4% 10% 1% 1% 1% 1% 1% 0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0 2
4 6
8 10
12 14
16 18
20 SVCE gen rate
discount vs PG&E
Customer Billing
Rate ( ₵/kWh)
Estimated
*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).
SVCE Gen Rate discount excludes CARE/FERA customer discount equal to 1% general discount distributed among CARE/FERA customer s. • 2025 Average
Customer Billing
Generation Rate
decreased -11% Year
over Year, reflecting
SVCE One -Time Bill
Credit
• 2026 Estimated
Average Customer
Billing Generation
Rate will decrease
around -24% Year
over Year
Item 3
PRESENTATION
CD Average Effective Customer Billing Rates
2025 Average
Customer Billing
Generation Rate
decreased -11% Year
over Year, reflecting
SVCE One-Time Bill
Credit
2026 Estimated
Average Customer
Billing Generation
Rate will decrease
around -24% Year
over Year
Customer Billing
Rate ( /kWh)
SVCE gen rate
discount vs PG&E
PCIA & Franchise Fee* ( /kWh)
SVCE Gen Rate* ( /kWh)
★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 $35 million in total additional credits).
SVCE Gen Rate discount excludes CARE/FERA customer discount equal to 1% general discount distributed among CARE/FERA customers. 14 15 Estimated Customer Billing Rate Breakdown and
Comparison Y -o-Y
Note
Total CARE/FERA bill discount (including T&D) vs average residential customer, assuming the same usage (491 kWh/month) is about 52%.
On average, CARE/FERA usage is about 12% lower than that of an average E -TOUC customer. 2025** 2026*** 2025** 2026*** 2025** 2026*** 2025** 2026*** 2025** 2026*** Rate Schedule E-TOUC Est. Avg E-TOUCL Est. Avg B-1 Est. Avg B-10S Est. Avg B-19S Est. Avg PG&E Bundled Gen Rate ($/kWh) $ 0.150 $ 0.108 $ 0.150 $ 0.1084 $ 0.151 $ 0.105 $ 0.159 $ 0.111 $ 0.145 $ 0.105 SVCE Gen Rate ($/kWh) $ 0.134 $ 0.071 $ 0.134 $ 0.071 $ 0.134 $ 0.069 $ 0.141 $ 0.073 $ 0.128 $ 0.069 PG&E Delivery Rate ($/kWh) $ 0.286 $ 0.221 $ 0.113 $ 0.074 $ 0.299 $ 0.239 $ 0.216 $ 0.177 $ 0.170 $ 0.151 PG&E PCIA/FF ($/kWh) $ 0.012 $ 0.036 $ 0.012 $ 0.036 $ 0.011 $ 0.035 $ 0.012 $ 0.037 $ 0.011 $ 0.035 Total Electricity Cost ($/kWh) $ 0.432 $ 0.328 $ 0.259 $ 0.181 $ 0.444 $ 0.343 $ 0.369 $ 0.287 $ 0.310 $ 0.255 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 $ 25.04 $ 865.00 $ 156.64 *Estimated, based on average historic residential usage. **Estimated, based on current PG&E rates as of March 1, 2025. ***Estimated, based on PG&E Fall Update ERRA, published on October15, 2025 and Errata, published on November 6, 2025.
Residential Res CARE* Small Commercial Medium Commercial Large Commercial Item 3
PRESENTATION
Estimated Customer Billing Rate Breakdown and
Comparison Y-o-Y
Total CARE/FERA bill discount (including T&D) vs average residential customer, assuming the same usage (491 kWh/month) is about 52%.
On average, CARE/FERA usage is about 12% lower than that of an average E-TOUC customer. 15 16
Typical Customer Bill Savings
(Current Rates)
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 3
PRESENTATION
(^) Typical Customer Bill Savings
(Current Rates)
16 17
CARE and FERA Customer Eligibility Criteria
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*
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.
* 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)*
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.
Item 3
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)*
17 18
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.
Item 3
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.
