1 New SV Clean Energy
PowerPoint Template
Subtitle
Stub Period Operating
Budget (Q4 2026)
Amrit Singh
Finance and Administration Committee
August 19, 2026
Item 3
PRESENTATION
2 Recap – Transition to Calendar Year Fiscal Period
1) Recap:
• New calendar year (Jan to Dec) fiscal period
begins January 1, 2027
• Current fiscal year that began on October 1,
2025, ends September 30, 2026
• This is a transition period budget (Oct 2026 to
Dec 2026), Stub Budget
2) Stub Period Budget Timeline and Actions:
• May 2026 (last meeting): Finance and
Administration Committee(Committee) reviewed
framework for developing the Stub Budget
• Aug 2026 (this meeting) : The Committee reviews Stub
Budget for recommendation for Board adoption
• Sept 2026: Board reviews Stub Budget for
Adoption
3) First Calendar Year 2027 Annual Budget Timeline and Actions:
• October 2026 (tentative date for next meeting) : F&A Committee reviews the proposed 2027 budget framework • Nov 2026: F&A Committee reviews the 2027 Budget for recommendation for Board adoption • Dec 2026: Board reviews the 2027 Budget for Adoption
Item 3
PRESENTATION
3 5-yr Financial and Stub Period Budget Highlights
Stub Budget:
• $27.6 million draw from reserves
• Revenues compared to the same period last year
decline substantially from higher 2026 PCIA charges
and lower PG&E generation rates
• Customer discount remains at 1%, as does the $12
monthly bill credit for low -income customers
2026 update of PCIA and PG&E generation rate account balances and projected 2027 rates. • PG&E May Rate projections will be updated in the fall after the CPUC issues market price benchmarks (MPBs).
In the past, rates between May and fall updates have varied significantly. *High-level comparison intended to communicate main drivers of the financial outlook; not adjusting for different 5 -year horizon s and changes to the fiscal year periods. 5-Year Financial Outlook Improves from Previous
Forecast, but Drawdown from Reserves Continues
• Ending reserves improve and corresponding Days
Cash on Hand (DCOH) over the 5 -year horizon
improves to 190 ( Mid-Year Budget: 142; Stress Test Base Case: 177)* • Energy prices remain at low levels, mostly aligned with previous forecasts, with the exception of Carbon Free
attribute prices dropping further
• Improvements in the financial outlook driven by:
1. Favorable power supply portfolio positions and reductions in the cost of carbon -free resources
2. Lower forecasted PCIA rates based on PG&E’s May
2026 forecast of 2027 rates
• PG&E May Rate projections will be updated in the fall after the CPUC issues market price benchmarks (MPBs). In the past, May rate forecasts have varied substantially from fall updates. *High-level comparison intended to communicate main drivers of the financial outlook; not adjusting for different 5 -year horizon s and changes to the fiscal year periods.
FY 27 Budget Outlook: Negative $150 million
FY 28 to 31 Outlook: On average, negative $18.5 million Item 3
PRESENTATION
4 • A 3 -month period budget requires more precision on the timing of expenses • For example, payment for renewable energy certificates (REC) occurs over a 12 -month period, but highly uncertain to isolate to a month because timing depends on when RECs are transferred to SVCE. Similarly, other expenses are typically managed on a 12 -month period • SVCE’s revenues and expenses vary by season
• No prior 3 -month Budget to compare against
• The proposed Stub Budget is compared to unaudited expenditures as of December 31, 2025, for FY 2025 -26 • Not a perfect comparison – given expenses are usually accounted/budgeted for over a 12 -month period Stub Period Budget Framework
Item 3
PRESENTATION
5 2026 Annual Revenue Forecast And Rates
** Power Charge Indifference Adjustment (PCIA) is a
charge our customers pay to PG&E so that PG&E can
recover commitments made on their behalf when the
customer was part of PG&E’s portfolio. Not shown is
the small franchise fee charge.
PG&E 2026 Gen
Rate: 11.49 ¢/kWh*
1% SVCE discount
PCIA** 3.56
¢/kWh SVCE Gen Rate 7.82 ¢/kWh
SVCE Customer Billing Gen Rate 11.38 ¢/kWh
* All rates are weighted for SVCE load.
