cc 2022 AR 06/28 membership in the clean energy alliance, a community choice energy program

ACTION:
____________________________
Clerk/Secretary
Department: City Manager/Community Development Item No: PH1 Prepared by:

Kaitlyn Elliott-Norgrove, CAP Administrator
John Conley, Director of Comm. Dev. Meeting Date: June 28, 2022 Approved by: Patrick Johnson, City Manager Agenda Location: Public Hearing SUBJECT: MEMBERSHIP IN THE CLEAN ENERGY ALLIANCE, A COMMUNITY CHOICE ENERGY

PROGRAM
RECOMMENDATION:

1.Open, conduct, and close a public hearing to receive public testimony regarding membership in the Clean Energy Alliance.

2.Adopt City Council Resolution No. 2022- , authorizing the execution of the Joint Exercise of Powers Agreement for membership in the Clean Energy Alliance, a Community Choice Aggregation Joint Power Authority, and allowing the Mayor’s appointment of a member and alternate member to the Board of Directors of the Clean Energy Alliance.

3.Adopt City Council Ordinance No. 2022- , obtaining the City Council’s decision, pursuant to Public Utilities Code Section 366.2(c)(12), to implement a Community Choice Aggregation program within the jurisdiction of the City of Vista by participating in the Clean Energy Alliance, under the terms and conditions provided in its Joint Powers Agreement.

CORRELATION TO CITY COUNCIL GOALS: (1) Fiscal Responsibility and (2) Climate and Environmental Responsibility.

PRIOR ACTION: On May 3, 2022, discussed possible membership in the Clean Energy Alliance, a Community Choice Energy (CCE) program, and provided direction to staff (No Vote).

On October 12, 2021, adopted the following City Council Resolutions: 1) No. 2021-175, approving a Negative Declaration for the Climate Action Plan Update, and 2) No. 2021-176, approving the Climate Action Plan with an amendment to the social equity clause to identify protected groups as listed in the Equal Credit Opportunity Act, and 3) directed staff to continue moving forward with Community Choice Aggregation (CCA) (Vote: 4-1, Melendez opposed).

A complete list of prior actions is included as Exhibit 3.

STATEMENT ON THE SUBJECT: With adoption of the Climate Action Plan (CAP) update in October 2021, the City established several Climate Action Measures needed to meet the greenhouse gas (GHG) reduction targets in the plan. One of the primary measures included in the CAP is a commitment to join a Community Choice Energy (CCE) program, also referred to as Community Choice Aggregation (CCA) by AGENDA
REPORT

CITY COUNCIL

COMMUNITY DEVELOPMENT COMMISSION

SUCCESSOR AGENCY

BUENA SANITATION DISTRICT

JOINT POWERS FINANCING AUTHORITY
06/28/2022 PH1 1 of 145
Approved above recommendation, adopted the following: 1) City Council Resolution No. 2022-113; and 2) Introduced and adopted City Council Ordinance No. 2022-9. Vote: 5-0

MEETING DATE: June 28, 2022 PAGE 2
SUBJECT: MEMBERSHIP IN THE CLEAN ENERGY ALLIANCE, A COMMUNITY CHOICE ENERGY

PROGRAM
2030. CCE programs offer an alternative electric power option to residents and businesses currently served by investor-owned utilities, such as San Diego Gas and Electric (SDG&E). SDG&E has stated they will no longer be providing electric power in the future, so the CCE model is necessary. Under a CCE model, local governments purchase and manage their community's electric power supply by sourcing power from a preferred mix of traditional and renewable power generation sources, while the investor- owned utility continues to provide distribution services.

At the October 12, 2021 City Council meeting, staff presented the findings of the Technical Feasibility Study (Exhibit 4)that was prepared with the cities of San Marcos and Escondido. Furthermore, staff discussed options for joining a CCE program, covering the two existing Joint Powers Authority's (JPAs) in the region, San Diego Community Power (SDCP) and the Clean Energy Alliance (CEA). Following a discussion of policy issues related to the two agencies, the City Council directed staff to further evaluate joining CEA, which was formed in 2019 through a JPA that includes the cities of Carlsbad, Del Mar, and Solana Beach and began service in 2021. Both Escondido and San Marcos became CEA members in 2021 and are scheduled to begin service in 2023.

April 2022 CEA Analysis. In January 2022, staff requested CEA evaluate Vista's energy load data and provide a summary of anticipated costs, implications for ratepayers, and steps involved in the process.

The energy load assessment analyzed the customer base and estimated probable rates if Vista were to join CEA. The results of the energy load assessment were provided to City staff in early April and presented to the City Council at the May 3, 2022 workshop. This assessment is included as Exhibit 5.

Table 1: Vista Customer Information
Classification Accounts Annual Energy (Megawatt Average Customer Usage per hour (MWh) (kilowatt per hour (kWh/Mo)
Residential 34,520 141,779 342
Commercial/Industrial 4,899 209,349 3,561 Agriculture/Pumping 28 831 2,472
Street Lighting 146 1,761 1,005
Total 39,593 353,719 744
Exit fees, also referred to as the "Power Charge Indifference Adjustment" or PCIA, are set by the Public Utilities Commission (PUC) annually and account for costs that SDG&E can recover for the purchase of long-term power contracts for a service area that is converting to a CCE. Exit fees are a significant consideration in estimating future costs for Vista customers however, these fees are unknown at this time, as they are not set until close to the launch date (in late 2023 for Vista's 2024 anticipated launch). Current CEA customers are realizing a two percent discount relative to SDG&E bundled service, based on exit fees and rates applicable to each jurisdiction. CEA staff estimates the discount for Vista customers would be comparable, but it is dependent upon several factors, including exit fees.

Customers in the City, upon the City joining CEA, would be automatically enrolled (once service begins in 2024) unless a customer chooses to opt out. Each customer would receive four notices of pending enrollment, with the first coming at least 60 days prior to automatic enrollment. Customers may choose to opt out of service from CEA and remain with SDG&E as an energy provider. The opportunity to opt out would be provided 60 days prior to automatic enrollment and 60 days after enrollment. After 60 days, customers may still return to SDG&E by providing a six-month notice and commitment to remain with them for at least one year. SDG&E would continue to provide transmission and distribution services to all 06/28/2022 PH 1 2 of 145

MEETING DATE: June 28, 2022 PAGE 3
SUBJECT: MEMBERSHIP IN THE CLEAN ENERGY ALLIANCE, A COMMUNITY CHOICE ENERGY

PROGRAM
customers. CEA's current opt-out rate is approximately 7.5 percent of the customers within its service area.

CEA offers three energy rates based on the percentage of renewables a customer desires to use. The base rate begins at 50 percent renewable and is referred to as "Clean Impact," the mid-rate is established at 75 percent carbon-free (because it includes significant hydro-electric contracts) and is referred to as "Clean Impact Plus," and the highest rate is 100 percent renewable and referred to as "Green Impact." A member agency may set a default rate for their customers at any of these three tiers. The cities of Carlsbad, Del Mar, and Solana Beach all established the 75 percent carbon-free Clean Impact Plus as their default rate. Escondido and San Marcos are expected to establish default rates for their customers in early 2023 when they know better what their rates will be. For Vista, the City Council can determine the default rate in late 2023. CEA staff prepared an average residential customer bill comparison for 2022 using the three rates, which is included below.

Table 2: Average Monthly Customer Bill Com arison
SDG&E: 31 CEA: Clean CEA: Clean CEA: Green
Rate Type percent Impact 50 Impact Plus Impact 100 Residential: DR Renewable percent 75 percent percent Renewable Carbon-Free Renewable
Generation $52.63 $37.79 $37.79 $37.79
Clean Impact + / Green Impact Premium - - $0.34 $2.57 SDG&E PCIA-FFS -2022 Vintage - $11.90 $11.90 $11.90 Generation Related Costs $52.63 $46.69 $50.03 $52.26 SDG&E Delivery* $89.32 $89.32 $89.32 $89.32 Total Average Monthly Bill $141.95 $139.01 $139.95 $141.58 *The average kWh used to calculate the SDG&E Delivery costs in this assessment was incorrect. The SDG&E Delivery costs in Table 5 are correct.

Cost Saving to SDG&E $(2.94) $(2.60) $(0.37) Percentage Saving to SDG&E -2.07% -1.83% -0.26% If Vista were to join CEA by August 2022, the earliest possible launch would occur in April 2024. Using this date as a startup, CEA prepared a three-year fiscal impact summary reflecting the addition of Vista's accounts, assuming a 90-percent customer participation rate and current CEA generation rates.

Table 3: Fiscal Impact Su mary for Vista $M
FY 2023-24 FY 2024-25 FY 2025-26
Revenue $6.19 $32.96 $33.12
Power Supply Costs $5.41 $27.67 $27.35 Billing and Other Costs $0.27 $0.81 $0.81 Net Operating Margin $0.52 $4.48 $4.95 Reserve Contribution $0.31 $1.65 $1.66 Net Surplus $0.21 $2.84 $3.30
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MEETING DATE: June 28, 2022 PAGE 4
SUBJECT: MEMBERSHIP IN THE CLEAN ENERGY ALLIANCE, A COMMUNITY CHOICE ENERGY

PROGRAM
Electric Sales (MWh) 61,790 322,478 324,090 Vista's membership would result in an overall positive fiscal impact for CEA under the current assumptions. Fiscal Year 2023/24 reflects only a partial year of service since the fiscal year ends on June 30 and the analysis assumes residential service would start in April 2024. Actual outcomes may vary due to volatility in the wholesale power market.

Updated CEA Financial Assessment. In May 2022, CEA prepared an updated financial assessment for Vista, Oceanside, and San Clemente. This assessment, included as Exhibit 6, anticipates that CEA will experience a decrease in projected revenue over the next four years and may fall short on its reserve contributions due to turbulence in the energy market, including increased energy contract costs and the conflict in Eastern Europe. CEA's current policy requires a minimum reserve of 5 percent each year.

Table 4: Revenue Projections
FYE 2024 FYE 2025 FYE 2026
Revenue $20.51 $110.34 $110.89
Power Supply Costs -$18.48 -$104.43 -$102.29 Staffing -$0.35 -$0.35 -$0.35
Billing and Other Costs -$0.83 -$2.76 -$2.77 Net Operating Margins $0.85 $2.79 $5.48
5% Reserve Contribution $1.03 $5.52 $5.54
Revenue Shortfall/Excess -$0.18 -$2.72 -$0.06 In order to meet the minimum reserve contribution, CEA foresees a systemwide rate increase of 2.5 percent to cover future generation costs. The anticipated generation increase of 2.5 percent will still realize for Vista customers an estimated cost savings averaging 2 percent over SDG&E rates.

Table 5: Bill Comparison with 2.5% Rate Increase
SDG&E: 31 CEA: Clean CEA: Clean CEA: Green
Rate Type percent Impact 50 Impact Plus Impact 100 Residential: DR Renewable percent 75 percent percent Renewable Carbon-Free Renewable
Generation $52.63 $38.73 $38.73 $38.73
Clean Impact + / Green Impact Premium - - $0.34 $2.57 SDG&E PCIA-FFS -2022 Vintage - $10.26 $10.26 $10.26 Generation Related Costs $52.63 $48.99 $49.34 $51.56 SDG&E Delivery 1 $77.14 $77.14 $77.14 $77.14 Total Average Monthly Bill $129.77 $126.13 $126.48 $128.70 Average 342 kWh usage
Cost Saving to SDG&E $(3.64) $(3.29) $(1.07) Percentage Saving to SDG&E -2.80% -2.54% -0.83% Procurement Concerns. As the City pursues membership in CEA, two concerns regarding energy procurement are important to note: Resource Adequacy (RA) and Long-Term Renewable Energy (LTRE). 06/28/2022 PH1 4 of 145

MEETING DATE: June 28, 2022 PAGE 5
SUBJECT: MEMBERSHIP IN THE CLEAN ENERGY ALLIANCE, A COMMUNITY CHOICE ENERGY

PROGRAM
Resource Adequacy. The CPUC adopted a RA framework in 2004 to ensure the reliability of electric service in California and the safe operation of the grid. CEA works closely with SDG&E to acquire excess energy contracts for RA related to the departures of new members from SDG&E to CEA. CEA is vulnerable to non-compliance with its RA requirements if it fails to reach an agreement with SDG&E.

Long-Term Renewable Energy: The CPUC requires SDG&E to make available to CEA excess renewable energy. LTRE contracts are required for existing generating facilities immediately upon the establishment of service. The current LTRE compliance period ends in December 2024, so if Vista customers launch in April 2024, it leaves only an eight-month period for negotiations with SDG&E to meet long-term contracting requirements. If an agreement is not reached prior to the 2024 customer launches, CEA risks non- compliance and the phasing in of new customers by groups in 2024 and could delay customer launches to 2025.

As a member of CEA, the City will have a representative seated on the CEA Board of Directors and will be able to participate in the Board's discussions including procurement concerns.

Governance. As mentioned above, a Board of Directors governs CEA with one representative from each member agency. A copy of the CEA by-laws is attached as Exhibit 7. Each representative's vote carries equal weight and there is no allowance for a weighted vote within the by-laws. Each member agency of CEA also appoints an alternate representative to serve when the primary is unavailable. Upon City Council authorization to join CEA, a representative and alternate representative will be seated to partial terms beginning in August 2022.

The JPA Agreement (Exhibit 8) allows member agencies to direct some discretionary revenues of CEA into certain programs or projects that benefit ratepayers. The distribution of discretionary funds must commensurate with each member agency's energy load. As of today, Vista's share of CEA's energy load would be approximately 19 percent of the current membership; however, the potential membership of Oceanside and San Clemente would decrease this percentage.

Environmental Review. The ordinance (Exhibit 2) is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to the State CEQA Guidelines, as it is not a "project" and has no potential to result in a direct or reasonably foreseeable indirect physical change to the environment (14 Cal. Code Regs. § 15378(a)). Further, the ordinance is exempt from CEQA as there is no possibility that the ordinance or its implementation would have significant negative effect on the environment (14 Cal.

Code Regs. § 15061(b)(3)). The ordinance is also categorically exempt because it is an action taken by a regulatory agency to assure the maintenance, restoration, enhancement, or protection of the environment (14 Cal. Code Regs. § 15308). To the extent necessary, the City Manager, or the City Manager's designee, shall cause a Notice of Exemption to be filed as authorized by CEQA and the State CEQA guidelines.

Implementation Costs. Vista's cost to join CEA would be an amount not to exceed $50,000. These funds would cover the costs incurred by CEA to update its Implementation Plan with the CPUC. Vista would share the cost of updating the Implementation Plan with any other cities electing to join CEA at the same time (early 2024), which could include Oceanside and San Clemente, should they decide to move forward.