18 19
FY25 -26 Budget Development Timeline
Budget Framework Full-Year Update
“Adjusted December Budget” “Mid-Year Budget”
June August August
Discuss the high -level
budget framework
and stress analysis
with the Finance and
Admin Committee
Review the draft
budget with the
Finance & Admin
Committee
Present the draft
budget to the BOD
for review and
feedback
March
Present the mid -
year budget to
the BOD for
approval
Present the stress test
analysis to the BOD
June
November December
Review adjustments to the
budget to reflect updates to
PCIA and PG&E gen rate
assumptions with the Finance
and Admin Committee
Present the
adjusted
budget to the
BOD for
approval
February
Review the mid -year
budget with the Finance
and Admin Committee
Present to the BOD the
budget, incorporating
any feedback received
in August
September
Oct 1st
Fiscal Year
Start
Item 3
PRESENTATION
Budget Framework Full-Year Update
June June August August September
Mid-Year Budget’
Oct 1st November December February March
19 FY25-26 Budget Development Timeline
Present the stress test
analysis to the BOD
Review the mid-year
budget with the Finance
and Admin Committee
Discuss the high-level
budget framework
and stress analysis
with the Finance and
Admin Committee
Present the mid¬
year budget to
the BOD for
approval
Present the
adjusted
budget to the
BOD for
approval
Present the draft
budget to the BOD
for review and
feedback
Review adjustments to the
budget to reflect updates to
PCIA and PG&E gen rate
assumptions with the Finance
and Admin Committee
Review the draft
budget with the
Finance & Admin
Committee
Fiscal Year
Start
Present to the BOD the
budget, incorporating
any feedback received
in August
“Adjusted December Budget'
r 7
20 Glossary
• 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 3
PRESENTATION
CD Glossary
20 1
New SV Clean Energy
PowerPoint Template
Subtitle
Implementation of Rate Stabilization
Fund Under GASB 62 for Fiscal Year
2024 -2025
Amrit Singh
Finance and Administration Committee
November 24, 2025
Item 4
PRESENTATION
Implementation of Rate Stabilization
Fund Under GASE 62 for Fiscal Year
2024-2025
Amrit Singh
Finance and Administration Committee
November 24, 2025
2 Main Areas of Discussion
1. Recap of GASB 62
2. Board -approved criteria for
implementing GASB 62
3. Staff’s plan for deferring revenues
Purpose
Discussion of staff’s plan for
implementation of GASB 62 for the fiscal
year that ended September 30, 2025.
Item 4
PRESENTATION
Purpose
Discussion of staff’s plan for
implementation of GASB 62 for the fiscal
year that ended September 30, 2025.
1. 2.
3. Recap of GASB 62
Staff’s plan for deferring revenues
Board-approved criteria for
implementing GASB 62
Main Areas of Discussion
3 Recap – Board Approved GASB 62 Fund in March 2025
Finance and Administration Committee reviewed GASB Standard 62 at the November 25, 2024, meeting and at the February 26, 2025 , meeting recommended that the Board establish a rate stabilization fund • GASB 62 enables SVCE to defer revenues to future periods and recognize them later when expenditures occur that correspond to the Board’s direction on the utilization of those revenues
• Impacts the Net Position in the Financial Statements
• Lowers net position for the year revenues are deferred and increases it for the future year when revenues are recognized
• Revenues for the applicable fiscal year are reduced, and a corresponding liability is created in the Statement of Net Position (balance sheet)
• SVCE’s first implementation will be for the fiscal year ending September 30, 2025.
The Governmental Accounting Standards Board (GASB) is the organization that determines, and updates generally accepted accoun ting principles (GAAP) for government entities.
Item 4
PRESENTATION
Recap - Board Approved GASB 62 Fund in March 2025
Finance and Administration Committee reviewed GASB Standard 62 at the November 25, 2024, meeting and at the February 26, 2025, meeting recommended that the Board establish a rate stabilization fund GASB 62 enables SVCE to defer revenues to future periods and recognize them later when expenditures occur that correspond to the Board’s direction on the utilization of those revenues
Impacts the Net Position in the Financial Statements
Lowers net position for the year revenues are deferred and increases it for the future year when revenues are recognized
Revenues for the applicable fiscal year are reduced, and a corresponding liability is created in the Statement of Net Position (balance sheet)
SVCE’s first implementation will be for the fiscal year ending September 30, 2025.