• SVCE’s rates are set for the calendar year to align with PG&E’s generation rate and PCIA changes in January
• PG&E’s generation rates and PCIA charges are not expected to change until January 2027
• 2026 Board approved rates were implemented in January 2026; these remain in effect for the Q4 2026 Stub Period*:
• 1% discount to PG&E’s applicable generation rates
• $12 monthly bill credit to CARE and FERA low -income customers • GreenPrime rate premium at $0.0074/kWh ($7.40/MWh)
*Rates in the stub period will be aligned with comparable PG&E winter rates for 2026.
The rat es shown in the diagram are the SVCE portfolio -weighted for the calendar year 2026.
Item 3
PRESENTATION
6 Stub Budget vs. 4Q Calendar 2025 Actuals
• Revenues are lower with
• Final PG&E 2026 gen rates (set at
the start of the year) came in much
lower than 2025 due to lower
expected commodity prices in 2026
than in 2025
• Power Supply Cost is flat relative to
the same period last year
• Other operating expenses are higher
for 2 reasons
• Actual spend historically lower than
the budget
• Stub budget contingency for
uncertainty on timing of expenses
(hitting a specific month vs a full
year)
• Transfer to New EcoInvest Fund
• Explained in the next slide
SILICON VALLEY CLEAN ENERGY
4Q 2025 Stub Budget
Calendar
Actual* (Q4 2026)
($ in thousands) $ %
Energy Revenues 115,493 66,612 (48,881) -42.3%
Power Supply Expense (84,949) (83,822) 1,126 -1.3%
Operating Margin 30,544 (17,210) (47,754) -156.3%
Operating Expenses (7,511) (10,359) (2,848) 37.9%
Non-Operating Revenue (Expense) 6,169 5,307 (862) -14.0% Annual Transfers and Other Expenses
Capital Outlay 0 (68) (68) 0.0%
Transfer to Building Fund (1,375) ** 0 1,375 -100.0%
Transfer to EcoInvest Fund 0 (3,500) (3,500)
Transfer to Program Fund (1,813) ** (1,332) 481 -26.5%
TOTAL CAPITAL EXPENDITURES, INTERFUND
TRANSFERS & OTHER (3,188) (4,900) (1,712) 53.7%
BALANCE AVAILABLE FOR RESERVES 26,014 (27,162) (53,177) -204.4% *The financial results in this table are preliminary and subject to change pending the closing of the books for the fiscal year 2025-26. ** Annual amount prorated for Q4 2025 for comparison purposes.
Change
Item 3
PRESENTATION
7 EcoInvest Fund Creation
EcoInvest Recap
• Part of Non -Standard Pricing Agreement
Policy (approved in 2019 to retain large
customers at higher departure risk)
• In exchange for committing to remain an
SVCE customer, a portion of bill is set
aside for decarb project funding
• Customer must do a local project and
(typically) contribute matching funds to
unlock
• Policy includes strong requirements to
prohibit any cost -shifting
Why transfer funds to a new EcoInvest Fund?
• Same treatment as that of other customer
decarbonization programs
• Customer’s expenditure of funds does not align with
the accrual of those funds in a fiscal year (i.e., customers can accrue over 5 fiscal years and spend all accrued amounts in year 5) • Better to manage as a portfolio that accounts for
expected spend and additions per new or existing
customers’ accrual of incentives
• Better visibility on the use of these incentives and
alignment with Accounting treatment
Status
• Several contracts signed, some customers
accruing EcoInvest funds
• No electrification projects yet
Item 3
PRESENTATION
8 Variables Affecting the Stub Budget in ¢/kWh
Note: Power Supply expenses shown account for 0.3¢/kWh from Prepay Savings [$3.5 million overall].
SVCE customers pay PCIA, and it’s not a budget expense. The impact of this variable is that it reduces the revenues by bringi ng the discounted generation rate from 10.2¢/kWh to 6.6¢/kWh on average.
