Valley Clean Energy Board Meeting – October 13, 2022
via video/teleconference
Item 13 – 2022 Integrated Resource Plan (IRP) & Action Plan 1 yvonnehunterphotography.com
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Item 13 – 2022 IRP & Action Plan: Background
• Docket No. R.20-05-003.
• Filing due November 1, 2022 (New IRP developed every two years). • Commission (CPUC) Objective: reduce the cost of achieving greenhouse gas (GHG) reductions and evaluate existing and planned resource types in individual LSE portfolios to identify solutions to reliability, cost, or other concerns.
• IRP filings are the vehicle by which the CPUC and stakeholders gain insight into individual LSEs' plans for meeting state goals and how LSEs show compliance with their requirements under PUC 454.52(a)(1). • The 2022 IRP is forward looking through 2035 with target years of 2030 and 2035.
• Resource procurement plan optimized to meet variety of planning objectives at lowest cost.
Note: LSE = Load Serving Entity 3
Item 13 – 2022 IRP & Action Plan: Modeling
• VCE’s IRP is developed using a suite of fundamental modeling tools that provide capacity expansion modeling, production cost modeling, and local portfolio optimization.
• For this IRP cycle, VCE has configured its models to align with the official inputs and assumptions made by the CPUC when available and has also included internal forecasts on expected market prices for capacity and energy in the future. • The CPUC assigns VCE forecasted values for energy consumption, peak demand, behind-the-meter solar, and electrification/demand-modification programs for each year through 2035.
• VCE’s existing portfolio of contracted resources is included in the model • The model outputs a future resource portfolio that meets all the planning objectives and identifies the timing, quantity, and type of future resource needs. • VCE’s influence over the model output is limited to establishing constraints on the quantity, timing, and type of resources selected by the model. 4 Modeling Assumptions &
Constraints
5 Item 13 – 2022 IRP & Action Plan: CPUC Retail Energy Sales Forecast (GWh) for VCE 718 718
729
741
752
765
774
786
799
812
822
834
847
650
700
750
800
850
900
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 6 Forecast based on California Energy Commission’s (CEC’s) Integrated Energy Policy Report (IEPR) mid-case developed as the “single forecast set” per the interagency agreement among the CPUC, CEC, and CAISO. LSEs may address the possibility of higher future loads in the electrification planning section of the IRP Narrative. (ALJ Ruling. Docket No. R.20-05-003. June 15, 2022) 207
MWp
231
MWp
249
MWp
38 MMT in 2030 Scenario
• Based on Preferred System Portfolio
(PSP) adopted in D.22-02-004
• VCE 2030 target (share of 38 MMT) =
112,000 metric tons
• VCE 2035 target (share of 30 MMT) =
88,000 metric tons
30 MMT in 2030 Scenario
• Based on Core Scenario in the SB
100 Joint Agency Report
• VCE 2030 target (share of 30 MMT) =
85,000 metric tons
• VCE 2035 target (share of 25 MMT)
= 70,000 metric tons
7 • GHG targets for CO2 emissions are based on LSEs’ share of forecasted statewide retail energy sales
• LSEs are required to submit a portfolio meeting 2030 and 2035 targets for each scenario, but may submit a single portfolio that achieves the 2035 target of the “30 MMT in 2030 Scenario”
• VCE intends to submit a single portfolio that satisfies the most stringent planning target Item 13 – 2022 IRP & Action Plan: CO2Emission Targets
Item 13 – 2022 IRP & Action Plan: Marginal Reliability Need & Marginal ELCC values- 30 MMT Scenario
8 Source: Reliability Filing Requirements for Load Serving Entities’ 2022 Integrated Resource Plans-Results of PRM and ELCC Studies. Energy Division. July 29, 2022 IRP Results