FISCAL IMPACT: The fiscal impact associated with joining CEA would be determined at the time of membership. As discussed herein, the projected cost to join CEA in August 2022 would be approximately $17,000 if the cities of Oceanside and San Clemente pursue membership; however, if only Vista joins this 06/28/2022 PH 1 5 of 145

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SUBJECT: MEMBERSHIP IN THE CLEAN ENERGY ALLIANCE, A COMMUNITY CHOICE ENERGY

PROGRAM
year, then the estimated costs would not exceed $50,000. CEA has committed to reimbursing member agencies start-up costs after three years of membership.

EXHIBITS:

1. City Council Resolution No. 2022- , authorizing the execution of the Joint Exercise of Powers Agreement for membership in the Clean Energy Alliance, a Community Choice Aggregation Joint Power Authority, and allowing the Mayor's appointment of a member and alternate member to the Board of Directors of the Clean Energy Alliance.

2. City Council Ordinance No. 2022- , obtaining the City Council's decision, pursuant to Public Utilities Code Section 366.2(c)(12), to implement a Community Choice Aggregation program within the jurisdiction of the City of Vista by participating in the Clean Energy Alliance, under the terms and conditions provided in its Joint Powers Agreement

3. Complete List of Prior Actions

4. CCE Technical Feasibility Study

5. CEA Assessment Summary for City of Vista

6. CEA Updated Assessment

7. CEA By-laws

8. JPA Agreement
06/28/2022 PH 1 6 of 145

RESOLUTION NO. 2022-

A RESOLUTION OF THE CITY COUNCIL OF THE CHARTERED CITY OF

VISTA, CALIFORNIA, AUTHORIZING THE EXECUTION OF THE JOINT

EXERCISE OF POWERS AGREEMENT FOR MEMBERSHIP IN THE CLEAN

ENERGY ALLIANCE, A COMMUNITY CHOICE AGGREGATION JOINT

POWERS AUTHORITY, AND AUTHORIZING THE MAYOR'S APPOINTMENT

OF A MEMBER AND ALTERNATE MEMBER TO THE BOARD OF

DIRECTORS OF THE CLEAN ENERGY ALLIANCE
The City Council of the City of Vista does resolve as follows:

1. Findings. The City Council hereby finds and declares the following:

A. Section 6500 et seq. of the Government Code authorizes the joint exercise by two or more public agencies of any power common to them as Joint Powers Authority (JPA); and
B. Public Utilities Code Section 366.2(c)(12)(B) specifically authorizes two or more cities and/or counties to conduct a Community Choice Aggregation (CCA) program through the creation of a JPA if each public entity adopts an ordinance; and C. An existing JPA, known as Clean Energy Alliance (CEA) and currently including the cities of Solana Beach, Del Mar, Carlsbad, Escondido, and San Marcos, allows its members to share resources and jointly provide and achieve the environmental and economic benefits of a CCA program on a regional basis; and
D. The City, in cooperation with other cities in northern San Diego County, has been actively investigating the feasibility of CCA service for electric customers within the City; and E. On June 1, 2021, the City Council held a workshop to discuss the findings of the Community Choice Technical Feasibility Study (Feasibility Study), dated May 24, 2021; and F. On October 12, 2021, the City Council directed staff to release its load data to CEA for the purposes of conducting a load analysis for the potential eventual membership of the City; and
G. On May 3, 2022, the City Council discussed possible membership in CEA and directed staff to pursue membership; and
H. The City seeks to achieve measurable goals in its Climate Action Plan (CAP), promote electrical rate price stability and cost savings, and foster consumer choice; and I. The Feasibility Study, which determined that a CCA program would be both technically and financially feasible, examined a number of organizational structures by which a CCA program could be implemented, including a JPA; and
J. This Resolution and the creation of the CEA is exempt from the requirements of the California Environmental Quality Act ("CEQA"), as it involves organizational and administrative activities of government that will not result in direct or indirect physical changes on the environment, and therefore is not considered a "project" (14 Cal. Code Regs. § 15378(b)(5)); and
001080261
EXHIBIT 1
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RESOLUTION NO. 2022-

CITY COUNCIL OF THE CHARTERED CITY OF VISTA
PAGE 2
K. The City desires to enter into the existing JPA Agreement ("Agreement") to join the CEA along with the current Members identified in the Agreement, and any additional members approved by the JPA Board in the future.

L. Participation in the CEA gives the Mayor the right to appoint one Board Member and one alternate Board Member to sit on the CEA Board of Directors to represent the City of Vista.

2. Action.

A. The above recitals are true and correct.

B. The Clean Energy Alliance Joint Powers Agreement, including any amendments creating and governing the CEA, is attached hereto as Exhibit A and incorporated by reference.

The Mayor is authorized to execute the Clean Energy Alliance Joint Powers Agreement on behalf of the City.

C. The Mayor is authorized to appoint one Board Member and one alternate Board Member to sit on the CEA Board of Directors to represent the City of Vista.

D. The City Manager, or the City Manager's designee, is authorized to prepare, negotiate, and execute such other related applications, agreements and written documents as may be required by CEA and related entities to implement the intent and purpose of this Resolution, the Ordinance titled Obtaining the City Council's Decision, Pursuant to Public Utilities Code Section 366.2(C)(12), to Implement a Community Choice Aggregation Program within the Jurisidiction of the City of Vista by Participating in the Clean Energy Alliance, Under the Terms and Conditions Provided in Its Joint Powers Agreement and applicable state law.

3. Adoption. PASSED AND ADOPTED at a meeting of the City Council of the City of Vista held on June 28, 2022, by the following vote:

AYES:

NOES:

ABSTAIN:

JUDY RITTER, MAYOR
APPROVED AS TO FORM: ATTEST:

WALTER CHUNG, ACTING CITY ATTORNEY KATHY VALDEZ, CITY CLERK By: By:

APPROVED
Walter C.Chung
20220609085443
00108026 1001 08026.DOCX
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ORDINANCE NO. 2022-

AN ORDINANCE OF THE CITY COUNCIL OF THE CHARTERED CITY OF VISTA,

CALIFORNIA, OBTAINING THE CITY COUNCIL'S DECISION, PURSUANT TO PUBLIC UTILITIES CODE SECTION 366.2(c)(12), TO IMPLEMENT A COMMUNITY CHOICE

AGGREGATION PROGRAM WITHIN THE JURISIDICTION OF THE CITY OF VISTA BY

PARTICIPATING IN THE CLEAN ENERGY ALLIANCE, UNDER THE TERMS AND

CONDITIONS PROVIDED IN ITS JOINT POWERS AGREEMENT
The City Council of the City of Vista does ordain as follows:

1. Findings. The City Council hereby finds and declares all of the following:

A. California Public Utilities Code (the "Act") Section 366.2 authorizes cities and counties to provide retail electric service individually or jointly to an aggregation of customers within their jurisdictions, which is referred to as community choice aggregation (CCA); and B. Measure E-3 of the City's 2021 Climate Action Plan aims to increase grid-supply renewable and zero-carbon electricity in the City of Vista (City); and C. The City completed a CCA feasibility study, which determined that a CCA program could result in local benefits including the use of renewable energy at levels above the State Renewables Portfolio Standard, the provision of competitive rates to consumers, and economic opportunity for the City; and
D. Pursuant to Section 366.2 of the Act, if each entity adopts the ordinance required by Public Utilities Section 366.2(c)(12), two or more public entities authorized to be a community choice aggregator under Section 331.1 of the Act may participate jointly in a CCA program through a Joint Powers Authority established pursuant to Government Code Section 6500 et seq.; and
E. The City wishes to implement a CCA program at this time, joining as a member the Joint Powers Authority known as Clean Energy Alliance, consisting of the member agencies of Carlsbad, Del Mar, Solana Beach, Escondido, and San Marcos; and F. Under section 366.2 of the Act, customers have the right to opt out of the CCA program and continue to receive bundled electric service from the incumbent utilities; and G. 366.2(c)(12) of the Act provides that an entity which elects to implement a CCA program within its jurisdiction must do so by ordinance; and H. This ordinance is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to the State CEQA Guidelines, as it is not a "project" and has no potential to result in a direct or reasonably foreseeable indirect physical change to the environment. (14 Cal. Code Regs. § 15378(a).) Further, the ordinance is exempt from CEQA as there is no possibility that the ordinance or its implementation would have significant negative effect on the environment. (14 Cal. Code Regs. § 15061(b)(3).) The ordinance is also categorically exempt because it is an action taken by a regulatory agency to assure the maintenance, restoration, enhancement or protection of the environment. (14 Cal. Code Regs. § 15308.) To the extent necessary, the City Manager or designee shall cause a Notice of Exemption to be filed as authorized by CEQA and the State CEQA guidelines. 00108036 1
EXHIBIT 2
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2. Action.

A. The above recitals are true and correct.

B. In order to provide businesses and residents within the jurisdictional boundaries of the City with a choice of electric service providers and with the benefits described in the recitals above, the City Council hereby elects, pursuant to Section 366.2(c)(12) of the Act, to implement a CCA program within the jurisdiction of the City of Vista by participating in the CCA program of the Clean Energy Alliance, under the terms and conditions provided in its Joint Powers Agreement, on file with the City Clerk.

3. Effective Date. This ordinance shall be effective on the thirty-first day following the date of its adoption. The City Clerk is authorized and directed to publish a copy in the manner provided by law.

4. Adoption. INTRODUCED and ADOPTED at a meeting of the City Council of the City of Vista held on June 28, 2022, by the following vote:

AYES:

NOES:

ABSTAIN:

By:

JUDY RITTER, Mayor
APPROVED AS TO FORM: ATTEST:

WALTER CHUNG, ACTING CITY ATTORNEY KATHY VALDEZ, CITY CLERK By: By:

APPROVED
Walter C.Chung
20220609144426
00108036 1
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PRIOR ACTIONS
On May 3, 2022, discussed possible membership in the Clean Energy Alliance, a Community Choice Energy (CCE) program, and provided direction to staff(No Vote).

On June 1, 2021, held a workshop to discuss the Climate Action Plan (CAP) Update and the findings of the CCE Technical Feasibility Study and directed staff to further evaluate governance structure options for the formation of a CCE and report back to the City Council (Vote: 5-0).

On June 25, 2019, approved a request for proposals (RFP) for Community Choice Energy and directed staff to release the RFP, subject to approval of the partner cities of San Marcos and Escondido (Vote: 5-0).

On April 9, 2019, directed staff to prepare a request for proposals to evaluate the feasibility of Community Choice Energy for review by the City Council (Vote: 5-0).

EXHIBIT 3
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PREPARED BY EES CONSULTING
Community Choice
Aggregation Technical
Feasibility Study
Prepared for the Cities of Escondido,
San Marcos, and Vista
r i
r
EES •

Gary Saleba, Executive Consultant
[email protected]
Consulting cell 425-260-6678
a GDS Associates Company
May 24, 2021
Mr.John Conley
Community Development Director
City of Vista
200 Civic Center Drive
Vista, CA 92084
SUBJECT: CCA Technical Feasibility Study
Dear Mr. Conley:

Please find attached the Community Choice Aggregation (CCA)Technical Feasibility Study (Study) for the cities of Escondido, San Marcos, and Vista.

We very much appreciate all the effort your project team has spent on the Study, and we hope this report is useful as the Cities evaluate CCA program implementation.

Very truly yours,
)ail �-
Gary Saleba

EXECUTIVE CONSULTANT
1850 Parkway Place Suite 800 Marietta,GA 30067 • 770-425-8100 • Fax 866-611-3791 www.eesconsulting.com Georgia • Texas Alabama New Hampshire • Wisconsin • Florida Maine . Washington . California 06/28/2022 PH 1 13 of 145

CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study

TABLE OF CONTENTS
1 EXECUTIVE SUMMARY...................................................................................................1

1.1 Background on CCA Business Model...........................................................................................................2

1.2 Overview of Study Purpose and Analytical Construct...........................................................................4

1.3 Study Assumptions and Scenarios................................................................................................................4

1.4 Key Findings..........................................................................................................................................................6

1.5 Governance............................................................................................................................................................8

1.6 Risks....................................................................................................................................................................... 10

1.7 Conclusions......................................................................................................................................................... 11 2 INTRODUCTION............................................................................................................12

2.1 History of CCA in California.......................................................................................................................... 12

2.2 CCA Programs and Status of Pending CCAs.......................................................................................... 12

2.3 CCA and Climate Action Plans..................................................................................................................... 14

2.3.1 Time-of-Use (TOU) Rates........................................................................................................... 15

2.3.2 CCA Regulations......................................................................................................................... 15

2.4 Study Methodology......................................................................................................................................... 16 3 LOAD REQUIREMENTS.................................................................................................18

3.1 Historical Consumption..................................................................................................................................18

3.2 CCA Participation Rates.................................................................................................................................20

3.3 Conceptual CCA Launch................................................................................................................................21

3.4 Forecast Consumption and Customers....................................................................................................21

3.5 Load Summary...................................................................................................................................................22 4 POWER SUPPLY STRATEGY AND COSTS ...................................................................23

4.1 Resource Strategy............................................................................................................................................23

4.1.1 Statewide IRP Results.................................................................................................................23

4.1.2 CCA Power Portfolios.................................................................................................................24

4.2 Projected Power Supply Costs.....................................................................................................................26

4.2.1 Market Purchases........................................................................................................................26

4.2.2 Renewable Energy......................................................................................................................27

4.2.3 Renewable Energy Credits (RECs).............................................................................................29

4.2.4 Ancillary Service Costs...............................................................................................................30 preparedbyEES CONSULTING i
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study

4.2.5 Resource Adequacy.....................................................................................................................31

4.2.6 Power Management/Schedule Coordinator.............................................................................32

4.3 Resource Portfolios..........................................................................................................................................33

4.3.1 Renewable PPA Pricing..............................................................................................................33

4.4 20-Year Levelized Portfolio Costs..............................................................................................................35

4.5 Resource Strategy............................................................................................................................................35 5 COST OF SERVICE..........................................................................................................37

5.1 Cost of Service for CCA Operations..........................................................................................................37

5.2 Non-Power Supply Costs...............................................................................................................................37

5.2.7 Estimated Staffing Costs............................................................................................................38

5.2.2 General and Administrative Costs and Membership..............................................................38

5.2.3 Outside Consultant Costs...........................................................................................................38

5.2.4 SDG&E Fees.................................................................................................................................38

5.2.5 Uncollectible Costs.....................................................................................................................39

5.3 Financial Reserves............................................................................................................................................39

5.4 Financing Costs.................................................................................................................................................40

5.4.7 Cash Flow Analysis and Working Capital................................................................................40

5.4.2 Total Financing Requirements..................................................................................................41

5.4.3 Current CCA Funding Landscape..............................................................................................41

5.4.4 CCA Financing Plan....................................................................................................................43 6 RATE COMPARISON.....................................................................................................44

6.1 Rates Paid by SDG&E Bundled Customers.............................................................................................44

6.2 Rates Paid by CCA Customers.....................................................................................................................44