The Governmental Accounting Standards Board (GASB) is the organization that determines, and updates generally accepted accounting principles (GAAP) for government entities. 3
4 Board Approved Criteria for Deferring & Recognizing
Revenues
• Staff may defer revenues provided that the amount does not exceed the outstanding balance of all earmarked budgeted funds*, and additions to the net position do not fall below two percent of the revenues • Staff may recognize revenues from the Rate Stabilization Fund if the net position falls below two percent of revenues, and/or to adjust the Rate Stabilization balance to be consistent with the outstanding balance of all earmarked budgeted funds
* Earmarked funds are funds that have been allocated in the budget but not yet spent, usually funding for decarbonization pro grams.
Item 4
PRESENTATION
Staff may defer revenues provided that the amount does not exceed the outstanding balance of all earmarked budgeted funds*, and additions to the net position do not fall below two percent of the revenues Board Approved Criteria for Deferring & Recognizing
Revenues
Staff may recognize revenues from the Rate Stabilization Fund if the net position falls below two percent of revenues, and/or to adjust the Rate Stabilization balance to be consistent with the outstanding balance of all earmarked budgeted funds
* Earmarked funds are funds that have been allocated in the budget but not yet spent, usually funding for decarbonization programs. 4 5
Title of the Page
Unaudited/Soft Close of FY 2025
Before Implementation of GASB 62 • Two percent of revenues is slightly less than $10 million
• The earmarked funds balance is
about $106 million (shown in the appendix)
• Staff is currently planning to defer
$100 million of revenues to the
GASB 62 Rate Stabilization Fund
• Resulting addition to net position
will be about $22 million
OPERATING REVENUES
Electricity Sales, Net $455,071,307
GreenPrime electricity premium 2,433,491
Liquidated damages 14,178,080
TOTAL OPERATING REVENUES 471,682,878
OPERATING EXPENSES
Cost of Electricity 332,442,316
Contract services 14,947,789
Staff compensation and benefits 14,759,730
Program incentives 6,991,805
Other operating expenses 3,415,692
Depreciation 636,510
TOTAL OPERATING EXPENSES 373,193,842
OPERATING INCOME(LOSS) 98,489,036
NONOPERATING REVENUES (EXPENSES)
Investment Income 23,242,267
Financing costs (3,553)
TOTAL NONOPERATING REVENUES (EXPENSES) 23,238,714
CHANGE IN NET POSITION 121,727,750
Net Position at beginning of period 485,196,874
Net Position at end of period $606,924,624
STATEMENT OF REVENUES, EXPENSES
October 1, 2024 through September 30, 2025
AND CHANGES IN NET POSITION
Item 4
Unaudited/Soft Close of FY 2025
PRESENTATION
Before Implementation of GASB 62
Two percent of revenues is slightly
less than $10 million
The earmarked funds balance is
about $106 million (shown in the appendix)
Staff is currently planning to defer
$100 million of revenues to the
GASB 62 Rate Stabilization Fund
Resulting addition to net position
will be about $22 million
5 6
Thank you! / Feedback / Questions?
Item 4
PRESENTATION
Thank you! / Feedback / Questions?
