Cotati City Council
July 8, 2025

Program Leader
Schneider Electric – Public Sector
Global Company – Local
Presence
 Over 1,000 completed Energy
Conservation projects, worth
more than $4B
 Awarded World’s Most Ethical
Company Honorees
consecutively from 2011 -
2023.
 Ranked #1 Energy Services
Company – 2021- 2024
 Turnkey solution
 Fixed-Firm Price with No
Change Orders
Sample of CA References
o City of Anderson
o City of Palmdale
o City of Gustine
o Town of Yountville
o Placer County
o City of El Centro
o Berkeley USD
o Lafayette USD
o Modesto City Schools
o Oakdale JUSD
o Turlock USD
125 CA Projects to Date
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Public
One Partner to Simplify Outcome Achievement
Confidential & Proprietary. Prepared by Schneider Electric. 3

DESIGN &

ENGINEERING

FINANCIAL

SERVICES

CONSTRUCTION

MANAGEMENT

SUPPORT

SERVICES

PERFORMANCE

GUARANTEE

OUTREACH &

ENGAGEMENT
Comprehensive Partnership
Confidential & Proprietary. Prepared by Schneider Electric. 3 Confidential & Proprietary. Prepared by Schneider Electric. 3 • Full Design & Engineering
• Building Envelope
• Security and Safety
• Utility Modeling
• Tariff Analysis
• Renewables
• Water, CNP, and Fleet
• Goal & Needs Alignment
• Onsight Supervision
• Subcontractor Mgmt.
• Scope Oversight
• Solicitations
• Safety
• Permitting
• O&M Planning
• System Training
• Grants & Incentives
• Federal, State, and
Local funding
• CIP Alignment
• Debt Service Options
• Ongoing Training
• Troubleshooting
• Remote Monitoring
• Warranty
• BAS Management &
Support
• New Construction
support
• Monthly Reporting
• Quarterly Reviews
• Yearly Reconciliation
• Resource Advisor
• Performance Based
Outcomes
• Client Services
• Project Branding
• Marketing Services
• Telling Your Good News
• Community Engagement
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Public

Program Goals
Commitment to Sustainability, Savings and Resilience
Strengthen your community with
innovative funding solutions
 Resilience – Back-Up Power When Grid
is Down
 Increased Electric Vehicle Integration –
More EV Charging for Public and Fleet
 Sustainability – Continue to Ensure City
Operates in Most Sustainable Way
Possible
 Funding – Take Advantage of All
Available Grants/Incentives
Example Program: LA County Sanitation is a huge
organization and serves 5.6M people in Los Angeles
County. Due to an increasing backlog of projects, LACSD chose the ESCO delivery model as an expedited path to
construction.
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Public

Future Electricity Costs
Impact by Not Doing Anything
Continued Usage and Rising Costs
Current Annual PG&E Costs
City Hall: $59,529
Police Department: $71,408
Public Works: $7,579
Current Annual Fleet Costs (O&M and Gas)
Police Department: $45,980
Public Works: $18,522
Annual Projected Increase for PG&E
7% 186 of 276
Public

Identified Measures
Aligned with Program Goals
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Public

LED Lighting Upgrades
Improved Building Operations and Aesthetics
Recommend Scope Summary
• Retrofit existing lighting with new LED lamps
at City Hall, Police Department, Public Works,
Cotati Room and Community Center
• Interior and non-LED exterior lights
• Energy and operational saving
Year One Savings
$22,000
Estimated Price Range (Stand-Alone)
$150-$160k
Existing Lighting at Corp Yard 188 of 276
Public

Expanded EV Charging Infrastructure
City Fleet and Public Facing Charging
Recommend Scope Summary
• City Hall: Add 4 level 2 ports all publicly accessible. • Police Department: Add 4 level 2 ports and 1 level 3
port.
• Public Works: Add 4 level 2 ports and 1 level 3 port
• New electrical service and associated infrastructure
Year One Savings
$35,300
Estimated Price Range (Stand-Alone)
$2.5M-$3M
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Public

Solar PV
Sustainable Energy and Costs Savings
Recommend Scope Summary
• Solar PV installations at City Hall, Police
Station, and Public Works.
• Sized for optimal offset (Savings/Potential
Resilience)
• Solar will be roof mounted
Year One Savings
$40,000
Estimated Price Range (Stand-Alone)
$1.5M-2M
Solar Rendering for Corp Yard
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Public

Microgrid
Fully Automated Back-Up Power Solution
Scope Options
• Microgrid = Solar, Generator, & Battery Energy Storage System (BESS) Installation • This microgrid will ensure power resilience at one of the City’s main support facilities • Scope includes batteries, controls, automatic transfer switches, connection of generator, and associated installation services
• Good, Better and Best Options depending on funding
• 24hr, 48hr and longer Options
• Option for inclusion of generator or not
Year One Savings
$5,000
Estimated Price Range (Stand-Alone)
$3M-$3.5M 191 of 276
Public

Microgrid Site Plan – City Hall Complex
Fully Automated Back-Up Power Solution
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Public

Available Project Grants and Incentives
Leverage Incentives
Self Generation Incentive
Program (SGIP)
~$500k
Cal OES Microgrid Grant
(Application Submitted)
~$2.7M
Charge! BAAQMD EV
Grant and PGE EV
Incentives
(Application Submitted)
~$2.4M
Investment Tax Credit
Direct Pay
~$1M
Solar PV Federal Incentive
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Public

Estimated Project Price and Savings
Self-Funding Program – All Recommended Scopes of Work
Lifecycle Savings
~$8.4M
Year-One Savings
~102k
Estimated Price Range
~$7-$8M
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Public

Timeline for Inflation Reduction Act Incentives
Proposed Changes in the “Big Beautiful Bill” by Senate
• Solar PV projects must begin construction before 2026 to keep its full value of Investment Tax Credit (ITC)
• 30% - Cash Reimbursement Credit for Public Agencies
• Projects that begin in 2026 have 18% Credit
• Ramp down from there
• All EV chargers must be installed within 12 months of the bill's enactment • $100k per facility where EV Charging Infrastructure is installed • The senate version retains the full 30% credit value for BESS into the 2030s • Safe Harbor of 5% of Construction Cost required
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Public

Recommended Phase 1 Project – Further Development
Taking Advantage of Federal Incentives
Scope Funding Sources Year-One Savings
Solar PV and Dashboard Investment Tax Credit – Direct
Pay $40,000
LED Lighting PG&E Incentives $27,000
Battery Energy Storage System SGIP and Investment Tax Credit – Direct Pay $5,000
EV Charging Infrastructure Charge Up! Grant, PG&E
Incentives and Investment Tax
Credit – Direct Pay
$35,000
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Public

Next Steps
Further Refining the Program
Investment Grade Audit
Detailed engineering, subcontractor
bidding and issue financing RFP
Summer 2025
City Council Review
Review potential program and
authorize Administration to
move into next stage of design
July 8th, 2025
Construction
Amendment/Financing
Approval
Return to Council for review of
Final Recommended Project
Fall 2025
Final Project
Finalize scope, price, schedule
and guarantee savings.

Fall 2025
Construction Mobilization
Turnkey Program Completion
Spring 2026
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General
make an
City of Cotati, California
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Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: CONSIDERATION AND DIRECTION TO THE CITY’S WATER

ADVISORY COMMITTEE REPRESENTATIVE REGARDING

THE PROPOSED WATER SUPPLY AGREEMENT BETWEEN

MARIN MUNICIPAL WATER DISTRICT AND SONOMA
WATER
Date: July 8, 2025
Written by: Craig Scott, Director of Public Works/City Engineer Recommendation
It is recommended the City of Cotati City Council consider the proposed water supply agreement by and between Marin Municipal Water District and Sonoma County Water Agency and, by motion, make a recommendation to its Water Advisory Committee (WAC) representative to conditionally support the agreement, as described.

Background
The City of Cotati entered into the Restructured Agreement for Water Supply with Sonoma Water in 2006 (2006 Restructured Agreement). The 2006 Restructured Agreement created the Water Advisory Committee (WAC), which is an advisory committee to the Sonoma Water Board of Directors and is comprised of elected officials of each of the eight prime contractors that purchase water from Sonoma Water, including Cotati. Marin Municipal Water District (Marin Water) is not a party to the 2006 Restructured Agreement and has a separate water supply agreement with Sonoma County Water Agency (Sonoma Water) with a term expiring June 30, 2025.

Sonoma Water and Marin Water have prepared a draft amended and restated water supply agreement (Draft Agreement) for approval by their respective governing bodies, which proposes changes to delivery caps and to the term of the agreement; addition of a roll over provision to the take-or-pay water provision and addition of a lump sum payment for regional water resiliency projects; and removing provisions regarding a new segment of aqueduct parallel to the Petaluma Aqueduct and including reference to a potential new pipeline from North Marin Aqueduct to 199 of 276
Nicasio and/or Soulajule Reservoirs. All other provisions of the Draft Agreement remain similar to the current existing water supply agreement.

The 2006 Restructured Agreement provides for deliveries to Marin Water pursuant to their 1996 water supply agreements, or to amendments to those agreements that have been approved by the WAC or to subsequent agreements between Sonoma Water and Marin Water that have been approved by the WAC. Therefore, the WAC will be considering approval of the Draft Agreement at a future WAC meeting, currently scheduled for August 4, 2025.

Staff are recommending the City Council provide a recommendation to its WAC representative, Councilmember Laura Sparks, regarding support for the Draft Agreement.

Analysis/Discussion
Marin Water currently obtains wholesale water supplies from Sonoma Water pursuant to the 2015 Renewal of the Third Amended Off-peak Water Supply Agreement and the Amended Agreement for the Sale of Water between the Sonoma County Water Agency and Marin Municipal Water District (2015 Renewal Agreement). The 2015 Renewal Agreement took effect July 1, 2015, with a ten-year term that expires on June 30, 2025. Exhibit A to the 2015 Renewal Agreement is the Fourth Amended Off-peak Water Supply Agreement (Off-peak Agreement), while Exhibit B is entitled Amendments to Amended Agreement for the sale of Water between Sonoma County water Agency and Marin Municipal Water District (Water Sale Agreement).

In advance of the 2015 Renewal Agreement’s expiration, Marin Water and Sonoma Water met to discuss the extension of the 2015 Renewal Agreement. The initial intent was to extend the agreement for another consecutive 10-year term, but there were several provisions in the 2015 Renewal Agreement that were mutually identified as no longer being in the future best interests of the two parties. Marin Water recently concluded a Water Supply Roadmap Project that, among other things, evaluates opportunities to maximize their storage of winter water for improved water supply resiliency. There are provisions in the 2015 Renewal Agreement that were identified as being too restrictive to allow Marin Water to be able to successfully carry out future conceptual “winter water” supply projects.

The 2015 Renewal Agreement imposes maximum transmission system delivery rates on Marin Water, in alignment with the 2006 Restructured Agreement, which would be simplified and revised by the proposed Draft Agreement. From the months of November through April, the maximum cap on deliveries to Marin Water would be increased, subject to availability and transmission capacity. The Draft Agreement also proposes to eliminate the 2015 Renewal Agreement’s mechanisms for ratcheting each year’s water availability up or down based on the amount of water delivered to Marin Water the prior year. In practice, the availability of water and transmission system capacity has served as the actual limit on Marin Water’s ability to receive Sonoma Water deliveries to the extent it would be requested by Marin Water. These operational changes would have no impact on Cotati’s priority and contractual amounts and would support Marin Water’s ability to pursue a proposed “winter water” supply project identified in their Water Supply Roadmap Project. Further, Marin Water’s maximum delivery cap of 14,300 AFY, and their 5,300 AFY minimum take-or-pay requirement remains unchanged 200 of 276
in the Draft Agreement.

In 2023, the North Marin Water District operated portion of the aqueduct experienced a land slide emergency, initiating reduced capacity in that pipeline during the repairs. During this emergency, Marin Water was unable to receive its minimum take-or-pay allotment for the year.

To address a future scenario where Sonoma Water is unable to deliver water to Marin Water due to circumstances completely beyond their control, the Draft Agreement includes a “roll-over” provision for Marin Water to receive that water in a future fiscal year, subject to availability.

This provision is fair in the spirit of “take-or-pay” requirements and does not change the Marin Water’s 5,300 AFY minimum take-or-pay requirement.

The Draft Agreement proposes no impacts to the allocation and curtailment process that is outlined in the 2006 Restructured Agreement. Water allocation during a shortage is critically important to all Sonoma Water’s contractors, including Cotati. The Draft Agreement would uphold the current allocation and curtailment structure, consistent with the 2006 Restructured Agreement.

The Draft Agreement includes a proposed provision for Marin Water to make an additional lump sum payment in the amount totaling $12,500,000 to support regional water resiliency projects in the Russian River, with $3,500,000 of that total being dedicated to projects that would enhance Sonoma Water’s ability to deliver winter water. The 2015 Renewal Agreement’s Off-peak and Water Sale Agreements included reference to the potential need for Sonoma Water to construct a parallel pipeline roughly adjacent to the Cotati Intertie and Petaluma Aqueduct, from the Ely Pumping Plant and terminating at Kastania Reservoir. The Draft Agreement would omit any reference to the earlier approach of expanding delivery capacity in parallel with the Petaluma Aqueduct from the Ely Pumping Plant to Kastania Reservoir (also referred to as the South Transmission System Project [STSP]). Instead, the Draft Agreement acknowledges that Marin Water is investigating the potential to build a pipeline from the existing transmission system to their Nicasio or Soulajule reservoirs. This pipeline would convey “winter water” to be available to meet Marin Water’s customer needs during dry years.

In accordance with the 2006 Restructured Agreement, the cities of Rohnert Park, Cotati and Petaluma are tied to the Petaluma Aqueduct for budget and capital project purposes. In the 2006 Restructured Agreement, Petaluma Aqueduct customers, as well as North Marin customers (Contractors), are responsible for the majority of the STSP costs. Marin Water, a Surplus Water Customer, is subject to the attached agreement, as amended, except that the 2006 Restructured Agreement includes various provisions that would presumably still control. Of most importance to Petaluma Aquaduct Customers, the 2006 Restructured Agreement states that water deliveries can‘t be curtailed to Marin Water due to flow restrictions in the Petaluma Aquaduct between Ely Booster Station and the Kastania Tanks, if Marin Water funds a parallel pipeline along this segment. Historically, this segment of pipeline was approaching its capacity, which is why it is specifically identified in the 2006 Restructured Agreement as a potential bottleneck in the system.

In the Sonoma Water FY 24-25 through FY 28-29 Capital Improvement Plan, the STSP is not included as demands for water have dropped due to greater water conservation. However, the STSP, as well as a parallel aqueduct along the Russian River-Cotati Intertie, are still listed in the 201 of 276
2006 Restructured Agreement when the region was projecting much higher water demands. If the STSP were to be required again, Marin Water would likely need to be re-added as a potential funder via their surplus supply agreement with Sonoma Water, if it is removed from the agreement now. The need for the STSP is unlikely in the near term but may be required in the future if overall water demands in Petaluma and Marin County grow. Separately, the 2006 Restructured Agreement term will expire in 15 years, on June 30, 2040. For these reasons, it’s recommended that the language regarding the pipeline parallel to the Petaluma Aqueduct remain in Marin Water’s agreement at this time. If, or when, this project is removed from the 2006 Restructured Agreement, a similar edit should be made to Marin Water’s agreement.

The proposed term of the agreement would be 15 years, in alignment with the expiration of the term of the 2006 Restructured Agreement, of which Cotati is a signatory. The Draft Agreement includes a provision for Sonoma Water’s statement of support for Marin Water’s participation in discussions regarding the extension or renewal of the 2006 Restructured Agreement, at the time it expires. Marin Water is not a “prime contractor” under the 2006 Restructured Agreement. This provision provides for Sonoma Water to be supportive of Marin Water participating in future discussions regarding the extension or renewal of the 2006 Restructured Agreement, however participation will still be subject to approval by all parties to the 2006 Restructured Agreement.

The 2006 Restructured Agreement provides for deliveries to Marin Water pursuant to the Third Amended Off-peak Water Supply Agreement dated January 25, 1996 and the Amended Agreement For The Sale of Water Between The Sonoma County Water Agency and the Marin Municipal Water District dated January 25, 1996, or to amendments to those agreement that have been approved by the WAC, or to subsequent agreements between Sonoma Water and Marin Water that have been approved by the WAC. Therefore, the WAC will be considering approval of the Draft Agreement at a future WAC meeting, currently scheduled for August 4, 2025.

Financial Considerations
The proposal would have no negative fiscal impacts to Cotati or Cotati customers. The proposed inclusion of the lump sum payment of $12,500,000 and opportunities for Marin Water to purchase off-peak available water could reduce the overall Sonoma Water Transmission System operational cost in the future.

