VCE Board of Directors Meeting – November 14, 2024
Item 11 - Electric Vehicle Rebate Pilot Program, Phase 2 yvonnehunterphotography.com
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Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 3 Background & Context:
Nat’l, Statewide push toward transportation electrification • Five Million Zero Emission Vehicles on the road in CA by 2030 (E.O. B-48-18) • All new cars and passenger trucks sold in CA must be Zero Emission Vehicles by 2035 (E.O. N-79-20)
• In 2023, Californians bought almost 450,000 new zero-emission vehicles (ZEVs), a 30% increase from 2022. ZEVs made up 25% of new vehicle sales in 2023, up from 20% in 2022.
The total number of cars registered in CA is 31.3M vehicles , with 1,256,646 being all-electric as of Dec 2023 Community Advisory Committee gave a recommendation for Board approval of EV Rebate Pilot Phase 2 at its 10.24.24 meeting
Requested Action: Approve Phase 2 VCE’s EV Rebates Pilot Program Item 11 – Electric Vehicle Rebate Pilot Program, Phase 2 Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] Proposed Program
Design:
3 components:
1. Incentives for vehicle
purchase
a. Staff is investigating
feasibility of providing
point-of-sale rebates
2. Incentives for at-home
charging systems
a. Bonus for VGI-capable charging
equipment
3. Incentives for panel
upgrades
4 Item 11 – Electric Vehicle Rebate Pilot Program, Phase 2 Proposed Incentive Proposed Amount Proposed Budget
EV Rebates $2,000 (low-income); $1,000
(standard)
$120,000
VGI Bonus with HFP
Participation
$500
In-home residential charging $500 $40,000
In-home panel upgrades $500
Multi-family housing
charging
$3,000 each, up to
$21,000/property
$100,000
Program Admin --- $20,000
Program contingency --- $20,000
Total --- $300,000
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] Program Equity: Ensuring that income-qualified customers have equitable access to rebates Staff plans to ensure equity by ensuring that:
1. Income-qualified applications are given priority processing
1. Income-qualified applicants fill out a VCE rebate interest form, VCE would consider these rebate funds reserved for 6 months
2. Allocate 25% of rebate funds in Phase 1 for income-qualified applicants. 6 months after program launch, the funds would be released for standard applications
5 Item 11 – Electric Vehicle Rebate Pilot Program, Phase 2 Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] Next Steps:
• Communicate with customers on EV Rebate
Waitlist
• Develop full list of eligibility criteria with Terms
and Conditions
• Finalize pilot administration processes,
potentially contract with 3rd parties for support
• Proposed Timeline: Launch Q1 2025 – program
funding is exhausted
6 Item 11 – Electric Vehicle Rebate Pilot Program, Phase 2 VCE Board of Directors Meeting – November 14, 2024
Item 12 - Hourly Flex Pricing Pilot Programs
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7 Public Comments
8 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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Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 9 Item 12 - Hourly Flex Pricing Pilot Programs
Background & Context:
VCE’s Successful implementation of Agricultural Flexible Irrigation Technology (AgFIT) Pilot led to California Public Utilities Commission Decision on Expanded Pilots Jan '24 4 Pilots under HFP Umbrella:
1. Hourly Flex Pricing (a.k.a. Expanded Agricultural Flexible Irrigation Technology, or AgFIT, Pilots) a. Agricultural (“Expanded Pilot #1”)
b. Residential and Non-Residential ("Expanded Pilot #2")
2. Vehicle-to-Everything (V2X) Pilots (a.k.a. VGI)
a. Residential
b. Non-Residential
Community Advisory Committee gave a recommendation for Board approval for all HFP pilots at its 10.24.24 meeting
Requested Action: Approve participation in Hourly Flex Pricing (HFP) Pilots Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] HFP Goals:
• Reduce congestion on the grid (infrastructure
costs), greenhouse gas (GHG) emissions
• Improve reliability, integration of renewables
• Facilitate greater integration, fair
compensation of distributed energy resources
(DERs)
10 Item 12 - Hourly Flex Pricing Pilot Programs
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Cross-Program Compatibility:
Possibility to leverage other program incentives
• Suite of programs, bringing customers more value
• Integrate into existing and future program design
• E.g. REACT
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] Design for Pilots:
• Day-ahead, hourly prices
• Customers may access on PG&E’s
website
• For residential pilot, Automation
Service Providers play a big role
• Shadow billed
• Low/no risk for customers
• PG&E administering all pilots except for
HFP/Expanded Pilot #1 (VCE administers)
• Little/no flexibility in
design/implementation
11 Item 12 - Hourly Flex Pricing Pilot Programs
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Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 12 Item 12 - Hourly Flex Pricing Pilot Programs
HFP Customer Price Interface
https://www.pge.com/en/account/rate-plans/find-your-best-rate-plan/current-hourly-flex-pricing.html 12 Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 13 Pilot Rate Name Eligibility Incentives Pilot Duration HFP #1, aka
Expanded AgFIT
Pilot #1
Ag <35 kW Low Use (AG-A1)
Ag <35 kW High Use (AG-A2)
Ag 35+ kW Medium Use (AG-B)
Ag 35+ kW High Use (AG-C)
$160/kW (~$120/HP) of
enrolled customer controllable
load
November/December 2024 through
December 31, 2027
HFP #2, aka
Expanded AgFIT
Pilot #2
Electric Home (E-ELEC) rate plan
Home Charging (EV2-A)
Business Low Use Alternative (B6)
Business Medium Use (B10)
Business Medium-High Use (B19)
Business High Use (B20)
$100,000 per year and an
enrollment incentive of
$20/kW-year of
controllable load payable to
the ASP for load that the ASP
has enrolled.