Data Management,
0.1¢
PG&E Fees, 0.0¢
Salaries and
Retirement, 0.5¢
Professional
Marketing & Services, 0.3¢
Promotions, 0.0¢
General &
Administrative, 0.1¢
Financing Expense,
0.0¢
Interest Expense,
0.0¢
Capital Outlay, 0.0¢
Transfer to EcoInvest
Fund, 0.3¢
Transfer to Program
Fund, 0.1¢
¢/kWh Stub Period Budget
Non-Power Supply O&M and Transfer Breakdown
The PCIA ($34 million ) exceeds the projected draw on reserves ($27 million).
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PRESENTATION
9 Variables Affecting the FY 2027 Preliminary
Forecast in ¢/kWh
The PCIA ($158 million) exceeds the projected draw on reserves ($150 million).
Data Management,
0.1¢
PG&E Fees, 0.0¢
Salaries and
Retirement, 0.5¢
Professional
Services, 0.2¢
Marketing &
Promotions, 0.1¢
General &
Administrative, 0.1¢
Financing Expense,
0.0¢
Interest Expense,
0.0¢
Capital Outlay, 0.0¢
Transfer to EcoInvest
Fund, 0.0¢
Transfer to Program
Fund, 0.1¢
¢/kWh CFY 2027 Forecast
Non-Power Supply O&M and Transfer Breakdown Note: Power Supply expenses shown account for 0.5¢/kWh from Prepay Savings [$22 million overall].
SVCE customers pay PCIA, and it’s not a budget expense. The impact of this variable is that it reduces the revenues by bringi ng the discounted generation rate from 9.0¢/kWh to 4.9¢/kWh on average.
Item 3
PRESENTATION
10 5-year Financial Outlook
(with additional liquidity assumptions)
Additional Operating Liquidity
Assumptions:
1. Lag in customer uptake of
programs leaving - $20
million program fund remains
at the end of the 5 -yr
forecast
2. Reducing operating
expenses by $6.5 million a
year to remove budget
contingencies
3. Using the Board -
approved Financial Levers
Playbook to reach the target
DCOH if needed
SVCE rates set at a competitive advantage to comparable PG&E rates.
Item 3
PRESENTATION
11 Review Reserve Targets and Policy
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
• 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
12 Staffing
Current Budgeted
Staffing
• 67 Full-time Employees (5 Vacancies)
• 3 intern positions
• 3 Part-time Employees ( 1Inactive)
• 3 Climate Corps Fellows
• 1 Long -term Independent Consultant
The proposed budget requests approval for one
additional position in the Operations
department
Facilities Manager – With the opening of the new HQ, a
dedicated Facilities Manager is needed to oversee the
building's operations, maintenance, safety, security, and vendor management . The position will protect the
agency's investment, ensure efficient day -to-day facility operations, and provide a safe, functional environment for employees and visitors.
Proposed Staffing
• 68 Full-time Employees (6 Vacancies)
• 3 intern positions
• 2 Part-time Employees
• 1 moved to professional services/consultant for
a temp 1099 contract
• 3 Climate Corps Fellows
• 1 Long -term Independent Consultants
Item 3
PRESENTATION
13 Title of the Page Summary – 5-yr financial outlook
improves, but DCOH remains below target
levels starting FY 2027
Reserves
• Reserves built for such financial outcomes position
SVCE well
• Staff will follow the Board-approved Financial Levers Playbook • No changes in 2026 and 2027 • If the financial trend continues, then implement financial levers as needed
• In the fall, staff will have a much better forecast of the 2027 financial outlook when the CPUC publishes
market price benchmarks, and PG&E updates its 2027
rate projections
• Staff will present the proposed 2027 fiscal year budget along with an updated 5-year financial outlook to the
Finance and Administration Committee in November
and then to the Board in December
Item 3
PRESENTATION
14 Recommendation
Recommend that the Board of Directors approve the proposed Stub Operating Budget (Q4 2026), which, at a high level, includes the following:
• Withdraws $27.2 million from the reserves
• Maintains an average of one percent (1%) customer discount to comparable PG&E rates through December 2026
• Continues to provide additional monthly $12 bill credit to California Alternate Rates for Energy (CARE) and Family Electric Rate Assistance (FERA) customers • Keeps the GreenPrime rate premium at $0.0074/kWh ($7.40/MWh) • Transfers $3.5 million to a new EcoInvest Fund
• Proposes no changes to the current financial reserves targets and policy Item 3