Environmental Issues
Pursuant to CEQA Guidelines Section 15378, the proposed action is not a “project” subject to the California Environmental Quality Act (CEQA) because it does not have a potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment. In the alternative, the proposed action is exempt from CEQA pursuant to CEQA Guidelines Section 15061(b)(3) because it can be seen with certainty that there is no possibility that the project may have a significant effect on the environment.
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Sonoma – Marin
Water Supply
Agreement Renewal
June 2, 2025
June 2, 2025 TAC Meeting
Agenda Item 3
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Water Supply Agreement Between the Sonoma County Water
Agency and Marin Municipal Water District
• Initial agreement signed in July 1975 (Off Peak)
• Added new agreement in 1991 (Supplemental)
• Combined agreements in 1996
• Current agreement expires June 30, 2025 (Extending to December 31, 2025)
Off-peak Water Supply (Exhibit A to recent renewal)
Establishes 4,300 AFY as minimum take or pay and
provides flowrates schedule
2nd Amended Agreement for Water Supply (Exhibit B)
Establishes additional volume of 10,000 AFY, max
flowrates for delivery and purchase limits based on prior year usage; Adds 1,000 AF to take or pay minimum from
the Offpeak, for total take or pay of 5,300 AFY
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Lump Sum Payments by Marin
 Lump-sum payments by Marin Water made for 14,300 AFY of “Firm Water” from the 75,000 AFY net yield of the Warm Springs Dam Project:
 May 3, 1984 — $168,347.89 for 4,300 AFY
 July 31, 1996 — paid $2,867,344 for 5,000 AFY
 July 1, 2005 — paid $6,326,257 for second 5,000 AFY
 Additionally, Marin Water pays an 11% premium over the highest cost of water (not including the Windsor 20% surcharge) as well as Russian River Project and Conservation charges.
3 205 of 276
Key Terms – Existing v. Restated Agreement
Existing Agreement
 Term – 10 years
 Total Volume of water – 14,300 AFY
 Take or Pay – 5,300 AFY
 Maximum delivery limit = based on prior year
purchase plus 1,000 AF, not to exceed 14,300 AFY
 Cost of Water –
 11% premium over highest rate on SR or Petaluma
Aqueduct (excluding Windsor surcharge)
 Russian River Conservation Charge
 Russian River Projects Charge
 Firm Water payment – based on the amount of the
14,300 AFY that is unused
Restated Agreement
 Term – 15 years
 Lump Sum payment $12.5M to support water supply
resiliency projects
 Total Volume of water – (no change) 14,300 AFY
 Take or Pay – (no change) 5,300 AFY
 Maximum delivery limit = based on availability of water and transmission capacity, not to exceed 14,300 AFY (Supports Winter Water Project) or by request
 Cost of Water – (no change)
 11% premium over highest rate on SR or Petaluma Aqueduct (excluding Windsor surcharge)
 Russian River Conservation Charge
 Russian River Projects Charge
 Firm Water payment – based on the amount of the 14,300 AFY that is unused
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Process & Schedule
Draft Agreement reached between Sonoma Water and Marin Water Draft agreement reviewed by TAC Chair & Vice Chair & North Marin and recommend approval - May 2025
 TAC members review of agreement - May – June 2025
 TAC vote - June 2, 2025
 TAC members process for WAC approval – June/July 2025  WAC vote August 4, 2025
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~ MARIN
~ WATER
June 2, 2025 TAC Agenda
Agenda Item 3
DATE: May 2, 2025
TO: Ben Horenstein, Marin Water General Manager
FROM: Molly MacLean, Marin Water General Counsel
Paul Sellier, Marin Water - Water Resources Director
SUBJECT: Review of Proposed Changes to the Sonoma Water – Marin Municipal Water District Water Supply Agreement

EXECUTIVE SUMMARY
The purpose of this memorandum is to provide an evaluation of the proposed draft Amended and Restated Water Supply Agreement (“Draft Agreement”) between the Marin Municipal Water District (“Marin Water” or “District”) and the Sonoma County Water Agency (“Sonoma Water” or “Agency”) in comparison to the current agreement for water supply between the Marin Water and the Sonoma Water entered into in 2015. The District currently obtains wholesale water supplies from Sonoma Water pursuant to the 2015 Renewal of the Third Amended Offpeak Water Supply Agreement and the Amended Agreement for the Sale of Water between the Sonoma County Water Agency and Marin Municipal Water District (“2015 Renewal Agreement”). The 2015 Renewal Agreement took effect July 1, 2015, with a ten-year term that expires on June 30, 2025. Exhibit A to the 2015 Renewal Agreement is the Fourth Amended Offpeak Water Supply Agreement (“Offpeak Agreement”), while Exhibit B is titled Amendments to Amended Agreement for the sale of Water between Sonoma County water Agency and Marin Municipal Water District (“Water Sale Agreement”). Additional details of each of these can be found in the attached Background.

In advance of the 2015 Renewal Agreement’s expiration, District staff met with Sonoma Water staff to discuss the extension of the 2015 Renewal Agreement. Although initial discussions focused on extension (or, renewal without amendments), subsequent discussions landed on a proposed amended and restated agreement that would provide a more clear, single agreement, which would also eliminate or change certain provisions of the 2015 Renewal Agreement that do not serve either party’s interests under current conditions.

The Draft Agreement, though restated into a single, comprehensive agreement, pulls forward most of the provisions of the 2015 Renewal Agreement, with the exception of the following key provisions:
• New lump sum payment by Marin Water for regional water resiliency projects. 208 of 276

May 2, 2025

• Addition of a roll over provision to address Sonoma Water’s inability to deliver the 5,300 acre feet of minimum take-or-pay water in any given year, which would allow the District to pay for any remaining undelivered balance and take that balance in the following fiscal year, subject to availability;
• Elimination of the ramp-up/ramp-down provision that limited Marin Water’s water purchases based on prior year water purchase amounts;
• Simplification and revision to the delivery caps, eliminating seasonal acre foot limitations and revising the caps on gallons per day deliveries to Marin Water; • Elimination of provisions regarding a new segment of aqueduct parallel to the Petaluma line, but including added mention of Marin Water’s consideration of a new aqueduct from the North Marin Aqueduct to Nicasio and/or Soulajule Reservoirs1 ;
• The Term of the Draft Agreement runs for fifteen (15) years, as opposed to the ten (10) year term of the 2015 Renewal Agreement; and
• Renewal provision includes Sonoma Water’s statement of support for Marin Water’s participation in discussions regarding the extension or renewal of the 2006 Restructured Agreement
Despite these changes, however, the 14,300 AFY water quantity remains unchanged, the 5,300 annual minimum take-or-pay amount remains unchanged, and the transmission system capacity requirements and water shortage allocation approaches remain unchanged. Meaning that the operation of the Draft Agreement will continue the prioritization of transmission system capacity in favor of the Water Contractors2 under the 2006 Restructured Agreement for Water Supply between Sonoma Water and the Water Contractors (“2006 Restructured Agreement”) and will continue the same allocation of water supplies among the Water Contractors and Marin Water.

EVALUATION OF PROPOSED 2025 DRAFT AGREEMENT
The remainder of this memorandum sets forth key provisions of the proposed 2025 Draft Agreement and evaluates them in comparison to the 2015 Renewal Agreement and includes a review for consistency with the 2006 Restructured Agreement between Sonoma Water and its Water Contractors.
3 Proposed 2025 Draft Agreement Versus 2015 Renewal Agreement Recitals: Compared to the 2015 Renewal Agreement, the proposed 2025 Draft Agreement includes the same or similar recitals but also includes additional recitals providing a more detailed background on Sonoma Water’s role in developing and paying for the Russian River Project. The more fulsome recitals trace the evolution of Marin Water’s agreements with 1 The Atmospheric River Capture Project has not been approved and is only in early stages of design and environmental review.
2 “Water Contractors” means the City of Cotati, City of Petaluma, City of Rohnert Park, City of Santa Rosa, City of Sonoma, North Marin Water District, Valley of the Moon Water District, and Town of Windsor.
3 Capitalized terms not otherwise defined herein, including in Exhibit A, have the meaning ascribed in the Draft Agreement.
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May 2, 2025

Sonoma Water, including documenting the three lump-sum payments made by the District to Sonoma Water totaling $9,331,949 for parity with the investment made by the Water Contractors in the Russian River System and to secure the District’s 14,300 AFY of firm Agency water supply.

Water Amount and Delivery Rates: The Draft Agreement’s 14,300 acre feet per year (“AFY”) amount and 5,300 AFY minimum take-or-pay amount remain unchanged. The Draft Agreement would eliminate the 2015 Renewal Agreement’s mechanisms for ratcheting each year’s water availability up or down based on the amount of water delivered to Marin Water the prior year. (Compare 2025 Draft Agreement § 3 at pp. 9-10 to 2015 Water Sale Agreement § 4(a)-(b) at pp. 10-11.) In most years the availability of water and of Transmission System capacity have served as the practical limit on the District’s ability to take Agency water to the extent requested by Marin Water.

The 2015 Renewal Agreement also imposes certain maximum delivery rates on the District that would be simplified and revised by the proposed Draft Agreement. Specifically, the Offpeak Agreement states deliveries to the District may not exceed 760 AF per month, and for the fivemonth period May 1 through September 30 may not exceed 360 AF per month without the prior consent of Sonoma Water, while the total quantity delivered during this five-month period may not exceed 1,800 AF, (Offpeak Agreement § 1 at pp. 3-4). The Water Sale Agreement augments these provisions and allows additional deliveries, which vary by season and based on prior year deliveries. The 2006 Restructured Agreement currently limits the District’s delivery rate to 12.8 MGD between May 1 and October 31. (Restructured Agreement § 3.12 at p. 35.) In practice, the availability of water and of Transmission System capacity have served as the actual limit on the District’s ability to take Agency water requested by the District.

The Draft Agreement instead proposes to establish new delivery caps, specifically the Draft Agreement would limit deliveries during the months of May through October to 12.8 mgd and limit deliveries to Marin Water during the months of November through March to 25 mgd. The proposed Draft Agreement would continue to consider Transmission System capacity in that it provides that: “Sonoma Water shall deliver water at the requested rate to [the District] only to the extent that the Transmission System has capacity in excess of that required by Sonoma Water to supply the Water Contractors, but not less than 5,300 acre feet per fiscal year.” (Draft Agreement § 3(b).) This approach is similar to the one applied to Marin Water in the 2006 Restructured Agreement, which states Sonoma Water “may deliver water to Marin Municipal when and to the extent that the Transmission System has capacity in excess of that required by Agency to supply its Regular Customers the[ir] Entitlements ….” (Restructured Agreement §

3.12 at p. 35; id. § 3.5(b)(2) at pp. 30-31 [allocating Transmission System capacity during temporary impairment].)
The Draft Agreement also contains a new provision that would allow the District, in the event of inability to deliver water to Marin Water, to pay for the 5,300 AF minimum take or pay amount and roll any undelivered portion of that 5,300 AF into the following fiscal year, if Sonoma Water determines that water is then available. Marin Water shall be required to take or pay for 5,300 AF each fiscal year and Marin Water shall take delivery of any amount undelivered amount rolled over into storage in addition to the 5,300 AF minimum take or pay in the following fiscal year. This provision was added to address situations like the slide impacting the North Marin Aqueduct in 2023 where Marin Water was unable to receive its minimum take-or-pay allotment.

Water Shortage Allocation: The proposed Draft Agreement’s Section 4 shortage provisions would first allocate health and safety water to Sonoma Water’s Regular Customers, Russian 210 of 276

May 2, 2025

River Customers, and Marin Water, after considering other potable water sources available to each customer, and then allocate any additional supply to the same entities in proportion to their respective contract amounts. (Draft Agreement § 3(a) at p. 9.) These provisions are unchanged from those water-shortage provisions in the 2015 Renewal Agreement, (Offpeak Agreement § 4 at pp. 5-7; Water Sale Agreement § 8 at p. 17). Water allocation during a shortage is critically important to all Sonoma Water’s water service customers, and this provision would continue the same allocation and curtailment process currently in place, consistent with the Restructured Agreement.

Payment: The proposed payments in the Draft Agreement are unchanged from those in the 2015 Renewal Agreement, with the sole exception of the lump sum payment for regional water resiliency projects from Marin Water to Sonoma Water. (Draft Agreement § 5.) The Draft Agreement details how revenue from the District’s payments is to be allocated among specified Agency fund accounts. (Ibid.) The Draft Agreement would continue to impose a per-acre-foot Russian River Conservation Charge and Russian River Projects Charge (the latter not to exceed $20 per AF) — both in lieu of property taxes levied on property in Sonoma County. (Id.) The Draft Agreement applies the take-or-pay approach for the 5,300 AFY. (Ibid.) Transmission System Capacity: The 2015 Renewal Agreement’s Offpeak and Water Sale agreements acknowledge that, as of 2015, Sonoma Water had “excess capacity” in its Transmission System to meet the District’s delivery requests for its existing contract water amounts but anticipated that more capacity might be needed in the future. To that end, the Offpeak Agreement explains:
… Marin acknowledges that priorities of use of delivery capacity in Agency’s facilities have been allocated to others who are not parties to this Offpeak Agreement, and that capacity to make deliveries of water to Marin at the rates in Section 1 of this Offpeak Agreement may not always be available to Agency. … If [Agency’s annual] reports indicate that delivery capacity is insufficient, or soon will be insufficient, to provide deliveries at the rates specified in Section 1 of this Offpeak Agreement, then Agency shall use its best efforts to secure an alternative means, solely at Marin’s expense, to accomplish the purposes of this Offpeak Agreement.
(Offpeak Agreement § 4 at p. 7.)
The Water Sale Agreement explains:

At the present time and under normal circumstances, the Transmission System has excess capacity that may be used by Agency to supply District with water pursuant to this Water Sale Agreement. In order for the Transmission System in the future to continue to have such excess capacity under normal
circumstances, Agency will need to construct elements of a new aqueduct from the Russian River to the Ely Pumping Plant, roughly paralleling portions of the existing Cotati lntertie and Petaluma Aqueduct, at an earlier date than would be necessary absent this Water Sale Agreement, and Agency will need to construct a new aqueduct from the Ely Pumping Plant to Kastania 211 of 276

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Reservoir, roughly paralleling portions of the existing Petaluma Aqueduct, which would not be necessary absent this Water Sale Agreement.
(Water Sale Agreement Recital O at p. 5.)
Section 13 of the Water Sale Agreement provides:

If Agency initiates construction of a new aqueduct roughly paralleling the portion of the existing Petaluma Aqueduct that extends from the junction of that aqueduct and the Cotati lntertie to the Ely Pumping Plant, then District may make a written request to Agency, requesting Agency to construct at District's expense an aqueduct roughly paralleling the portion of the existing Petaluma Aqueduct that extends from the Ely Pumping Plant to Kastania Reservoir, with sufficient capacity to meet the maximum delivery limits specified in Section 2 of this Water Sale Agreement and the maximum delivery limit specified in the Offpeak Agreement, taking into account surplus capacity in that portion of the existing Petaluma Aqueduct.
(Id. § 13 at p. 23.)
As of 2025, the new delivery capacity described above has not been added to Sonoma Water’s Transmission System as additional capacity was not required to meet Marin Water’s supply needs. The Draft Agreement would omit any reference to the earlier approach of expanding delivery capacity in parallel with the Petaluma Aqueduct from the Ely Pumping Plant to Kastania Reservoir.

The Draft Agreement does acknowledge that the District is investigating the potential to build a pipeline connecting the existing Transmission System to the District’s Nicasio or Soulajule reservoirs, 4 so that the District may store Agency water there for later recovery and use to help meet Marin Water service area demand during dry years. To that end, section 6 of the 2025 Draft Agreement provides:

Sonoma Water acknowledges that [the District] is evaluating the feasibility and efficacy of constructing, at [the District’s] sole cost and expense, a new aqueduct from the existing North Marin Aqueduct to [the District’s] Nicasio and/or Soulajule Reservoirs to enhance water resiliency and reliability consistent with long term planning for the Russian River Project. [The District] will continue to actively communicate with Sonoma Water regarding project design and development and Sonoma Water, if requested by [the District], will provide available information and data necessary to project planning and assessment of project benefits and impacts. (2025 Draft Agreement § 6.)
4 The Atmospheric River Capture Project has not been approved and is only in early stages of design and environmental review.
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Despite this provision, however, the 14,300 AFY water quantity remains unchanged, the 5,300 AFY take-or-pay amount remains unchanged, and the Transmission System capacity requirements and water shortage allocation approaches remain unchanged. Meaning that, even if this project is developed at some future date, the provision of water to this project would continue to be subject to the constraints set forth in the Draft Agreement and allocation of water among the Water Contractors.

Support for SCWA Water Right Changes: The Draft Agreement’s Section 7 says the District acknowledges that the 75,000-AFY limit on Sonoma Water’s water rights prevents full use of the Russian River Project’s water supply yield, that Sonoma Water has previously filed applications and petitions asking the State Water Resources Control Board (“State Board”) to increase the limit to provide water to Sonoma Water customers and to modify instream fish-flow requirements in response to federal fish-protection mandates or hydrologic conditions. (Draft Agreement § 7.) The Draft Agreement says “[the District] recognizes and agrees that it will be in the public interest for the State Board to grant such petitions and applications.” (Ibid.) A similar provision is include in the Water Sale Agreement (Water Sale Agreement, § 17).

Waiver and Indemnity: The Draft Agreement’s Section 8 waivers and indemnity in favor of Sonoma Water are essentially the same as those in the 2015 Renewal Agreement. (Compare Sale of Water Agreement § 21 to Draft Agreement § 8).

Term; Renewal: The 2015 Renewal Agreement had a ten-year term with renewal rights. (Offpeak Agreement § 7 at p. 12 and Water Sale Agreement §18 at p. 26) The Draft Agreement proposes a 15 year term, to June 30, 2040, with similar rights of renewal, but also includes recognition of the concurrent expiration of the 2006 Restructure Agreement, and provides that “Sonoma Water agrees to advocate to include MMWD in any discussions related to any renewal or extension of the Restructured Agreement” . (Draft Agreement § 13) Water Quality: The Draft Agreement’s Section 10 would require Sonoma Water to deliver water to Marin Water that has the same quality as water delivered through the Transmission System to the Water Contractors and that complies with California drinking water standards. That would improve upon the water quality language in the Water Sale Agreement, which omits any reference to drinking water standards. (Water Sale Agreement § 22 at p. 29.)

COMPARISON TABLE
The following table sets forth a comparison of key provisions of the Draft Agreement relative to the 2015 Renewal Agreement, as well as how these provisions relate to the 2006 Restructured Agreement for Water Supply.

Key Provision 2025 Draft Agreement 2015 Renewal
Agreement
2006 Restructured
Agreement
Total Water
Amount: 14,300 AFY 14,300 AFY Consistent
Take-orPay Amount: 5,300 AFY 5,300 AFY Consistent
Annual
Ramp-up: No Yes Silent/Consistent
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Water
Shortage
Allocation
Priorities: Yes Yes Consistent
Transmission
System
Capacity
Allocation
Priorities: Yes Yes Consistent
Payment @
111% of
Yes Yes Consistent
highest
Petaluma/
Santa Rosa
Aqueduct
Charge:

Reference to
Potential New
Aqueduct: To Nicasio/Soulajule Parallel to Petaluma N/A Aqueduct
MMWD Support
SCWA Water
Right Changes: Yes Yes, Offpeak
Agreement
Silent
MMWD Waiver, Yes Yes, Water Sale Similar to Water
indemnity: Agreement Agreement
Renewal: Yes Yes Consistent
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BACKGROUND
Since 1975, Marin Municipal Water District (“Marin Water” or “District”) has entered into a series of contracts to import wholesale water supplies from Sonoma County Water Agency (“Sonoma Water” or “Agency”). The District uses the imported Sonoma Water supplies to supplement the water supplies developed by the District’s local reservoirs to provide retail public water service within Marin Water’s sphere of influence. From 2015 through 2020, about 77 percent of MMWD’s average annual water supply originated from its local reservoirs, while about 23 percent was imported from Sonoma Water.