9 Item 13 – 2022 IRP & Action Plan: VCE Contracted and Planned Resource Capacity, MW
10 0
100
200
300
400
500
600
700
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Contracted Resources Planned Resources RA Only Resources Item 13 – 2022 IRP & Action Plan: VCE Portfolio Resources by Type, MW 11 BTM PV, 66 BTM PV, 103 BTM PV, 134 CAM Capacity, 26.2 CAM Capacity, 6.2
CAM Capacity, 6.2 Solar PV, 50 Solar PV, 50
Solar PV, 50 Demand Response Small Hydro, 2.9, 7
Demand Response, 7
Hybrid Solar, 185 Hybrid Solar, 185
Hybrid Solar, 185
Battery Storage, 2.5
Battery Storage, 7.6
Battery Storage, 5.1
Geothermal, 5.1 Geothermal, 5.1 Geothermal, 5.1
Planned Resources, 20
Planned Resources, 121
Planned Resources, 144
RA Only Resources, 29
RA Only Resources, 27
RA Only Resources, 80
0 100
200
300
400
500
600
700
2024 2030 2035
BTM PV CAM Capacity Solar PV Small Hydro Demand Response Hybrid Solar Battery Storage Geothermal Planned Resources RA Only Resources Item 13 – 2022 IRP & Action Plan: VCE Portfolio Resources by Type, % share of portfolio
12 BTM PV, 66 BTM PV, 103 BTM PV, 134
CAM Capacity, 26.2 CAM Capacity, 6.2 CAM Capacity, 6.2
Solar PV, 50
Solar PV, 50 Solar PV, 50
Demand Response Small Hydro, 2.9, 7
Demand Response, 7
Hybrid Solar, 185
Hybrid Solar, 185
Hybrid Solar, 185
Battery Storage, 2.5
Battery Storage, 7.6
Battery Storage, 5.1
Geothermal, 5.1
Geothermal, 5.1
Geothermal, 5.1
Planned Resources, 20
Planned Resources, 121
Planned Resources, 144
RA Only Resources, 29 RA Only Resources, 27
RA Only Resources, 80
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2024 2030 2035
BTM PV CAM Capacity Solar PV Small Hydro Demand Response Hybrid Solar Battery Storage Geothermal Planned Resources RA Only Resources Item 13 – 2022 IRP & Action Plan: VCE Portfolio (Cumulative MW Nameplate Capacity)
Year 2024 2026 2030 2035
Estimated Resources
BTM PV 66 77 103 134
CAM Capacity1 26 12 6 6
RA Only Resources 29 42 27 80
Operational Resources
Solar PV 50 50 50 50
Small Hydro 3 0 0 0
Demand Response 7 7 7 0
Battery (4-hr) 3 3 3 0
In-Development
Contracted Resources
Solar PV + Storage 185 185 185 185
Geothermal 5 5 5 5
Battery (8-hr) 0 5 5 5
IRP-Identified Future
Resources
Battery (4-, 6-, 8-hr) 20 20 73 70
Onshore Wind 0 20 39 39
Offshore Wind 0 0 9 35
Cumulative Total Resources 394 426 512 609
13 1. Cost Allocation Mechanism (CAM) for legacy PG&E resources 500
550
600
650
700
750
800
850
900
2024 2026 2030 2035
Retail Sales RPS-Eligible Delivered Renewable GHG free
Item 13 – 2022 IRP & Action Plan: VCE Portfolio Results – Renewable & GHG-Free Energy, GWh
14 VCE Board of Directors policy: 80% renewable energy by 2030 VCE internal staff planning assumption: 100% renewable energy by 2035 97% RPS-Eligible
98% GHG-Free
92% RPS-Eligible
93% GHG-Free
Results from 25 MMT Clean System Power Calculator
60% RPS Target in 2030
(SB 100 de León, 2018)
RPS target is 100% by 2045
Item 13 – 2022 IRP & Action Plan: VCE Portfolio Results – Emissions & Supply/Demand
Emissions Unit 2030 2035
CO2tonnes/yr 74,000 62,000
PM2.5 tonnes/yr 2.661 2.128
SO2tonnes/yr 0.261 0.207
NOx tonnes/yr 6.532 4.183
15 Supply Demand Balance Summary Unit 2030 2035
LSE Supply, before curtailment and exports GWh 810 904
Net Purchases, before curtailment and exports GWh 39 10 Curtailment GWh (86) (95)
Exports GWh (18) (23)
Zero Emissions Power From System GWh 13 8
Net System Power (incurs emissions) GWh 132 120
Results from 25 MMT Clean System Power Calculator
VCE 2030 emissions are 12.9% below 2030 target of
85,000 metric tons
VCE 2035 emissions are 11.4% below 2035 target of
70,000 metric tons
Item 13 – 2022 IRP & Action Plan: Conclusion
• IRP provides forward-looking guidance for planning power portfolio needs to meet GHG, RPS, reliability, supply, and other goals.