PRESENTATION
15 Thank you! / Questions?
Item 3
PRESENTATION
16 Stub Period
Operating Budget
(Q4 2026)
Item 3
PRESENTATION
17 Transition Timeline and Plan
New Fiscal Period Starts January 1, 2027
December 2026
Board:
• Adopts the
Proposed Budget
for Calendar Fiscal
Year 2027 ,and
2027 Customer
Rate Proposals
Board:
• Reviews Stress
Test Analyses
• Optional: Reviews
Budget
Framework for
Stub Period
Board:
• Adopts the Proposed 3 -
month Stub Period Budget
Finance and Admin Committee:
Executive Committee (Optional):
• Reviews and recommends that the
Board adopt the Proposed Budget
for Calendar Fiscal Year 2027 and
Customer Rate Proposals
Board:
• Adopts Mid -
Year Budget
(FY25 -26)
• Receives
Audited
Financials for
the last fiscal
year. (FY24 -25)
January 2026 February 2026
Staff:
• Enterprise Risk
Assessments
(ERM)
Finance and Admin Committee:
• Reviews Proposed Financial Stress Test
Scenarios
• Reviews and Recommends the Mid -Year
Budget Update to the Board
May 2026
Finance and Admin
Committee:
• Reviews and recommends that
the Board adopt the Proposed
Budget for October 2026 to
December 2026, a 3 -month
stub fiscal period budget .
Finance and Admin Committee:
1) Review Stress Test Analyses
2) Reviews Budget Framework for the
Stub Period
June 2026
August 2026 September 2026 November 2026
Audit Committee:
• Receives Audited Financials for the last
fiscal year. (FY24 -25)
March 2026
Audit Committee:
• Kicks off the Audit for Fiscal
Year 25 -26
NEW: October 2026
Finance and Admin
Committee:
• Reviews Budget
Framework for the
Calendar Fiscal
Year 2027
Item 3
PRESENTATION
18 5-Year Forecast
For forecast years FY2027 onward:
- Revenues are based on SVCE’s load
forecast and CalCCA NewGen Model for
SVCE margin analysis using market data as
of 6/25/2026.
- Power Supply Costs are based on updated
portfolio positions and market data as of
6/25/2026.
- Operating Expenses are assumed to grow
5% / year except for health care, which is
projected to increase by 11% in 2027 and
10% thereafter.
($ in Thousands)
Q4 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031
Operating Revenue (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) (Forecast) Electricity Sales, Net1 $67,264 $206,343 $354,847 $406,683 $429,491 $439,823 GreenPrime Electricity Premium $275 $1,145 $1,177 $1,214 $1,225 $1,225 Reduction in Revenue1
$(928) $(3,424) $0 $0 $0 $0
Other Income $0 $0 $0 $0 $0 $0
Total Operating Revenues $66,612 $204,065 $356,024 $407,897 $430,717 $441,048 Operating Expense
Power Supply $(83,822) $(321,323) $(349,714) $(374,551) $(389,022) $(398,734) Operating Margin $(17,210) $(117,259) $6,311 $33,345 $41,694 $42,314 Data Management $(950) $(3,990) $(4,190) $(4,399) $(4,619) $(4,850) PG&E Service Fees $(397) $(1,667) $(1,750) $(1,838) $(1,930) $(2,026) Salaries and Retirement $(4,795) $(20,225) $(21,313) $(22,464) $(23,681) $(24,968) Professional Services $(2,727) $(9,814) $(10,305) $(10,820) $(11,361) $(11,929) Marketing & Promotions $(139) $(2,762) $(2,900) $(3,045) $(3,197) $(3,357) General and Administration $(1,350) $(6,158) $(6,514) $(6,329) $(6,632) $(6,821) Transfer to EcoInvest Fund $(3,500) $0 $(500) $(2,000) $0 $0 Transfers to Programs Fund $(1,332) $(4,081) $(7,120) $(8,158) $(8,614) $(8,821) Total Operating Expenses $(99,013) $(370,021) $(404,306) $(433,604) $(449,056) $(461,506) Operating Income $(32,401) $(165,956) $(48,282) $(25,707) $(18,340) $(20,458) Nonoperating Revenue
Investment Income $5,307 $15,437 $10,197 $10,049 $9,322 $8,886 Grant Income $0 $0 $0 $0 $0 $0
Total Non-Operating Revenues $5,307 $15,437 $10,197 $10,049 $9,322 $8,886 Nonoperating Expense
Financing Cost $0 $0 $0 $0 $0 $0
Capital Outlay $(68) $(50) $(50) $(50) $(50) $(50)
Interest Expense $0 $0 $0 $0 $0 $0
Total Non-Operating Expense $(68) $(50) $(50) $(50) $(50) $(50) Non-Operating Income $5,239 $15,387 $10,147 $9,999 $9,272 $8,836 Change in Net Position/Available for Reserves $(27,162) $(150,569) $(38,135) $(15,709) $(9,068) $(11,622)
1. Assumptions: 1% discount relative to comparable PG&E rates for the Stub budget (Q4 2026) and for FY 2027-2031. Stub budget and FY2027 include additional discounts in the form of CARE/FERA bill credits to low-income customers totaling $928K and $3.4M, respectively. No CARE/FERA bill credit is assumed after 2027.