6.2.1 Power Charge Indifference Adjustment...................................................................................44

6.3 Retail Rate Comparison..................................................................................................................................45 7 ENVIRONMENTAL AND MACROECONOMIC IMPACTS...........................................47

7.1 Impact of Resource Plan on Greenhouse Gas (GHG) Emissions.....................................................47

7.2 Local Resources/Behind the Meter CCA Programs.............................................................................47

7.3 Economic Development Rate Incentive...................................................................................................48

7.4 Net Energy Metering (NEM) Program......................................................................................................48 TSFeed-in Tariffs....................................................................................................................................................49

7.6 Local Generation Resources Development.............................................................................................49 preparedbyEES CONSULTING H
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study

7.7 Electric Vehicle (EV) Programs and Charging Stations.......................................................................49

7.8 Low Income Programs.................................................................................................................................... 50

7.9 Economic Impacts in the Community.......................................................................................................50 8 SENSITIVITY AND RISK ANALYSIS..............................................................................53

8.1 No Action Option Review..............................................................................................................................53

8.2 CCA Risk Analysis............................................................................................................................................. 53

8.3 SDG&E Rates and Surcharges.....................................................................................................................57

8.3.7 Generation Rate..........................................................................................................................57

8.3.2 PCIA..............................................................................................................................................57

8.4 Regulatory Uncertainties...............................................................................................................................58

8.5 Power Supply Cost Risk.................................................................................................................................. 58

8.5.1 Price Volatility............................................................................................................................58

8.5.2 Procurement................................................................................................................................61

8.6 Financial Risks....................................................................................................................................................61

8.7 Loads and Customer Participation Rates................................................................................................61

8.8 Sensitivity Results.............................................................................................................................................62 9 CCA GOVERNANCE OPTIONS......................................................................................64

9.1 Enterprise CCA...................................................................................................................................................64

9.2 VSME Partner JPA CCA...................................................................................................................................64

9.3 San Diego Community Power......................................................................................................................65

9.4 Clean Energy Alliance (CEA).........................................................................................................................66

9.5 Summary Observations on Governance Options.................................................................................66

9.6 CCA Operational Options..............................................................................................................................67 10 CONCLUSIONS AND RECOMMENDATIONS............................................................68

10.1 Local Control....................................................................................................................................................68

70.1.1 Energy Programs......................................................................................................................68

10.2 Findings and Conclusions...........................................................................................................................69

10.3 Summary and Next Steps Timeline.........................................................................................................69 11 APPENDIX A — BASE CASE PRO FORMA ANALYSES...............................................71 12 APPENDIX B — GLOSSARY..........................................................................................75 13 APPENDIX C — IMPLEMENTATION SCHEDULE........................................................80 preparedbyEES CONSULTING iii
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study 1 Executive Summary
Since the State's first Community Choice Aggregation (CCA program was launched in Marin County in 2010, many communities across the state have benefitted from reduced electricity costs and community- specific activities and programs associated with CCA operations. To date, 23 CCAs comprising multiple counties and cities are operating; and even more are scheduled to commence operations in 2021 and 2022.

Under the CCA business model, local governments purchase and manage their community's electric power supply by sourcing power from a preferred mix of traditional and renewable energy sources,while the incumbent investor-owned utility(IOU), in this case San Diego Gas and Electric(SDG&E), continues to provide distribution and billing service.

To better understand the benefits and risks associated with CCA programs, the cities of Escondido, San Marcos, and Vista (VSME Partners) selected EES Consulting (EES) to prepare this Study that assesses the technical feasibility of CCA operations as a mechanism to provide choice to customers, lower their electricity rates, and contribute toward achieving the VSME Partners' Climate Action Plan (CAP) targets for greenhouse gas reduction. CAP goals for each VSME City are summarized below. ■ The City of Vista will join a program (e.g., CCA) to increase the renewable or zero-carbon electricity supplied to the city to 90%, reducing citywide emissions by approximately 28,300 MTCO2e in 2030.1 ■ The City of San Marcos intends achieve 95%zero carbon electricity by 2030 for a reduction of 34,336 MTCO2.2
■ The City of Escondido intends to reduce GHG emissions through energy efficiency and renewable energy choice (100% renewable energy by 2030).3 Both of these measures could be promoted through CCA.

This Study evaluates the technical (economic) feasibility of a VSME Partner CCA as well as for each VSME City individually. The study does not assume that the cities will enter into joint decision-making based on the results. Each VSME City can choose to remain with bundled service through SDG&E,form its own city- only CCA, participate in the creation of a new CCA, or join an existing CCA. 1 Measure E-4 Page ES-5 City of Vista Climate Action Plan. October 2019. Available at:
https://www.citvofvista.com/Home/ShowDocument?id=20634
z City of San Marcos Climate Action Plan. December 14,2020. Available at: https://www.san- marcos.net/departments/development-services/planning/climate-action-plan 3 City of Escondido Climate Action Plan. Page 3-17. Available at:
https://www.escondido.org/Data/Sites/1/media/PDFs/Planning/ClimateActionPlan/Final/ResolutionExAEscondido CAP3GHG Red uction_FINAL3.pdf
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study

1.1 BACKGROUND ON CCA BUSINESS MODEL
California Assembly Bill 117 allows local governments to form CCAs that offer an alternative electric power supply option to constituents currently served by IOUs. CCAs face the same requirements for renewable energy purchases as the incumbent IOUs and other public utilities; however, many CCA programs can offer power content that has a greater share of renewable energy compared with the incumbent utility and at lower retail rates.

Figure 1-1 illustrates how CCAs function within the traditional electric utility industry supply infrastructure.

FIGURE 1-1.CCA BUSINESS MODEL CONSTRUCT
-it
source delivery customer
v v v
CCA INVESTOR-OWNED YOU

UTILITY
buying and building delivering energy, possible benefits from electric power supply maintaining lines, lower rates,local resources billing customers control,cleaner energy As illustrated in Figure 1-2 below,there are currently 23 operational CCAs in the state, serving more than 11 million customers.

FIGURE 1-2. CCA LOCATIONS
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study The 23 operational CCAs vary widely in size and governance structure. Table 1-1 summarizes the existing CCAs relative size on internal governance structures. The Hybrid governance refers to an enterprise CCA where administration costs are shared with other CCAs through a JPA. For comparison,the VSME Partner estimated participating load is 1,600 GWh.

TABLE 1-1. CCA PROGRAM SIZE AND OPERATIONAL STRUCTURE
2021 Operational Inception
CCA Name GWh Load Service Location Structure Date Clean Power Alliance 11,113 SCE JPA 2018
San Diego Community Power' 7,407 SDG&E JPA 2021 East Bay Community Energy 5,951 PG&E JPA 2018 MCE S,879 PG&E JPA 2010
Central Coast Community Energy 4507 PG&E and SCE JPA 2018 San Jose Clean Energy 4,462 PG&E Enterprise 2018 Silicon Valley Clean Energy 3,991 PG&E JPA 2017 Orange County Power Authority 3,692 SCE JPA 2022 Peninsula Clean Energy 3,290 PG&E JPA 2016 CleanPowerSF 3,083 PG&E Enterprise 2016 Sonoma Clean Power 2,335 PG&E JPA 2014
Western Community Energy 1,575 SCE JPA 2020
Desert Community Energy 1,433 SCE JPA 2020 Pioneer Community Energy 1,187 PG&E JPA 2018 Butte Choice Energy Authority 1,123 PG&E JPA 2023 Clean Energy Alliance' 929 SDG&E JPA 2021 Valley Clean Energy 737 PG&E JPA 2018 Redwood Coast Energy Authority 631 PG&E JPA 2017 Lancaster Choice Energy 551 SCE Hybrid 2015 Pomona Choice Energy 409 SCE Hybrid 2020 Rancho Mirage Energy Authority 266 SCE Hybrid 2018 Pico Rivera Innovative Municipal Energy 243 SCE Hybrid 2017 Baldwin Park 241 SCE Hybrid 2020
Apple Valley Choice Energy 235 SCE Hybrid 2017 San Jacinto Power 160 SCE Hybrid 2018
Solana Energy Alliance' 60 SDG&E Enterprise 2018 King City Community Power 34 PG&E Enterprise 2018

1. Load is forecast 2022 after all currently scheduled enrollments are completed

2. Part of CEA beginning in 2021
It should be noted that the CCA business model was first applied in Marin County roughly 10 years ago by establishing Marin Clean Energy. Since this first CCA formation, another 23 have been launched. All of these CCAs have operated successfully. As indicated above, at least 2 additional CCAs are planning to launch in 2022 and 2023.
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study Other potential partnerships exist in the San Diego region as three other jurisdictions continue to evaluate CCA programs including the City of Santee, City of Oceanside, and County of San Diego. At the time of this study, these entities have not yet established a clear path for either joining an existing CCA or establishing a new program.

1.2 OVERVIEW OF STUDY PURPOSE AND ANALYTICAL CONSTRUCT
The purpose of this study is to: estimate all CCA operating costs (including power supply, labor, consultants,regulatory,legal,financing),calculate anticipated CCA revenues by projecting customer rates, determine if projected revenues can cover estimated operating costs and whether projected CCA rates are comparable to or lower than projected SDG&E rates.The Study's power supply options are consistent with the VSME Partner Climate Action Plan (CAP) goals to achieve up to 100% renewable electricity by 2030.4 Risks are assessed through a sensitivity analysis on key input variables. The Study also looks at various governance options.

In order to determine the technical and financial feasibility of a CCA in the participating cities' service territory(VSME Partner CCA), a comparison of SDG&E rates versus corresponding rates for a Partner CCA must be undertaken. If a VSME Partner CCA can provide electricity at a lower price than SDG&E, the CCA business model is deemed to be technically and financially feasible.Within this Study,a forecast of SDG&E and VSME Partner CCA rates is performed. The details of this comparison are provided within this Study.

This Executive Summary contains the highlights of the Study. The balance of this Study discusses the details of this rate comparison,then continues to discuss a VSME Partner CCA's environmental,economic, governance and operational relative attributes.A glossary of terms and acronyms is available in Appendix D at the end of this Study.

1.3 STUDY ASSUMPTIONS AND SCENARIOS
Electrical usage data for all residences and businesses located within the Cities' incorporated areas was provided by SDG&E. Figures 1-3 and 1-4 show the forecast energy consumption by electric accounts in the incorporated areas. Residential,commercial and industrial customers make up the majority of energy use. Street lighting and agricultural use make up the balance of energy use with the latter stemming primarily from irrigation load.
4 Individual city goals are Vista:90%by 2030,San Marcos:9S%by 2030,and Escondido: 100%GHG free by 2030. preparedbyEES CONSULTING 4
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study FIGURE 1-3. FORECAST CCA SERVICE AREA LOAD
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 ■ Residential ■ Small Commercial ■ Medium Commercial Agricultural ■ Lighting FIGURE 1-4. 2023 FORECAST SERVICE ACCOUNTS
70,000
60,000
50,000
c
° 40,000
V
Q
u 30,000
L
N 20,000
10,000
0 Escondido San Marcos Vista
■Residential ■Commercial/Industrial ■Agriculture Lighting Electricity can be produced in several ways. In California, electricity was historically produced using nuclear, natural gas, coal and hydro resources. More recently, renewable resources, such as solar, wind, and geothermal have increasingly been used to generate electricity. These renewable resources and power provided from hydrologic facilities are also greenhouse gas (GHG) free. These attributes are considered in the CCA power portfolio analysis in this study.

At this time,SDG&E's standard power supply offering is 44%from renewable resources. In California,most renewable energy comes from solar and wind generation. SB 100, adopted in 2018,accelerates the State- mandated Renewable Portfolio Standard (RPS) obligations as follows:
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study ■ 44%from renewable sources by 2024
■ 52%from renewable sources by 2027
■ 60%from renewable sources by 2030
■ 100%GHG free electricity by 2045
While a high-level analysis of all CCA governance options are evaluated here, the Study's base-line calculations assume the Cities will proceed with a VSME Partner CCA operating as a standalone entity. As described in further detail in the Governance section of this report, this option is commonly called the Enterprise CCA business model.The Study also assumes that the VSME Partner CCA would purchase power supply options in compliance with the cities' CAP measure to achieve 90-100% renewable energy(or GHG free energy) by 2030.This level of renewable energy will exceed SB 100's 2030 targets of 60% renewable.

The VSME Partner CCA will also meet SB 350 requirements requiring 65%of renewable energy be met by long-term (10 or more years) power supply contracts and comply with all other related California Public Utility Commission (CPUC) regulations.The Study compares VSME Partner CCA rates to forecasted SDG&E rates. All rate discounts or bill savings referenced throughout the Study are the savings off the total SDG&E rate which includes energy supply,transmission, distribution, and other charges.

To provide information about cost differences among renewable resource portfolios, this Study analyzes three power supply scenarios detailed in Table 1-2 for the VSME Partner CCA option. Additional portfolios are specifically analyzed for individual city CCA feasibility.

TABLE 1-2.VSME PARTNER CCA RESOURCE PORTFOLIOS
%Renewable'at %Renewable
Launch(2023) in 2030
Scenario 1:60%Renewable(RPS Compliant)Portfolio 41% 60% Scenario 2:90%Renewable by 2030(Base Case) Portfolio 75% 90% Scenario 3:100%Renewable Portfolio 100% 100%
'Renewable includes only RPS eligible resources. For this study,all eligible renewable resources are also greenhouse gas(GHG) free. Where renewables don't meet the CPUC's GHG free definition,GHG free attributes are purchased through a$/MWh adder.

It is assumed throughout this Study that Scenario 2 is the "base case". Scenario 2 is also consistent with the City of Vista's 90% renewable by 2030 CAP goal. Scenario 3 would meet or exceed CAP goals for both San Marcos and Escondido. The results later show that portfolio choice between 90% and 100% renewable does not significantly impact the financial feasibility.