• Process & modeling incorporate many assumptions that:
• Do not always reflect VCE’s actual circumstances
• Are limited in consideration of both changing technology and market dynamics • Actual procurement may differ from the IRP results:
• Actual project costs
• Technological performance and developments
• Changes in VCE customer base or energy profile
• Ongoing changes in regulatory approaches (e.g., reliability, resource adequacy, electrification, and future unknown changes
• VCE is on track to achieve its goals of providing 100% renewable, carbon-free electricity at competitive prices for its customers well ahead of state requirements.
16 Item 13 – 2022 IRP & Action Plan: Recommendation
Staff recommends that the Board adopt a resolution establishing the following:
• Approving the Integrated Resource Plan (IRP) in substantially the form attached and selects the “25MMT Portfolio” as Valley Clean Energy’s (VCE’s) preferred conforming resource portfolio and the Action Plan identified therein, for submission to the California Public Utilities Commission (CPUC). • Authorizing staff to make any non-substantial changes necessary to finalize the IRP as well as supplemental documents and work products to be submitted to the CPUC by November 1, 2022.
17 Valley Clean Energy Board Meeting – October 13, 2022 via video/teleconference
Item 14 – VCE Strategic Plan 18
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Public Comments
19 To Provide Public Comment on any agenda item please:
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Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] Background & Overview
• The Board ratified the VCE Three-Year Strategic Plan (Plan) for 2021-2023 at the November 12, 2020, meeting. The strategic plan is the basis for developing annual organization and individual goals, annual budgets, key decisions, and priorities. • Significant progress has been made in each goal area. The VCE Strategic plan continues to serve the overall intended purpose of aligning organizational activities with policy priorities.
VCE’s current three-Year Strategic Plan Strategic Plan runs through the end of 2023. Staff is seeking early Board feedback on to identified options on the approach for extending the strategic plan beyond the end of 2023.
20 Item 14 – Strategic Plan Update
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 21 Item 14 – Strategic Plan Update
GOAL 1 - FINANCIAL STRENGTH
Maintain a strong financial foundation and manage costs to achieve long-term organizational health.
1.1 - Maintain consistently healthy cash reserves to fund VCE’s mission, vision, and goals
1.2 - Achieve an investment grade credit rating by end of 2024.
1.3 - Commit to fiscal efficiencies to build a program foundation from which to deliver customer and community value.
1.4 - Manage customer rates to optimize VCE’s financial health while maintaining rate competitiveness with PG&E. • VCE maintained cash reserves and liquidity with lines of credit through the initial launch, COVID-19 pandemic, and power market volatility to optimize VCE’s financial health and competitiveness with PG&E. • New & Updated VCE Policies - Cost recovery-based customer rate policy, expanded customer rate options (UltraGreen, Standard Green, & Base Green), collections policy, and debt policy to support establishing a credit rating by 2024.
• Credit Rating – 4 years of “Clean” audited Financials, credit line facilities for liquidity, and PFM as financial Advisor • Customer Financial Support – Rate discounts (CARES, FERA, & Medical baseline), California Arrearage Payment Program (CAPP), Percentage of Income Payment Plan (PIPP) Pilot, Arrearage Management Program (AMP),etc.
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 22 Item 14 – Strategic Plan Update
GOAL 2 - PROCUREMENT & POWER SUPPLY
Manage power supply resources to consistently exceed California’s Renewable Portfolio Standard (RPS) while working toward a resource portfolio that is 100% carbon neutral by 2030.
2.1 - Continue to identify and pursue cost effective local renewable energy resources.
2.2 - Acquire sufficient bundled energy and renewable resources to achieve VCE’s greenhouse gas reduction targets.
2.3 - Deploy storage and other strategies to achieve renewable, carbon neutral, resource adequacy, and resiliency objectives.
2.4 - Identify and pursue cost effective, local distributed energy (e.g., behind the meter rooftop Solar + storage) resources to help meet reliability needs.