The District currently obtains wholesale water supplies from Sonoma Water pursuant to the 2015 Renewal of the Third Amended Offpeak Water Supply Agreement and the Amended Agreement for the Sale of Water between the Sonoma County Water Agency and Marin Municipal Water District (“2015 Renewal Agreement”). The 2015 Renewal Agreement took effect July 1, 2015, with a ten-year term that expires on June 30, 2025. Exhibit A to the 2015 Renewal Agreement is the Fourth Amended Offpeak Water Supply Agreement (“Offpeak Agreement”), while Exhibit B is titled Amendments to Amended Agreement for the sale of Water between Sonoma County water Agency and Marin Municipal Water District (“Water Sale Agreement”).
2015 Renewal Agreement
As stated above, the 2015 Renewal Agreement is comprised of two separate components, the Offpeak Agreement, which evolved from the initial series of agreements between the District and Sonoma Water, and the Water Sale Agreement, which augments the Offpeak Agreement.

In 1996, these two agreements were incorporated into one, the Supplemental Water Supply Agreement, which was renewed and extended pursuant to the current 2015 Renewal Agreement.

1. Exhibit A - Offpeak Agreement
The 2015 Renewal Agreement’s Exhibit A - Offpeak Agreement provides that Sonoma Water shall deliver to Marin Water up to 4,300 acre-feet per year (“AFY”) of water at delivery rates not to exceed 760 AF per month. (Renewal Agreement, Exhibit A, § 1 at p. 3.) For the five-month period May 1 through September 30, the delivery rate shall not exceed 360 AF per month without the prior consent of Sonoma Water, and the total quantity delivered during this period shall not exceed 1,800 AF. (Id. at pp. 3-4.)
The Offpeak Agreement’s Section 3 requires the District to pay Sonoma Water for at least 4,300 AFY of water, regardless of whether the District actually requests or receives this amount (commonly called a “take-or-pay” amount). (Id. § 3 at p. 5.) The Offpeak Agreement’s Section 2 requires the District to pay for water at a rate of 111 percent of the highest rate that Sonoma Water’s primary wholesale water contractors pay for Agency water they take from the Petaluma Aqueduct or Santa Rosa Aqueduct. (Id. § 2 at p. 4.) Section 5 requires the District to pay a Russian River Conservation Charge and a Russian River Projects Charge. (Id. § 5(a)-(b) at pp. 9-10.)
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The Offpeak Agreement’s Section 4 provides that the District shall release stored water from lakes Mendocino or Sonoma when needed to meet Sonoma Water’s delivery obligations to Marin Water. (Id. § 4 at p. 5.) Section 4 describes how Sonoma Water will allocate available water among competing customers during a shortage caused by factors outside the Agency’s control:
• First, health-and-safety deliveries to Marin Water and Sonoma Water’s “regular customers”5 and “Russian River customers”6 based on quantities required for human consumption, sanitation, and fire protection in consideration of other potable water sources available to each such customer; and
• Second, additional water beyond health-and-safety deliveries is allocated to regular customers, Russian River Customers, and Marin Water in proportion to each customer’s respective contract quantity, but not to exceed specified average monthly delivery rates or each customer’s contract amount or reasonable need.

The Offpeak Agreement’s Section 4 also allocates capacity in the Agency’s Transmission System. With respect to Marin Water, Section 4 provides in part:

Agency shall make all reasonable efforts to deliver water to Marin at Kastania Reservoir or at North Marin's meter, as specified in Section 1 of this Offpeak Agreement, using all facilities available to Agency. However, Marin acknowledges that priorities of use of delivery capacity in Agency's facilities have been allocated to others who are not parties to this Offpeak Agreement, and that capacity to make deliveries of water to Marin at the rates in Section 1 of this Offpeak Agreement may not always be available to Agency.
(Id. at p. 7.)
If Transmission System capacity is limited for reasons beyond Sonoma Water’s control, the available capacity is generally allocated as follows:
• First, capacity for health-and-safety deliveries first goes to Sonoma Water’s Regular Customers;
5 “Regular Customers” collectively means “Water Contractors” and “Other Customers.” “Water Contractors” means the City of Cotati, City of Petaluma, City of Rohnert Park, City of Santa Rosa, City of Sonoma, North Marin Water District, Valley of the Moon Water District, and Town of Windsor. “Other Customers” means Sonoma Water, the County of Sonoma, California American Water Company (with respect to the Larkfield Water District), Forestville Water District, Lawndale Mutual Water Company, Kenwood Village Water Company, Penngrove Water Company, the City of Sebastopol, the State of California, and Santa Rosa Junior College. (Offpeak Agreement § 4 at p. 9 [incorporating definitions from 2006 Restructured Agreement]; 2006 Restructured Agreement § 1.2(g)(5) at p. 3 [defining “Regular Customer”]; id. § 1.2(g)(1) at p. 2 [defining “Water Contractor”]; id. § 1.2(g)(2) at p. 3 [defining “Other Agency Customer”].)
6 “Russian River Customer” means any Sonoma Water customer within Sonoma County who has or in the future will have contracts with Sonoma Water to divert or redivert water directly from the Russian River or Dry Creek without the use of the Transmission System.” (2006 Restructured Agreement § 1.2(gg) at p. 7.)
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• Second, additional capacity is allocated to Regular Customers in proportion to their respective contract amounts, but not to exceed their reasonable needs; • Third, additional capacity is allocated to Regular Customers in excess of their entitlements, but subject to certain limits;
• Fourth, additional capacity is allocated to Marin Water; • Fifth, additional capacity is allocated to deliver surplus water to the Water Contractors; • Sixth, additional capacity is allocated to deliver surplus water to Other Customers. (Id. at p. 8.)
The Offpeak Agreement’s Section 6 states that the water provided to the District here is in addition to the water provided under the Sale of Water Agreement (Exhibit B to the 2015 Renewal Agreement, which is described below).

The Offpeak Agreement’s Section 7 says its term starts July 1, 2015, and remains effective until June 30, 2025, and that the District has the following right to renew:

Upon the request of Marin, Agency agrees to enter into renewal agreements for periods not to exceed the then-existing term of the Restructured Agreement for Water Supply or any renewals, amendments or replacement agreements to the Restructured Agreement for Water Supply upon the same terms and conditions contained in this Offpeak Agreement, except that the Agency may make reasonable adjustments to the charges under Section 5 … (Id. § 7 at p. 12.)

2. Exhibit B Sale of Water Agreement
The 2015 Renewal Agreement’s Exhibit B Water Sale Agreement provides that Sonoma Water shall deliver to the District up to 10,000 AFY or the District’s “Maximum Delivery Limit.” (Water Sale Agreement § 3 at pp. 9-10.) the District’s Maximum Delivery Limit started at 5,000 AFY in 1995 and could be increased in a following year by up to 1,000 AFY by Marin Water taking or paying for at least 90 percent of its then-current limit in any year. (Id. § 4(a), which is referred to as the “ramp-up”.) The District’s Maximum Delivery Limit may be decreased by the District not taking at least 90 percent of its then-current limit in any year in which sufficient Agency water supply and Transmission System capacity were available. (Id. § 4(b).) The Water Sale Agreement’s Section 5 allows the District to pay Sonoma Water in lieu of taking delivery of water to prevent any reduction in the District’s Maximum Delivery Limit for the next year. (Id. § 5 at p. 11.) Section 5 essentially requires the District to take or pay for 1,000 AFY of water, under the Water Sale Agreement, (ibid.), which creates a total combined take-or-pay obligation of 5,300 AFY under the Offpeak Agreement and Water Sale Agreement.

Consistent with Section 2 of the Offpeak Agreement, the Water Sale Agreement’s Section 10 requires Marin Water to pay for water at a rate of 111 percent of the highest rate of Sonoma Water’s primary wholesale water contractors pay for Agency water they take from the Petaluma 217 of 276

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Aqueduct or Santa Rosa Aqueduct. (Id. § 10(a) at p. 18.) Section 10 requires the District to pay a Russian River Conservation Charge and a Russian River Projects Charge. (Id. § 10(b)-(c) at pp. 19-20.) Section 10 requires additional payments when the amount of water Sonoma Water delivers to the District and the amount of water for which the District has made payments in lieu of delivery is less than the 10,000 AFY of firm water supply for which the District made lumpsum firming payments pursuant to Section 8 of the Water Sale Agreement. (Id. § 10(c)-(e).) Consistent with Section 4 of the Offpeak Agreement, the Water Sale Agreement’s Section 8 provides that Sonoma Water shall release stored water from lakes Mendocino or Sonoma when needed to meet Sonoma Water’s delivery obligations to Marin Water. (Id. § 8(d)-(e) at pp. 12-

14.)
The Water Sale Agreement’s Section 8 uses the same priority principles as the Offpeak Agreement to allocate available Agency water among competing customers during a shortage caused by factors outside Sonoma Water’s control:
• First, health-and-safety deliveries to Marin Water and Sonoma Water’s “regular customers”7 based on quantities required for human consumption, sanitation, and fire protection in consideration of other potable water sources available to each such customer; and
• Second, additional water beyond health-and-safety deliveries is allocated to regular customers, Russian River Customers, and Marin Water in proportion to each customer’s respective contract quantity, but not to exceed specified average monthly delivery rates or each customer’s contract amount or reasonable need.
(Id. § 8 at p. 17.)
In practice, any curtailments under the 2015 Renewal Agreement rely on the water shortage methodology employed by Sonoma Water with respect to all Water Contractors and Marin Water.

The Water Sale Agreement’s Section 2 states that the first 360 AF of water the District receives from Sonoma Water in any month shall be accounted for as being received pursuant to the Offpeak agreement. (Id. § 2 at p. 9.) Further, the District may not receive any water under the Water Sale Agreement in any month unless (1) the District already has received in that month at least 360 AF pursuant to the Offpeak Agreement, or (2) the District already has received in that year the maximum amount of water allowed by the Offpeak Agreement. (Ibid.) The Water Sale Agreement’s Section 9 allocates capacity in the Agency’s Transmission System, stating:
… Agency shall be obligated to release water from storage or deliver water to District pursuant to this Water Sale Agreement only to the extent that the Transmission System has capacity in excess of that required by Agency to supply all of its Other 7 Consistent with the Offpeak Agreement, the Water Sale Agreement defines “regular customers” consistent with the 2006 Restructured Agreement. (Id. § 8(f) at p. 17; see, supra, note 1 [defining “Regular Customers”].)
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Customers and Contractors, and District under the Offpeak Agreement.
(Id. § 9 at p. 17.) The Water Sale Agreement’s Section 1 defines “Other Customers and Contractors” to mean:
… the North Marin Water District and all present and future Agency customers within Sonoma County, including all entities within Sonoma County that receive or will receive water from the Transmission System or other water conveyance facilities, and all entities within Sonoma County that divert or will divert water purchased from Agency directly from the Russian River or Dry Creek.
(Id. § 1(d) at p. 6.)
The Water Sale Agreement’s Section 18 says its term starts July 1, 2015, and remains effective until June 30, 2025, and that Marin Water has the following right to renew:

Upon the request of District, Agency shall enter into renewal agreements for periods not to exceed the then-existing term of the Restructured Agreement for Water Supply or any renewals, amendments or replacement agreements to the Restructured Agreement for Water Supply upon the same terms and conditions contained in this Water Sale Agreement, except that the Agency may make reasonable adjustments to the charges under Section 10 ….
(Id. § 18 at p. 26.)
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DRAFT May 2, 2025
Amended and Restated Water Supply Agreement
by and between
The Marin Municipal Water District
and
The Sonoma County Water Agency
June 2, 2025 TAC Meeting
Agenda Item 3
220 of 276
DRAFT, May 28, 2025 -- Page 1
Amended and Restated Water Supply Agreement
by and between
The Marin Municipal Water District
and
The Sonoma County Water Agency
This Amended and Restated Water Supply Agreement (“Agreement”) is made by and between the Marin Municipal Water District (“MMWD”) and the Sonoma County Water Agency (“Sonoma Water”) (each referred to individually as “Party” and collectively as “Parties”) and is effective as of ____________, 2025 Section 1: Recitals.

A) Sonoma Water was formed and operates pursuant to Appendix 53 of the California Water Code, which authorizes Sonoma Water to enter into contracts to provide a firm supply of water within or outside of Sonoma Water’s jurisdictional boundaries to any municipal corporation or agency (Water Code Appendix 53-9).

B) MMWD was formed and operates pursuant to the Municipal Water District Act of 1911, which authorizes MMWD to acquire and distribute water for the beneficial use of its residents (Cal. Water Code § 71610).

C) Sonoma Water entered into contracts with the United States Government to secure the construction of Coyote Valley Dam on the east fork of the Russian River and Warm Springs Dam on Dry Creek (hereafter “Russian River Project”).

D) The Coyote Valley Project was authorized by the Flood Control Act of 1950 (Pub. L. No. 81-516) and was completed by the U. S. Army Corps of Engineers in 1958. This component of the Russian River Project includes the impoundment of Lake Mendocino, which has a capacity of 122,500 acre feet of which between 64,800 acre feet and 111,000 acre feet, depending on the time of year, is allocated to storage for water supply. 221 of 276
DRAFT, May 28, 2025 -- Page 2
E) In 1955, Sonoma Water (then called the “Sonoma County Flood Control and Water Conservation District”) sold general obligation bonds to raise $5,650,000, which it paid to the United States for the reimbursable costs of the water-storage element of the Coyote Valley Project. Parts of the property taxes paid since 1955 by taxpayers within Sonoma County have been used to make payments on these bond obligations and to fulfill other obligations to the United States Government for the Russian River Project.

F) The Warm Springs Dam Project was authorized by the Flood Control Act of 1962 (Pub. L. No. 87-874) and was completed by the U.S. Army Corps of Engineers in 1984. This component of the Russian River Project includes the impoundment of Lake Sonoma, which has a capacity of 381,000 acre feet, of which 245,000 acre feet is allocated to storage for water supply.

G) Sonoma Water contracted with the United States to make annual payments to the U.S. for portions of the construction, operation, maintenance, major-replacement and major-rehabilitation costs of the Warm Springs Dam Project. Parts of the property taxes paid since 1971, including future taxes to be paid, by taxpayers within Sonoma County have been paid into a sinking fund that was established to fund Sonoma Water’s payment obligations, and to fulfill other obligations, to the United States Government for the Russian River Project.

H) In October 1974, Sonoma Water entered into a contract with the cities of Cotati, Petaluma, Rohnert Park, Santa Rosa and Sonoma, the Forestville County Water District, the Valley of the Moon Water District, and the North Marin Water District entitled “Agreement for Water Supply and Construction of Russian River-Cotati Intertie Project”, which was last amended June 23, 2006 (hereafter the “Restructured Agreement for Water Supply”).

I) The Restructured Agreement for Water Supply authorizes the use of certain water transmission facilities (hereinafter “Transmission System”) for the purpose of Sonoma Water delivering water to MMWD, under prescribed terms and conditions, water which is available in the Russian 222 of 276
DRAFT, May 28, 2025 -- Page 3
River and the Santa Rosa Plain groundwater wells.

J) On July 3, 1975, Sonoma Water and MMWD entered into an agreement entitled “Offpeak Water Supply Agreement”, which provides for Sonoma Water to deliver up to 4,300 acre feet of water per fiscal year, subject to specified terms and conditions, which Offpeak Water Supply Agreement was amended on August 28, 1984, on May 3, 1988, and on January 25, 1995. On October 22, 1991, Sonoma Water and MMWD entered into an agreement entitled the “Agreement for Sale of Water between the Sonoma County Water Agency and the Marin Municipal Water District” for the delivery of up to 10,000 acre feet of water per fiscal year from Sonoma Water to MMWD, under prescribed terms and conditions. On January 25, 1996, Sonoma Water and MMWD entered into a “Supplemental Water Supply Agreement”, which amended and incorporated the “Third Offpeak Water Supply Agreement” as Exhibit A thereto and the “Amended Agreement for Sale of Water between the Sonoma County Water Agency and the Marin Municipal Water District” as Exhibit B thereto, which Supplemental Water Supply Agreement was renewed and extended pursuant to the “Renewal of the Third Amended Offpeak Water Supply Agreement and the Amended Agreement for the Sale of Water between the Sonoma County Water Agency and Marin Municipal Water District” effective July 1, 2015 through June 30, 2025 (hereinafter the “2015 Renewal Agreement”).

K) Pursuant to the Restructured Agreement for Water Supply and the Off Peak Water Supply Agreement, the North Marin Water District and MMWD, respectively, have paid Sonoma Water a Russian River Conservation Charge, the proceeds of which have been paid into the sinking fund established to fund Sonoma Water’s obligations to the United States for the Russian River Project, as described in Recitals E and G above.

L) Sonoma Water currently utilizes the Transmission System to supply water to the Water Contractors under the Restructured Agreement for Water Supply, as well as Other Agency Customers under other agreements.

Payments by the Water Contractors under the Restructured Agreement for Water Supply were and are being used to fund payments on the bonds sold to finance the construction of, and upgrades to, the Transmission 223 of 276
DRAFT, May 28, 2025 -- Page 4
System and to directly fund the construction of parts of the Transmission System. Other customers of Sonoma Water divert water directly from the Russian River.

M) In June 1980, Sonoma Water certified its final environmental impact report on Proposed Amendments of Permits on Applications 12919A, 15736, 15737 and 19351. In July 1984, Sonoma Water certified its supplemental environmental impact report covering Proposed Coordinated Use of the Water Supply of Lake Mendocino and Lake Sonoma, Russian River Project. On November 14, 1990, MMWD certified its Water Supply Plan Program Final Environmental Impact Report. On September 24, 1991, MMWD certified its Water Supply Project Final Environmental Impact Report. These reports together satisfy the requirements of the California Environmental Quality Act (Pub. Res. Code § 21000, et seq.) for ongoing water sales pursuant to this Agreement.

N) Sonoma Water holds Water Right Permits 12947A, 12949, 12950 and 16596, which were issued by the State Water Resources Control Board and its predecessors pursuant to Applications 12919A, 12920A, 15736, 15737 and 19351, which Permits authorize Sonoma Water to divert Russian River water and to redivert water previously stored in Lake Mendocino and Lake Sonoma, subject to specific terms and conditions.

O) Recital E. in the Supplemental Agreement recognized that one of the reasons for that agreement was “to accommodate the Agency’s [Sonoma Water] efforts to attempt to ensure a continuation of Pacific Gas and Electric Company’s historic diversions of Eel River water to the Russian River and to increase the reliability of the water supply deliverable to [MMWD].” The need to ensure the continuation of such flows for the benefit of all of Sonoma Water’s Water Contractors was heightened by the amendments made by the Federal Energy Regulatory Commission in 2004 to Pacific Gas & Electric Company’s (PG&E) license for the Potter Valley Project, which reduced such flows and subsequently by PG&E’s decision to pursue surrender of its license to operate the Potter Valley Project and propose its decommissioning. By entering into this Agreement, the parties recognize the ongoing importance of the continuation of flows from the Eel River to the Russian River for the benefit of all of Sonoma Water’s customers. 224 of 276
DRAFT, May 28, 2025 -- Page 5
P) MMWD and Sonoma Water recognize the need for a regional approach to water supply, water conservation, fishery and water reuse issues.