1.4 KEY FINDINGS
The Study results show that a VSME Partner CCA is financially feasible and can provide the following benefits:
■ Each VSME City could establish its own technically and financially sound CCA program and have local control of its own power supply. Each VSME City's respective CAP goal for GHG free or renewable power supply can be met under current market conditions while providing an estimated 2% rate discount when compared with SDG&E bundled rates.
■ Establishing a VSME Partner CCA reduces start-up costs compared with each VSME City establishing its own program and provide economy of scale savings. CCA start-up costs are estimated at$600,000 for each program.Additionally,the VSME Partner CCA will need roughly$18M in cash working capital, preparedbyEES CONSULTING 6
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study collateral, and start-up costs. Most of this is assumed to be financed externally. Both the initial start- up costs and cash working capital loans are forecasted to be fully repaid within the first five years of the VSME Partner CCA operations.
■ Under Scenarios 2 and 3, which are consistent with the VSME City CAP goals„ CCA customer bills are predicted to be 2% lower than forecasted SDG&E total bills for the first 5-years of CCA operation. ■ Under a VSME Partner CCA Program, electricity cost savings are estimated at $9.3 million per year over the next ten years for residents and businesses located within the Cities. ■ In order to assess the risks associated with operating a CCA,the Study analyzed CCA rate results under scenarios with high and low participation rates, high and low market power supply costs, and high and low SDG&E departing load charges (Power Charge Indifference Adjustment, PCIA). The findings identify key risks with regard to stranded cost recovery and power supply costs. The Study's section on Risks and Sensitivity Analysis describes the magnitude of those risks and measures for mitigating those risks.There are some, scenarios where the CCA costs exceed the headroom available between SDG&E generation rates and the exit fees charged by SDG&E to CCA customers. ■ The VSME Partner CCA will have a 10-year average annual surplus revenue stream of $15.5 million ($1.6 M/year). After financial reserves are collected, $14 million of this revenue stream can be used for customer-related programs such as:
• Energy efficiency programs.
• Local renewable energy resource programs, such as renewable energy generation and net metering.
• Rate savings are estimated at 2%of total electric bills, or 4.5%savings off generation rates. • The VSME Partner CCA could trade off energy program funding for rate savings or vice versa. ■ The Study uses an economic input/output model (IMPLAN)to estimate the economic impacts of CCA- related rate savings. The rate savings to customers under the VSME Partner CCA would additionally result in local economic development benefits, such as 113 new jobs and a total of $9.3 million in additional annual economic output.
■ If the VSME Partner CCA would have full control over its power supply purchases and could create a power supply mix that meets each of the cities CAP goals. The cost for power supply can be allocated to each city/rate product to recover costs fairly and equitably.

Table 1-3 shows Key Operating Figures for a VSME Partner CCA and the three individual Enterprise CCAs (each VSME City establishes its own program).
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study TABLE 1-3.VSME PARTNER CCA KEY OPERATING FIGURES
EscondidoVSME Partner City of Vista City of San Marcos CCA:90% Enterprise CCA: Enterprise CCA: City of Power Supply Portfolio Renewable •0 00 PortfolioScenario: Portfolio Portfolio Portfolio Renewable 2024 Operating Budget,$million $105 $31 $31 $46 2024 Revenues,$million $118 $32 $32 $50 2024 Load Served,GWh 1,527 484 431 666 Startup Loan (Including Pre-Startup
Costs and Working Capital,
Collateral),$million $18 $9 $9 $9
Startup Loan and repayment,years 5 5 5 5 Average Rate Discount,% 2.1% 2.0% 2.0% 2.0%

1.5 GOVERNANCE
The following portion of the executive summary is an introduction to the governance component of the Business Plan focusing on governance options.

If the cities choose to implement a CCA, they each must select an appropriate governance structure.This Study evaluated the following four governance options:
■ Enterprise CCA—Each of the VSME Cities operates its own CCA as a city department. Under this option there could be multiple organizational structures. For example, the enterprise CCAs could join together or with other individual CCAs under a JPA for sharing certain CCA operating costs and services.Administration costs are shared but power supply mix, rates,and potentially other programs are unique to each member CCA.
■ Partner Joint Powers Authority (JPA) CCA — The VSME Cities partner together or with other public agencies to form a single CCA governed under a JPA. Additional potential partners may include the City of Oceanside, Unincorporated County of San Diego, City of Santee, or others. As of this writing, none of the cities have committed to a partner, or have submitted an Implementation Plan to the CPUC; however, the named potential partners are all jurisdictions who have analyzed CCA through their own feasibility studies.
■ Joining Existing JPA in or outside SDG&E Service Area • San Diego Community Power—JPA consisting of the Cities of San Diego, Encinitas,Chula Vista, La Mesa, and Imperial Beach. This program is scheduled to launch in 2021 and will be the largest CCA in the SDG&E service area.
• Clean Energy Alliance—JPA consisting of the Cities of Carlsbad, Del Mar, and Solana Beach.

This new CCA will launch in 2021 and will include customers currently served by Solana Energy Alliance (SEA) a currently operating CCA in San Diego County. • CCA outside SDG&E Service Area—Other potential partners include jurisdictions in other IOU service areas. Central Coast Community Energy will be the first CCA to serve customers across 2 IOU service areas in 2021. Other operating JPAs may be interests in expanding to the SDG&E service area as well including the newly formed Orange County Power Authority.

A summary of key findings for each governance option is provided in Table 1-4. If the cities were to join an existing JPA, there will likely be a cost to join. The specific costs would be unique for each situation and are not provided below.
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study TABLE 1-4.GOVERNANCE OPTIONS SUMMARY
Enterprise CCA Three City JPA CCA
Pre-Launch Costs $600,000 each City <=$600,000 Total Start-Up Costs,Working Capital, and Collateral Escondido:$9 million $18 million (Financed) San Marcos:$9 million
Vista:$9 million
Estimated Bundled Rate Discount 2% At least 2% Probable Launch Date 2023 2023
Power Supply Cost Allocation and Program Individual Shared or Individual Customization
The Pre-launch Costs estimated at $607,000 million are detailed in Table 1-5 for a launch date of April 2023. These pre-launch costs for start-up are the minimum funds needed to launch a CCA program. These costs assume deferred consultant costs until launch and member city staff support rather than hiring program staff. CCAs that hire program staff immediately typically spend between $1.5 and $2.5 million in the year prior to launch.

TABLE 1-5. START-UP COST ESTIMATES
CPUC Bond $147,000
SDG&E Fees $10,000
Staffing $150,000
Consultants $300,000
Total $607,000
Enterprise CCA— A city-only Enterprise CCA retains the greatest amount of local control for programs, organization, and power supply. Surplus revenues above what is needed to run the CCA program remain under the cities' direct control. Power supply choice, rate discounts, customer program designs, marketing, and outreach are customized to the Cities' needs.The Enterprise CCA option is well suited for jurisdictions that are large enough to operate individually and may not find partners with similar goals and demographics. The City of San Jose, for instance, set up an Enterprise CCA that is functioning smoothly. Various mechanisms are available to shield the general fund from liability associated with an Enterprise CCA, including fund segregation, contractual protections, and insurance, which can be addressed in more detail by the Cities' Counsel and staff. This option also requires the Cities to secure or provide the $600,000 in pre-launch funding. .A CCA's working capital is typically financed externally, and options for financing the pre-launch costs are also available.

Once an Enterprise CCA is formed, it could then partner with other cities to form a JPA to share overhead costs (Enterprise JPA). Under this type of JPA, each member is its own CCA and chooses its own power supply portfolio, retail rate design, customer program development, CCA branding, and CCA marketing and outreach.Some administration costs can be shared in this model,such as power supply procurement, scheduling and dispatch, data management, integrated resource planning, regulatory services, and customer programs development and implementation. The Enterprise JPA model is made up of individual CCAs;therefore,contracts for the services just described are entered into by each CCA either directly with each service provider or through the JPA. For example, a three-member JPA would have a single contract manager administering three separate power contracts—one for each CCA—as opposed to three preparedbyEES CONSULTING 9
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study individual contract managers each administering a single contract. This structure allows for the sharing of some overheads.

VSME Partner JPA CCA—The cities could form a CCA with other jurisdictions under a JPA. This would include jurisdictions in the region that do not want to pursue their own CCA or join the other existing CCAs. Under this option,the governing body of each member would pass an ordinance to approve joining a VSME Partner-developed JPA CCA. The JPA operates as its own entity and typically is governed by a Board consisting of one elected official from each member jurisdiction. Voting requirements would be documented in the JPA agreement. Under a VSME Partner JPA, the CCA would have a larger customer base, and could possibly offer higher rate discounts compared with individual CCAs for each city. The start-up costs would typically be shared among the JPA members and each member would pay a prorated portion of the startup costs. Under this scenario, the VSME Partner JPA would need to secure the start- up funding. The working capital financing would be shared by all members. The power supply mix for a VSME Partner JPA would be determined by the Board of Directors and the default power supply option for each VSME City could be selected independently to meet individual VSME City CAP goals.

San Diego Community Power(SDCP)—As noted above,SDCP currently consists of the cities of San Diego, Encinitas, Chula Vista, La Mesa, and Imperial Beach. As the largest SDG&E CCA, SDCP may provide economies of scale savings resulting in additional rate savings depending on how SDCP sets its internal goals. These scale savings would occur through overhead costs and potentially through power supply contracts.

While participation in SDCP may have additional economies of scale benefits, there would be a trade-off in the level of control for each city. Careful consideration would need to be given to the JPA agreement regarding the guarantee of new program funding for each JPA member. Other considerations should also be analyzed in terms of jurisdictional voting, potential weighted voting, and overall program goals.

Joining an existing JPA will likely require the cities to produce some upfront funding. The amount and terms of this funding would need to be acquired through formal request for proposal or information process.

Clean Energy Alliance (CEA) — Similarly the cities could join CEA—an existing JPA—and launch in either 2022 or 2023. CEA is a much smaller CCA compared with SDCP, but it may still offer economies of scale savings. As with SDCP, the VSME Cities should carefully consider joining costs, voting structure, and program goals to determine if CEA is a good fit.

Joining Existing JPA in or outside SDG&E Service Area—Finally,the VSME Cities could join an existing CCA operating in either PG&E or SCE service area. In order to gauge potential partnerships, the Cities could issue a request for information to various operating CCAs to determine the costs and structure of a potential agreement. There are benefits of joining a well-established CCA since operating and rate stabilization reserves are likely to have been established. Whereas, joining a new CCA (<1 year in operation) would carry similar risks as starting a new CCA.

1.6 RISKS
While the Study shows that forming a CCA is technically feasible under a wide range of scenarios, doing so is not without risk.The feasibility of a VSME Partner CCA(maintaining customer rates competitive with SDG&E and maintaining positive net revenues), primarily depends on power supply costs, which make up preparedbyEES CONSULTING 10
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study over 90%of the overall CCA operating budget. Other factors impacting the financial feasibility of the CCA include: costs SDG&E directly passes through to all customers (including the Power Charge Indifference Adjustment or PCIA),market supply of renewable power,availability and cost of financing CCA operations, and legislative and regulatory actions.

To assess the magnitude of risk imposed on a potential CCA program by these factors, the Study includes a Sensitivity and Risk Analysis section. This section establishes a wide range of high and low scenarios of prices for CCA-procured market power, SDG&E's forecasted customer rates, CCA financing costs, CCA's customer participation rates, and the level of SDG&E's PCIA.

The results of the Sensitivity and Risk Analysis indicate under what scenarios the CCA's rates may exceed SDG&E's customer rates, and also suggest actions the CCA can take to manage these risks. The risk mitigation actions consist of standard industry best practices and strategies employed by other established CCAs—including conservative power procurement strategies, utilization of market risk management policies, development of a cash reserve fund from annual net revenues, and engagement with State regulatory and legislative issues.

1.7 CONCLUSIONS
The Study results suggest that CCA programs are technically and financially feasible for the cities whether each VSME City forms its own program or they join together to form a VSME Partner CCA. These findings are based on the mentioned governance options and under current market conditions. The economies of scale for all options are sufficient for stable CCA operation under a wide range of financial assumptions and sensitivities.

Suggested next steps for the VSME Partners include completing an internal review of this Study, receiving the Study results through City Council action, and determining whether to move forward with further evaluation of a CCA. If the policy decision is to proceed with establishing a CCA,the VSME Partners should decide which governance option they prefer, begin pre-startup operations required to launch the CCA, and file an Implementation Plan with the CPUC on a timely basis. preparedbyEES CONSULTING 11
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study 2 Introduction
Since the State's first CCA program was launched in Marin County in 2010, many communities across the state have benefitted from reduced electricity costs and community-specific activities and programs associated with CCA operations. To date, 23 CCAs comprising multiple counties, cities, and towns are operating with more territory expansions schedule for 2021 and 2022.

To better understand the benefits and risks associated with CCA programs, the cities of Escondido, San Marcos, and Vista (VSME Partners) selected EES Consulting (EES) to prepare this Study that assesses the technical feasibility of CCA operations as a mechanism to provide choice to customers, lower their electricity rates,and contribute toward achieving the VSME Cities'various Climate Action Plan (CAP)goals for greenhouse gas (GHG) reduction and renewable energy portfolios. This Study examines the technical and financial viability of a CCA program that serves customers in the VSME Partner cities. Upon the finding that a CCA business model is technically feasible, a business plan for VSME Partner CCA is to be developed to assess risks,governance options, and environmental and macroeconomic impacts.

2.1 HISTORY OF CCA IN CALIFORNIA
AB 117 was enacted in 2002 and became law the same year.This legislation enables jurisdictions, such as cities and counties,to implement electric power supply programs that offer electric consumer choice. The entities given this authority are known as Community Choice Aggregators (CCAs). The programs implemented by these CCAs were designed to be opt-out programs where customers are automatically enrolled after notification but can opt-out if desired. Marin Clean Energy (MCE) implemented the first CCA program in 2010.

As the first CCA program to serve customers in California, MCE has worked to establish CCA-common practices by offering 50%to 100% renewable energy choices to its customers. MCE has contracted with a variety of power suppliers of new renewable projects including landfill gas and several local solar power projects. MCE incentivized local project development through both its feed-in-tariff rates and direct investment.