2.5 - Study and present options for achieving a 100% carbon neutral resource portfolio as well as 100% carbon free resource portfolio (carbon free hour by hour) by 2030.
2.6 - Optimize the hedging strategy to mitigate risk in accordance with the energy risk guidelines and procurement plan. • 12 Power Purchase Agreements (PPAs) - >85% renewable content by 2024 • Local Power Content – Putah Creek (Winters/Yolo County), Gibson (Yolo County), & Tierra Buena Battery Storage Facility
• 4 through California Community Power, PV plus storage, long duration storage, and geothermal technologies 243 MW Renewables, 128 MW BESS, and 7 MW Demand Response. • Performed portfolio analysis for 100% carbon neutral and carbon-free hour-by-hour with Energeia. • Completed Integrated Resource Plan (IRP) reflecting 80% renewables by 2030 (Board policy) and nearly 100% by 2035
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 23 Item 14 – Strategic Plan Update
GOAL 3 - CUSTOMERS & COMMUNITY
Prioritize VCE’s community benefits and increase customer satisfaction and retention.
3.1 - Develop engagement strategies to increase awareness of, and participation in, local control of VCE’s energy supply and programs with a particular focus on engaging disadvantaged and historically marginalized communities.
3.2 - Develop programs and initiatives to better support community goals, including supporting member agency achievement of energy-sector emissions reduction targets.
3.3 - Design and implement a strategy to more effectively engage local business and agricultural customers.
3.4 - Build awareness and trust of the VCE brand through direct engagement with customers, communities and organizations.
3.5 - Develop customer programs and initiatives that prioritize decarbonization, community resiliency and customer savings.
3.6 - Measure and increase customer satisfaction, using tools such as surveys and focus groups, while maintaining an overall participation rate of no less than 90%.
3.7 - Integrate and address the concerns and priorities of emerging and historically marginalized communities in the design and implementation of VCE's services and programs. • AgFIT pilot development and implementation designed to provide VCE agricultural customers with hourly price signals and incentives for irrigation automation and scheduling software to better manage energy costs. • Maintained customer participation rate of over 90% for service territory through VCE’s launch phase and expansion to include Winters
• Customer Programs – 3-Year Programs Plan adopted by Board; 4 new programs launched and 3 maintained (2021- 2022)
• Customer Opt-Ups – Member Agency (Yolo County) Opt-up, Partnership with Davis Food Co-op • Significant improvements to the VCE website and materials, including adding content on carbon-free vs. renewables, highlighting key UltraGreen customers on the homepage, updating FAQs, updating the financial resources page, adding the VCE Power Contract map, translating virtually everything into Spanish and improving Spanish website navigation
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 24 Item 14 – Strategic Plan Update
GOAL 4 - DECARBONIZATION & GRID INNOVATION
Promote and deploy local decarbonization and grid innovation programs to improve grid stability, reliability, community energy resilience, and safety.
4.1 - Working with a variety of local, regional and state partners, develop a grid innovation roadmap for VCE’s service territory that supports community energy resilience and reliability.
4.2 - Develop a VCE decarbonization roadmap to guide near and long-term program decisions and offerings.
4.3 - Increase participation in VCE’s UltraGreen 100% renewable product.
4.4 - Identify external funding sources to support decarbonization and grid-related programs and initiatives. • Completed portfolio analysis for 100% carbon neutral and carbon-free hour-by-hour by 2030 (Goal 4 – Decarbonization & Grid Innovation)
• Engaging member jurisdiction staff for UltraGreen Analysis & opt-up adoption; worked with Yolo County to opt up all muni accounts not covered by existing renewable energy to 100% renewable UltraGreen • Awarded $3.25M in funds for the 3-year pilot funding from CPUC under the Reliability OIR to develop and deploy an agricultural auto demand response.
• Worked w/ the CAC on a building electrification statement. The Board adopted a statement supporting and encouraging the electrification of new buildings
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 25 Item 14 – Strategic Plan Update
GOAL 5 - REGULATORY & LEGISLATIVE AFFAIRS
Strongly advocate for public policies that support VCE’s Vision/Mission.
5.1 - Work with CalCCA and other partners to proactively engage State regulators, legislators, and other State authorities in developing policy that furthers VCE’s mission and facilitates our contributions to decarbonization, grid reliability, energy resiliency, affordability, local programs and social equity.