Q) In May 1984, June 1996 and June 2005, MMWD made payments to Sonoma Water of $168,348, $2,837,344 and $6,326,257, respectively, and MMWD made the latter two payments pursuant to Section 8 of the Water Sale Agreement for the purpose of securing firm water, which lump sum payments represent a share of the Warm Springs Dam sinking fund and principal payments made to the United States Government by Sonoma Water for Lake Sonoma water storage space corresponding to a potential additional 10,000 acre feet per annum of the 75,000 acre feet per annum net firm yield of the Warm Springs Dam Project, which increased MMWD’s total potential net yield of the Warm Springs Dam Project to 14,300 acre feet per fiscal year.

R) Due to changes in circumstances since the Offpeak Agreement and the Water Sale Agreement were agreed upon, some provisions are no longer relevant and impose obligations and procedures on MMWD and Sonoma Water that are no longer necessary and provide undue burden to the Parties. The Parties wish to update the agreements and consolidate them into one document for ease of use. As of the effective date of this Agreement, this Agreement will replace all prior water sales agreements between Sonoma Water and MMWD including the 2015 Renewal Agreement.

Now, therefore, in consideration of the foregoing recitals, which are incorporated herein and made part of this Agreement, and of the prior agreements between the parties, and of the promises made herein, MMWD and Sonoma Water agree as follows:

Section 2: Definitions.

When used in this Agreement, unless otherwise distinctly expressed or manifestly incompatible with the intent of this Agreement, capitalized terms shall have the meanings set forth below or, if not defined below, the meanings set forth in the Restructured Agreement for Water Supply:
(a) “Sonoma Water” means the Sonoma County Water Agency or any 225 of 276 DRAFT, May 28, 2025 -- Page 6
successor thereto.
(b) “Sonoma Water’s Water Rights Permits” means water rights permits 12947A, 12949, 12950 and 16596, which the State Water Resources Control Board and its predecessors issued to Sonoma Water pursuant to Applications 12919A and 12920A, 15736, 15737 and 19351, as such permits now exist or in the future may exist (including any licenses that may be issued to replace these permits).
(c) “Agreement” means this Amended and Restated Water Supply Agreement.
(d) “Fiscal Year” means the financial accounting year beginning on July 1 and ending on June 30.
(e) “MMWD” means the Marin Municipal Water District or any successor thereto.
(f) “Potter Valley Project” means the hydroelectric project owned and operated by the Pacific Gas and Electric Company and licensed by the Federal Energy Regulatory Commission as Project No. P-77. (g) “Other Agency Customers” means Sonoma Water, the County of Sonoma, California American Water Company (with respect to the Larkfield Water District), Forestville Water District, Lawndale Mutual Water Company Kenwood Village Water Company,
Penngrove Water Company, the City of Sebastopol, the State of California, and Santa Rosa Junior College.
(h) “Regular Customers” means any of the Water Contractors or Other Customers.
(i) “Restructured Agreement for Water Supply” means the Restructured Agreement for Water Supply between Sonoma Water 226 of 276
DRAFT, May 28, 2025 -- Page 7
and the Cities of Cotati, Petaluma, Santa Rosa, Rohnert Park, and Sonoma, the Town of Windsor, and Forestville, Valley of the Moon, and North Marin Water Districts, executed on June 23, 2006, and any amendments or successor agreements thereto.
(j) “Russian River Conservation Charge” means the charge described in Section 5(b) of this Agreement.
(k) “Russian River Projects Charge” means the charge described in Section 5(c) of this Agreement.
(l) "Transmission System" means the water-supply facilities financed and constructed pursuant to the Restructured Agreement for Water Supply and its predecessor agreements.
(m)“Water Contractor” means a party signatory to the Restructured Agreement for Water Supply executed on June 23, 2006, and any amendments or successor agreements thereto.

Section 3: Sonoma Water Delivery of Water to MMWD.
(a) Subject to all of the terms and conditions of this Agreement, and subject to the provisions of the Restructured Agreement for Water Supply (as now existing or as may be amended in the future), MMWD may purchase water from Sonoma Water pursuant to this Agreement in any Fiscal Year in an amount not less than 5,300 acre feet but not to exceed 14,300 acre-feet. (b) Sonoma Water shall deliver water at the requested rate to MMWD only to the extent that water supply is available and the Transmission System has capacity in excess of that required by Sonoma Water to supply the Water Contractors, but not less than 5,300 acre feet per fiscal year. (c) In September each year, Sonoma Water and MMWD will meet to determine MMWD’s likely water demand for the coming fiscal year and whether MMWD’s potential water supply needs can likely be supported by anticipated Sonoma Water’s water supply availability and Transmission System capacity. Notwithstanding the foregoing, the maximum delivery rate to MMWD shall be limited to 25 million gallons per day (MGD) during 227 of 276 DRAFT, May 28, 2025 -- Page 8
the calendar months of January, February, March, April, November and December, and shall be limited to 12.8 mgd between the months of May through October. In the event that, in any given year, MMWD has a desire for a greater maximum mgd deliveries, MMWD may request the same from Sonoma Water and provided that there is sufficient Transmission System capacity and available water, Sonoma Water will not unreasonably withhold such additional deliveries to MMWD. MMWD agrees to provide written notice to all members of the Technical Advisory Committee, as that term is defined in the Restructured Agreement, of any such request by MMWD as well as the correspondent determination made by Sonoma Water.
(d) All water furnished by Sonoma Water to MMWD hereunder shall be delivered at a separately metered turnout or through the North Marin Water District’s metered turnout(s) at MMWD’s option.
(e) Water received by MMWD pursuant to this Agreement shall only be used within the sphere of influence (as such term is defined in section 56076 of the Government Code) of the MMWD.

Section 4: Shortage and Impairment.

Except as otherwise provided herein, Sonoma Water shall release water from storage in Lake Mendocino or Lake Sonoma when necessary to make available in the Russian River sufficient water to make the deliveries provided for herein. If by reason of drought, environmental laws or regulations, other causes beyond the control of Sonoma Water, a deficiency does occur, then Sonoma Water shall not be liable to MMWD for any damage resulting therefrom. In the event of an impairment of or limitation on the use or capacity of the Transmission System, or other facility that affects Sonoma Water’s ability to deliver water to MMWD pursuant to this Agreement, by reason of natural disaster, sabotage, legal impediment or other cause beyond the control of Sonoma Water, Sonoma Water shall not be liable to MMWD for any damage arising therefrom, provided however, that in such event MMWD shall have the right to roll any remaining undelivered allotment below the minimum 5,300 acre feet minimum fiscal year requirement into the following Fiscal Year such that the minimum take for that year is the 5,300 AF minimum and the undelivered water from the prior fiscal year so long as MMWD pays for the full 5,300 acre feet at the end of the fiscal year in which it was to be delivered at the then current rates if Sonoma Water 228 of 276
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reasonably determines that it has water available.

In the event of shortage of water in the Russian River or the Russian River Project that requires Sonoma Water to apportion available supply of water, Sonoma Water shall apportion the available water supply in accordance with the shortage and apportionment provisions in the Restructured Agreement section

3.5, so that it may make deliveries as follows:
(a) First, Sonoma Water shall deliver to each of its Regular Customers, not in excess of the respective entitlements set forth in Sections 3.1, 3.2 and 3.3 of the Restructured Agreement for Water Supply or any amendments or successor agreements thereto, authorize Sonoma Water’s Russian River customers to divert or redivert not in excess of the amounts for which those customers have contracted to purchase from Sonoma Water, and deliver water to MMWD not in excess of the amounts set forth in Section 3 of this Agreement, the quantities of water required by each for human consumption, sanitation and fire protection, as determined by Sonoma Water after taking into consideration all other sources of potable water then available to said customer;
(b) Second, to the extent additional water is available to Sonoma Water, Sonoma Water shall deliver such water to Sonoma Water’s Regular Customers, authorize Sonoma Water’s Russian River customers, to divert or redivert such water and deliver such water to MMWD in proportion to the respective entitlements set forth in Section 3.1, 3.2 and 3.3 of the Restructured Agreement for Water Supply, or any amendment or successor agreements thereto, the agreements between Sonoma Water and its Russian River customers, and section 3 of this Agreement, provided, however, that no customer shall receive under subdivisions (a) and (b) hereof a total quantity of water in excess of its reasonable requirements or its said entitlement or contracted amount, whichever is less.

Section 5: Charges and Payment.

For all water delivered under this Agreement, MMWD shall pay Sonoma Water each of the following charges:
(a) A per-acre-foot charge equal to the highest rate per acre-foot then charged by Sonoma Water to any party to the Restructured Agreement for 229 of 276 DRAFT, May 28, 2025 -- Page 10
Water Supply for water taken from either the Petaluma Aqueduct or the Santa Rosa Aqueduct, multiplied by 1.11; provided, however, that the 20% surcharge imposed on the Town of Windsor under Section 4.17(a) of the Restructured Agreement for Water Supply shall not be included in determining the highest rate per acre-foot for water taken from the Santa Rosa Aqueduct or Petaluma Aqueduct. Seven and four hundred thirty-two one-thousandths percent (7.432%) of this per-acre-foot charge shall be placed in the Russian River Projects Fund; two and four hundred seventyseven thousandths percent (2.477%) of this per-acre-foot charge shall be used, at the discretion of Sonoma Water, to pay for the costs of Common Facilities, to pay the Capital Costs of Aqueduct Facilities relating to the Santa Rosa or Petaluma Aqueducts, or to pay operations and maintenance costs; and the remainder shall be applied pursuant to the Restructured Agreement for Water Supply, with the water delivered to MMWD considered to be delivered from the Petaluma Aqueduct. (b) A per-acre-foot Russian River Conservation Charge in lieu of the property taxes levied by Sonoma Water on property in Sonoma County, to pay the capital, operation and maintenance costs associated with the Warm Springs Dam Project and the Russian River Project. The charge shall be determined annually on or before April 30 preceding each September 30.

The Russian River Conservation Charge shall be determined by multiplying the tax rate levied by Sonoma Water in the then current Fiscal Year to pay the costs associated with the Warm Springs Dam Project times the total assessed value of secured and unsecured property situated within the cities of Cotati, Petaluma, Rohnert Park, Santa Rosa and Sonoma, the Valley of the Moon Water District, and the Town of Windsor, and dividing the product by the total number of acre feet of water delivered to said public agencies pursuant to Section 3.1 and 3.3 of the Restructured Agreement for Water Supply, or any amendments or successor agreements thereto, during the twelve month period ending on March 31.
(c) A per-acre-foot Russian River Projects Charge in lieu of the property taxes levied on property in Sonoma County and other Sonoma Water general fund monies which are transferred by Sonoma Water to Sonoma Water’s Russian River Projects Fund and expended to pay for or partially pay for:
(1) carrying out Sonoma Water’s Coyote Valley Dam Project and Warm 230 of 276
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Springs Dam Project channel-stabilization works obligations to the United States Government and the State of California under Sonoma Water Board of Directors Resolutions No. 6847 adopted May 24, 1955, No. 7798 adopted September 27, 1955, No. DR00793-1 adopted September 25, 1961 and Resolution No DR68485 adopted December 23, 1980; (2) securing and defending appropriative water rights which are necessary for the realization of the full benefits of the Coyote Valley Dam and Warm Springs Dam Projects; (3) Sonoma Water’s share of the United States Government’s investment, operation and maintenance costs associated with the Coyote Valley Dam and Warm Springs Dam Projects; (4) the acquisition of all or part of the Potter Valley Project, contributions made to the Potter Valley Project owner, or its successor, to insure the continued operation of all or part of the Potter Valley Project or its successor; and (5) fishery mitigation and enhancement projects undertaken by Sonoma Water in the Russian River and Eel River and their tributaries. The Russian River Projects Charge shall be determined by dividing the total amount of Sonoma Water monies expended from Sonoma Water’s Russian River Projects Fund in the preceding ten Fiscal Years, exclusive of the funds contributed to the Fund by MMWD and the North Marin Water Districts and interest earnings attributable to funds contributed by MMWD and the North Marin Water District, by the sum of the total acre-feet of water delivered by Sonoma Water to the cities of Cotati, Petaluma, Rohnert Park, Santa Rosa, and Sonoma, the Valley of the Moon Water District, and the Town of Windsor (plus amounts diverted by the Town of Windsor via its own facilities under Sonoma Water’s water rights) pursuant to Sections 3.1 and 3.3 of the Restructured Agreement for Water Supply, or any amendments or successor agreements thereto, during the preceding ten Fiscal Years and multiplying the quotient by the ratio that the assessed value of secured and unsecured property situated within the cities of Cotati, Petaluma, Rohnert Park, Santa Rosa and Sonoma, the Valley of the Moon Water District, and the Town of Windsor bears to the assessed value of all secured and unsecured property within Sonoma County, provided however, in no event shall the Russian River Projects Charge exceed $20.00 per acre-foot. Sonoma Water shall keep proper books, records and accounts in which complete and accurate entries shall be made of all Sonoma Water general fund monies transferred to Sonoma Water’s Russian River Projects Fund and all expenditures made from the fund for the purposes described in this paragraph. Sonoma Water shall 231 of 276 DRAFT, May 28, 2025 -- Page 12
maintain a separate account within the Russian River Projects Fund for monies contributed by MMWD and the North Marin Water District. Monies expended from the Russian River Projects Fund shall be deemed to have been expended from the MMWD and North Marin Water District account in the proportion that the balance of the account bears to the total Russian River Projects Fund balance at the end of the Fiscal Year quarter preceding the expenditure.
(d) A lump sum payment which shall be determined by multiplying the Russian River Conservation Charge times the difference between 14,300 acre-feet and the sum of the total acre-feet of water delivered under this agreement during the prior Fiscal Year plus the total acre-feet of water for which payments have been made in lieu of delivery pursuant to Section 5(f) of this Agreement during the prior Fiscal Year.
(e) A lump sum payment which shall be determined by multiplying the Russian River Projects Charge times the difference between 14,300 acrefeet and the sum of the total acre-feet of water delivered under this Agreement during the prior Fiscal Year plus the total acre-feet of water for which payments have been made in lieu of delivery pursuant to Section 5(f) of this Agreement during the prior Fiscal Year.
(f) A lump sum payment, calculated as follows: If the total amount of water delivered to MMWD pursuant to this Agreement is less than 5,300 acrefeet in any Fiscal Year, then Sonoma Water shall include in the bill for the month of August the difference between the actual amount of water delivered during the previous Fiscal Year and 5,300 acre-feet, and MMWD shall pay for such amount at the same rate as though such water had been delivered, if and to the extent that such water was available to MMWD. Water shall be deemed to have been available to MMWD during the previous Fiscal Year if MMWD could have taken delivery of such water at any time during such Fiscal Year at delivery rates not exceeding available Transmission System capacity. Sonoma Water shall keep and make available for review by MMWD operating records indicating the availability of water to MMWD.
(g) MMWD Payment to Support Regional Water Resiliency. Within sixty (60) days following full execution of this Agreement, MMWD will pay to Sonoma Water an amount equal to Twelve Million Five Hundred Thousand 232 of 276
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Dollars ($12,500,000), a portion of which funds, specifically Nine Million Dollars ($9,000,000) will be used by Sonoma Water for projects to enhance water resiliency within the Russian River System. The remaining portion, Three Million Five Hundred Thousand Dollars ($3,500,000) will be used by Sonoma Water for projects to enhance Sonoma Water’s ability to deliver winter water. Sonoma Water shall be responsible for conducting any environmental review that may be required under the California Environmental Quality Act for all such projects.
(h) Notwithstanding any dispute between Sonoma Water and MMWD, MMWD shall pay all bills made by Sonoma Water pursuant to this Agreement when due and shall not withhold all or any part of any amount billed pending the final resolution of such dispute. In the event of a dispute, MMWD may pay its bills under protest, and if necessary under the ultimate resolution of the dispute, Sonoma Water shall make an appropriate refund to MMWD, including interest on the overpaid amount at the rate obtained by Sonoma Water as a result of investment of the disputed amount. If MMWD does not pay any bill by the due date for such bill, then, in addition to the principal amount due, MMWD also shall pay Sonoma Water interest on this principal amount due, calculated from the due date until the payment date at the legal rate per annum established pursuant to section 685.010 of the Code of Civil Procedure.

Section 6: Construction of New Aqueduct.

Sonoma Water acknowledges that MMWD is evaluating the feasibility and efficacy of constructing, at MMWD’s sole cost and expense, a new aqueduct from the existing North Marin Aqueduct to MMWD’s Nicasio and/or Soulajule Reservoirs to enhance water resiliency and reliability consistent with long term planning for the Russian River Project. MMWD will continue to actively communicate with Sonoma Water regarding project design and development and Sonoma Water and if requested by MMWD, will provide available information and data necessary to project planning and assessment of project benefits and impacts. In connection with the foregoing, MMWD will be solely responsible for the completion of any analysis required pursuant to the California Environmental Quality Act.

Section 7: Sonoma Water Petitions and Applications with State Water Resources Control Board. 233 of 276
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MMWD acknowledges that the existing 75,000 acre foot per year limit on diversions and rediversions in Sonoma Water’s Water Right Permits does not allow Sonoma Water to utilize the entire yield of the Russian River Project, and that Sonoma Water may from time to time file petitions or applications with the State Water Resources Control Board (“State Board”) to increase this or future limits or otherwise provide water to Sonoma Water customers. MMWD also acknowledges that Sonoma Water has filed petitions with the State Board requesting changes in minimum instream flow requirements and other changes in its water rights permits to respond to hydrologic conditions or any environmental release requirements, or both. MMWD recognizes and agrees that it will be in the public interest for the State Board to grant such petitions and applications.