7 Title of the Page
Unaudited/Soft Close of
FY 2025
Before Implementation of GASB 62
Current Assets
Cash & Cash Equivalents* $ 314,494,997
Accounts Receivable, net of allowance 23,094,020
Investments 65,225,316
Accrued Revenue 31,097,074
Cash equivalents - restricted 1,242,049
Other Receivables 25,973,973
Prepaid Expenses 1,049,374
Deposits 873,380
Total Current Assets 463,050,183
Noncurrent assets
Capital assets, net of depreciation 12,246,144
Investments** 214,086,188
Total Noncurrent Assets 226,332,332
Total Assets 689,382,515
Current Liabilities
Accounts Payable 2,512,309
Accrued Cost of Electricity 66,947,740
Other accrued liabilities 2,824,314
User Taxes and Energy Surcharges due to other gov'ts 1,695,403 Total Current Liabilities 73,979,766
Noncurrent Liabilities
Supplier security deposits 8,478,125
Total noncurrent liabilities 8,478,125
Total Liabilities 82,457,891
Net investment in capital assets 12,246,144
Restricted for security collateral 1,242,049
Unrestricted (deficit) 593,436,431
Total Net Position $ 606,924,624
NET POSITION
STATEMENT OF NET POSITION
As of September 30, 2025
ASSETS
LIABILITIES
Item 4
Unaudited/Soft Close of
PRESENTATION
FY 2025
Before Implementation of GASB 62
7 8
Earmarked Funds Balance Title of the Page
BUDGET ACTUAL/
REVENUE & OTHER SOURCES: ACTUAL REMAINING BUDGET
Transfers in - General Programs $ 10,530,000 $ 10,530,000 $ - 100.0% Total $ 10,530,000 $ 10,530,000 $ -
EXPENDITURES & OTHER USES:
Program expenditures 17,552,064 11,227,551 6,324,513 64.0% Net increase (decrease) in fund balance $ (7,022,064) $ (697,551) Fund balance at beginning of period 77,436,658
Fund balance at end of period $76,739,107
BUDGET ACTUAL/
REVENUE & OTHER SOURCES: ACTUAL REMAINING BUDGET
Transfer from Operating Fund $ 5,370,000 $ 5,370,000 $ - 100.0% EXPENDITURES & OTHER USES:
Customer bill relief credit 5,370,000 5,089,436 280,565 94.8% Other program expenditures 825,000 806,660 18,340 97.8% Total Program expenditures 6,195,000 5,896,096 298,905
Net increase (decrease) in fund balance $ (825,000) $ (526,096) Fund balance at beginning of period 5,437,984
Fund balance at end of period $4,911,889
BUDGETARY COMPARISON SCHEDULE
October 1, 2024 through September 30, 2025
CUSTOMER RELIEF & COMMUNITY RESILIENCY FUND
GENERAL PROGRAM FUND
BUDGETARY COMPARISON SCHEDULE
October 1, 2024 through September 30, 2025
BUDGET
BUDGET
BUDGET
REVENUE & OTHER SOURCES: BUDGET ACTUAL REMAINING
Transfer from Operating Fund $ - $ - $ -
EXPENDITURES & OTHER USES:
Program expenditures 850,000 419,071 430,929
Net increase (decrease) in fund balance $ (850,000) (419,071) Fund balance at beginning of period 9,159,383
Fund balance at end of period $8,740,312
BUDGET
REVENUE & OTHER SOURCES: BUDGET ACTUAL REMAINING
Transfer from Operating Fund * $ -
EXPENDITURES & OTHER USES:
Capital outlay - 11,681,508
Other building expenditures 104,182 (104,182)
11,785,690
Net increase (decrease) in fund balance $ - (11,785,690) Fund balance at beginning of period 20,000,000
Fund balance at end of period $8,214,310
BUDGET
REVENUE & OTHER SOURCES: ACTUAL REMAINING
Transfers in - Nuclear Allocation $ 3,708,000 $ 3,708,000 Transfer in - Hanford Emissions Mitigation Fund $ 1,800,000 $ 1,800,000 $ - Total $ 5,508,000 $ 5,508,000 $ -
EXPENDITURES & OTHER USES:
Program expenditures - 1,703 (1,703)
Net increase (decrease) in fund balance $ 5,508,000 $5,506,297 Fund balance at beginning of period 2,188,000
Fund balance at end of period $7,694,297
ELECTRIFICATION DISCOUNT FUND
BUDGETARY COMPARISON SCHEDULE
October 1, 2024 through September 30, 2025
BUDGET
NUCLEAR AND HANFORD PROGAM FUNDS
BUDGETARY COMPARISON SCHEDULE
October 1, 2024 through September 30, 2025
BUILDING FUND
BUDGETARY COMPARISON SCHEDULE
October 1, 2024 through September 30, 2025
Item 4
PRESENTATION
Earmarked Funds Balance
• Subtitle
New SV Clean Energy
PowerPoint Template
GASB 96 – Subscription-Based IT
Arrangements (SBITAs)
Amrit Singh, CFO
Finance and Administration Committee
November 24, 2025
Item 5
PRESENTATION
What is GASB 96? (Background)
• GASB 96 covers “Subscription-Based IT Arrangements (SBITAs)” such as cloud software and certain IT services.