5.2 - Develop relationships with community stakeholder organizations that foster support for VCE‘s mission and vision.
5.3 - Optimize regulatory compliance activities.
• Actively participated in the CPUC Summer Reliability proceeding (AgFit Pilot) and PG&E Regionalization Proceeding. Active in the recently concluded legislative session for 2022 • Engaged and supported CalCCA sponsored legislation on PCIA – SB 612 (Portantino) and AB 843 (Aguiar-Curry) – access for CCA’s to BioMat resources
• Engaged with CalCCA PCIA forecasting team to make more informed forecasts of PCIA and PG&E rates for Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 26 Item 14 – Strategic Plan Update
GOAL 6 - ORGANIZATION, WORKPLACE & TECHNOLOGY
Analyze and implement optimal long-term organizational, management, and information technology structure at VCE.
6.1 - Develop a roadmap to evaluate and guide future steps toward formation of a local Publicly Owned Utility (POU).
6.2 - Evaluate and pursue opportunities for shared services with other CCAs for certain functions.
6.3 - Develop an evaluation framework to guide future expansion opportunities beyond the existing service territory.
6.4 - Identify optimal management, staffing and contracting structure of VCE in the near and long term; factors include balance of internal staff vs. consultant support services, transition of leadership positions to permanent internal employees.
6.5 - Promote diversity, equity and inclusion in leadership, hiring, promotion, and contracting policies.
6.6 - Support health, wellness and a productive workplace.
6.7 - Create an innovation-focused culture that rewards proactive participation, problem solving, new ideas, and creative use of partnerships.
6.8 - Deploy a modernized IT infrastructure that enables knowledge management, analytics and collaboration through robust use of data and information resources. • Recruited and retained key personnel for leadership and operational positions. • Joined California Community Power joint powers authority to optimize shared CCA platform to execute multiple PPAs to meet regulatory requirements.
• Partnered with County of Yolo GIS team on VCE platform for Dashboard and GIS mapping • Continue to promote, support, and provide annual diversity reports (GO 156) for CPUC. • Actively monitor POU formation activities and funding options in PG&E service territory.
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] Summary
VCE’s current three-Year Strategic Plan Strategic Plan runs through the end of 2023. Staff is seeking early Board feedback on the approach for extending the strategic plan beyond the end of 2023. Staff has identified two basic options:
1. Multi-year Strategic Plan (Current Model)
• Plan Update Required by the end of the current planning period (end of 2023) • More formal/traditional approach that allows for a longer look ahead (Less frequent)
2. One year “rolling” Strategic Plan
• Extensions each year so that the Plan is always 1+ years from expiration. • Frequent updates associated with the “rolling” approach Staff believes that either approach can serve VCE’s objectives but is leaning toward the rolling approach to maintain the Plan’s relevance in a fast-changing energy sector. Guidance from the Board at this early date will help Staff organize for the Plan update.
Discussion
27 Item 14 – Strategic Plan Update
Valley Clean Energy Board Meeting - October 13, 2022
via video/teleconference
Item 15 – Receive progress update on VCE 3-Year Programs Plan and 2023 program concepts 28
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29 To Provide Public Comment on any agenda item please:
➢ E-mail 300 words or less to: [email protected] OR
Join the Public Comment Queue by
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➢ Press *9 if joining by phone
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Emailed comments received after the item has concluded but before the end of the meeting will not be read but will be included in the meeting record.
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 30 Item 15 – Progress Report on 3-Year Programs Plan and 2023 Program Concepts
This informational presentation will provide:
• Update on progress made on evaluating and launching programs Background
• 3-Year Programs Plan (3YPP) was approved in June 2021 • PTG and CAC provided a lot of feedback on program concepts and evaluation methodology
• Evaluation methodology criteria include
• Greenhouse gas (GHG) mitigation
• Ease of implementation
• Customer satisfaction
• Staff and the Programs Task Group (PTG) also evaluate other CCA programs Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 31 Item 15 – Progress Report on 3-Year Programs Plan and 2023 Program Concepts
Update
• Since Board approval in June 2021, VCE has launched 4 new programs and continued 3 programs, for a total of 7 active programs
New Programs:
Heat Pump Program
• Launched in June 2022; Staff held first contractor-focused webinar • Webinar focused on:
• Getting customers access to rebates and incentives for heat pump water heaters • Demystifying heat pumps
• Dispelling misinformation.