Item 3
PRESENTATION
19 Financial Levers Summary
Playbook:
• No changes for 2026
and 2027
• Build out new product
options for use in
future years, if
needed, to maintain
reserves (considering
higher rates, less
clean portfolio, etc.)
• Pursue operational
cost savings
• Financial levers are risk mitigation –
to help SVCE know what it will do if
needed
• Balancing competitiveness with
mission, impact, and value
• Specific new product concepts will be
designed and brought to the board
for discussion prior to any roll -out
Item 3
PRESENTATION
20 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 PCIA & Franchise Fee* (₵/kWh) 3.29 4.76 1.97 0.37 1.14 1.12 3.62 4.06 2.72 2.34 2.19 2.14 SVCE Gen Rate* (₵/kWh) 7.59 6.10 12.41 13.99 14.22 12.53 7.76 4.99 8.59 9.50 9.90 10.02 SVCE gen rate discount vs PG&E 4% 1% 1% 4% 4% 10% 1% 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 Customer Billing Rates
*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) **CalCCA NewGen Model analysis using market data as of 6/25 /2026 and estimated CPUC attribute benchmarks for CY 2026 -2031 (Weighted for SVCE Portfolio Load) SVCE Gen Rate discount excludes CARE/FERA customer discount equal to 1% general discount distributed among CARE/FERA customer s • 2026 Average Customer Billing
Generation Rate decreased 17%
Year over Year, inclusive of
SVCE One -Time Bill credit
disbursement in September
2025
• 2026 SVCE margins decline 38%
• 2027 Estimated Average
Customer Billing Generation Rate
is expected to decrease further
by around 20 % Year over Year
• 2027 SVCE margins decline 36%
Item 3
PRESENTATION
21 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*
* 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 around 40%
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.
CARE Income Guidelines
(valid through May 31, 2027)
Number of
people in
household
Total gross annual
household income
1-2 $43,280 or less
3 $54,640 or less
4 $66,000 or less
5 $77,360 or less
6 $88,720 or less
7 $100,080 or less
8 $111,440 or less
9 $122,800 or less
10 $134,160 or less
Each
additional
person, add
$11,360
*Before taxes and based on all current income sources.
FERA Income Guidelines
(valid through May 31, 2027)
Number of
people in
household
Total gross annual
household income*
1-2 $43,281-$54,100
3 $54,641-$68,300
4 $66,001-$82,500
5 $77,361-$96,700
6 $88,721-$110,900
7 $100,081-$125,100
8 $111,441-$139,300
9 $122,801-$153,500
10 $134,161-$167,700
Each
additional
person, add
$11,360-$14,200
*Before taxes and based on all current income sources.
Item 3
PRESENTATION
22 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
23 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 a 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
1 Risk Controls & Oversight
Scott Wrigglesworth
Director, Risk Management & Analytics
August 19, 2026 – Finance and Administration Committee
Item 4
PRESENTATION
2 Provide a high level overview of internal controls,
oversight and process related to transactions
executed under authority delegated to the CEO
to manage energy risk.