2.2 CCA PROGRAMS AND STATUS OF PENDING CCAS
Table 2-1 summarizes the current status of CCAs operating in California as well as those jurisdictions considering CCA.
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study TABLE 2-1. CCA PROGRAMS ACROSS THE STATE
CCA/Entity Status
PG&E Service Territory
Marin Clean Energy Marin and Napa Counties and cities within, Launched 2010 cities in Solano and Contra Costa Counties
Sonoma Clean Power Sonoma and Mendocino Counties and cities Launched 2014 within
Peninsula Clean Energy San Mateo County and cities within Launched 2016 Silicon Valley Clean Energy Santa Clara County and cities within (except Launched 2017 San Jose)
Pioneer Clean Energy Placer County and cities within Launched 2018 Central Coast Community Energy Monterey,Santa Cruz,San Benito, and Launched 2018 Santa Barbara Counties and cities within,
cities of San Luis Obispo and Morro Bay
East Bay Community Energy Alameda County and cities within Launched 2018 Valley Clean Energy Yolo County,Cities of Davis and Woodland Launched 2018 Redwood Coast Energy Authority Humboldt County and cities within Launched 2017 San Francisco Clean Energy City/County of San Francisco(SF Public Launched 2017 Utilities Commission)
San Jose Clean Energy City of San Jose Launched 2018 King City Community Power City of King City Launched 2018 Butte Choice Energy Authority Butte County,Chico, Oroville 2023 Launch Tuolumne County, Calaveras County,City of Separate Feasibility Stockton Studies in Process
SCE Service Territory
Clean Power Alliance Los Angeles and Ventura Counties and cities Launched 2018 within
Lancaster Clean Energy City of Lancaster, Member of California Launched 2015 Choice Energy Authority(CCEA)
Apple Valley Clean Energy City of Apple Valley, Member of CCEA Launched 2017 Pico Rivera Innovative Municipal City of Pico Rivera, Member of CCEA Launched 2017 Energy
San Jacinto Power City of San Jacinto, Member of CCEA Launched 2018 Rancho Mirage Energy Authority City of Rancho Mirage, Member of CCEA Launched 2018 preparedbyEES CONSULTING 13
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study Desert Community Energy Coachella Valley Association of Launched 2020 Governments cities
Western Community Energy Western Riverside Council of Governments Launched 2020 cities
BProud Baldwin Park(CCEA) Launched 2020 Pomona Choice Energy Pomona (CCEA) Launched 2020 Orange County Power Authority Cities of Irvine, Huntington Beach, Fullerton, Launch in 2022 Buena Vista
,cities of Santa Barbara,Goleta,Carpinteria, Feasibility Study Riverside County, Laguna Beach, Laguna Completed
Woods, Hanford
Cities of Long Beach„ Commerce, Mission Feasibility Studies in Viejo,Stockton Process
SDG&E Service Territory
Solana Energy Alliance Solana Beach Launched 2018 San Diego Community Power San Diego, Encinitas,Chula Vista, La Mesa, Launch in 2021 Imperial Beach
Clean Energy Alliance Carlsbad, Del Mar,Solana Beach Launch in 2021 County of San Diego Feasibility and Business
Plan completed
Cities of Oceanside and Santee Separate Feasibility studies completed
Additional potential CCA feasibility studies underway for Cities of Long Beach,Hermosa Beach,Commerce, El Monte, Rialto, Santa Paula, and Fresno.s

2.3 CCA AND CLIMATE ACTION PLANS
A number of the VSME Partner cities' CAP GHG reduction strategies and measures may be accomplished or supported through the implementation of a VSME Partner CCA.

A VSME Partner CCA can achieve the CAP measure of 90% renewable energy use by 2030 or better. In addition, a VSME Partner CCA can directly support CAP measures around clean energy implementation, in increasing solar photovoltaic installations on existing homes and the city facilities, and in increasing alternative powered water heaters in new residential construction. A VSME Partner CCA can provide both customer rate and direct incentives to encourage these actions. 5 https://cleanpowerexchange.org/california-community-choice/ preparedbyEES CONSULTING 14
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study Examples of customer rate and direct incentives that support other GHG reduction strategies related to clean energy include:
■ Supporting clean transportation strategies by providing a higher amount of GHG free energy for electric vehicles in both the private sector and in city operations. ■ Encouraging more electric vehicle charging station installations and utilization. ■ Incentivizing agricultural equipment conversions to clean and efficient electricity use. ■ Prioritizing the purchase of local renewable generation such as waste-to-energy power production projects.

Most CCAs currently operating offer a rate discount compared with their incumbent IOU. Rate discounts range from 0.5%to 3%depending on a CCA's exit fee vintage, power supply product, and overhead costs.

Very small CCAs have a more difficult time offering high discounts due to relatively high administration costs. For a CCA the size of a VSME Partner CCA, rate discounts around 1-2% are typical depending on exit fee vintage.

2.3.1 Time-of-Use (TOU) Rates
SDG&E has begun to move all customers to default Time-of-Use(TOU)rates,i.e.,rates reflecting the actual temporal cost of procuring power supply by charging customers based on the hour of customer energy use. As SDG&E moves toward TOU rates for all accounts, information on SDG&E rate structures should be examined to help the CCAs operating in SDG&E service area to set rates while affording discounts to CCA customers. The rates used in this Study reflect SDG&E's forecasted average retail rate by customer class including the impacts of moving to TOU rate design. These TOU rates are expected to help incentivize the installation of solar plus battery systems by improving on-peak period economics for these resources.

2.3.2 CCA Regulations
The California Public Utilities Commission (CPUC) has jurisdiction over IOU rates. Additionally, the CPUC has jurisdiction over certain investor-owned and CCA operational processes such as the state-wide integrated resource planning(IRP) process, power system reliability,and renewable energy requirements.

A VSME Partner CCA would be required to meet all CPUC requirements for Load Serving Entities (i.e., an entity that procures wholesale power and establishes retail rates on behalf of retail customers).

Historically,the CPUC has changed regulations affecting the exit fee CCAs pay to the IOUs. This exit fee is known as the Power Charge Indifference Adjustment (PCIA). The PCIA is discussed in more detail later in this Study; however, recent changes in the PCIA resulted in a material one-time increase to the PCIA.This increase so far has been managed by operating CCAs as most have accumulated reserves from which to mitigate rate increases.

Similarly, recent legislative changes have impacted how CCAs operate including increasing the Direct Access cap (DA—supply of retail power to customers by third parties); integrated resource planning; and net energy metering.The result of these changes is that CCAs must meet planning requirements including the purchase of long-term renewable energy contracts to meet a share of renewable energy requirements (10 years or longer), energy storage investments, and resource adequacy(RA) requirements.

If the VSME Partners move forward with CCA implementation, they will need to participate in and keep track of a number of regulatory and legislative processes, including:
preparedbyEES CONSULTING 15
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study

1. Resource Adequacy (RA, or grid reliability) The goal of current rulemaking is for RA resources to become widely available to market purchasers and to ensure grid reliability throughout the state.

An RA proceeding for SCE and PG&E as central procurement entities is underway to set methodologies for RA obtained on behalf of other load serving entities, which would apply to SDG&E. Once a proposed decision or final decision is made, the methodology can be used to update CCA financial analyses.

2. As wildfire mitigation efforts increase costs to electric ratepayers through the distribution charge, it will become more nuanced for CCAs to explain rate discounts off the bundled rate even without changes in power supply costs because higher distribution rates (paid to IOUs) reduce the overall IOU rate discount amount offered by CCAs. CCAs have evolved from marketing a discount off the total electric bill to a discount off just the generation portion of the bill.

3. The CPUC may have future jurisdiction over CCAs for electric vehicle infrastructure requirements and the implementation of other Distributed Energy Resource projects.

Generally, there will likely continue to be legislation and regulatory changes increasing the amount of oversight the CPUC has over CCAs. CPUC oversight tends to lessen local control for a CCA. CCAs can help to mitigate these changes by being involved in the proceedings and legislative process through lobbyists and state-wide CCA organizations such as California Community Choice Association (CaICCA). Mitigation measures are further discussed in the Risks section of the Study. Overall, it is unlikely that future changes at the legislative level or at the CPUC would result in failure of CCAs.

2.4 STUDY METHODOLOGY
This Study evaluates the estimated costs and resulting rates of operating a CCA for the residents and businesses within the cities and compares these rates to an SDG&E rate forecast for the years 2023 through 2032. This pro forma financial analysis models the following cost components:
■ Power Supply Costs:
• Wholesale purchases
• Renewable purchases
• Procurement of resource adequacy (RA) and capacity (System, Local and Flexible capacity products)
• Other power supply and charges
■ Non-Power Supply Costs:
• Start-up costs
• CCA staffing and administration costs
• Consulting support
• SDG&E billing and regulatory charges
• Financing costs
■ Pass-Through Charges from SDG&E:
• Transmission and distribution charges
• Power Charge Indifference Adjustment (PCIA)
The information above is used to determine the projected retail rates for a VSME Partner CCA.The VSME Partner CCA rates are then compared to the SDG&E projected rates for the CCA service area. After these rate comparisons are made, economic development and GHG emission comparisons are made. preparedbyEES CONSULTING 16
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study Operational and governance options are discussed, including a sensitivity analysis of the key variables contained in the Study.
preparedbyEES CONSULTING 17
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study 3 Load Requirements
One indicator of the viability of a CCA for the unincorporated county is the number of customers that participate in the CCA as well as the quantity and timing of energy these customers consume. This section of the Study provides an overview of these projected values and the methodology used to estimate them.

3.1 HISTORICAL CONSUMPTION
SDG&E provided historical data on energy use (kWh) for each of the customers receiving power supply services from SDG&E(bundled customers)for 2017 and 2018 calendar years. Bundled customers currently purchase the electric power, transmission, and distribution from SDG&E. Direct Access (DA) customers buy only the transmission and distribution service from SDG&E and purchase power from an independent and competitive Electric Service Provider (ESP). In California, eligibility for DA enrollment is currently limited to non-residential customers and subject to a maximum allowable annual limit for new enrollment measured in gigawatt-hours of new load and managed through an annual lottery.6 Customers classified as taking service under DA arrangements are not included in this Study, as it is assumed that these customers would remain with their current Energy Service Provider(ESP).' Once operating,the CCA may decide to provide service options to DA customers with expired contracts, but this Study's approach offers the most conservative analysis of feasibility.

EES aggregated this data by rate class in each month for bundled (full service)customers. In total, bundled residents and businesses within the VSME Partner cities purchased 1,281 GWh of electricity in 2018 from SDG&E. These 2018 data were forecast assuming that load impacts of COVID-19 would not persist past 2022. On average, COVID-19 has resulted in increased residential usage and decreased industrial and commercial usage. However, by the time the CCA begins service, these impacts will likely be resolved.

Figures 3-1 and 3-2 summarize energy consumption and number of accounts for bundled customers projected over the study period. These projections are before any participation rates are applied. The load data was provided by SDG&E for each VSME City jurisdiction. The forecast assumes no significant annexations over the study period.
6 S.B.286(CA, 2015-2016 Reg.Sess.)
'CPUC rulemaking to date has not addressed how vintage would be handled to DA customers that opt to switch to receive electric power from a CCA rather than their ESP. The most recent ruling on PCIA vintaging was issued on 10/5/2016: http://docs.cpuc.ca.gov/Published Docs/Published/G000/M167/K744/167744142.PDF. 18 06/28/2022 PH 1 34 of 145

CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study FIGURE 3-1. FORECAST CCA SERVICE AREA LOAD
1,800,000
1,600,000 — —
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 ■ Residential ■ Small Commercial ■ Medium Commercial Agricultural ■ Lighting FIGURE 3-2. 2023 FORECAST SERVICE ACCOUNTS
70,000
60,000
50,000
+:
c
° 40,000
V
Q
u 30,000
v
20,000
10,000
0 Escondido San Marcos Vista
■Residential ■Commercial/Industrial ■Agriculture Lighting Monthly load is shown in Figure 3-3. The timing of energy usage is important for estimating power supply costs to the CCA. Residential customers have the largest increase in summer load requirements due to space conditioning.
preparedbyEES CONSULTING 19
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study FIGURE 3-3. MONTHLY AGGREGATED LOAD
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0 ,a�JatJJ�y�
Q P qeQ'`
■Commercial/Industrial ■Residential ■Agriculture Lighting

3.2 CCA PARTICIPATION RATES
Before customers are served by a CCA, they are required to be provided two notices with their monthly energy bills 60 and 30 days before the CCA's launch, and another two notices 30 and 60 days after the CCA launches. These notices provide information needed to understand the terms and conditions of service from the CCA and explain how customers can opt-out, if desired. Notices typically provide a rate comparison between the CCA and the incumbent IOU. All customers that do not follow the opt-out process specified in the customer notices prior to launch are automatically enrolled into the CCA.$ As such,a CCA would provide a minimum of four opt-out notices to customers to notify and educate them about the CCA's product offerings and their option to opt-out. Customers automatically enrolled would continue to have their electric meters read and billed for electric service by SDG&E. The CCA billing would also continue to be processed by SDG&E, showing separate charges for power supply procured by the CCA, all other charges related to the delivery of the electricity by SDG&E, and other utility charges that would continue to be assessed.
s Typically,this doesn't apply to DA customers as the CCA would assume that these customers are not interested in being served by the CCA unless otherwise confirmed prior to launching service. preparedbyEES CONSULTING 20
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study This Study anticipates an overall customer participation rate of 90% for the Commercial and Industrial accounts.9 For residential accounts, it is assumed that approximately 95% of customers would remain with the VSME Partner CCA. For agricultural and lighting accounts, the participation rate is 95%. These participation assumptions are conservative based on participation rates in other CCAs; however, this Study's sensitivity analysis tested CCA feasibility under higher opt-out scenarios.

3.3 CONCEPTUAL CCA LAUNCH
In 2015 CPUC issued Resolution 4723, which requires that new CCAs file their Implementation Plan by January 1 of a year, resulting in an earliest possible launch date of January 1 of the subsequent year for the VSME Partner CCA. This twelve-month delay allows for the proper planning and procurement of the CCA's power supply requirements. Under this requirement,the earliest possible launch date for a VSME Partner CCA is early 2023. As requested by the Partners, this Study assumes that service would be offered to all customers by April 2023 as outlined in Table 3-1. An April launch is assumed to maximize net revenue in a CCA's first year of operation.

TABLE 3-1. CCA ANNUALIZED CUSTOMERS, LOADS,AND REVENUES Estimated
Estimated Estimated Peak Estimated
CCA Assumed Customer TotalLoad Demand Operating Members Start Eligibility Accounts (GWh) (MW) Revenues JPA:All April 2023 All Customers 128,153 1,581 464 $117.0 Three Cities
Escondido April 2023 All Customers 55,358 666 205 $49.5 San Marco April 2023 All Customers 35,447 431 122 $31.7 Vista April 2023 All Customers 37,349 484 137 $35.8

3.4 FORECAST CONSUMPTION AND CUSTOMERS
The number of customers enrolled in the CCA and the retail energy they consume are assumed to increase at 0.62% per year. This forecast is selected as the midpoint based on the California Energy Commission's (CEC) mid-demand baseline forecasts for SDG&E service territory.10 Peak demands are calculated using hourly consumption data provided by SDG&E. The forecast of load served by a CCA over the next five years is shown in Figure 3-4. The CCA forecast of GWh sales in Figure 3-4 reflects the single-phase roll- out and customer enrollment and participation schedule discussed previously. Annual wholesale energy requirements are also shown below in Table 3-2.
9 Opt-out rates were increased to account for a 16% increase in the amount of non-residential load that is allowed to move to direct access schedules. California Senate Bill 237: September 20, 2018. https://Ieginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=20172018OSB237 10 http://www.energy.ca.gov/2017_energypolicy/documents/ preparedbyEES CONSULTING 21
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study FIGURE 3-4. PROJECTED LOAD BY SECTOR, 3-CITY JPA
1,800
1,600
1,400
1,200
1,000
l7 800
600
400
200
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 ■ Residential ■ Small Commercial ■ Medium Commercial Agricultural ■ Lighting
TABLE 3-2. 3 VSME CCA JPA PROJECTED ANNUAL ENERGY REQUIREMENTS, GWH Year Total Wholesale Load Total Retail Sales Losses 2023 1,159 1,108 51
2024 1,527 1,460 67
2025 1,536 1,469 68
2026 1,546 11478 68
2027 1,556 11487 68
2028 1,565 11496 69
2029 1,575 1,506 69
2030 1,585 1,515 1 70
2031 1,594 1,524 70
2032 1,604 1,534 71

3.5 LOAD SUMMARY
The load in the three cities is significant and nearly the same size or larger than several existing CCAs including several JPAs. The VSME Partner CCA also has a large number of customers that can support the administrative costs for CCA operation. Economies of scale efficiencies for administration have been observed in the range of 75,000 to 100,000 accounts. The VSME Partner CCA service territory will have an estimated 128,153 accounts in 2023 and increase to an estimated 135,000 accounts by 2032. preparedbyEES CONSULTING 22
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study 4Power Supply Strategy and Costs
This section of the Study discusses resource strategy, projected power supply costs, and resource portfolios based on the VSME Partner CCA's projected loads.