Section 8: Waiver and Indemnity.
(a) MMWD waives, releases and forever discharges Sonoma Water, its officers, agents and employees from any and all liabilities, claims, demands, losses and costs relating to any of the following: (1) any property damage or personal injury arising from any non-delivery of water requested by MMWD pursuant to this Agreement, or for any property damage or personal injury arising from the quality of water delivered pursuant to this Agreement, if such property damage or personal injury is caused by lack of available capacity in the Transmission System, drought, earthquake or other Act of God, strike or other labor dispute, partial or total dam, gate or tunnel loss, dam, gate or tunnel repairs, water pollution, or any factor beyond the control of Sonoma Water (whether or not such factor is listed in this sentence); and (2) any property damage or personal injury arising from any decision of Sonoma Water regarding: (a) determinations of the availability of water for sale by Sonoma Water to MMWD pursuant to this Agreement; (b) allocation of transmission system capacity; (c) proposed expansions of the Transmission System; or (d) repair (or non-repair) of the Potter Valley Project, Coyote Valley Dam or Warm Springs Dam. MMWD's waiver, release and discharge described in this paragraph shall apply to any of the property damages or personal injuries described in this paragraph, whether or not such property damages or personal injuries were caused by Sonoma Water's negligence, unless such property damages or personal injuries resulted from Sonoma Water's negligence, willful misconduct or violation of law. 234 of 276
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(b) MMWD shall indemnify, hold harmless, protect and defend Sonoma Water, its officers, agents and employees from and against any and all liabilities, claims, demands, damages, losses, disabilities or expenses (including attorney fees and litigation costs) of every nature arising out of, or in connection with: (1) the lack of quantity of water that has been delivered by Sonoma Water to MMWD pursuant to this Agreement; or (2) the control, conveyance and disposition of water that has been delivered by Sonoma Water to MMWD pursuant to this Agreement. For the purposes of this section, the point of delivery shall be as specified in Section 3 of this Agreement. MMWD shall provide such indemnification, holding harmless, protection and defense whether or not such liabilities, claims, demands, damages, losses, disabilities or expenses are based on Sonoma Water's negligence, unless such liabilities, claims, demands, damages, losses, disabilities or expenses are based on Sonoma Water's sole negligence, willful misconduct or violation of law.
(c) This section shall not apply to any construction activities, or construction contracts, relating to the construction described in Section 6of this Agreement. The provisions in this section regarding attorney fees shall not apply to any other section of this Agreement.

Section 9: Water Conservation; Coordination on Urban Water Management Planning.
(a) MMWD and Sonoma Water will comply with all applicable state laws related to water conservation planning and implementation, including the Urban Water Management Planning Act, Water Code sections 10610- 10655 (as such act now exists or in the future may exist). MMWD shall implement or use its best efforts to secure the implementation of any water conservation requirements that may be added as terms or conditions of Sonoma Water’s appropriative water rights permits or licenses, or with which the Agency must comply under compulsion of regulation or law. (b) MMWD and Sonoma Water shall coordinate the preparation of their respective Urban Water Management Plans required by the Urban Water Management Planning Act. MMWD shall provide Sonoma Water MMWD’s projections of projected future water demands, conservation, recycled water use, and other non-Sonoma Water water supplies, and the methodology and assumptions used by MMWD to produce those 235 of 276
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projections. Sonoma Water shall review the projections and may provide comments on the projections, and shall provide MMWD with projections of the amount of water to be provided by Sonoma Water to MMWD to be used in MMWD’s and the Sonoma Water’s Urban Water Management Plans, provided, however, that nothing in this Section 9, including any lack of compliance, shall impact the other provisions of this Agreement nor any obligation hereunder.

Section 10: Water Quality.

Water delivered by Sonoma Water to MMWD pursuant to this Agreement shall be of the same general quality as water delivered by Sonoma Water from the transmission system to the Water Contractors in compliance with California drinking water standards. Except as expressly stated in the preceding sentence, Sonoma Water does not make any express or implied warranty regarding the quality of the water delivered pursuant to this Agreement. The payment obligations of MMWD set forth in Section 5 shall not be affected in any manner by the quality of the water delivered by Sonoma Water hereunder.

Section 11: CEQA for Future Projects.

Pursuant to section 15051(d) of the State CEQA Guidelines, MMWD is designated as the lead agency under the California Environmental Quality Act for the construction of any new aqueduct to be constructed by MMWD pursuant to Section 6 of this Agreement. Sonoma Water is designated as the lead agency for any other projects north of Kastania Reservoir that Sonoma Water may construct to implement this Agreement.

Section 12: CEQA for this Agreement.

Pursuant to section 15061 of the California Environmental Quality Act (CEQA) Guidelines, the parties have evaluated this Agreement and have concluded that their approval of this Agreement is exempt from the provisions of CEQA under Section 15301 of the CEQA Guidelines because MMWD fully exercised its right to delivery of water under the 2015 Renewal Agreement, the not to exceed amount of water to which MMWD is entitled under this Agreement is unchanged from the amounts included under the 2015 Renewal Agreement and future levels of diversions and use of water by MMWD under this Agreement will not be significantly different from present levels of diversion and use. Accordingly, the parties will file, pursuant to CEQA Guidelines section 15062, notices of 236 of 276 DRAFT, May 28, 2025 -- Page 17
exemption with the Marin and Sonoma County Clerks and the State Clearinghouse of the Office of Planning and Research.

Section 13: Term.

This Agreement supersedes the 2015 Renewal Agreement. This Agreement shall be effective on July 1, 2025 and shall remain in effect until June 30, 2040. Upon the request of MMWD, Sonoma Water agrees to enter into renewal agreements for periods not to exceed the then-existing term of the Restructured Agreement for Water Supply or any renewals or amendments to the Restructured Agreement for Water Supply upon the same terms and conditions contained herein, except that Sonoma Water may make reasonable adjustments to the charges under Section 5 of this Agreement, and any such reasonable adjustments then shall be included in any renewal agreement. Sonoma Water acknowledges that the expiration date of the Restructured Agreement for Water Supply is June 30, 2040. Based upon MMWD’s longstanding and ongoing participation and support of Sonoma Water’s Russian River Project, including lump sum capital payments and other payments made by MMWD in parity with Sonoma Water’s Water Contractors, Sonoma Water agrees to advocate to include MMWD in any discussions related to any renewal or extension of the Restructured Agreement for Water Supply. If at the expiration date of this Agreement and the Restructured Agreement for Water Supply has been terminated or has expired without either being renewed or replaced by another agreement pertaining to water supply, then upon the request of MMWD, Sonoma Water shall enter into renewal agreements for periods not to exceed forty (40) years upon the same terms and conditions contained herein, except that Sonoma Water may make reasonable adjustments to the charges under Section 5 of the Agreement and any such reasonable adjustment then shall be included in any renewal agreement.

Section 14: Modifications:

This writing is intended both as the final expression of the agreement between the parties hereto with respect to the included terms and conditions and as a complete and exclusive statement of the terms of the agreement. Pursuant to Code of Civil Procedure section 1856, no modification of the Agreement shall be effective unless and until such modification is evidenced by a writing signed by all parties.

Section 15: Equitable Remedies.
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Because water is a scarce and precious resource, MMWD will not have an adequate remedy at law, and thus may request a court of competent jurisdiction to order equitable remedies, to compel Sonoma Water to deliver the water that MMWD is entitled to receive pursuant to this Agreement. Such equitable remedies shall be MMWD's sole and exclusive remedies in actions brought by MMWD relating to the amounts of water that Sonoma Water must deliver to MMWD pursuant to this Agreement.

Section 16: Notices.

All notices shall be in writing and notices and payments may be given by personal delivery or by mail. Notices and payments sent by mail shall be addressed as follows:

To Sonoma Water:

General Manager,
Sonoma County Water Agency,
404 Aviation Boulevard, Santa Rosa, CA 95403;
To MMWD:

General Manager,
Marin Municipal Water District,
220 Nellen Avenue, Corte Madera, CA 94925
When so addressed, a notice shall be deemed given upon deposit in the United States Mail, postage prepaid. In all other instances, notices and payments shall be deemed given at the time of actual delivery. Changes may be made to the names and addresses of the person to whom notices and payments are to be given by giving notice pursuant to this section.

Section 17: Demand for Assurances. When reasonable grounds for insecurity arise with respect to the performance of either party, the other party may, in writing, demand adequate assurance of due performance and, until it receives such assurance, may, if commercially reasonable, suspend any performance for which the agreed return performance has not been received. "Commercially reasonable" includes not only the conduct of either party with respect to performance under this Agreement, but also conduct with respect to other agreements with the other party to this Agreement or others. After receipt of a justified demand, the failure to provide within a reasonable time, but not 238 of 276
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exceeding 30 days, such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of this Agreement.

Acceptance of any improper delivery, service, or payment does not prejudice the aggrieved party's right to demand adequate assurance of future performance.

Section 18: No Third-Party Beneficiaries.

No third-party beneficiaries are intended or established by this Agreement.

Section 19: Representation by Counsel.

Sonoma Water and MMWD each was represented by independent counsel in the negotiation and execution of this Agreement. For the purposes of interpretation of this Agreement, neither party shall be deemed to have been the drafter of this Agreement.

Section 20: Merger.

This Agreement is intended both as a final expression of the agreement between the parties hereto with respect to the included terms and conditions and as a complete and exclusive statement of the terms of the Agreement.

ATTEST: MARIN MUNICIPAL WATER DISTRICT
By:

Board Secretary Matt Samson, President
Board of Directors
Reviewed As To Form:

Molly MacLean
General Counsel
ATTEST: SONOMA COUNTY WATER AGENCY
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By:

Deputy Clerk of the Chair, Board of Directors
Board of Directors
DATE:

Reviewed As To Substance By
Sonoma County Water Agency:

Grant Davis, General Manager
Reviewed As To Form:

Deputy County Counsel
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Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: DISCUSS AND PROVIDE DIRECTION TO THE CITY'S

REPRESENTATIVE ON THE SONOMA CLEAN POWER

BOARD OF DIRECTORS REGARDING SONOMA CLEAN

POWER EXPANSION TO LAKE COUNTY
Date: July 8, 2025
Written by: Damien O'Bid, City Manager
Recommendation
It is recommended that the City Council provide direction to the City’s representative on the Sonoma Clean Power (SCP) Board of Directors to authorize expansion of SCP service to Lake County and the associated cities, including direction (if any) on the key considerations discussed in the staff report.

Background
On June 5, 2025, the Sonoma Clean Power (SCP) Board of Directors voted to start the process of offering service to Lake County. If approved later this year, Lake would become the third county served by SCP, joining Sonoma and Mendocino.

At the Board’s request, SCP completed a detailed study and found that adding Lake County would likely lower overall costs and help reduce greenhouse gas emissions. The study is attached. Lake County shares SCP’s goals of lowering energy bills, cutting pollution, growing the local economy, and developing more geothermal energy.

Analysis/Discussion
In the feasibility report, the key considerations for the SCP Directors are the following:
• Should an offer of service to Lake County and the Cities of Clearlake and Lakeport be made at this time?
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• Does the Board agree to staff’s recommendation for starting service between April and June 2027?
• Does the Board wish to use the same practice as in Mendocino County by offering one Board seat to the County of Lake Supervisors and one shared seat for the two incorporated cities of Clearlake and Lakeport?
• Does the Board wish to stress the importance of the Geothermal Opportunity Zone (GeoZone) and seek to confirm that Lake County is aligned and wishes to join the GeoZone?
Other findings of the feasibility report are as follows:
• Expanding service to all of Lake County appears to be financially beneficial to both Lake County customers and existing SCP customers in a majority of years. • Expansion to Lake County appears to be well aligned with the criteria established in SCP’s Policy for New Customer Communities D.4.
• SCP’s current portfolio of long-term renewable contracts is sufficient to accommodate expansion to Lake County without requiring additional long-term procurement to maintain compliance.
• Startup costs for an expansion to Lake County are estimated to be $578,000, which forecasts indicate would be recouped through rates in the first year of service. • In the base market scenario used for evaluation, Lake County customers see total bill savings of 4% or more, however, it is important to note that there is a clear possibility that total bills will be higher with SCP some of the time due to changing PG&E fees outside SCP’s control and energy market conditions.
• An expansion to Lake County will increase SCP’s target for reserves by $42.7 million (using 2030 costs), which would have the effect of reducing SCP’s ability to provide savings until that higher balance is achieved. The time estimated to accumulate the additional reserves while sustaining competitive rates is difficult to estimate, but likely could be completed by 2032.
• Lake County’s participation in the GeoZone is mutually beneficial and it is strongly recommended that Lake County join the GeoZone concurrently with SCP’s electric service.
• Expansion to Lake County offers additional benefits such as more cost-effective building electrification opportunities, increased portfolio flexibility, improved advocacy, and additional phone and web support for customers in Lake County. • Risks that should be considered before proceeding with an expansion include the impacts of a jurisdiction withdrawing from SCP service, high customer opt-outs, possible impacts to SCP’s credit rating, and the inability to guarantee rates that are lower than PG&E. • The feasibility plan outlines steps leading up to an April to June 2027 start date, including approvals from SCP’s Board and Lake County jurisdictions, as well as filings with the CPUC, customer noticing, and outreach.

Since inception, a core value of SCP has been supporting the construction of local energy resources that provide economic development opportunities to the communities it serves. SCP has contracted with the Geysers, built six 1 MW local solar projects, and is currently building a 4 242 of 276
MW solar with storage project in Mendocino County.

Geozone
SCP has created the GeoZone in partnership with Sonoma and Mendocino counties with the aim of building 600 MW of new geothermal capacity. SCP’s GeoZone is structured as a publicprivate partnership to promote local geothermal development. The motivation of GeoZone is to leverage SCP’s community relationships, power offtake, and political and regulatory advocacy to build geothermal capacity that is cost-competitive at scale-up and that generates significant local economic benefits. In expanding to Lake County, SCP may find new opportunities for partnership in resource development and use its leverage as a large power customer and regulatory advocate to steer development towards positive outcomes for the region.

Next Steps
The next Board vote on this issue is scheduled for August 7, 2025. If the SCP Board approves, Lake County and its two cities—Lakeport and Clearlake—will then decide whether to accept the offer. If all goes forward, service could begin as soon as May 2027.

Financial Considerations
SCP would fund the initial startup costs for an expansion to Lake County, which is estimated to be $578,000. Forecasts indicate that this would be recouped through rates in the first year of service. Longer term, the expansion is expected to result positive benefits to the region, including clean power jobs, continued electricity rates lower than PG&E (not withstanding some unexpected legislative or regulatory change), and greater leverage with regulatory advocacy at the State.

Environmental Issues
Where it can be determined with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA review.

This general rule can be applied to activities which could be subject to the CEQA process, but which logic dictates should not be subject to CEQA review. Therefore, based on the information provided above, the proposed resolution is exempt from CEQA pursuant to Section 14.03.021 of the CEQA Guidelines in that there is no possibility that the activity may have a significant impact on the environment.
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Feasibility Study
Sonoma Clean Power Expansion to Unincorporated Lake
County, the City of Clearlake, and the City of Lakeport May 2025
Version 1.1
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Table of Contents
Chapter 1. Executive Summary....................................................................................... 3 Chapter 2. Background ................................................................................................... 4 Community Choice Aggregation (CCA) ....................................................................... 4 SCP Cannot Promise Lower Rates.............................................................................. 5 Lake County Interest in CCA Service .......................................................................... 6 Sonoma Clean Power Policy for New Customer Communities.................................... 7 Chapter 3. Lake County Electricity Demand.................................................................... 9 Lake County Load ....................................................................................................... 9 Comparison to Existing Customers of Sonoma Clean Power.................................... 10 Chapter 4. Sonoma Clean Power Electric Service ........................................................ 12 Products & Resource Portfolio................................................................................... 12 Credit & Financial Resources .................................................................................... 14 Customer Programs and Customer Service .............................................................. 15 Chapter 5. Economic Evaluation ................................................................................... 16 Power Costs .............................................................................................................. 16 Administrative Costs.................................................................................................. 18 Uncollectible Revenue............................................................................................... 19 Revenue Requirement............................................................................................... 19 Startup Costs............................................................................................................. 20 Customer Type and Usage Pattern Impacts to Unit Revenue ................................... 20 PG&E Generation Rates, PCIA, and Rate Competitiveness ..................................... 21 Sensitivity Analysis .................................................................................................... 23 Reserves and Rate Stabilization Fund Considerations.............................................. 25 Chapter 6. Local Resource Development Opportunities ............................................... 26 Geothermal Opportunity Zone (GeoZone)................................................................. 26 Other Clean Energy Opportunities............................................................................. 28 Chapter 7. Additional Benefits ....................................................................................... 28 Chapter 8. Risks............................................................................................................ 29 Chapter 9. Implementation............................................................................................ 31 Enrollment Process ................................................................................................... 31 Governance............................................................................................................... 32 245 of 276
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Chapter 1. Executive Summary
Staff recommend the SCP Board consider extending service to all of Lake County.

This feasibility study provides a comprehensive review of the requirements to expand Sonoma Clean Power (SCP) service to unincorporated Lake County, the City of Clearlake, and the City of Lakeport (referred to as “Lake County”). The study characterizes the load of Lake County and performs an economic evaluation to assess the financial feasibility of expansion. This report also provides background on Community Choice Aggregation (CCA) and SCP’s current electric service, and discusses resource development opportunities, benefits of expansion, potential risks, and outlines implementation steps. The main findings of this study and considerations are as follows:
• Expanding service to all of Lake County appears to be financially beneficial to both Lake County customers and existing SCP customers in a majority of years. • Key considerations for the SCP Board of Directors are:
o Should an offer of service to Lake County and the Cities of Clearlake and Lakeport be made at this time?
o Does the Board agree to staff’s recommendation for starting service between April and June 2027?
o Does the Board wish to use the same practice as in Mendocino County by offering one Board seat to the County of Lake Supervisors and one shared seat for the two incorporated cities of Clearlake and Lakeport? o Does the Board wish to stress the importance of the GeoZone and seek to confirm that Lake County is aligned and wishes to join the GeoZone? • Expansion to Lake County appears to be well aligned with the criteria established in SCP’s Policy for New Customer Communities D.4.
• SCP’s current portfolio of long-term renewable contracts is sufficient to accommodate expansion to Lake County without requiring additional long-term procurement to maintain compliance.
• Startup costs for an expansion to Lake County are estimated to be $578,000, which forecasts indicate would be recouped through rates in the first year of service.
• In the base market scenario used for evaluation, Lake County customers see total bill savings of 4% or more, however, it is important to note that there is a clear possibility that total bills will be higher with SCP some of the time due to changing PG&E fees outside SCP’s control and energy market conditions. 246 of 276
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• An expansion to Lake County will increase SCP’s target for reserves by $42.7 million (using 2030 costs), which would have the effect of reducing SCP’s ability to provide savings until that higher balance is achieved. The time estimated to accumulate the additional reserves while sustaining competitive rates is difficult to estimate, but likely could be completed by 2032.
• Lake County’s participation in the GeoZone is mutually beneficial and it is strongly recommended that Lake County join the GeoZone concurrently with SCP’s electric service.
• Expansion to Lake County offers additional benefits such as more cost-effective building electrification opportunities, increased portfolio flexibility, improved advocacy, and additional phone and web support for customers in Lake County. • Risks that should be considered before proceeding with an expansion include the impacts of a jurisdiction withdrawing from SCP service, high customer opt-outs, possible impacts to SCP’s credit rating, and the inability to guarantee rates that are lower than PG&E.
• The feasibility plan outlines steps leading up to an April to June 2027 start date, including approvals from SCP’s Board and Lake County jurisdictions, as well as filings with the CPUC, customer noticing, and outreach.