• Examples: Microsoft 365, Salesforce, or customer program software. • The rule says treat these like leases: record an intangible asset (right to use) and a liability (future payments).
• Effective for SVCE starting fiscal year ended Sept 30, 2023 (subject to materiality thresholds)
Item 5
PRESENTATION
Application to SVCE
• Reviewed contracts that might qualify as SBITAs
• For years ended 9/30/2023 and 9/30/2024: determined not material, no recognition required
• Documented results shared with auditors
• Auditors concluded that historical results are immaterial 3 Item 5
PRESENTATION
Impact for Fiscal Year Ending September 30, 2025
• Management intends to recognize applicable SBITAs beginning in FY 2025. Although current balances are not expected to materially impact the financial statements (less than 0.50% of net position), prospective recognition will improve transparency and consistency with GASB 96.
• Adoption in FY 2025 provides useful information to the Board and stakeholders, particularly as SVCE anticipates growth in the volume and size of SBITA-related technology contracts over future periods.
• Prior periods (FY 2023 and FY 2024) are immaterial, and GASB 96 permits prospective application. Therefore, SVCE does not intend to restate these closed years.
Item 5
PRESENTATION
Next Steps
• Continue analyzing contracts annually for applicability of GASB 96 • Staff plans to formalize a policy with specific thresholds for recognition and to present that policy to the Finance and Administration Committee, likely in February 2026 Item 5
PRESENTATION
1 • Subtitle
New SV Clean Energy
PowerPoint Template
Review of Completed
Fourth Prepay Transaction
Amrit Singh
Finance and Administration Committee
November 24, 2025
Item 6
PRESENTATION
SILICON VALLEY
CLEAN ENERGY
Review of Completed
Fourth Prepay Transaction
Amrit Singh
Finance and Administration Committee
November 24, 2025
2 Main Areas of Discussion • Goals of Prepay • Board Authorized Execution Parameters
• Summary of Executed
Transactions
• Next Steps
Purpose
Informational Item: Report Out of
the Completed Fourth Prepay
Transaction
Item 6
PRESENTATION
Purpose
Goals of Prepay
Next Steps
Summary of Executed
Transactions
Board Authorized Execution
Parameters
Informational Item: Report Out of
the Completed Fourth Prepay
Transaction
3 • Goal
✓Reduce the cost of power purchases by leveraging SVCE’s ability to fund low -cost tax -exempt debt • Prepays grant CCA’s competitive advantage relative to IOUs • Target Benefits
✓ Savings over the 30 -year term around 8% - 10% per year on power quantities delivered under the pre-pay structure
✓ Approximately 3 MM to $4 MM per year in savings
✓ Favorable risk allocation where SVCE only pays for energy that is delivered (same as contracts today)
✓ Debt is non -recourse to SVCE
Review of Prepay Goal and Benefits
Item 6
PRESENTATION
Review of Prepay Goal and Benefits
Goal
Reduce the cost of power purchases by leveraging SVCE’s ability to fund low-cost tax-exempt debt Prepays grant CCA’s competitive advantage relative to lOUs Target Benefits
Savings over the 30-year term around 8% - 10% per year on power quantities delivered under the pre-pay structure
Approximately 3 MM to $4 MM per year in savings
Favorable risk allocation where SVCE only pays for energy that is delivered (same as contracts today)
Debt is non-recourse to SVCE
SILICON VALLEY
CLEAN ENERGY 3
4 • Aggregate Principal Amount of bonds to not exceed $1.25 billion • Execution contingent on achieving savings of at least 8 percent under the power supply contract for the initial bond reset period • Bonds not be guaranteed obligations of SVCE
Board Authorized Execution Parameters
Item 6
PRESENTATION
Board Authorized Execution Parameters
Aggregate Principal Amount of bonds to not exceed $1.25 billion Execution contingent on achieving savings of at least 8 percent under the power supply contract for the initial bond reset period Bonds not be guaranteed obligations of SVCE