Purpose
Informational only
Item 4
PRESENTATION
3 Up Front Disclaimer
• The following reflects current policy, standards, and procedures • The following also contemplates policy and standard revisions coming to the committees for input & review and Board for approval. • Procedures are operational – recommended by appropriate staff and approved by the Risk Manager, CFO and CEO
Please note:
Item 4
PRESENTATION
4 Title of the Page
• In short, an ERMP governs how an entity manages its risks, with what products, for how much, with whom, measured how, reported to whom. • The ERMP is a policy that is not only common to government entities but most participants in power markets.
• It defines how an organization identifies, measures, manages, controls and reports financial and operational risks.
• It is the Board’s conveyance of the guardrails between which staff executes power procurement and compliance activities.
• It balances the need for oversight, aligning staff to the Board’s risk tolerance and policies, with the need to facilitate a nimble organization empowered to act in the best interest of its stakeholders.
What is the Energy Risk Management Policy (ERMP), what
does it govern, and what does the Board enable through it? Item 4
PRESENTATION
5 Practical Application of the ERMP Title of the Page
Board ERMP CEO
Front Office
Middle Office Back Office
CFO
Delegated
Transaction
Authority
Delegated
Transaction
Authority
External
Counterparties
Board retains approval of
some very large
transactions
Board empower CEO
to approve important
transactions
Board & CEO empower approved
staff to execute routine transaction
based on a pre-approved
procurement plan
Board defines risk
measurement and
controls
ERMP Defined Oversight
for Policy Compliance
Reporting
Independent
Reporting
Note: ERMP delegation of authority only applies energy and related supply products Item 4
PRESENTATION
6 • Transactions greater than 5 years must be
approved by the Board
• Wholesale market is volatile and timing of
execution is a short window
• Master Power & Purchase Sale Agreements
with Counterparties Approved by the Board
(establishing approved counterparties)
• Resource adequacy transactions can be with
any counterparty
• Board approves the types of transactions and
volume limits
Delegated Authority
The ERM Policy Delegates Authority to the CEO to execute transactions to manage risk for up to five years in term.
Item 4
PRESENTATION
7 Front, Middle, and Back Offices
What does Front, Middle, and Back Office Mean?
Front Office –
Market Facing & Transactions
Middle Office –
Analytics, Risk Mgmt. & Controls
Back Office –
Ops, Settlements & Validation
• Procurement Contact
• RFO Screening, Shortlisting
and Selection
• Customer Contact
• Deal Structure
• Price Negotiation/Approval
• Transaction Deal Entry
• Hedging Compliance, Strategy,
and Execution
• Independence
• Deal Capture Confirmation
• Risk and Gross Margin Modeling
• Stress Testing
• RFO Valuation and Analysis
• Risk Limits and Metrics
• Counterparty Credit Monitoring &
Authorization
• Management Reporting
• Retail Pricing Analysis
• Market Curves & Fundamentals
• Portfolio Operations and
Scheduling Coordinator
Mgmt.
• CAISO and Counterparty
Settlements
• Invoice Validations and
Processing
• Compliance Reporting
• Contract Management
• Operational Performance
Reporting
Item 4
PRESENTATION
8 Board
Approved Policy Standards
Needs
Assessment /
Procurement
Plan
Board & CEO
Delegated
Authority
Robust
Analytics &
Internal
Meetings
Clear Board
Advising,
Authority and
Oversight
Front Office
Transaction and
Deal Capture
Middle Office
Risk Mgmt.,
Controls &
Confirmations
Back Office
Settlement,
Performance, &
Invoicing
Direct Reporting
& Transparency
ROC / FC/ EC /
Board
Energy Delegation of Authority
Governance and delegation of authority at SVCE involves the Board at multiple touch points in the transaction & operation process.
Multiple Meetings for
Transparency and Accountability
Involved Parties
Front
Office
Middle
Office
(and/or CFO)
Back
Office RPPL Customer Success
General
Counsel CEO Board Members
Front Office Commercial Meeting
Front Office Middle Office (FOMO)
Mgmt. & Ops of Portfolio (MOoP)
C&I Custom Product Offerings
Internal Risk Oversight
Risk Oversight Committee
Finance Committee
Executive Committee
Board Meetings
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Item 4
PRESENTATION
9 Governance, Controls, Oversight
SVCE’s commercial activity is transparent, diligent, and has sound oversight.