Chapter 2. Background
Community Choice Aggregation (CCA)
CCAs were created in response to California’s
2000-2001 energy crisis through Assembly Bill
117 in 2002. CCAs enable local governments to
purchase electricity generation for their residents
and businesses that is delivered to customers by
an investor-owned utility (IOU). In Northern
California, the IOU is Pacific Gas & Electric
(PG&E). The first CCA, Marin Clean Energy
(now MCE), started service in 2010. Sonoma
Clean Power (SCP) started service as the state’s
second CCA in 2014. There are now 25 CCAs in
the state serving over 14 million customers and
participation continues to grow. Figure 1 shows
the expected footprint of CCA service in
California by 2027.

Figure 1. Map of areas expected to be served by
CCAs by 2027.
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CCAs are governed by elected officials from participating jurisdictions and operate as government agencies that are not-for-profit and return all revenues to ratepayers in the form of competitive electric rates and customer education and incentives.

Figure 2. Roles of SCP and PG&E in delivering electric service to customers.

The role of CCAs, including SCP, is primarily to buy or build power generation resources on behalf of all customers, while PG&E continues to maintain and operate all of the poles, wires and substations of the grid. Figure 2 illustrates the roles of SCP and PG&E in delivering electric service to customers.

When a CCA is formed or expands, new customers must be automatically enrolled as a CCA customer unless they choose to opt-out and continue relying on PG&E to procure electricity for their home or business. If a customer opts-out after 60 days of starting service with a CCA, they must remain on PG&E service for one year before being eligible to enroll in CCA service.

SCP Cannot Promise Lower Rates
CCA customers receive a consolidated bill from PG&E including generation charges from the CCA as well as transmission and distribution charges from PG&E. The bill for CCA customers includes a charge called the Power Charge Indifference Adjustment (PCIA) that covers costs for energy that was procured by the IOU prior to a customer’s departure from IOU service. The PCIA changes annually depending on market conditions - if the IOU’s energy portfolio that was procured for CCA customers performs well (due to high market prices), the PCIA is lower; if the portfolio performs poorly, the PCIA is higher. This fee ensures that PG&E cannot lose any money as a result of CCA formation. To limit opt-outs, CCAs generally seek to offer rates that are competitive and lead to total bills (including the impact of PCIA) that are at or below the total bill for IOU customers – as often as possible. Figure 3 shows SCP’s history of total bill savings relative to PG&E, which shows a strong historical record of providing savings to 248 of 276
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customers. Importantly, SCP cannot guarantee future rate savings—and did go through a period of two years where its customers paid higher bills than opt-out customers.

Figure 3. Historical bill comparison between SCP and PG&E.

CCA customers retain eligibility for ratepayer-funded programs through the California Public Utilities Commission (CPUC), such as income qualified assistance programs, energy efficiency rebates, and medical baseline discounts. CCA customers also gain access to incremental programs offered by the CCA which are not otherwise available from PG&E. SCP offers incremental equipment rebates, incentives for participation in its demand response program, and a variety of other programs for energy efficiency and electrification. SCP, like other CCAs, also offers a net energy metering (NEM) and solar billing plan (SBP) program that compensates solar customers.

In addition to CCAs, California law also created a program called Direct Access (DA) that allows customers to purchase electricity from a competitive third-party. DA has an annual load cap that is currently fully subscribed. The vast majority of DA customers are non-residential. There are currently around 70 meters in Lake County with service from DA, representing 7.4 gigawatt-hours (GWh) of annual load (which is less than 2% of Lake County’s total). Unlike PG&E customers, DA customers will not be automatically enrolled in CCA service. Although if SCP expands to Lake County DA customers would have the option of CCA service, this study evaluates service to only non-DA customers although inclusion of DA customers would have negligeable impact.

Lake County Interest in CCA Service
The Lake County Board of Supervisors unanimously passed Ordinance 3206 on June 23, 2015, to authorize implementation of a CCA program, with the goal of reducing energy costs for Lake County residents. Lake County explored various options to 249 of 276
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implement CCA service on its own at the time, but ultimately did not proceed. Lake County re-evaluated CCA service in 2019, when it requested SCP to study the feasibility of expanding service to Lake County. SCP’s study, which was released in March 2020, found that it would be unable to offer competitive service to Lake County residents at the time due to the expected cost of PG&E’s PCIA fee on Lake County relative to the PCIA fee on SCP’s existing customers.

Market and regulatory dynamics following the feasibility study in 2020 have greatly improved the economic prospects for new CCA service. As described in detail in Chapter 5, PG&E’s PCIA fee is now lower for new CCA jurisdictions relative to the PCIA for SCP’s customers. These conditions led to Sonoma Clean Power reengaging with Lake County, the City of Clearlake, and City of Lakeport in early 2025. After preliminary discussions with SCP, the city managers of City of Clearlake and City of Lakeport made a written request to the Sonoma Clean Power Board of Directors to complete a new feasibility study. Likewise, the Lake County Board of Supervisors authorized staff to submit a written request for a feasibility study after discussion during the April 15, 2025 meeting. The Sonoma Clean Power Board of Directors directed SCP staff to respond to Lake County interest by completing the requested feasibility study.

In the 2025 discussions between SCP and the Lake County jurisdictions, SCP staff captured several factors that are driving interest in CCA expansion: the opportunity to reduce energy costs for Lake County residents, increased economic development opportunities (through geothermal and other types of local project development), improved customer service, and better representation in energy-related advocacy.

Sonoma Clean Power Policy for New Customer Communities
In December 2015, the Sonoma Clean Power Board of Directors adopted Policy D.4 that guides the procedure for evaluating and facilitating expansion to new jurisdictions.

The policy includes a set of criteria that must be met to proceed with an expansion that are summarized in Table 1 below, along with SCP staff’s recommended determination and if applicable, a reference to the applicable chapter of this study.

In addition to the evaluation criteria, Policy D-4 also establishes the series of steps SCP shall follow in expanding participation to a new region. After completing a feasibility study and presenting the results to the candidate community and SCP Board of Directors, the current SCP Board members have a 60-day period to evaluate expansion and discuss the opportunity with their own city councils or Board of Supervisors. The SCP Board of Directors will then vote on whether to extend a formal offer for service.

The timing of this process, along with the required steps to formally enroll Lake County in SCP service, are further detailed in Chapter 9.
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Table 1. Policy D-4 New Community Evaluation Criteria
Criteria SCP Staff’s Recommended Determination
Community is close to SCP service
territory to make meeting attendance
and community engagement practical
(Criteria 1).

Pass – Lake County jurisdictions directly border SCP
territory. The commute to Santa Rosa is not quick but is comparable to many parts of SCP’s existing territory in Mendocino County.

Community agrees to abide by SCP
Joint Powers Agreement (JPA),
policies, and conditions of service
(Criteria 2).

TBD - This is subject to the careful review and determination by Lake County and the Cities of Clearlake and Lakeport.

Service to new region will decrease
greenhouse gas emissions and be
consistent with purpose of promoting
renewable energy, energy efficiency,
and conservation (Criteria 3a and 3c).

Pass – Expansion would provide additional room for
expansion in SCP’s renewable portfolio, improve
opportunities for local clean energy development, and enable more cost-competitive electrification. See Chapters 6 and 7.

Service to new region will not increase
cost or financial risks to existing
customers (Criteria 3b).

Pass – Expansion to Lake County would leverage
efficiencies of scale and increases flexibility in SCP’s power portfolio with the effect of generally decreasing cost and risk to existing customers. The additional load would come with additional procurement obligations and a potential increase in meeting those additional obligations. However, the overall expectation is that, on average, costs would remain or
decline due to serving Lake County. See Chapter 5 and 7.

Significant political and public
alignment between new community
and proposed participants and addition
of new community will increase voice
of SCP in relevant venues (Criteria 4
and 5).

TBD – Staff note that Lake County shares many of the same regional priorities as Sonoma and Mendocino County: wildfire mitigation, energy affordability, water scarcity, sustainability of small businesses and the agricultural industry. California’s 4th Congressional District and the 2nd State Senate District span both SCP and Lake County. Expansion would add the 4th
State Assembly District to SCP’s territory, currently
represented by Assembly Majority Leader Aguiar-Curry.

Ultimately, however, this determination must be made by the SCP Board of Directors, the County of Lake Board of
Supervisors, and the City Councils of Clearlake and
Lakeport.

Addition of the new community will not
harm SCP’s autonomy (Criteria 6).

Pass – Expansion to Lake County is expected to involve two new seats on the current eleven-seat Board of Directors (one for the County and one shared seat between the two
incorporated cities). Staff do not see how the scale of the expansion would threaten the autonomy of SCP’s power
sources and priorities. However, staff urge SCP and all of the jurisdictions in Lake County to consider the political alignment of objectives carefully.

Addition of the new community will not
harm the quality of service or give rise
to operational risks (Criteria 7).

Pass – The economic study includes budgeted costs to
expand staff and SCP’s investments to serve Lake County without impacting existing customers. See Chapter 5.
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Chapter 3. Lake County Electricity Demand
Lake County Load
In order to facilitate a feasibility study, Sonoma Clean Power obtained customer data and hourly load for all customers in Lake County from PG&E for the years 2022, 2023, and 2024. Like Sonoma Clean Power’s current load, Lake County’s load is fairly stable and most year-to-year fluctuations are driven by weather. For the purposes of this study, staff have decided to use Lake County’s 2024 load and customer composition as the basis for evaluating feasibility—even though some modest growth is expected due to electrification. Table 2 below shows a breakdown of meter count and annual load by jurisdiction and residential and non-residential meters using the 2024 data. This table excludes the DA meters discussed in Chapter 2 which would not be automatically enrolled but could opt-in to CCA service in the future.

Table 2. Lake County Load and Customer Breakdown by Jurisdiction City of Clearlake City of Lakeport Unincorporated
Lake County Total
Residential
Meters 7,216 2,418 22,361 31,995
Non-residential
Meters 610 671 3,067 4,348
Total Meters 7,826 3,089 25.428 36,343
Residential
Annual Load 61.5 GWh 18.6 GWh 174.8 GWh 254.8 GWh
Non-residential
Annual Load 23.2 GWh 17.6 GWh 95.9 GWh 136.7 GWh
Total Annual
Load 84.7 GWh 36.2 GWh 270.7 GWh 391.5 GWh
Lake County’s load has two peak seasons—with increased usage in the summer due to hot temperatures driving air conditioning demand and is similarly high in the winter due to electric heating needs. Figure 4 shows the monthly load for Lake County. Lake County does not have access to PG&E’s natural gas system and accordingly has more electric heating1. Due to more extreme summer heat, air conditioning ownership is also more prevalent in Lake County, which increases summer energy needs. 1 Data from the American Community Survey from the U.S. Census Bureau estimates 42.7% of Lake County residences use electricity as their main heating source, compared to 24.4% in Sonoma and

19.1% in Mendocino counties.
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Figure 4. Monthly load for Lake County.

The average hourly load profile for Lake County is shown in Figure 5. Hourly load is low in the middle of the day due to generation from behind-the-meter solar. Customer data suggests 15% of Lake County’s meters have Net Energy Metering (NEM) solar.

Increased load in the evening is driven by cooling and heating needs as residents return home. Figure 5 shows an average across the year, but for context Lake County’s load varied in 2024 from as low as 7 MW midday on a sunny day in May to 96 MW on a hot July evening.

Figure 5. Hourly load profile for Lake County.

Comparison to Existing Customers of Sonoma Clean Power
The addition of Lake County could increase the number of meters served by Sonoma Clean Power by 15.6% and Sonoma Clean Power’s load by 18.5%. Table 3 shows a breakdown of how Lake County’s meter count and load compares to Sonoma Clean Power. The annual electric usage per residential meter is over 56% higher in Lake -
5 10
15 20
25 30
35 40
45 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
GWhr
Monthly Lake County Load
0 10
20 30
40 50
60 70
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 MW
Hour Ending
Average Hourly Lake County Load
Residential Non-residential
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County (8.0 MWh/year in Lake County versus 5.1 MWh in SCP)—which leads to a disproportionate increase in load compared to meter count. Lake County’s meter count and load is also more residential (less commercial) than SCP. The figures for Lake County in Table 3 include 100% of eligible customers and do not reflect the effect of customers who choose to opt-out—which are assumed to be 10% in the evaluation in Chapter 5. The conclusions of this analysis are not sensitive to the actual opt-out rate.

Table 3. Lake County Load vs. Sonoma Clean Power
Sonoma Clean
Power Lake County Total % Potential Increase
Residential
Meters 200,824 31,995 232,819 15.9%
Non-residential
Meters 31,862 4,348 36,210 13.6%
Total Meters 232,686 36,343 269,029 15.6%
Residential
Annual Load 1,022.6 GWh 254.8 GWh 1,277.5 GWh 24.9%
Non-residential
Annual Load 1,090.0 GWh 136.7 GWh 1,226.6 GWh 12.5%
Total Annual
Load 2,112.6 GWh 391.5 GWh 2,504.1 GWh 18.5%
Figure 6 shows the monthly load per meter for Lake County compared to SCP. Like Lake County, SCP has high usage in the summer and winter—although the Lake County fluctuations are amplified. Figure 7 shows an average hourly load comparison.

The hourly load shapes are also very similar given similar penetrations of NEM solar and increased energy needs in the evening. In looking at 2024 data, the hourly load for Sonoma Clean Power and Lake County together would have fluctuated between 99 MW to 567 MW. The peak load of 567 MW is 17.5% higher than Sonoma Clean Power’s standalone peak of 483 MW—and would occur at the same hour on a hot July evening.

Understanding the impact of Lake County to SCP’s load shape and peak are critical to evaluating the revenue requirement that is detailed in Chapter 5. 254 of 276
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Figure 6. Monthly load comparison for Sonoma Clean Power and Lake County.

Figure 7. Hourly load comparison for Sonoma Clean Power and Lake County.

Chapter 4. Sonoma Clean Power Electric Service
Products & Resource Portfolio
SCP offers customers a choice between two products: CleanStart and EverGreen.

CleanStart is SCP’s standard offering and the default product for new customers.

Power from CleanStart is sourced from renewable and carbon-free resources across 0 200
400
600
800
1000
1200
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
MWh/meter
Monthly Load per Meter
Sonoma Clean Power Lake County
0 0.2

0.4 0.6

0.8 1

1.2 1.4

1.6 1.8
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Hourly Load per Meter (kW)
Hour Ending
Average Hourly Load per Meter
Sonoma Clean Power Lake County
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the Western Interconnection. A small portion, approximately ten to twelve percent, of CleanStart is provided by unspecified resources—which are primarily natural gas.

EverGreen is SCP’s premium product that customers can opt-in to for an additional cost of 2.5 cents per kilowatt-hour. This premium translates to $17 extra per month for a typical Lake County household. EverGreen is completely sourced from local renewable resources within SCP’s territory. Unlike products offered by other power providers, EverGreen is unique in that it is backed by resources that deliver clean energy for every hour—rather than relying on natural gas power to back up variable resources like solar and wind power. If Lake County were to join SCP, resources within Lake County would become eligible to provide EverGreen-eligible generation.

SCP contracts for power from long-term power purchase agreements (PPAs), shortterm contracts that give SCP claim to the bundled renewable or carbon-free attribute of energy, and purchases from the spot market. Table 4 is a list of long-term PPAs expected to be in SCP’s portfolio in 2027. If Lake County were to join SCP, incremental energy needs would be first filled with new short-term contracts and spot market purchases, but long-term SCP would seek additional PPAs to optimize costs.

Importantly, the resources in Table 4 provide 1,271 GWh of renewable annual energy, which is sufficient to meet the long-term contract compliance minimum for Sonoma Clean Power after an expansion to Lake County2.

Table 4. Long-term Power Purchase Agreements
Facility Technology Capacity Annual Energy
Geysers
Sonoma County, CA Geothermal 20 MW3 175.2 GWh
Mustang
Kings County, CA Solar 70 MW 156.2 GWh
Golden Hills
Alameda County, CA Wind 46 MW 124.6 GWh
Proxima
Stanislaus County, CA Solar 70 MW 169.1 GWh
2 State law requires 65% of SCP’s renewable energy for meeting compliance requirements is sourced from long-term contracts. The renewable compliance requirement for renewable energy maxes out at 60% in 2030—which means SCP would need 39% of its total energy in long-term renewable contracts. 3 Contract includes 9 MW in 2027 that ramps-up to 20 MW in 2028-2037; table shows ramp-up values 256 of 276
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Facility Technology Capacity Annual Energy
Azalea
Kern County, CA Solar 60 MW 150.9 GWh
SunZia
New Mexico Wind 100 MW 328.1 GWh
Ormat Portfolio
Imperial County, CA &
Nevada
Geothermal 14 MW 122.6 GWh
Fish Lake
Nevada Geothermal 1.5 MW 13.3 GWh
Redemeyer
Mendocino County, CA Solar 4 MW 10.1 GWh
ProFIT
Sonoma & Mendocino
County, CA
Solar 6 MW
(6 projects x 1 MW) 13.8 GWh
Montgomery Creek
Shasta County, CA Small Hydro 2.6 MW 7.4 GWh
Total: 1, 271 GWh
Credit & Financial Resources
In 2021, SCP received an ‘A’ issuer credit rating from S&P Global Ratings that was reaffirmed in 2024. SCP’s investor-grade credit rating is important in negotiating favorable power contract terms and reflects the agency’s fiscal strength. SCP has no outstanding debt. In 2024, on behalf of SCP, the California Community Choice Financing Authority (CCCFA) issued $775.6 million in pre-pay bonds that provide SCP’s customers with significant reductions in energy costs. Notably, those bonds do not appear on SCP’s financial statements or impact SCP’s borrowing capacity.

SCP’s latest financial statement from February 2025 shows $373 million in total assets.

SCP is targeting an end-of-year reserves balance of about $268 million which reaches the Board of Directors’ target reserves of 365 days of annual budgeted operating expenses. SCP’s financial policy dictates a minimum reserves balance of 180 days of operating expenses. SCP has funded a rate stabilization fund with a current balance of $56 million, which makes up a portion of total reserves. The rate stabilization fund is meant to provide flexibility in setting competitive rates in future years with a high PG&E PCIA fee. Conditions warranting the use of the rate stabilization fund are expected in 2026, but not necessarily in 2027 when service to Lake County would begin, though 257 of 276
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forecasting the PCIA fee is difficult due to frequent regulatory changes and energy market price movement. The fee on SCP customers has varied by over $100 million in a single year, so the scale of this fee is important to consider.