VGI - Res E-ELEC or EV2A
Incentives Per Charger Upfront
+ Kicker for DAC
Customers:
$2,500 + $500.
Performance
(up to)
$2,175
Until funds are exhausted or
December 31, 2027
VGI - Non-Res Small Business – B6
Medium Business – B10
Large – B19 or B20
Business Electric Vehicle – BEV-1 or BEV-2
EVSE <50 kW $2,500 + $500.
Performance (up to) $3,625
EVSE >=50 kW $4,500 + $500
$5,000
Item 12 - Hourly Flex Pricing Pilot Programs
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] Next Steps:
• Finalize program design and agreement
with PG&E; VCE webpages for pilots
• Clarify cross-program eligibility
• Continue discussions with other agencies
• Upon approval, begin to enroll customers
14 Item 12 - Hourly Flex Pricing Pilot Programs
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VCE Board of Directors Meeting – November 14, 2024
Item 13 – Draft 2025 Operating Budget & Customer Rates – Update yvonnehunterphotography.com yvonnehunterphotography.com 15 yvonnehunterphotography.com
Public Comments
16 To Provide Public Comment on any agenda item please:
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Join the Public Comment Queue by
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Emailed comments received before the item has concluded will be read into the record.
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)] 17 Item 13 – Draft 2025 Operating Budget & Customer Rates – Update Overview
VCE’s short-term (2025) outlook indicates increased volatility in power market prices, Resource adequacy, and Renewable Energy Credits (RECs) driving increased costs with significantly favorable Power Charge Indifference Adjustment (PCIA). VCE’s longer-term outlook (2026-2028) indicates healthy margins/reserves.
This presentation will provide:
• Updated overview of Key factors Influencing 2025 Budget & Customer Rates • Introduce VCE’s Reserve and Dividend Policy – draft revisions • 2025 Budget & Rate Scenarios
• Scenario 1: Continuation of current rate 2% rate discounts to PG&E generation rate; ~$3.5M net revenue reduction;
• Scenario 2: Increase to a 5% rate discount to PG&E generation rate; ~$6.5M net revenue reduction Scenario 3: Increase to a 10% rate discount to PG&E generation rate ; ~$11.5M net revenue reduction
• Discussion and Feedback
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 18 Item 13 – Draft 2025 Operating Budget & Customer Rates – Update Key Factors - Preliminary draft Budget
• PG&E Bundled rates (PCIA & Generation): 2% decrease – Results in approximately $2M reduced gross revenue for 2025
• Resource Adequacy (RA). The CPUC slice-of-day RA model driving Rising RA cost increases has outpaced PPA savings for 2025.
• 2025 Programs Expenditures – VCE has been able to make significant contributions in support of customer programs. VCE anticipates spending $1M in designated program funds in 2025 from non-reimbursable programs and $2M including reimbursable programs (i.e. grants). • 2025 Power Charge Indifference Adjustment (PCIA) (Revenue reducing): significant increase due to under-collection in 2024 and lower power cost forwards for 2025.
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 19 Item 13 – Draft 2025 Operating Budget & Customer Rates – Update Updated Key Factors – Draft Budget and Customer Rates
• Updated 2025 Power Charge Indifference Adjustment (PCIA) (Revenue reducing): Significant decrease to near zero due to market price benchmarks for RA and RECs. ~$23M increase in gross revenues to VCE. (Outside of VCE’s direct influence) • Rate Discounts/Revenue Investment - Revenues can be “invested” in rate discounts, programs, increased procurement of clean energy resources (e.g. short-term RECs), or a combination of these and other elements.
• VCE’s Long-term Fixed Costs - VCE, along with all other California CCAs, will face increased PPA prices in the longer horizon based on current PPA market price forwards. • VCE’s Reserve and Dividend Policy Revisions - Both policies require routine updates to reach VCE’s strategic goal of financial strength including reaching (and maintaining) VCE’s initial investment-grade credit rating.