• Well-attended; video is live on VCE’s website
• Staff will evaluate Phase 2 of Heat Pump Program in Q2 2023 Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 32 Item 15 – Progress Report on 3-Year Programs Plan and 2023 Program Concepts
Agricultural Flexible Irrigation
Technology (AgFIT)
• Launched in July 2022 with 8 pumps;
enrolling remaining pumps
• Preliminary data indicates possible
modest savings for customers
• 1.8MW (out of 5MW cap) are enrolled
• Recruitment underway for 2023
growing season
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 33 Item 15 – Progress Report on 3-Year Programs Plan and 2023 Program Concepts
OhmConnect
• Continued 2nd year of
outreach/marketing partnership
• Customers shift usage for “OhmHour”
events of peak stress on the grid
• 2022 Spring Campaign yielded 132
utility connected accounts
• Higher Summer Campaign incentives:
$50 sign-up bonus, ongoing cash and
rewards
• Overall very low unsubscribe rates
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 34 Item 15 – Progress Report on 3-Year Programs Plan and 2023 Program Concepts
Electric Vehicle (EV) Rebate Program
• Launched September 19, 2022
• Higher incentives for low-income
customers: $4,000 for battery electric
(BEV) or plug-in hybrid vehicles.
Standard applicants: $2,500 for BEV;
$2,000 plug-in hybrids
• Wide promotion: social media, print
ads, digital ads, posters, new collateral
and new swag. Staff is working with
community partners to spread the
word.
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 35 Item 15 – Progress Report on 3-Year Programs Plan and 2023 Program Concepts
Continuing Programs:
Electrify Yolo (SACOG Grant) for EV Chargers
• Program active; all jurisdictions making progress toward installing chargers • Despite delays, project is projected to reach completion on time (December 2023).
Energy Efficiency Graphic
• Educational program active
• Graphic updated and translated into Spanish (Summer 2022) Electric Vehicle Information
• Informational program active in English and Spanish; regularly updated • Customers can compare EV models, estimate savings, learn about EV benefits and carbon reduction, find EV chargers and evaluate rebates and incentives Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 36 2023 Program Concepts Under Consideration
Staff will return to CAC Q1 2023 for feedback on concepts before concepts go to Board for consideration
• Continuing OhmConnect partnership
• Phase 2 of the EV Rebate Program
• Potentially including used vehicles for rebates
• Phase 2 of the Heat Pump Program
• Potentially including rebates for heat pump installations • Energy efficiency rebates for low-income customers
• Home energy ratings
• Agricultural electrification
• Self-Generation Incentive Program (SGIP)
• Workforce Development
Item 15 – Progress Report on 3-Year Programs Plan and 2023 Program Concepts
Valley Clean Energy Board Meeting – October 13, 2022
via video/teleconference
Item 16 – Operating Budget Update 37
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Public Comments
38 To Provide Public Comment on any agenda item please:
➢ E-mail 300 words or less to: [email protected] OR
Join the Public Comment Queue by
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OR
➢ Press *9 if joining by phone
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Emailed comments received after the item has concluded but before the end of the meeting will not be read but will be included in the meeting record.
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] Overview
VCE’s short-term outlook (2022 and 2023) indicates continued volatility in power market prices due to global events outside VCE’s control. • September’s 10-day heat storm; VCE’s short-term net significantly impacted. • The mid/longer term outlook (2023-2025) shows VCE recovers net income.
This presentation will:
• Key Factors influencing short-term operating budgets
• 2022 Financials Update and additional factors
• Multi-Year Forecast Update
• Discussion
39 Item 16 – Operating Budget Update
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] Key factors – Operating Budgets Results
• Load Forecast - 2022 energy use has out-paced forecasts. • Residential energy - TOU transition, return to work/hybrid, heat storms, etc. • Commercial energy use related to agriculture - droughts, mild winter, heat storms, etc. • 2022 actual vs. load forecast remains within 5% overall • Power Prices - Geopolitical climate resulting from the Ukraine conflict and multiple heat storm events
• Supply Chain interruptions – Manufacturing and import supply chains have been consistently interrupted.