Customer Programs and Customer Service
SCP offers programs and incentives to customers and the community to improve energy affordability, encourage electrification, and increase energy efficiency. These programs are incremental to programs offered by PG&E. A list of currently offered programs is included below. Note that these are subject to change at any time, including before Lake County would begin service in 2027, but are indicative of the types and scale of programs to expect.
• GridSavvy Rewards: GridSavvy is a demand response program that invites customers to sign-up to receive alerts for energy conservation or connect a smart thermostat or EV charger to be dispatched during energy-savings events in the summer. Customers receive a sign-up cash bonus and a modest payment for their performance in reducing energy during periods of grid stress. • Electric Appliance Rebates: SCP offers rebates that can be added to state and local incentives for heat pump HVAC, induction cooking, and heat pump water heaters. The rebates are higher for low-income customers - providing up to $10,000 toward equipment and installation.
• Energy Savings Box: A free energy savings box packed with easy-to-use tools to conserve energy including things like LED lightbulbs, smart plugs, and weather stripping. The box contains over $100 of useful equipment and shipped directly to customers.
• Commercial Energy Assistance Program: An internal energy expert will identify energy savings opportunities for interested businesses and conduct an onsite visit with a detailed follow-up report.
• Non-profit EV Incentives: Up to $22,500 for non-profits to assist non-profits with the purchase of an electric vehicle.
• Solar: SCP compensates customers with solar by applying credits toward a future bill or as part of an annual cash-out.

SCP staffs a customer call center and the Sonoma Clean Power Customer Center in downtown Santa Rosa to assist customers with utility bills, electrification questions, customer programs, and other needs. SCP staff can assist residential and commercial customers with selecting an optimal rate plan and have a strong track record of identifying opportunities for customer cost savings.
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SCP also supports the community through partnerships and funding. As examples, SCP currently partners with the Career Technical Education Foundation and the LIME Foundation for training and curriculum for careers in clean energy and sustainability.

SCP also offers scholarships at local colleges, sponsors many key community events, and raises donations for food banks in Sonoma and Mendocino Counties.

Chapter 5. Economic Evaluation
In assessing the viability of SCP expansion to Lake County, results must both provide Lake County a reasonable expectation of competitive electric rates and the SCP Board of Directors with confidence that the expansion is not disadvantageous to SCP’s current customers. The power market is very dynamic and conditions are certain to vary from the forecasts used as the basis for this evaluation. Accordingly, this chapter also includes several sensitivities to test the robustness of the results.

Power Costs
In assessing the cost of power for Lake County, this feasibility study assumes a 90% opt-in rate - which is slightly higher than SCP’s current opt-in rate of 87% but a reasonable expectation given the experience of recent CCA expansion elsewhere in the state4. This feasibility study also assumes a start date of April 2027, which appears optimal from a monthly review of cost and compatibility with SCP’s portfolio but may occur as late as June. Costs are forecasted through 2030, when the price forecast SCP uses begins to stabilize. The projections for 2030 are a reasonable proxy for future years. SCP’s direct costs of power for Lake County are driven by four components: the cost of wholesale power, the cost of energy attributes, grid charges from the California Independent System Operator (CAISO), and the cost of resource adequacy (RA).

These are considered together with PG&E’s charges for transmission, distribution and numerous fees and surcharges, including the PCIA in evaluating total bill impacts.

The cost of wholesale power for Lake County is highly dependent on its hourly load profile. Power costs directly correlate to the availability of renewable and hydro resources. Power is often cheaper in the spring and midday and more expensive in the evening and winter months when solar, wind and battery storage are less available. To assess the cost of power for Lake County, SCP developed an hourly load profile using smart meter data from 2024 and leveraged future hourly price forecasts available through its Ascend PowerSIMM platform as of April 12, 2025. The feasibility study assumes that the early years of power for Lake County will be procured entirely from the spot market, although in practice SCP would likely seek to optimize costs through 4 Pioneer Community Energy achieved 99% opt-in rates in their 2024 expansion to Grass Valley and Nevada City. Peninsula Clean Energy achieved 89% opt-in rate in their 2022 expansion to Los Banos. 259 of 276
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signing additional long-term PPAs. SCP needs to procure sufficient power to cover metered sales plus losses on the distribution system, which adds an additional 6%.

Table 5 shows the unit cost, volume, and total dollars needed to provide wholesale energy to Lake County with a 90% participation rate (equal to 10% opt out). Note that the per unit results are not very sensitive to the actual participation rate.

In expanding to Lake County, SCP would need to maintain compliance with statemandated renewable energy requirements while also seeking to maintain its Boardadopted voluntary environmental performance targets. As with wholesale power, SCP would seek to optimize the cost of its portfolio long-term through signing PPAs with resources that provide renewable or carbon-free energy. In the short-term, the volume of renewables needed for Lake County is estimated by applying the state’s compliance minimum by year against the metered load. The volume of carbon-free energy needed to meet SCP’s voluntary targets is calculated to reach a portfolio that is 93.5% renewable or carbon-free5. The required procurement of resources for Lake County is reduced by allocations SCP would expect to receive for Lake County’s portion of carbon-free power from the Diablo Canyon Nuclear Power Plant and PG&E’s hydropower fleet that is included in PCIA. Table 5 shows the resulting need for renewable and carbon-free to serve Lake County, along with the expected procurement cost based on current market prices.

CAISO charges SCP grid charges in addition to wholesale power costs to cover its costs of operation. These grid charges are expected to grow proportional to load. For this evaluation, SCP is assuming grid charges add an additional $1.50 per MWh of wholesale load.

SCP is required to procure resource adequacy (RA) for its load. RA is a contract with power plants to provide standby capacity to respond to peak grid conditions and is California’s regulatory solution for ensuring system reliability. Recent revisions to RA rules require SCP to prove it has a resource fleet, battery storage, and short-term RA contracts sufficient to provide capacity across 24 hours for a peak load day each month.

This new structure is known as “slice of day” and differs from the past approach of planning for a single peak hour. The incremental RA cost for serving Lake County is related to how Lake County’s load profile interfaces with SCP’s existing resource fleet and load shape. The cost of RA included in the table below is based on an assessment of how much additional RA, either firm capacity from natural gas plants or battery storage capacity, SCP needs to maintain compliance with its RA obligation when adding Lake County’s load to its portfolio.
5 A 93.5% renewable or carbon-free annual metric is consistent with a recent staff recommendation to adopt an 85% hourly renewable or carbon-free target for 2026 and beyond 260 of 276
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The total power cost for Lake County is forecasted to grow from $25.6 million in the 9 months of participation and grow to $40.2 million per year in 2030, which represents around a 14% increase relative to SCP’s power cost forecast in outer years without Lake County participation. This increase is lower than the anticipated 15.4% growth in sales, which importantly indicates that Lake County participation is expected to reduce power costs borne by SCP’s current customers.

Table 5. Power Cost Forecast
2027 (Apr-Dec) 2028 2029 2030
90% Opt-in Metered Sales MWh 255,342 351,182 351,182 351,182 Wholesale Power $/MWh 59.01 63.36 70.59 77.65
Wholesale MWh 270,663 372,253 372,253 372,253
Wholesale $ thousands 15,970 23,585 26,278 28,906
Renewable Need % 52.0% 54.7% 57.3% 60.0%
Carbon Free Allocation % 18.6% 18.3% 17.3% 13.0%
Carbon Free Need % 22.9% 20.5% 18.8% 20.5%
Renewable Need MWh 132,778 191,991 201,333 210,709
Carbon Free Need MWh 58,513 72,008 66,141 71,845
Clean Energy $ thousands 4,490 5,136 5,217 5,507
CAISO Grid Charges $ thousands 402 553 553 553
Resource Adequacy $ thousands 4,823 5,274 5,274 5,274
Total Power Cost $ thousands 25,690 34,554 37,327 40,246 Total Power Cost ¢/kWh 10.06 9.84 10.63 11.46
Administrative Costs
Adding Lake County to SCP would introduce some efficiencies of scale, but there are costs associated with data management and PG&E service fees that directly scale with meter count. SCP also anticipates growing customer service staff to maintain its high level of service, and expanding the budget for marketing, communications, and programs incentives for Lake County. Program participation for Lake County is forecasted to grow to the level of adoption SCP currently sees in Mendocino County.

Overall, expansion to Lake County is expected to increase SCP’s administrative costs by around 4%--which is lower than the anticipated 15.4% growth in sales. A breakdown of the administrative cost forecast is included in Table 6. 261 of 276
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Table 6. Administrative Cost Forecast, $ Thousands
Category 2027 (Apr-Dec) 2028 2029 2030
Data Management 337.5 450.0 450.0 450.0
PG&E Service Fees 11.3 15.0 15.0 15.0
Personnel 250.0 270.0 280.0 290.0
Marketing & Communications 570.0 400.0 410.0 420.0
Customer Service 50.0 50.0 50.0 50.0
Programs Incentives 120.0 240.0 330.0 350.0
Total Administrative Cost 1,338.8 1,425.0 1,535.0 1,575.0 Total Administrative Cost ¢/kWh 0.52 0.41 0.44 0.45
Uncollectible Revenue
A consideration in determining the revenue requirement for a utility is the amount of revenue that is uncollectible. SCP’s collectible rate on its current customers is 98.6%, which means rates need to be set to recover 101.4% of projected costs. Lake County is expected to have a lower collectible rate due to lower average household incomes than SCP territory. Whereas 16.5% of SCP meters are enrolled in the California Alternative Rates for Energy (CARE) income-assistance program, 43.1% of Lake County meters are enrolled. This feasibility study applies SCP’s observed CARE-specific collection rate of 96.6% and non-CARE collection rate of 98.7% using the 43.1% weighting of CARE meters in Lake County to estimate an overall 97.8% collection rate. In evaluating the revenue requirement for Lake County, rates are therefore set at 102.2% of projected costs.

Revenue Requirement
Table 7 below incorporates the incremental load, power costs, administrative costs, and uncollectible rates associated with an expansion to Lake County alongside the SCP financials for the status quo to evaluate the impact of expansion to SCP’s revenue requirement. Importantly, the results show that due to efficiencies of scale and compatibility with SCP’s portfolio, an expansion is expected to provide a reduction in the per-kilowatt-hour revenue requirement for SCP. These results suggest that an expansion to Lake County would not create an additional financial burden on existing SCP ratepayers and are an indication of the generation rates SCP could offer given the assumed market conditions. The revenue requirement does not include any contributions to reserves, which is discussed in a later section. 262 of 276
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Table 7. Revenue Requirement Comparison, ¢/kWh
Scope 2027 (Apr-Dec) 2028 2029 2030
SCP (Status Quo) 11.79 12.55 13.12 13.62
SCP + Lake County Expansion 11.66 12.27 12.88 13.43
Change -0.13 -0.28 -0.24 -0.19
Startup Costs
The power and administrative costs above reflect ongoing expenses pertinent to evaluating the long-term viability of a Lake County expansion. There are also one-time costs that SCP would incur in expanding to Lake County. These costs cover enrollment notices, staff outreach, travel expenses, preparation of this feasibility report, and marketing. The SCP Board will want to take these costs into consideration while establishing its offer for service to Lake County. For context, the revenue requirement reduction detailed in Table 7 generates $238,000 of reduced costs for SCP ratepayers per month in 2027, implying that the payout for SCP’s investments in startup costs will likely occur within three months.

Table 8. Startup Costs
Category Startup Cost, $ Thousands
Feasibility Report Staff Time 15
Implementation Plan Update 10
Outreach Staff Time 236
Enrollment Notices 150
Travel Expenses 24
Marketing & Communication 143
Total Startup Costs 578
Customer Type and Usage Pattern Impacts to Unit Revenue SCP currently sets rates by making adjustments to PG&E’s rate schedule, all of which fluctuate with season and customer type and many that also vary based on time of day.

Because Lake County’s load profile and customer mix is different than SCP’s existing customers, a potentially important consideration is whether the different customer mix will impact revenue. To approximate the impact of these dynamics, the average rate for a given month, hour, and residential or non-residential customer was determined from SCP’s current rates. These implied rates were then applied to the hourly residential and non-residential load profiles for Lake County. The results imply Lake County would 263 of 276
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provide 0.6% more revenue per kilowatt-hour. The results of this analysis were close enough to treat the revenue contribution of Lake County and SCP the same when assessing the revenue contribution of an overall generation rate.

PG&E Generation Rates, PCIA, and Rate Competitiveness
A key priority for Lake County in exploring SCP service is the potential for delivering lower cost electricity to its residents. To evaluate the potential for rate savings compared to PG&E service, the revenue requirement estimated for the expansion in Table 7 should compare favorably to generation rates expected to be offered by PG&E, net of the effects of PG&E’s PCIA fee. Both PG&E’s competing generation rate and PCIA depend on market conditions. If market prices of energy are lower, PG&E is able to reduce its generation rates and yet the PCIA paid by CCA customers increases due to poorer market performance of the portfolio PG&E procured for departing customers.

Although a CCA’s revenue requirement also decreases in a low-price market, the lower PG&E generation rate and higher PCIA make it difficult to maintain cost competitiveness. Conversely, in a high-price market scenario PG&E’s generation rates increase to cover costs and the PCIA is reduced, making CCA competitiveness generally easier.

PCIA rates vary by the date customers depart PG&E service (called “vintage” by PG&E). Most SCP customers are on the 2014 vintage with a PCIA based on the portfolio of resources PG&E procured before 2014. If Lake County were to join SCP service in April through June 2027, they would be assigned vintage year 20266. Their 2026 vintage portfolio would include the resources in SCP’s PCIA portfolio but also resources procured between 2014 and 2026. The resources PG&E has procured in that timeframe have by and large been more cost-competitive than their older vintage portfolio, which has had the impact of significantly reducing PG&E’s PCIA fee for newer vintages of CCA customers. To offer savings, SCP must offer rates that are at or below the PG&E generation rate minus the PCIA - a term referred to as “competitive differential”. Table 9 shows the 2025 generation rate paid by PG&E customers, PCIA credit, and resulting competitive differential for three different vintages to illustrate how PCIA has reduced over time. The table shows that 2025 vintage customers pay 3.25 cents less per kWh for PCIA than SCP’s 2014 vintage customers. At SCP’s current generation rate of 11.5 cents per kWh, SCP’s current customers enjoy a discount of 2.4 cents per kWh versus service with PG&E. At that same rate, as an example, a 2025 vintage customer would enjoy a discount of 5.7 cents per kWh. A 2.4 cent per kWh discount is a 16% decrease from PG&E for generation and reduces total bills (which 6 PG&E assigns vintage based on a fiscal year that runs from July 1st through June 30th. April 2027 through June 2027 is thus in the 2026 vintage year.
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include 20 cents per kWh of additional costs paid to PG&E for transmission and distribution) around 7%.

Table 9. PG&E Gen Rate, PCIA, and Competitive Differential by Vintage, ¢/kWh 2014 Vintage 2020 Vintage 2025 Vintage
2025 PG&E Generation Rate 14.99
2025 PCIA 1.06 0.31 -2.19
2025 Competitive Differential 13.93 14.68 17.17
PG&E’s generation rate, PCIA, and resulting headroom are expected to change before 2027. The PCIA is currently lower due to high-price market conditions in 2024 that were used as the basis for setting 2025 rates. Market prices have since fallen and the forecast model SCP used to estimate the power costs for this feasibility study provide conditions in 2027 for a lower PG&E generation rate and higher PCIA. SCP has access to a model that can provide an estimate for future generation rates and PCIA by vintage using market assumptions and has leveraged that model to predict competitive differential for the same market conditions underpinning the power cost estimates.

However, it is important to note that actual PG&E rates and fees have historically varied significantly from estimates – both estimates made by SCP and estimates made by PG&E. Table 10 shows the anticipated PG&E competitive differential for a 2026 vintage (Lake County) and 2014 vintage (SCP) compared to the revenue requirement estimate for an expansion from Table 7.

Table 10. Competitive Differential Forecast vs. Revenue Requirement, ¢/kWh 2027 (Apr-Dec) 2028 2029 2030
SCP Expansion Revenue Requirement 11.66 12.27 12.88 13.43 PG&E 2026 Vintage Competitive
Differential (Lake County) 16.35 15.55 15.22 14.89
PG&E 2014 Vintage Competitive
Differential (SCP) 12.95 12.69 12.74 12.78
SCP currently sets the same generation rates for its customers, regardless of PCIA vintage. If SCP continues that practice in expanding to Lake County and sets rates at its revenue requirement, Table 10 indicates Lake County with its 2026 vintage PCIA would enjoy higher savings than SCP customers in Mendocino and Sonoma Counties (1.46 cents per kWh to 4.69 cents per kWh of savings relative to PG&E service, which 265 of 276
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represents 9.8% to 28.7% savings on generation or 4.2% to 12.9% savings on a total bill basis). In this same scenario, current SCP customers would be seeing comparatively smaller discounts (or a slight premium) due to their 2014 vintage, but with increased savings relative to the status quo without expansion. In 2027, SCP would need to add some costs to its revenue requirement to build reserves up to the new higher target balance beyond the amounts reflected in Table 10.

Sensitivity Analysis
Changes in regulations are a key uncertainty in predicting the future but are difficult to model and forecast. As a result, staff have completed this analysis assuming the existing regulatory conditions. In contrast, power market conditions are the other key uncertainty in determining the economic feasibility of expanding SCP service to Lake County and are possible to model. Power prices not only drive the costs for serving Lake County’s load, but also directly influence PG&E’s generation rate, PCIA, and competitive differential that determines whether SCP service offers cost savings. In order to understand the robustness of the feasibility study’s findings, scenarios have been evaluated for both a high and low market price scenario. Figure 8 shows the power price assumptions used in the low and high price scenarios compared to the base case described above.

Figure 8. Power price assumptions for low and high price sensitivities vs. base case.

Table 11 shows the expected total power costs in the low price and high price scenarios compared to the base case. Whereas the base case represents a scenario with an average power cost of 10.5 cents per kWh, the low case averages 8.45 cents per kWh and the high scenario averages 14.23 cents per kWh. Because this feasibility study assumes power for the expansion to Lake County will be first procured on the spot market, the overall power costs are very sensitive to market price assumptions. 0 20
40 60
80 100
120
2027 2028 2029 2030
North Path 15 Hub Price
($/MWh)
Annual Hub Price vs. Sensitivity Scenario
Base Case Low Price Market High Price Market
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Table 11. Power Costs for Lake County by Sensitivity Scenario, ¢/kWh Scenario 2027 (Apr-Dec) 2028 2029 2030
Base Case 10.06 9.84 10.63 11.46
Low Price Market 9.01 8.17 8.49 8.11
High Price Market 13.36 12.89 15.28 15.39
In order to understand whether the changes in power costs impact the determination that a Lake County expansion lowers the revenue requirement to existing SCP ratepayers, SCP’s existing load profile and power portfolio were tested using the same scenarios with and without a Lake County expansion. The results of this analysis are shown in Table 12.