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] VCE’s Long-term Fixed Costs
VCE’s fixed price renewable contracts have rate/cost stabilization effects while significantly increasing VCE's renewable portfolio content. VCE will face increased PPA prices in the longer horizon based on current PPA market price forwards as displayed in Table 1. These higher costs for new PPA’s are driven in large part by delays in interconnecting to the transmission and distribution grid. 20 Item 13 – Draft 2025 Operating Budget & Customer Rates – Update $-
$50
$100
$150
$200
$250
2025-2029 2030-2034 2035-2039 2040-2044 Millions
VCE PPA Fixed Prices Future PPAs
TABLE 1 – VCE Fixed Price Power Costs
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] VCE’s Reserve and Dividend Policy Revisions
VCE’s Reserve and Dividend Policy Revisions - Both policies require routine updates to reach VCE’s strategic goal of financial strength including reaching (and maintaining) VCE’s initial investment-grade credit rating. Staff will be bringing a final recommendation to the Board at the December meeting based on final analysis and budget recommendations.
The proposed draft policy modifications include:
1. An increased Operational Financial Reserve minimum from 30 days to 120 days
2. An Increased Operational Financial Reserve Target of 180 from 90 days (this increase aligns with current minimums typically seen for CCA qualification for investment grade credit ratings)
3. Addition of a Rate Stabilization Reserve minimum target of 60 days
4. Increased the minimum net margin allocation of 75% from 50% towards financials reserves of net margin above > 5%
5. Administrative updates and references to VCE cost recovery rate policy and rate adjustment policy.
6. Definitions of uses for Operational Financial Reserves and Rate Stabilization Reserves. 21 Item 13 – Draft 2025 Operating Budget & Customer Rates – Update Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] Rate Discounts/Revenue Investment
Revenues can be “invested” in rate discounts, programs, increased procurement of clean energy resources (e.g. short-term RECs), or a combination of these and other elements. • Revenues can be “invested” in rate discounts, programs, increased procurement of clean energy resources (e.g. short-term RECs), or a combination of these and other elements. • Every 1% discount results in approximately $1.50/month reduction in the average residential customer bill and approximately $3.75/month reduction in the average small commercial customer bill • Every 1% discount would be approximately $1M in reduced net income available for cash reserves, rate stabilization, programs, and procurement of additional clean energy resources. Net Income allocations for reserves and programs are normally evaluated in May as part of VCE’s audited financial results. • If selected, rate discounts are best implemented during PG&E rate changes (e.g. January), to minimize billing efforts, risk of errors, and customer messaging. 22 Item 13 – Draft 2025 Operating Budget & Customer Rates – Update Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 2025 Draft Budget & Rate Scenarios
• Scenario 1: Continuation of current rate 2% rate discounts to PG&E generation rate; approximately $3.5M net revenue reduction in 2025; • Scenario 2: Increase to a 5% rate discount to PG&E generation rate; approximately $6.5M net revenue reduction in 2025;
• Scenario 3: Increase to a 10% rate discount to PG&E generation rate; approximately $11.5M net revenue reduction in 2025;
23 Item 13 – Draft 2025 Operating Budget & Customer Rates – Update Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 24 Item 13 – Draft 2025 Operating Budget & Customer Rates – Update Table 5 – Budget Scenario Comparison
* Revenues are highly subject to VCE seasonal load variation and PG&E filings that impact generation rates and PCIA. Generation rate changes (1% change approximately $1M Net Annual Impact to VCE) Scenario 1 2022 2023 2024 2025 2026 2027 2028
Customer Revenue 85,323 95,430 103,478 109,930 95,810 99,350 100,140 Power Cost 75,130 68,528 80,490 63,970 75,090 72,080 68,800 Other Expenses 4,469 6,030 6,250 7,200 7,200 7,920 8,712 Net Income 5,724 20,872 16,738 38,760 13,520 19,350 22,628 Scenario 2 2022 2023 2024 2025 2026 2027 2028
Revenue 85,323 95,430 103,478 104,430 91,020 94,380 95,130 Power Cost 75,130 68,528 80,490 63,970 75,090 72,080 68,800 Other Expenses 4,469 6,030 6,250 7,200 7,200 7,920 8,712 Net Income 5,724 20,872 16,738 33,260 8,730 14,380 17,618 Scenario 3 2022 2023 2024 2025 2026 2027 2028
Revenue 85,323 95,430 103,478 98,940 86,230 89,420 90,130 Power Cost 75,130 68,528 80,490 63,970 75,090 72,080 68,800 Other Expenses 4,469 6,030 6,250 7,200 7,200 7,920 8,712 Net Income 5,724 20,872 16,738 27,770 3,940 9,420 12,618 Actual YTD
August 31 (8 MO)
+ Forecast (4 MO)
Budget
Scenarios Preliminary Forecast*
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] Conclusion
The draft 2025 operating budget scenarios meet VCE’s current and anticipated fiscal policy updates while providing funds for rate relief and/or other customer focused investments (e.g. programs, additional clean energy procurement). Based on the Board's feedback and direction, staff will return with an updated Operating Budget/customer rates recommendation for 2025 in December.
Discussion
25 Item 13 – Draft 2025 Operating Budget & Customer Rates – Update