SILICON VALLEY
CLEAN ENERGY 4
5 Summary of Transaction
New Prepay:
Series 2025F
Prior Prepays:
Series 2021B
• ~$1.2bn total
• $4.38/MWh savings
• 46% share; split with Ava
Series 2023B
• ~$850M total
• $9.77/MWh savings
Series 2024A
• ~$1.1bn total
• $11.31/MWh savings
• $844M deal size
• 10.8% discount (BOD authorization was 8%)
• $11.65/MWh
• $4.6M annual average savings through 2033
• 10% of load coverage
• Combined, all four prepays provide:
• 48% of load coverage
• $19M in annual average savings during initial
bond reset periods
Item 6
PRESENTATION
Summary of Transaction
New Prepay: $844M deal size
Series 2025F
10.8% discount (BOD authorization was 8%)
Prior Prepays:
Series 2021B $11.65/MWh
~$1.2bn total
$4.38/MWh savings
$4.6M annual average savings through 2033
46% share; split with Ava
Series 2023B
10% of load coverage
~$850M total
$9.77/MWh savings
Combined, all four prepays provide:
Series 2024A 48% of load coverage
~$1.1bn total $19M in annual average savings during initial $11.31/MWh savings bond reset periods
5 6
Next Steps
• Work with CCCFA on ongoing annual disclosure requirements • Assign existing or new Power Purchase Agreements (PPA) into the Prepay before the end of 2027, when the initially assigned contract ends
• Analyze the Power Procurement Portfolio and continue to monitor the Prepay Market for Additional Opportunities
Item 6
PRESENTATION
Next Steps
Work with CCCFA on ongoing annual disclosure requirements Assign existing or new Power Purchase Agreements (PPA) into the Prepay before the end of 2027, when the initially assigned contract ends
Analyze the Power Procurement Portfolio and continue to monitor the Prepay Market for Additional Opportunities
SILICON VALLEY
CLEAN ENERGY 6
7 Thank you! / Questions?
Item 6
PRESENTATION
Thank you! / Questions?
7 8
Review of Prepay Background Information
Goal: Reduce the cost of power purchases
• 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
• Municipal electric and gas utilities (and tax -exempt entities such as CCAs) in the US can prepay for a supply of electricity or natural gas from a taxable (corporate) entity and fund that prepayment with tax -exempt municipal bonds:
o Must sell that commodity to retail end -users within their traditional service area. • Since the first prepayments of natural gas were done in the early 1990s, the IRS issued rules allowing tax -exempt prepayments, a nd Congress enacted legislation specifically allowing the transactions (National Energy Policy Act of 2005; Section 1327). • A seasoned team of professionals will help to guide, negotiate, and structure the transactions.
Fees for professionals are contingent on the completion of the deal and paid from the deal proceeds.
Item 6
PRESENTATION
CD Review of Prepay Background Information
Goal: Reduce the cost of power purchases
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
Municipal electric and gas utilities (and tax-exempt entities such as CCAs) in the US can prepay for a supply of electricity or natural gas from a taxable (corporate) entity and fund that prepayment with tax-exempt municipal bonds:
Must sell that commodity to retail end-users within their traditional service area.
Since the first prepayments of natural gas were done in the early 1990s, the IRS issued rules allowing tax-exempt prepayments, and Congress enacted legislation specifically allowing the transactions (National Energy Policy Act of 2005; Section 1327).
A seasoned team of professionals will help to guide, negotiate, and structure the transactions.
Fees for professionals are contingent on the completion of the deal and paid from the deal proceeds.
8 9
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.
Item 6
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)
9