Mid Office
Confirmation
Front Office
Trade Entry
iROC & ROC
Analytics Reporting
Needs Assessment
& Procurement Plan
ERM Standards
& CEO Delegation of Authority to Staff
ERM Policy
& Board Delegation of Authority to CEO
Intentional
process of
transparency
with clear
governance,
delegated
authority, risk
controls, and
operational
controls.
Adapt2 Deal Capture,
Scheduling
Coordinator,
Maher/Accounting
PowerSIMM,
IAE, RADaR
Back Office Settlements & Performance Reporting
Item 4
PRESENTATION
10 Example of a Transaction
A transaction is as much about the preparation and post-transaction steps as it is about the execution of a trade agreeing on volume and price.
Note: this example is for an IST Energy Transaction, but other product types follow nearly identical steps.
Board
delegates
authority to
CEO
CEO approves a
Standard for
guidelines to
Staff
MO continuously
models and
reports positions
and risk
FO develops a
NA&PP based on
positions and risk
FO reviews NA&PP
with iROC and ROC
CEO Approves the
NA&PP, delegating
Authority to the FO
for execution
FO issues a
solicitation to
approved
counterparties
FO, w/ MO, meet
to review
responses, perform
final credit rating
checks and award
Approved FO Trader
agrees to terms
Counterparty sends
a Transaction
Confirmation to
SVCE
FO Director, with
delegated authority,
executes via
Docusign the
Confirmation
FO trader commits
the transaction into
the Energy Trading
and Risk Mgmt
(ETRM) System
MO staff review the
ETRM entry to
validate it matches
the Confirmation and
signs Docusign
BO staff validate that
all necessary
information is
prepared for eventual
settlement
MO caputures signed
and validated
transaction in
position and risk
reporting
FO Reports
transaction to the
ROC and Board
Transaction’s market
revenues deliver via
SVCE’s CAISO
settlement; BO
validates
Counterparty
invoices SVCE for
the transaction cost,
BO validates
FO, BO,
Accounting, and
Finance/MO validate
invoice payment
before release
Finance staff
schedules wire; CFO
independently
approves wire
NA&PP = Needs
Assessment and
Procurement Plan
FO = Front Office
MO = Middle Office
BO = Back Office
Item 4
PRESENTATION
11 Current Initiatives Include:
• Desktop Procedures & Business Continuity (Nik)
Ongoing enhancement and refinement of documentation to provide step by step execution of business as usual and business interruption continuity planning. • RADaR
iROC and ROC reporting are currently in place, although it is through some manual intervention. RADaR will create significant efficiency gains for automated reporting. It will also further enhance transparency across the organization.
• Policy & Standards
Improvements and enhancements to the policy and standards will be reviewed with committees and the policy will go for Board approval in September.
Next Steps & Continuous Improvement
Risk Policy, Standards and Controls have been robust for many years.
Staff are continuously refining as well as building enhanced capabilities and reporting.
Item 4
PRESENTATION
• Subtitle
New SV Clean Energy
PowerPoint Template
ERM Policy
Revision Review Discussion
Scott Wrigglesworth
August 19, 2026 – Finance Committee
Item 5
PRESENTATION
2 ERMP Review Requirement Title of the Page
Item 5
PRESENTATION
3 Title of the Page
3 Substantive
Changes
Item 5
PRESENTATION
4 Policy Revision #4
Derivatives not Speculation; Affirm Non-Speculation (section 6.3) ERM Item Revisions/Review/Discussion
Change: Remove inference that derivative financial products are inherently speculative. Still prohibit derivatives (no change). Affirm and clarify speculative vs non-speculative.
Rationale: Financial derivatives are not speculative or non-speculative.
Benefit: Sound policy, clarity.
Recognizing compliance obligation along side supply & demand balancing.