Table 12. Revenue Requirement Comparison by Sensitivity Scenario, ¢/kWh Scenario Scope 2027 (Apr-Dec) 2028 2029 2030
Low Price Market
SCP (Status Quo) 11.29 11.61 11.89 11.77
SCP + Lake County
Expansion 11.08 11.23 11.53 11.37
Change -0.21 -0.38 -0.37 -0.40
High Price Market
SCP (Status Quo) 13.65 14.69 16.26 16.27
SCP + Lake County
Expansion 13.72 14.54 16.24 16.26
Change +0.07 -0.15 -0.02 -0.01
Unlike Lake County’s power costs, a large portion of SCP’s power is contracted through long-term power purchase agreements at fixed prices. These contracts reduce the sensitivity of SCP’s revenue requirement to variations in market price. Accordingly, the revenue requirement benefits for an expansion to Lake County are amplified in the low market scenario compared to base case results in Table 7 because an expanded portfolio can realize more benefits from reduced power costs. Conversely, the revenue requirement benefits in a high price scenario are muted because SCP’s portfolio becomes more exposed to high market prices with an expansion. However, even in the high price scenario, the revenue requirement with an expansion is either similar or lower than the status quo—indicating that expansion is likely advantageous to SCP across a range of market conditions.
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The low price and high price market scenarios were also tested in the PCIA and competitive differential model—as different market conditions will impact the competitiveness of the rates SCP is able to offer. Table 13 shows the revenue requirement results from Table 12 alongside the PG&E competitive differential model outputs for the low and high price scenarios. In the low-price scenario, the competitive differential is reduced due to higher PCIA and reduced PG&E generation rates. The results show that the revenue requirement reductions, however, are likely sufficient to continue providing discounts to the 2026 vintage for Lake County. The low scenario for 2014 vintage customers shows reduced discounts in 2027 and 2028 and increased premiums in 2029 and 2030—but the amplified revenue requirements benefits in the low scenario improve their outcome relative to service without Lake County. In the high market scenario, the differential increases disproportionately to the revenue, allowing greater potential for savings for the 2026 vintage. These results demonstrate that the feasibility study’s finding that SCP could likely deliver competitive rates for Lake County is applicable across a range of market conditions.

Table 13. Competitive Differential Forecast by Scenario, ¢/kWh Scenario Scope 2027 (Apr-Dec) 2028 2029 2030
Low Price
Market
SCP Expansion Revenue
Requirement 11.08 11.23 11.53 11.37
2026 Vintage Competitive
Differential (Lake County) 15.31 14.16 13.39 12.04
2014 Vintage Competitive
Differential (SCP) 11.92 11.31 10.92 9.95
High Price
Market
SCP Expansion Revenue
Requirement 13.72 14.54 16.24 16.26
2026 Vintage Competitive
Differential (Lake County) 19.25 18.21 19.35 18.18
2014 Vintage Competitive
Differential (SCP) 15.84 15.33 16.85 16.05
Reserves and Rate Stabilization Fund Considerations
The results above assume the rates are set at SCP’s revenue requirement and no contribution is made to reserves or a rate stabilization fund7. In practice, SCP will need to budget for contributions to reserves and the rate stabilization fund in years with sufficient competitive differential. Conversely, in years where the revenue requirement is above the competitive differential, SCP would likely draw from its stabilization fund or reserves to provide competitive electric bills to customers. 7 SCP’s rate stabilization fund is a subset of SCP’s reserves entirely made up of deferred revenue. In contrast, the rest of SCP’s reserves are comprised of revenue that was recognized. 268 of 276
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Expanding to Lake County equates to a $21.1 million increase in SCP’s minimum reserves requirement using 2030 costs (the reserves minimum is 180 days of operating costs). Given its current assets and budget for the next year, SCP expects to have a sufficient reserves balance to accommodate the increased requirement without supplemental revenue requirements before or after the start of service.

SCP’s current financial policy sets a target reserves balance of 365 days and stipulates that during periods when SCP is below its target, rates should be set to meet it within 5 years while still protecting customers from unreasonable rates. Adding Lake County increases SCP’s target reserves balance by $42.7 million using 2030 costs. In order to build $42.7 million in additional reserves by the end of 2032, rates would need to be set at 0.28 cents per kWh above the revenue requirement (on average). Depending on the market scenario, this would likely offset the cost reductions for expanding service projected for existing SCP ratepayers in the short term but still allow for discounts to Lake County customers.

An important consideration in expanding to Lake County is that the reserves and rate stabilization fund built-up from SCP’s existing participants will be spread out over 15.4% more load.

Chapter 6. Local Resource Development Opportunities
Since inception, a core value of SCP has been supporting the construction of local energy resources that provide economic development opportunities to the communities it serves. SCP has contracted with the Geysers, built six 1 MW local solar projects, and is currently building a 4 MW solar with storage project in Mendocino County. SCP has created the Geothermal Opportunity Zone (GeoZone) in partnership with Sonoma and Mendocino counties with the aim of building 600 MW of new geothermal capacity. SCP has also recently created a capital projects department specifically focused on building local energy resources. In expanding to Lake County, SCP may find new opportunities for partnership in resource development and use its leverage as a large power customer and regulatory advocate to steer development towards positive outcomes for the region.

Geothermal Opportunity Zone (GeoZone)
SCP’s GeoZone is structured as a public-private partnership to promote local geothermal development. SCP sees clean firm resources such as geothermal as key components of the future grid. The motivation of GeoZone is to leverage SCP’s community relationships, power offtake, and political and regulatory advocacy to build geothermal capacity that is cost-competitive at scale-up and that generates significant local economic benefits. GeoZone partners commit to offering SCP a first right-ofrefusal on all future capacity—locking-in long-term ratepayer benefits if a scale-up is 269 of 276
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successful.

The Clear Lake Volcanic Field that underlies the Geysers creates a regional temperature anomaly that provides favorable conditions for both conventional geothermal development—such as the existing operation at the Geysers—as well as deployment of next-generation geothermal technologies. Although next-generation technologies such as Enhanced Geothermal Systems (EGS) and advanced closed loop (ACL) are technically viable far beyond
the reaches of existing geothermal
fields, the elevated temperatures in that
area allow for them to be tested at
shallower depths and lower cost. SCP
has identified an “Early Interest Area” in
the GeoZone where elevated
temperatures and transmission
availability are likely to attract near-term
development interest. Figure 9 shows
how SCP expects the “Early Interest
Area” could expand should Lake
County join the GeoZone. Figure 9
also shows the Geothermal Setback
Area where Lake County has passed a
moratorium on geothermal
development that would be left
unchanged.

Adding Lake County to the GeoZone
would be mutually beneficial. By
expanding the total land area of
opportunities, SCP and GeoZone
partners are more likely to identify viable projects. Lake County offers high rock temperatures, lower land costs, and significant transmission infrastructure that are likely to attract development interest. Through participation in the GeoZone, Lake County would have an increased influence on guiding project development and selecting project partners and importantly would retain its existing jurisdiction over projects proposed within its borders. It would also benefit from SCP’s investment in community engagement and through long-term cost savings from commercial commitments in the GeoZone cooperation agreements. Although Lake County is likely to see geothermal development regardless of participation in the GeoZone, participation in the GeoZone will attract additional interest from industry—accelerating and increasing the scale of investment.

Figure 9. Early interest area for an expanded GeoZone
with Lake County.
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Given the strategic nature of the GeoZone and potential long-term ratepayer benefits, it is strongly recommended that Lake County join the GeoZone concurrently with SCP’s electric service. The SCP Board may want to establish expectations or a requirement on Lake County’s participation in the GeoZone in its offer for service.

Other Clean Energy Opportunities
Lake County has excellent conditions for clean
energy development beyond geothermal power
as well. In 2024, Calpine installed two utility-scale
battery storage systems totaling 38 MW at the
Geysers. AES is in the early stages of developing
a 70 MW wind project in Morgan Valley (see
Figure 10). Lake County and the Hidden Valley
Lake Community Services District have been
exploring the development of closed-loop pumped
hydropower systems. Lake County has high solar
irradiance, high wind power density, relatively
affordable land, and access to transmission.

Lake County’s participation in SCP would support
clean energy development that maximizes local
benefits. As a potential buyer of local projects,
SCP can increase the importance of local
considerations in siting and constructing projects.

SCP offtake of local projects also allows Lake County residents to directly benefit from electricity generation. SCP is also very active in advocacy at the CPUC, California Energy Commission (CEC), and CAISO and can advocate for infrastructure and grants to support local project development for Lake County. Importantly, SCP’s new capital projects team provides an avenue for SCP to directly invest and build resources in Lake County.

Chapter 7. Additional Benefits
SCP expansion to Lake County offers potential benefits beyond ratepayer savings and increased opportunities for partnership in local resource development. These additional benefits include:
• Cost-effective building electrification: SCP has invested heavily in building programs, incentives, and expertise to promote building electrification. However, electrification in Sonoma and Mendocino Counties is challenging because it is not clearly cost-effective due to the relatively low cost of natural gas compared to Figure 10. Wind power density map for Lake
County with location of Morgan Valley project.
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electricity. Lake County does not have access to natural gas and instead relies on higher-cost propane for heating. SCP thus expects the cost-effectiveness of electrification to be significantly better in Lake County which will result in higher adoption rates and allow faster and larger impact.
• Increased portfolio flexibility: As shown in Table 4, over half of SCP’s existing load is served by long-term contracts, which limit SCP’s flexibility to optimize its portfolio if costs decline or new resources or technologies become available.

Adding additional load increases opportunities for SCP to optimize its portfolio.

Adding load also increases utilization of SCP’s existing resources, including its large battery storage fleet. Although the revenue requirement estimates in Chapter 5 assume spot market purchases for incremental load, SCP will look for new long-term contract opportunities that provide supplemental savings. • Improved advocacy: Adding Lake County would expand SCP’s voice to be representative of energy-related issues across a broader region and a more diverse set of experiences. Partnering with Lake County would give SCP more direct experience in understanding the concerns of tribes, low-income communities, and regions that are net exporters of electricity. Lake County would gain access to SCP’s expertise in engaging in energy-related issues with the CPUC, CEC, CAISO, and PG&E to address local priorities. • Improved customer service: SCP staffs a call center and a Customer Center in Santa Rosa that provides very responsive customer service. SCP is able to answer questions on both its own charges and PG&E bill overall. SCP staff also has a long-track record of delivering savings to customers by identifying optimal rate plans, low cost or no cost tips for energy savings, and information on energy efficient appliances.
• Customer choice: An intrinsic benefit of a jurisdiction participating in CCA service is that it provides customers with a choice for two options for their electric provider, where before they had only PG&E. Providing choice to Lake County gives customers greater control over their electricity sources and costs, and creates competition that encourages better service and lower costs.

Chapter 8. Risks
The economic evaluation and benefits listed in Chapter 6 and Chapter 7 provide support for moving forward with expansion of SCP service to Lake County. However, in evaluating whether to proceed it is important to understand the following risks:
• Financial risk to Lake County jurisdictions: Section 3.3 of the JPA governing SCP stipulates that the debts, liabilities, and obligations of SCP shall not be the 272 of 276
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debts, liabilities, or obligations, of participating jurisdictions. Accordingly, participation in SCP should not have any impact on the credit rating or books of Lake County jurisdictions. This also means that member cities and counties of SCP have absolutely no access to the funds or other assets of SCP. In addition, if a jurisdiction decides to completely withdraw from SCP service, Section 7.3 of the JPA give that jurisdiction a choice: (A) they may withdraw on a date of SCP’s choosing without cost obligation, noting that date may be as far in the future as the length of SCP’s longest energy contract (typically 20 or 25 years); or (B) the withdrawing jurisdiction must pay SCP for the financial liability for costs related to the jurisdiction’s participation in SCP service—including losses from the resale of power contracts entered to serve load (an amount that will generally exceed $40 million for a region the size of Lake County). Given the practical difficulty of withdrawal, Lake County jurisdictions should only consider SCP participation if they intend on making a very long-term commitment that will weather different rate and political environments.
• Customer opt-outs: This study assumes a 90% participation rate. However, given the flexibility allowed to individual customers in switching power providers, the participation rate could be higher or lower. High opt-outs could lead to a situation where SCP has excess energy procured in long-term contracts that is not offset by customer revenues. SCP seeks to mitigate customer opt-out risk by investing heavily in marketing and community engagement leading up to start of service and make procurement decisions for the expansion with the flexibility to adapt to lower or higher opt-out rates.
• SCP credit rating: SCP’s current investor-grade credit rating is based on its financial assets, portfolio position, industry conditions, and the demographics of its customers among other conditions. Although this study demonstrates that expansion is financially prudent, credit rating agencies may see it as adding risk—particularly given the impact to the reserves target and the lower average household income observed in Lake County. SCP will seek to mitigate this issue by socializing the financial merits of the expansion with rating agencies and building up reserves to the new higher target balance.
• PG&E Generation Rates & PCIA: As demonstrated in Chapter 5, the ability of SCP to offer competitive rates is very sensitive to the generation rate and PCIA PG&E charges. SCP’s estimates of PG&E’s rates and fees are based on a model calibrated to long sets of historical data, but regulatory changes or changes in PG&E’s procurement practices could cause future generation rates and PCIA to diverge from SCP’s forecasts in Chapter 5. Although this analysis provides strong evidence that SCP will be able to offer competitive rates to Lake County, discounts cannot be guaranteed.
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• Legislative and regulatory risk: SCP is subject to many different compliance requirements, which can be changed through new legislation or rulemaking.

Compliance requirements can challenge the ability of SCP to compete or can devalue its existing resources. SCP seeks to mitigate this risk by investing heavily in its own legislative and regulatory capacity and working through its trade association CalCCA.

Chapter 9. Implementation
Enrollment Process
The steps for Lake County joining SCP service are established in SCP’s Policy D-4, CPUC Resolution 4907, and guided by best practices by other CCA expansions. The steps in Table 14 below include the activities SCP anticipates in working towards a start of service date between April and June 2027 (exact date to be determined following CPUC approval of an updated Implementation Plan).

Table 14. Enrollment Activities and Expected Timing
Expected Timing Activity
June 2025 Socialize Feasibility Study: Feasibility Study presented to SCP Board and Lake County jurisdictions. Starts 60-day clock for SCP jurisdictions to review.

July 2025 Tribal Engagement: SCP, with support from Lake County, begins engaging Lake County tribes to build awareness of CCA service and address concerns.

August to
September 2025
(depending on
meeting schedule)
SCP Board Invitation: SCP Board of Directors votes on whether to extend a formal offer of service
Lake County Ordinance Approval: Lake County jurisdictions approve resolution requesting SCP membership and ordinance authorizing CCA service through SCP. Note: this requires two consecutive meetings.

October 2025 SCP Resolution: SCP Board of Directors adopts resolution authorizing participation of Lake County jurisdictions.

Drafting: SCP staff write an updated Implementation Plan and circulate to the SCP Community Advisory Committee for review.

November 2025 Implementation Plan: SCP Board certifies the updated Implementation Plan and SCP staff submits updated Implementation Plan to CPUC with Lake County expansion
February 2026 Implementation Plan Certified: CPUC must certify it has received the Implementation Plan within 90 days of filing.
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Expected Timing Activity
April 2026 RA: SCP submits its load forecast for 2027 RA requirements including Lake County.

Sep 2026 Customer Outreach: SCP hires necessary staff and begins community outreach in Lake County in earnest including participation in community events, advertising/marketing, and dedicated townhall meetings.

July 2026 Procurement: SCP is assigned RA obligation for Lake County and begins supplemental procuring resources to serve load in earnest.

February 2027 First Notice: SCP will mail notices to all prospective customers describing terms of service and customer’s opt-out opportunity before service.

March 2027 Second Notice: SCP will mail second notice to all prospective customers describing terms of service and customer’s opt-out opportunity before service.

Between April and
June 2027 (TBD)
Start of Service: PG&E will transfer eligible accounts to SCP service based on billing period.

Governance
SCP is governed by a Board of Directors composed of elected members from participating jurisdictions. The early Board included one appointee from Sonoma County and one from each of the participating municipalities in Sonoma County. When SCP expanded to Mendocino County in 2017, one seat was assigned to Mendocino County and one seat was shared by the three participating cities: Fort Bragg, Point Arena, and Willits. The SCP Board currently has eleven total board members.

Decisions of the Board of Directors are generally made by a majority of directors present at the meeting, but a director can request approval of any matter also require the majority of voting shares. Voting shares are allocated between participants proportional to annual load.

It is the staff’s recommendation that the Board consider following the approach used in expanding to Mendocino County. Adding one seat from Lake County’s Board of Supervisors and a shared seat between the City of Clearlake and City of Lakeport would expand the SCP Board of Directors to thirteen seats. The three Lake County jurisdictions are expected to represent 13.5% of SCP’s load after expansion. Two seats on a 13-member board closely approximates their load share (15.4% vs. 13.5%), which will still be used as the basis for allocating voting shares. 275 of 276
Cotati City Council
Agenda Staff Report
Item type: INFORMATION RECEIVED AFTER THE AGENDA WAS POSTED To: City Council
Subject: INFORMATION RECEIVED AFTER THE AGENDA WAS POSTED Date: July 8, 2025
Written by: Kevin Patterson, Deputy City Clerk
Recommendation
Information or written comments pertaining to this meeting, and which was received after the agenda was posted, is attached below.

Pursuant to City Council Policy 2025-02: City Council Rules section IV A., written Communications, interested persons or their authorized representative may address the Council by written communication on any matters concerning the City’s business, or any matters over which the Council has control.

1. To be considered for inclusion in the agenda packet, such written communication shall be delivered to the Deputy City Clerk no later than 11:00 a.m. of the Wednesday the week preceding the regular Council meeting for which such written communication is intended.

2. If received after the above date and time, but no later than noon the day before the meeting, written communications received by the Deputy City Clerk shall be posted on the website by the end of that day and notification provided to the electronic Agenda mailing list by the end of the day. All written communications received by the Deputy City Clerk by 5 pm on the City Council meeting day shall be made available to the City Council and public at the City Council meeting.

City Council Policy 2025-02 is available at the online meeting portal at www.cotaticity.gov or by request from the Deputy City Clerk at 707-665-3622 or [email protected]. 276 of 276