Long-term resource planning involves load forecasting and supply planning on a 10- to 20-year time horizon. Prior to launch,the CCA planners would develop integrated resource plans that meet their supply objectives and balance cost, risk, and environmental considerations. Integrated resource planning also considers demand side energy efficiency,demand response programs,and non-renewable supply options.

The CCA would require staff or a consultant to oversee planning even if the day-to-day supply operations are contracted to third parties. This staff or consultant would ensure that local preferences regarding the future composition of supply and demand side resources are planned for, developed, and implemented.

4.1 RESOURCE STRATEGY
This Study assumes that the VSME Partner CCA would be interested in minimizing overall community energy bills, stimulating local economic development, achieving CAP targets to reduce GHG emissions, and meeting or exceeding the State's renewable energy requirements. A VSME Partner CCA can likely achieve the CAP renewable energy target in 2030 by taking advantage of relatively low wholesale market prices and abundant GHG-free energy. As discussed in greater detail below, the CCA's electric portfolio would be guided by the CCA's policymakers with input from its scheduling coordinator and other power supply experts. The scheduling coordinator would obtain enough resources each hour to serve all the CCA customer loads. The CCA policymakers would guide the power supply acquisition philosophy to achieve the CCA's policy objectives.

For the purposes of this study,it is assumed that the CCA would obtain power supply supporting the needs identified in the CPUC's state-wide IRP process. Those resources rely heavily on solar plus storage technologies. Background on the statewide IRP planning process is provided below.

4.1.1 Statewide IRP Results
All California Load Serving Entities (LSEs) submitted their 2020 Integrated Resource Plans (IRP) to the CA Public Utility Commission on September 1, 2020.These plans are mandated by the CPUC and reflect, at a high level,the anticipated growth of load and type of resources that will be utilized to meet it.The results of the statewide planning effort will likely not be available until early 2021; however,there is a significant amount of information already known about the resource plans filed by the LSEs. Specifically, the CPUC has established a state-wide reference system portfolio that meets the 38 million metric tons of Carbon Dioxide equivalent (MMTCOze) greenhouse gas (GHG) emissions benchmark by the year 2030. This portfolio shows reductions in conventional generation capacity and additions of renewable energy capacity. Figure 4-1 summarizes the changes in capacity for the statewide plan and is indicative of the expected statewide growth of renewables capacity by 2030. 23 06/28/2022 PH 1 39 of 145

CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study FIGURE 4-1. 38 MMT REFERENCE SYSTEM PLAN CHANGE IN CAPACITY BY 2030" 25,000
20,000
15,000 ■Natural Gas
■Coal
10,000 Nuclear
■Demand Response
5,000 ==MEN
■Customer PV
3 tin
v ■Solar
■Wind
(5,000) Battery Storage
(10,000)
(15,000)
According to the CPUC, a significant portion of new capacity additions will be solar and wind projects.The specific new solar projects evaluated in the statewide portfolio are located in the Greater Imperial area, Central Valley, Tehachapi, and in the southern California desert. The portfolio also accounts for imports from Arizona and New Mexico. The projected costs for these resources are used as a basis for the CCA power cost estimate.

4.1.2 CCA Power Portfolios
As noted early in this study, 3 power portfolios are analyzed for the VSME Partner CCA Option within the feasibility analysis:
■ Scenario 1 RPS Compliant Portfolio:Achieve between 48%and 59%renewables in 2023 through 2029, and 60% renewables beginning in 2030.
■ Scenario 2 90% Renewable by 2030 Portfolio (Base Case): 75% of retail loads are served with RPS- qualifying renewable resources beginning in 2023 increasing in share to 90% by 2030. ■ Scenario 3100%Renewables Portfolio: 100%of retail loads are served with RPS-qualifying renewable resources in all years.
si California Public Utilities Commission."2019-2020 IRP Events and Materials".Retrieved from https://www.cpuc.ca.gov/General.aspx?id=6442459770 >.
prepared by E E S CONSULTING 24
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study Additional portfolios are analyzed for VSME City-only options. Those portfolios meet the CAP goals for each respective VSME City.

It should be noted that while CCA policymakers may opt for other resource portfolios, those selected above should give the VSME Partners a sound basis for evaluating other resource portfolio options. The renewable energy targets of the three portfolios included in the power cost model are shown below in Figure 4-2.All power supply portfolios meet the RPS requirement(SB 100 and SB 350).

FIGURE 4-2. PORTFOLIO RENEWABLE ENERGY SHARE12
120%
100%
80%
60%
40%
20%
0%
2023 2024 2025 2026 2027 2028 2029 2030 2031 90%Renewable by 2030 —100%Renewable RPS Portfolio SDG&E's resource mix is compared with the portfolios analyzed to determine how competitive the CCA's resource offerings could be. SDG&E's current resource mix exceeds the current RPS requirements (43% renewable). In its 2020 IRP, SDG&E states that it plans to continue to exceed RPS requirements through 2030.13 Figure 4-3 compares the 3 CCA portfolios to SDG&E's 2018 power content label.14 SDG&E's renewable resources consist of a near 50/50 split between wind and solar. " http://docs.cpuc.ca.gov/Published Docs/Efile/G000/M158/K845/158845742.PDF 13 SDG&E 2020 Integrated Resource Plan. September 1, 2020. Available at:
https://www.sdge.com/sites/default/files/regu latory/Appendix%202_SDG E%202020%201 ndividual%201ntegrated %20Resource%20PIan_FINAL.pdf
14 SDG&E 2018 Power Content Label July 2019. Available at: https://www.energy.ca.gov/sites/default/files/2020- 01/2018 PCL San Diego Gas and Electric.pdf
Note that SDG&E's 2020 power content label was not available at the time of this study. preparedbyEES CONSULTING 25
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study FIGURE 4-3. RENEWABLE SHARE COMPARISON IN 2023
120%
100%
80%
60%
40%
20%
0%
SDG&E RPS 90%Renewable in 100%Renewable
2030
■Current ■CCA Portfolio in 2023
SDG&E has several contracts set to retire in the next 5 years including over 700 MW of natural gas and 300 MW of renewables (primarily wind). At the same time,the launch of SDCP and Clean Energy Alliance will reduce SDG&E's retail load by approximately 60%by the end of 2023. Based on these large upcoming load departures, it is expected that SDG&E will continue to offer a base power supply mix that exceeds the state RPS.

4.2 PROJECTED POWER SUPPLY COSTS
This Study presents the costs of renewable and non-renewable generating resources as well as power purchase agreements based on current and forecasted wholesale market conditions, recently transacted power supply contracts, and a review of the applicable regulatory requirements. In summary, a VSME Partner CCA would need to procure market purchases, renewable purchases, ancillary services, resource adequacy, and power management/schedule coordinator services. The Study determines the base case assumption for each of these cost categories and establishes a high and low range for each,to be used for the risk analysis later in the Study.

4.2.1 Market Purchases
Market prices for Southern California (referred to as SP15 prices) were provided by EES's subscription to a market price forecasting service, S&P Global. Figure 4-4 shows forecast monthly Southern California wholesale electric market prices. The levelized value of market purchase prices over the 10-year Study period is$0.042/kWh ($2021)assuming a 4%discount rate. Figure 4-4 shows the clear seasonal variability in prices each year, as well as the overall trend in prices. prepared by E E S CONSULTING 26
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study FIGURE 4-4. FORECAST OF SOUTHERN CALIFORNIA WHOLESALE MARKET PRICES $100
$90
$80
$70
$60
$50
$40
$30
$20
$10
$0
L, L, L� L, L� L� L� L� L� L� L� L� L� L L� L L L L� 1 'L� L� '1� L� ,ti0 ,LO ,ti0 ,LO ,LO ,10 ,y0 ,LO ,ti0 ,LO ,LO ,LO ,LO ,LO ,10 ,LO ,LO ,LO ,ti0 ,LO ,ti0 ,LO ,LO ,LO O�
HLH LLH
Wholesale market power prices have been used to calculate balancing market purchases and sales.When the CCA's loads are greater than its resource capabilities, the CCA's scheduling coordinator would schedule balancing purchases. When the CCA's loads are less than its resource capabilities, the CCA's scheduling coordinator would transact balancing sales and the CCA would receive market sales revenue.

Balancing market purchases and sales can be transacted on a monthly, daily, and hourly basis, as needed.

4.2.2 Renewable Energy

4.2.2.7 Solar PV
Utility-scale solar PV technology prices have fallen between 66% and 85% between 2010 and 2019.15 Installation costs were approximately$4,700/kW in 2010 and are now about$1,000/kW. Capacity factors have also improved due to siting the resources in sunnier locations. California-specific solar PV capacity factors are around 24% compared to the global average of 18%. Arizona solar projects often have much lower prices and higher capacity factors.

Pricing estimates for solar power delivered to the San Diego region is summarized in Figure 4-5 by project capacity. As expected, solar project prices decrease as capacity increases. The chart shows that projects that are at least 10 MW in size could be cost competitive with solar prices from Arizona and New Mexico where contracts indicate pricing in the range of $20-$32/MWh. From a national perspective, Lazard indicates solar PV costs in the range of$31-$40/MWh.16
is https://www.irena.org/publications/2020/Jun/Renewable-Power-Costs-in-2019 i6 https://www.lazard.com/media/451086/lazards-levelized-cost-of-energy-version-130-vf.pdf prepared by E E S CONSULTING 27
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study FIGURE 4-5. SURVEY SOLAR PV PRICES IN CALIFORNIA, NEW RESOURCES 80 70
50 50 i ■ 1-10 Mwac
r
40 x ■ 10-50 MWa€
■ 50-100 MWa€
30 ❑ >100 MMc
20 10
0 Many developers are including storage options to pair with solar PV. Battery storage costs an additional $4-$12/MWh. These costs are comparable to current resource adequacy prices for capacity.

4.2.2.2 Wind
Figure 4-6 shows the estimated pricing range for each wind project capacity category. Small projects are not price competitive; however, larger utility scale projects are in the $30/MWh range. 2020 cost data from Lazard shows that wind costs are in the range of$23-$46/MWh in the U.S." These prices include high capacity factor wind in places like Wyoming. Capacity factors for local wind projects in California are typically much lower resulting in higher energy costs.
17 https://www.Iazard.com/perspective/levelized-cost-of-energy-and-levelized-cost-of-storage-2020/ preparedbyEES CONSULTING 28
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study FIGURE 4-6. SURVEY WIND PRICES IN CALIFORNIA, NEW RESOURCES 90 80
70 60
■ ■ 1-10 M W�
■ 10-50 MW
40 ■ 50-100 MW
30 ❑ >100 MW
20 10
0 4.2.2.3 Battery Storage
The CPUC and CAISO have both emphasized the importance of battery storage technologies in resource planning. The capacity values for wind and solar are small compared with baseload resources. As the penetration of these variable resources increases, battery storage is expected to offset some of the open capacity requirements. Short-term lithium-ion batteries are a widely available technology that is expected to grow at an exponential pace in California in the next 2 years. These storage resources are typically short-term resources providing 4-6 hours of energy daily. High on-peak pricing during evening hours create significant incentive for these short-term, lower cost resources. As mentioned above, short-term battery storage can add a 4-$12/MWh to solar or wind project costs. These resources provide very little energy (negative net energy), but they are needed to meet resource adequacy requirements under high renewable scenarios. Other storage options may become available to the CCA including pumped storage and long-term storage technologies.

4.2.3 Renewable Energy Credits (RECs)
In addition to direct purchases of renewable power, renewable energy credits (RECs) are an alternative for meeting RPS requirements. However, RECs are highly restricted and not always the best alternative.

California load serving entities (LSE)18 must purchase bundled energy and/or RECs that meet certain eligibility requirements across three Portfolio Content Categories(PCC). Each of the categories represents a different type of renewable product that can be used to meet up to a specific percentage of the total procurement obligation during a compliance period. The permitted percentage shares of each category 18 Load serving entities include entities that serve retail load, including IOUs, CCAs, and public utilities including municipal utilities.
preparedbyEES CONSULTING 29
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study type changes over time. The three PCCs, and the type of energy included in each, are be summarized as follows:
■ PCC1: Bundled renewable resources and RECs—either from resources located in California or out-of- state renewable resources that can meet strict scheduling requirements ensuring real-time delivery into California.
■ PCC2: Renewable resources that cannot be delivered into California on a real-time basis without some substitution from non-renewable resources19. This process of substitution is referred to as "firming and shaping" the energy.The firmed and shaped energy is delivered and then bundled with RECs. ■ PCC3: Unbundled RECs, which are sold separately from the electric energy.20 Under current guidelines,the quantity of RECs that can be procured through PCC2 and PCC3 is limited and decreases over time. SBX1 2 (April 2011) established a 33% RPS requirement for 2020 with certain procurement targets prior to 2020. SB 350 (October 2015) increased the RPS requirement to 50% by 2030. Finally, SB 100 increased RPS to 60% by 2030. The share of renewable power that can be sourced from PCC2 or PCC3 energy after 2020 is expected to be the same as the 2020 required share of total RPS procurement.21 All power supply portfolios are modeled to meet the relevant state mandates. All load serving entities face the same mandates and resource choices.

4.2.4 Ancillary Service Costs
The CCA would need to pay the California Independent System Operator (CAISO) for transmission congestion and ancillary services associated with its power supply purchases. Transmission congestion occurs when there is insufficient capacity to meet the demands of all transmission customers.Congestion is managed by the CAISO by charging congestion charges in the day-ahead and real-time markets. The Grid Management Charge (GMC) is the vehicle through which the CAISO recovers its administrative and capital costs from the entities that utilize the CAISO's services.

In addition, because generation is delivered as produced and, particularly with respect to renewables,can be intermittent,deliveries need to be firmed using ancillary services to meet the CCA's load requirements.