40 Item 16 – Operating Budget Update
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
Forecast Actuals Forecast Actuals Forecast Actuals Forecast Actuals Forecast Actuals Forecast Actuals January February March April May June
Retail Load (MWH)
VCE RETAIL LOAD BY CUSTOMER CLASS
Residential Agriculture Med. Commercial Large Commercial Small Commercial Industrial Lighting Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 41 Item 16 – Operating Budget Update
Month Res
Sm
Com
m
Med
Com
m
Lg
Com
m Ind Ag Light Total
1 89% 85% 94% 102% 114% 105% 89% 93%
2 89% 87% 96% 110% 119% 179% 94% 101%
3 85% 90% 95% 102% 108% 140% 100% 98%
4 89% 91% 101% 100% 106% 127% 107% 101%
5 104% 97% 96% 106% 103% 109% 117% 104%
6 108% 99% 96% 102% 97% 121% 116% 108%
Load
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 42 Item 16 – Operating Budget Update
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 43 Item 16 – Operating Budget Update
Energy sector has
increased by 10%+
compared to other
sectors
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 44 Item 16 – Operating Budget Update
2022 Budget Proforma Update (8 Months Actuals – unaudited) Key Highlights
• Power Costs – Overall Rising Power Costs Market. September Heat Storm power costs $5M
• Budgeted Revenues – Incorporated Drought/heat wave - revenues have not fully materialized in the actuals for 2022.
Description Variance
Revenue $ 89,750 $ 86,760 $ (2,990)
Power Cost $ 66,990 $ 75,050 $ (8,060)
Other Expenses $ 5,292 $ 5,080 $ 212
Net Income $ 17,468 $ 6,630 $ (10,838)
APPROVED
2022 BUDGET
2022 Proforma
(8 Month Actuals +
4 Month Budget)
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 45 Item 16 – Operating Budget Update
Description FY2019 FY2020 FY2021 FY2022 2022 2023 2024 2025 Customer Revenue 51,035 55,249 54,657 29,366 86,760 96,800 73,500 71,050 Power Cost 38,540 41,538 54,234 30,139 75,050 68,880 53,500 50,820 Other Expenses 3,850 4,346 4,267 2,285 5,080 5,938 6,100 6,178 Net Income 8,646 9,365 (3,844) (3,058) 6,630 21,982 13,900 14,052 2022 Proforma
(8 Month Actuals +
Actuals 4 Month Budget) Preliminary Forecast*
Updated Multi-Year Forecast
Key Factors in Multi-Year Forecast
• *Multi-Year Forecast includes a 60% PCIA decrease in 2023 with no rate changes. • Geopolitical Climate. The conflict in Ukraine and consequent Russian energy supply disruptions have significantly impacted current and forecast energy prices and availability. (Natural Gas Prices ) • Long-term power contracts (PPAs). When VCE’s two largest PPA’s begin full deliveries in 2023: ~60% of VCE’s load served, growing to 80%+ by 2024.
• 2022 drought conditions continued from 2021 impacting agriculture sector pumping loads. (Short-term Energy)
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 46 Item 22 – 2022 Mid-Year Financials Update
Operating Budget Outlook Summary
• Additional power costs result in deferred net income through PCIA • Continued profitability and building of reserves
• Credit rating forecasted for 2024 (Strategic Plan)
• Continued climate related impacts (heat/drought)
• Continued market volatility that
• Rate Adjustment System (December) Normalizing rate impacts from extreme events Other Considerations – Increased Power Market Prices -> Increased Net Revenues for VCE Generally, increased power costs increase PG&E rates and VCE’s ability to set competitive rates for full cost recovery.
• 2022 power cost increases are forecasted to decrease 2023 PCIA (over collection) by more than 60%
• PG&E Bundled Rates are forecasted to have minimal +-5% changes to current rates for 2023
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] Next Steps
• October 17th – PG&E filing for PCIA & Rates
• November 2022 – Preliminary 2023 Budget
• December 2022 – Adopt 2023 Budget & Rates
• Rate Adjustment System
Discussion
47 Item 16 – Operating Budget Update