Item 5
PRESENTATION
5 Policy Revision #2
Raising Threshold Mandated Length (section 6.4)
ERM Item Revisions/Review/Discussion
Change:
Increased the max Net Open Position Tolerance Bands to 110% for all year due to the need to comply with RPS long-term contracts and acknowledgement of PCIA as a financial hedge. (No change to minimum levels). Allows for a compliance obligation exception.
Rationale: Last policy update added the PCIA hedge but did not contemplate out year implications versus thresholds.
Benefit: Makes the thresholds consistent with the addition of the PCIA hedge.
Item 5
PRESENTATION
6 Title of the Page
6 Non-Substantive
Changes
Item 5
PRESENTATION
7 Non-Substantive Revisions
(Detail in Appendix)
Topic Reason
Solicitation Technical alignment that procurement involves solicitations Load Risk Added load risk language to acknowledge potential coming/going of large loads Product List Cleaned-up redundant items and increased clarity CRRs Added explanation of what CRRs are and what they do Auction vs Allocation Clarified that delegated authority applies to CRR Auctions, and that CRR Allocations are a zero-cost item provided to SVCE based on load it serves Adjusted footnote Clarified footnote language for CEO delegated authority as it was leading to confusion among staff
No financial holding Revised COI language to change ‘direct holdings’ to ‘financial interest’ to align with proper legal terminology
Item 5
PRESENTATION
8 Recommendation:
Staff requests that the Finance and Administration Committee (Committee) recommend that the Silicon Valley Clean Energy (SVCE) Board of Directors (Board) approve proposed amendments to the Board-adopted Energy Risk Management Policy.
Next Steps:
1. Request Executive Committee support of revision August
2. Seek Board for approval in September
3. Modify internal standards to conform with changes
Recommendation and Next Steps
Item 5
PRESENTATION
9 Title of the Page
9 Appendix:
Non-Substantive Changes
Item 5
PRESENTATION
10 Policy Revision #3
Solicitation Language (section 1.2)
ERM Item Revisions/Review/Discussion
Change: Added “solicitations” to the scope of the document.
Rationale: Introducing clarity that proper solicitation processes are referenced in policy.
Benefit: Affirms procurement diligence even if supply cost is an exception to normal procurement.
Item 5
PRESENTATION
11 Policy Revision #4
Load Risk (section 5.6)
ERM Item Revisions/Review/Discussion
Change: Acknowledge that load risk includes the coming and going of large customer loads.
Rationale: Non-weather load risk that forecast could be unknowingly off due to customer decisions.
Benefit: Transparency regarding non-weather load risk.
Item 5
PRESENTATION
12 Policy Revision #5
Product Table (section 6.3)
ERM Item Revisions/Review/Discussion
Change: Revised product list for clarity & removed
redundant references.
Rationale: Clarity and conciseness (no new products,
none removed).
Benefit: Tightens list to align to proposed updates to
the standards for clarifications to staff.
Item 5
PRESENTATION
13 Policy Revision #6
Table 5 Clarify “CRR Allocation vs Auction” (section 6.4 and 6.5.2) ERM Item Revisions/Review/Discussion
Change: Added definition of CRRs, and clarified table and footnote on differences for CRR Auction and Allocation.
Rationale: Clarity and to acknowledge that allocations are granted and come at no cost; the CRR limits therefore are limited to auction transactions.
Benefit: Clarity.
Continued on next slide
Item 5
PRESENTATION
14 Title of the Page Policy Revision #6 continued
Item 5
PRESENTATION
15 Policy Revision #7
Table 5 Clarify “Cumulative” (section 6.5.4)
ERM Item Revisions/Review/Discussion
Change: Clarified table and table footnote.
Rationale: Delegation of authority is to be per transaction.
Benefit: Clarity for staff as the term cumulative was being misunderstood.
Item 5
PRESENTATION
16 Policy Revision #8
COI Language (section 6.6)
ERM Item Revisions/Review/Discussion
Change: Clarified employees cannot have a “financial interest” that is in conflict with SVCE, but pragmatically softens language related to “direct holdings”.
Rationale: Employees or employee family members may have direct holdings as part of larger personal portfolios or as compensation that do not pose a conflict of interest.
Benefit: Not excessively burdensome.
Item 5
PRESENTATION