Ancillary services and products need to be purchased from the CAISO based on the CCA's total load 19 This may occur if a California entity purchases a contract for renewable power from an out of state resource.When that resource cannot fulfill the contract, due to wind or sun intermittency for example, the missing power is compensated with non-renewable resources.
20 For example, a small business with a solar panel has no RPS compliance obligation, so they use the power from the solar panel, but do not "retire" the REC generated by the solar panel.They can then sell the REC, even though they are not selling the energy associated with it.
21 California Public Utilities Commission Final Decision, 12/20/2016,accessed at:
http://docs.cpuc.ca.gov/Published Docs/Published/G000/M17l/K457/171457580.PDF,on 1/19/2017. 75%of the RPS procurement must be Bucket 1 resources and less than 10%of the RPS procurement can come from Bucket 3 resources.
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study requirement. Based on a survey of transmission congestion and ancillary service costs currently paid by CAISO participants, the VSME Partner CCA Base Case ancillary service costs are estimated to be approximately$4/MWh, escalating by 3%annually through 2032.

4.2.5 Resource Adequacy
All LSEs that are participants in the CAISO balancing area, including CCAs, are under the jurisdiction of the CPUC for the purpose of obtaining adequate Resource Adequacy(RA). RA refers to the ability of a resource to meet capacity obligations under various criteria. Three types of RA are defined and regulated by the CPUC:
■ System capacity is capacity from a resource qualified for use in meeting system peak demand and planning reserve margin requirements.
■ Local capacity is from a resource that is located within a Local Capacity Area and can contribute to the capacity requirement for that area.
■ Flexible capacity is from a resource that is operationally able to respond to dispatch instructions to manage variations in load and variable energy resource output.

The CCA would need to demonstrate it has sufficient physical power supply capacity to meet its projected peak demand plus a 15% planning reserve margin as determined by the CPUC in consultation with CEC load forecasts system capacity). Year-ahead filings must show that the LSE has contracted for 90%of the projected System RA requirement in summer months (May-September). The forecasts must be updated on a month-ahead basis and show that 100%of the requirement has been contracted.

In addition, the CCA must meet the local and flexible resource adequacy requirements set by the CPUC, CAISO, and CEC every year. Local RA requirement must be met by LSEs serving 10 local reliability areas identified by the CAISO. The Local RA requirement is based on the CAISO's assessment of the generation needed in the local area. Beginning with the 2020 compliance year, the Local RA requirements are set three years ahead and updated each year. However, on June 11, 2020, the CPUC adopted a framework (D. 20-06-002)that designated a central buyer for the procurement of multi-year Local RA in the SCE and PG&E distribution areas, beginning in 2021. The CPUC did not establish a central procurement entity in the SDG&E area; however, SDG&E may become the default central procurement agency in the future as a result of CCA implementation. This feasibility analysis assumes pricing and procurement structure based on historic and forecast values.

The CAISO also determines the required Flexible RA needs operating criteria. Currently there are three flexible capacity categories with varying must-offer obligations, energy limits and number of starts, with associated requirements for how much of each category may be used to meet the LSE's obligation. LSEs must demonstrate the purchase of 90%of their flexible RA requirement in their annual RA filing,and 100% of the requirement in their monthly RA filings.

Depending on generation profiles and ramping characteristics, resources have different capacity values for RA compliance purposes, and those values can change by month. Due to their generation profiles, recent rule changes have reduced the RA values for wind and solar resources. These structural changes highlight the need for the CCA to obtain capacity resources such as storage. There is a bilateral market for RA capacity,with standardized products for each type of RA capacity. preparedbyEES CONSULTING 31
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study The CPUC's published market price benchmarks are used to forecast RA costs for each type of RA above." These annualized benchmarks are shaped to reflect higher prices in the summer, which are often 2 or 3 times greater than winter RA prices. The CPUC undertakes annual policy changes to the RA program, so these requirements may change by the time program launch occurs.

4.2.6 Power Management/Schedule Coordinator
Given the likely complexity of a CCA's resource portfolio, the CCA would want to engage an experienced scheduling coordinator to efficiently manage the CCA's power purchases and wholesale market transactions. The CCA's resource portfolio would ultimately include market purchases, shares of some relatively large power supply projects, as well as shares of smaller, most likely renewable resources with intermittent output. Managing a diverse resource portfolio with metered loads that will be heavily influenced by distributed generation may be one of the most important and complex functions of the CCA.

The CCA should initially contract with a third party possessing the necessary experience (proven track record, longevity, and financial capacity)to perform most of the CCA's portfolio operation requirements.

This would include the procurement of energy and ancillary services,scheduling coordinator services,and day-ahead and real-time trading. Portfolio operations encompass the activities necessary for wholesale procurement of electricity to serve end use customers. These activities include the following:
■ Electricity Procurement—assemble a portfolio of electricity resources to supply the electric needs of CCA customers.
■ Risk Management— standard industry risk management techniques would be employed to reduce exposure to the volatility of energy markets and insulate customer rates from sudden changes in wholesale market prices.
■ Load Forecasting—develop accurate load forecasts, both long-term for resource planning, and short- term for the electricity purchases and sales needed to maintain a balance between hourly resources and loads.
■ Scheduling Coordination — scheduling and settling electric supply transactions with the CAISO, with related back office functions to confirm SDG&E billing to customers.

A CCA should approve and adopt a set of protocols that would serve as the risk management tools for the CCA and any third-party involved in the CCA portfolio operations. Protocols would define risk management policies and procedures,and a process for ensuring compliance throughout the CCA. During the initial start-up period,the chosen electric suppliers would bear most of the risk and be responsible for managing those risks. The protocols that cover electricity procurement activities should be developed before operations begin.

Based on conversations with scheduling coordinators currently working within the CAISO footprint, the estimated cost of scheduling services is $10,000 to $15,000 per month. For this study, schedule " California Public Utility Commission. Calculation of the Market Price Benchmarks for the Power Charge Indifference Adjustment Forecast and True-Up. November 2,2020. prepared by E E S CONSULTING 32
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study coordinator service costs are assumed at $10,000 plus another $16,000 per month for power procurement and risk management services.

4.3 RESOURCE PORTFOLIOS
Projected power supply costs were developed for three representative resource portfolios. For each of the resource portfolios,a combination of resources has been assumed to meet the renewable energy and GHG-free targets, resource adequacy targets, and ancillary and balancing requirements. The mixes of resources included in each portfolio are for analytical purposes only. The CCA should be flexible in its approach for obtaining the renewable and non-renewable resources necessary to meet these requirements.

Figure 4-7 shows the levelized resource costs used in this Study. It compares the costs of wholesale market power prices, a Power Purchase Agreement (PPA) tied to the wholesale market power prices, blended and shaped renewables, and the three portfolios evaluated in the Study.

FIGURE 4-7. BASE CASE LEVELIZED RESOURCE COSTS ($2021/MWH) $90
$80 $77.23 $71.97 $75.03 $76.63 $77.04 $70
$60 $52.40
$50
$40
$30
$20
$10
$0
Wholesale Shaped Shaped RPS 90% 100%
Market Market PPA Renewable Renewable Renewable by 2030
The levelized resource costs shown above include ancillary services, RA and necessary carbon free purchases for RPS PCC2 compliance. Scheduling services and other costs are not included. These costs would not change significantly due to different portfolio choice (90%, 95%or 100% renewable).

4.3.1 Renewable PPA Pricing

4.3.7.7 Short-Term Renewable Energy Contract Price
Short-term contracts have a term of fewer than 10 years. Short-term contract prices include two components: a price for energy that is based on forward wholesale market prices and a price for Renewable Energy Credits (RECs). To minimize power costs, it is assumed that the maximum amount of PCC2 RECs are purchased to meet unbundled REC allowances. This means that 75% of unbundled RECs are PCC1 and the remaining 25%are PCC2 RECs. PCC2 RECs are not considered carbon free by the CPUC, therefore, an equal quantity of GHG free power is purchased to equate PCC2 RECs to the same GHG content as PCC1 RECs.
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4.3.7.2 Long-Term Renewable Energy Contract Price
The Study's base case includes a long-term renewable PPA fixed contract price of$35/MWh (all years).

The$35/MWh assumption is conservative as other CCAs are currently signing PPAs for the output of solar projects with flat contract prices in the range of $20-$32/MWh for solar and wind, respectively. This higher price allows for both smaller-scale local projects to be added to the CCA resource mix and for solar plus battery resources. Typical solar plus battery storage resources have been offered at$25-$45/MWh.

The power supply costs are based on 65%of the RIDS requirement purchased via the lower-cost long-term contracts beginning in 2023 to meet SB 350 requirements, as shown in Figure 4-8. The share of long-term contracts increases from 65%to 75% by 2030 to take advantage of lower cost renewables.

FIGURE 4-8. FORECAST POWER COSTS VS. FORECAST DEVELOPMENT COSTS $180
$160 -
$140
$120
s
2 $100
$80
$60
$40 114ifl
$20
$0
d d d d
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Forecast Solar �Forecast Wind
Forecast Battery Storage PCC1
PCC2 Long-Term Renewable Contracts
The above forecasts for specific resources are based on the Energy Information Administration (EIA) and Lazard sources for historic costs. Lazard shows a 5%decrease in unsubsidized wind costs from 2015-2020 and an 11% decrease in solar costs over the same period.23 The EIA reports storage technologies have decreased in cost by 70%from 2015-2018.24 Given these trends, the renewable prices used in the study are conservatively high.
2s https://www.Iazard.com/perspective/levelized-cost-of-energy-and-levelized-cost-of-storage-2020/ 2424 https://www.eia.gov/todayinenergy/detail.php?id=45596 preparedbyEES CONSULTING 34
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4.4 20-YEAR LEVELIZED PORTFOLIO COSTS
The 20-year levelized costs have been calculated based on the base case assumptions detailed above regarding resource costs and resource compositions under the three portfolios. Figure 4-9 shows a breakdown of power, renewable, and ancillary service costs components associated with each portfolio.

FIGURE 4-9. LEVELIZED BASE CASE PORTFOLIO COSTS ($/MWH) $80
$70
$60 $23.8 $23.4

24.3 $50
t
$40
$30
$20
$10 9
$0
RPS 90%Renewable by 2030 100%Renewable
■Power ■Renewable and GHG Free ■Capacity and Ancillary As shown above, power costs under the three portfolios considered are similar except for the renewable component in each portfolio. There is a low level of power cost variance between these portfolios because the majority of power is supplied by market PPAs and renewable energy purchases, which are very close in cost. The difference is driven by the amount of renewable energy relative to the entire portfolio.

4.5 RESOURCE STRATEGY
A third-party vendor may manage a CCA's electric portfolio, at least during the initial implementation period. Through a power services agreement, a CCA can obtain full-service requirements electricity for its customers, including providing for all electric, ancillary services and the scheduling arrangements necessary to provide delivered electricity. The contracted power services manager would assist the CCA in meeting resource portfolio requirements such as the requirements for long-term renewable energy contracts and energy storage requirements.The costs for these resources are factored into the feasibility analysis.

After operations have begun, a CCA could decide to sign long-term PPAs,which could minimize the CCA's exposure to market prices and provide the CCA with the ability to increase the renewable percentage over time. Additionally, it is recommended that the CCA engage with a portfolio manager or schedule coordinator, who has expertise in risk management and would work with the CCA to design a comprehensive risk management strategy for long-term operations. A portfolio manager or schedule coordinator would actively track the CCA's portfolio and implement energy source diversification, monitor trends and changes in economic factors that may impact load, and identify opportunities for dispatchable energy storage systems or automatic controls for managing energy needs in real-time with the CAISO. preparedbyEES CONSULTING 35
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study Once operational,the CCA will be subject to energy storage targets under AB 2514,the California Energy Storage Bill. AB 2514 was signed into law in September 2010 and established energy storage targets for IOUs, CCAs, and other LSEs in September 2013. The applicable CPUC decision established an energy storage procurement target for CCAs and other LSEs equal to 1%of their forecasted 2020 peak load.The decision requires that contracts be in place by 2020 and projects be installed by 2024. This requirement means that a VSME Partner CCA would need to issue an RFP for storage projects in its initial power supply procurement process.
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study 5Cost of Service
This section of the Study describes the financial pro forma analysis and cost of service for a VSME Partner CCA. It includes estimates of staffing and administrative costs, consultant costs, power supply costs, uncollectable charges,and SDG&E charges. In addition, it provides an estimate of start-up working capital and longer-term financial needs.

5.1 COST OF SERVICE FOR CCA OPERATIONS
The first category of the pro forma analysis is the cost of service for a VSME Partner CCA.To estimate the overall costs associated with CCA operations, administration costs are estimated and added to the power supply cost estimates. Once the costs of CCA operations have been determined, the total costs can be compared to SDG&E's projected rates.

5.2 NON-POWER SUPPLY COSTS
While power supply costs would make up the vast majority of costs associated with operating the VSME Partner CCA(power supply costs are roughly 90-95%total operating expenses), there are additional cost components that must be considered in the pro forma financial analysis. These additional non-power supply costs are summarized in Table 5-1 and then described below.

TABLE 5-1.ANNUAL NON-POWER SUPPLY COSTS
One-Time
Costs 2022 2023 2024
CAISO Deposit $500,000
SDG&E Security Deposit $147,000
CPUC Bond $100,000
Customer Notification $300,000
Billing&Data Management $0 $1,177,000 $1,608,000 Power Management and Scheduling $0 $225,000 $306,000 SDG&E Metering&Billing Fees $0 $323,000 $441,000 General Legal,Regulatory,Power Contracts $78,000 $316,000 $479,000 Marketing $88,000 $153,000 $78,000
Technical Consulting Services $113,000 $230,000 $260,000 Memberships $0 $57,000 $78,000
Staffing $0 $696,000 $1,097,000
General&Administrative Expenses $0 $101,000 $103,000 Debt Service $0 $2,299,000 $3,080,000 Total One-Time Costs $1,047,000
Total Operating&Administration Costs $279,000 $5,577,000 $7,530,000 Pre-launch costs in 2022 can be variable depending on how quickly the CCA wants to begin outreach. The estimate in Table 5-1 is considered the minimum and is budgeted based on the$600,000 in start-up funds provided by member cities.
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5.2.1 Estimated Staffing Costs
Staffing is a key component of operating a CCA. The VSME Partner CCA would have discretion to distribute operational and administrative tasks between internal staff and external consultants in any combination.

For this Study, a limited staffing scenario is modeled. This minimum staff scenario relies on a few dedicated full-time staff members and the use of technical consultants for support. If the CCA finds that there are cost savings for increasing the number of organization staff, feasibility of this scenario would improve.

Based on the minimal staffing plan,the VSME Partner CCA would initially rely on staff from member cities and hire a CEO in 2023. Once the CCA launches, it is anticipated that staffing would increase to approximately 4 employees within the first year of operation. It should be noted that if the one or more of the Partners choose to join another CCA, there would likely be some economies of scale savings for overhead such as staffing.

5.2.2 General and Administrative Costs and Membership
Overhead needed to support the organization includes computers and other equipment, office furnishings, office space, utilities, and miscellaneous expenses. These expenses are estimated at $101,000/year and escalated at 2%. A nominal fee is included for memberships. Many CCA's find the CaICCA membership valuable and become members after launch.

5.2.3 Outside Consultant Costs
Consultant costs would include outside assistance for legal and regulatory work, power supply management, communication and marketing, data management, financial consulting, technical consulting, and implementation support.

CCA data management providers supply customer management system software and oversee customer enrollment and service, as well as payment processing, accounts receivable,and verification services.The cost of data management is charged on a per customer basis and has been estimated based on existing contracts for similarly sized CCAs. For this Study,the cost for data management is estimated at$1.00 per account per month.

In addition, estimated funding for other consulting support (such as human resources, legal, customer service,etc.) is provided. These costs have been estimated based on the experience of start-up consulting costs at other CCAs. The estimate for each of the services is based on costs experienced by other CCAs.

Consultant costs are increased by inflation every year.

5.2.4 SDG&E Fees
SDG&E would provide billing and metering services to the VSME Partner CCA based on Schedule CCA:

Transportation of Electric Power to CCA Customers. The estimated costs payable to SDG&E for services related to the VSME Partner CCA start-up include costs associated with initiating service with SDG&E, processing of customer opt-out notices, customer enrollment, post enrollment opt-out processing, and billing fees.
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5.2.5 Uncollectible Costs
As part of its operating costs,the CCA must account for customers that do not pay their electric bill. While SDG&E would attempt to collect outstanding funds, approximately 0.2% of revenues are estimated as uncollectible.25 This cost is removed from the revenue projection in the proforma. It should be noted that uncollectible revenues will increase during economic downturns. The assumption in this study reflects long-term averages.

5.3 FINANCIAL RESERVES
The CCA is assumed to receive capital financing during its start-up through full operation. After a successful launch, a CCA should build up a reserve fund that is available to address contingencies, cost uncertainties, rate stabilization, or other risk factors faced by the CCA. This Study assumes that a CCA would begin building its reserve immediately upon launch. After five full operating years, it is estimated that the CCA will have accumulated enough reserves to cover four months of expenses. This level of reserves represents the industry standard for electric utilities and would provide financial stability to assist the CCA in obtaining favorable interest rates if additional financing is needed. After that point, revenues that exceed costs could be used to fund a reserve to mitigate rate changes, procure new local renewable resources, and pursue economic development projects and/or lower rates. Table 5-2 provides an estimate of the revenues available for local programs, rate stabilization, or additional rate discounts in excess of 2%. These financial reserves may be utilized for cash flow and to stabilize rates in response to market conditions or exit fee changes.

TABLE 5-2. RESERVES AND NEW PROGRAM ACCOUNT BALANCES, MILLIONS Operating
Reserve Fund Target New Programs or Rate
Balance* (4 months O&M) Reduction
2023 $0.6 $0.1 $0.0
2024 $25.8 $25.8 1 $9.4 _
2025 $33.4 $33.4 $8.5
2026 $33.8 $33.8 $17.3
2027 $34.3 $34.3 $17.6
2028 $34.8 $34.8 $19.1
2029 $34.0 $34.0 $25.2
2030 $34.7 $34.7 $24.7
2031 $35.4 $35.4 $25.6
2032 $36.0 $36.0 $26.9
* Includes cash from financing
2s Based on SDG&E 2019 GRC uncollectible revenue as percent of total revenue. preparedbyEES CONSULTING 39
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5.4 FINANCING COSTS
In order to estimate financing costs, a detailed analysis of working capital needs and start-up capital is estimated. Each component is discussed below.

5.4.1 Cash Flow Analysis and Working Capital
This cash flow analysis estimates the level of working capital that would be required until full operation of the CCA is achieved. For the purposes of this Study, it is assumed that the CCA pre-operations begin in January 2022. The cash flow analysis identifies and provides monthly estimates for each of these two categories. A key aspect of the cash flow analysis is to focus primarily on the monthly costs and revenues associated with the CCA and specifically account for the transition or"phase-in" of CCA customers.

The cash flow analysis also provides estimates for revenues generated from CCA operations. In determining the level of revenues, the cash flow analysis assumes that all customers are enrolled at the same time. The results of the cash flow analysis provide an estimate of the level of working capital required for the CCA to move through the pre-operations period. This estimated level of working capital is determined by examining the monthly cumulative net cash flows (revenues minus cost of operations) based on payment terms, along with the timing of customer payments and power supply bill payments.

The cash flow analysis assumes that customers will make payments within 60 days of the service month, and that the CCA would make payments to power suppliers within 30 days of the service month. It is assumed that payments for all non-power supply expenses would need to be paid in the month they occur. Customer payments typically begin to come in soon after the bill is issued, and most are received before the due date; however,some customer payments are received well after the due date.The 30-day net lag in payment is therefore a conservative assumption for cash flow purposes.

For purposes of determining working capital requirements related to power purchases,the CCA would be responsible for providing the working capital needed to support electricity procurement unless the electricity provider can provide the working capital as part of the contract services. In addition, the CCA would be obligated to meet working capital requirements related to program management, the SDG&E program reserve of$147,000.26 While the CCA may be able to utilize a line of credit, for this Study it is assumed that the working capital requirement is included in the financing associated with start-up funding. The Study finds that the CCA will need as much as $13 million in working capital and start-up funds. The CCA will also likely need an additional $5-10 million for power supply contract collateral.

For comparison, Marin Clean Energy (MCE) started with $3.3 million in pre-launch funding27 and is now operating with $21.7 million in working capita1.21 Similarly, Sonoma Clean Power (SCP) acquired $6.2 26 CPUC Decision 18-05-022
27 https://www.mcecleanenergy.org/wp-content/uploads/2016/01/MCE-Start-Up-Timeline-and-Initial-Funding- Sources-10-6-14-1.pdf
2' https://www.mcecleanenergy.org/wp-content/uploads/2016/09/MCE-Audited-Financial-Statements-2015- 2016.pdf
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study million in pre-launch capita 1,29 and now maintains working capital reserves of$25 million30 while serving 25%more than the VSME Partner CCA's estimated load.31 The working capital needs after launch assumed in this Study are reflective of the experience of successfully operating CCAs on a $/GWh basis.

5.4.2 Total Financing Requirements
The start-up of a VSME Partner CCA would require an amount of start-up capital for three major functions:
(1) staffing and consultant costs; (2) overhead costs (office space, computers, etc.); and (3) CPUC Bond and SDG&E security deposits. The study assumes that a $500,000 CAISO fee is financed and repaid within 12 months of funding the cash for working capital loan.

Staffing, consultant, and other program initiation costs have been discussed previously. In addition, the Public Utilities Code requires demonstration of insurance or posting of a bond sufficient to cover re-entry fees imposed on customers that are involuntarily returned to SDG&E service under certain circumstances.

SDG&E also requires a bond equivalent to the re-entry fee for voluntary returns to the IOU. This corresponds to the fees outlined in the CCA rate schedule from SDG&E. In addition, the bond must cover incremental procurement costs. Incremental procurement costs are power supply costs incurred by the IOU when a customer provides notice and returns to IOU bundled service. These incremental procurement costs are minimal as SDG&E has a surplus of power supply resources.

For a VSME Partner CCA, the total financing requirement, including working capital, collateral requirements, and start-up costs is $18 million.

5.4.3 Current CCA Funding Landscape
The CCA market is rapidly expanding with increasingly proven success. To date, existing CCAs have demonstrated the ability to generate positive operating results. The early sources that funded CCA start- up capital costs were community banks located in the CCA service territory, but now a mix of regional and large national banks have shown increased levels of interest evidenced by additional banks submitting proposals to CCAs in need of financing. As such, a VSME Partner CCA would likely have access to an adequate number of potential financial counterparties.

As CCAs have successfully launched across the state and a more robust data set of opt-out history becomes available,the financial community has demonstrated an increased level of comfort in providing credit support to CCAs. Most programs that have launched to date, along with those in development, have relied on a sponsoring entity to provide support for obtaining needed funds. This support has come in varied forms,which are summarized in Table 5-3. During the COVID-19 pandemic, SDCP relied on loan securitization from a local philanthropist. This arrangement is the only one of its kind to date and should not be considered a new normal.
29 https:Hsonomacleanpower.org/wp-content/uploads/2015/01/2014-SCPA-Audited-Financials.pdf 30 https:Hsonomacleanpower.org/wp-content/uploads/2015/01/2016-05-SCP-Compiled-Financial-Statements.pdf 31 https:Hsonomacleanpower.org/wp-content/uploads/2015/01/2015-SCP-Implementation-Plan.pdf preparedbyEES CONSULTING 41
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study TABLE 5-3. CCA FINANCIAL MECHANISMS
Pre-Launch Funding
CCA Name Date Requirement' Funding Sources
Marin Clean Energy 2010 $2-$5 million Start-up loan from the County of Marin, individual _ investors,and local community bank loan.

Sonoma Clean 2014 $4-$6 million Loan from Sonoma County Water Authority as well as Power loans from a local community bank secured by a Sonoma County General Fund guarantee.

CleanPowerSF 2016 —$5 million Appropriations from the Hetch Hetchy reserve (SFPUC).

Lancaster Choice 2015 —$2 million Loan from the City of Lancaster General Fund.

Energy
Peninsula Clean 2016 $10-$12 million PCE obtained a $12 million loan with Barclays and Energy almost$9 million with the County of San Mateo for start-up costs and collateral.

Silicon Valley Clean 2017 $2.7 million Loans from County of Santa Clara and City members, Energy $21 million Line of Credit with $2 million guarantee, otherwise no collateral.

Clean Power 2018 $41 million $10 million loan from Los Angeles County and$31 Alliance million Line of Credit from River City Bank.

Solana Energy 2018 N/A Vendor Funding
Alliance
East Bay Clean 2018 $50 million Revolving Line of Credit from Barclays.

Energy
Western 2019 $13 Million Revolving Line of Credit from Barclays Community Energy
San Diego 2020 $40 million Philanthropist loan securitization$5 million, River City Community Power Bank Loan$5 million pre-launch loan plus$35 million line of credit
1 Source: Respective entity websites and publicly available information.These funds are representative of CCA funding at different times of start-up.

A review of the current state of options for obtaining funds for these initial phases is detailed below:

Direct Loan from the Member Cities-The VSME Partners could loan funds from their General Funds for all or a portion of the pre-launch through launch needs. Start-up funding provided by the Partners would be secured by the CCA's revenues once launched. The VSME Partners would likely assess a risk- appropriate rate for such a loan.This rate is estimated to be 4.0%to 6.0% per annum.

Collateral Arrangement from the Cities -As an alternative to a direct loan from the VSME Partners, the VSME Partners could establish an escrow account to backstop a lender's exposure to the CCA. The Cities would agree to deposit funds in an interest-bearing escrow account, which the lender could tap should the CCA revenues be insufficient to pay the lender directly. The VSME Cities'obligations would be secured by CCA revenues collected once the CCA is launched.

Loan from a Financial Institution without Support-Silicon Valley Clean Energy Authority(SVCEA)was able to use this option to fund ongoing working capital. After member agencies funded a total of$2.7 million in start-up funds,SVCEA obtained a $20 million line of credit without collateral. This is the most common financing option used by emerging CCAs. This arrangement typically requires a "lockbox" approach with a power provider.A lockbox arrangement requires the CCA to post revenues into a "lockbox"which power prepared by E E S CONSULTING 42
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study suppliers can access in order to get paid first before the CCA. This arrangement reduces the required reserves and collateral required of a CCA.

Vendor Funding — The CCA could negotiate with its power suppliers or other vendors to eliminate or reduce the need for supplemental start-up and operating capital. However,the vendor funding approach can be less transparent as the vendor controls expenses and activities, and the associated cost may outweigh the benefit of eliminating or reducing the need for bank financing.

Revenue Bond Financing—This financing option becomes feasible only after the CCA is fully operational and has an established credit rating.

5.4.4 CCA Financing Plan
While there are many options available to the CCA for financing, it is expected that initial start-up funding will be provided via short-term financing with a loan from a financial institution. The CCA would recover the principal and interest costs associated with the start-up funding via subsequent retail rate collections.

This Study demonstrates that the CCA start-up costs would be fully recovered within the first five years of CCA operations.

The anticipated start-up and working capital requirements for a VSME Partner CCA through launch are approximately $600,000 for pre-startup costs, $13 million for working capital, and $5 million for power supply collateral. Once the CCA program is operational, these costs would be recovered through retail rate collections. Actual recovery of these costs would be dependent on third-party electricity purchase prices and the rates set by the CCA for customers.

Based on several recent examples of CCAs obtaining financing for start-up and operating costs, this financial analysis assumes that the CCA would be able to obtain a loan for all $18 million with a term of 5 years at a rate of 5.0%. This is very conservative, as most CCAs will operate on aline of credit for the majority of working capital needs.The detail of the cash flow analysis is provided in the Appendix. prepared by E E S CONSULTING 43
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study 6Rate Comparison
This section provides a comparison of rates between SDG&E and a VSME Partner CCA. Rates are evaluated based on the CCA's total electric bundled rates as compared to SDG&E's total bundled rates.Total bundled electric rates include the rates charged by the CCA, including non-bypassable charges, plus SDG&E's delivery charges.

6.1 RATES PAID BY SDG&E BUNDLED CUSTOMERS
Customers served by SDG&E will pay a bundled rate that includes SDG&E's generation and delivery charges. SDG&E's current rates and surcharges have been applied to customer load data aggregated by major rate schedules to form the basis for the SDG&E rate forecast.

The average SDG&E delivery rate, which is paid by both SDG&E bundled customers and CCA customers, has been calculated based on the forecasted customer mix for a VSME Partner CCA. The SDG&E rate forecast assumes that delivery costs will be based on SDG&E's recent General Rate Case (GRC) filing for 2019 to 2021. Thereafter, it is assumed that the delivery costs will increase by 2% per year based on inflation expectations.Similarly,the average power supply rate component for SDG&E bundled customers has been calculated based on the projected CCA customer mix.

Finally,the SDG&E generation rates have been projected to increase 1-2%per year. These cost projections are consistent with a power market that has experienced decreasing energy costs but increasing capacity costs. It's expected that the primary driver for SDG&E generation rate forecasts will be for capacity resources and the sale of excess contracts where the cost to SDG&E of those contracts exceeds the market value. These above market costs will be shared among both bundled and unbundled customers through the PCIA.

6.2 RATES PAID BY CCA CUSTOMERS
The Study assumes that VSME Partner CCA rate designs would initially mirror the structure of SDG&E's rates so that similar rates can be provided to CCA's customers and bill comparisons can be made on an apples-to-apples basis. SDG&E is moving towards Time-of-Use (TOU) rates for all customers and it is assumed that the CCA would follow this transition initially. In determining the level of CCA rates, the financial analysis assumes all customers are enrolled at the same time and that the implementation phase costs are financed via start-up loans.

In addition to paying the CCA's power supply rate, CCA customers would pay the SDG&E delivery rate and non-bypassable charges.These non-bypassable charges include: 1) Department of Water Resources Bond Charge (DWRBC), 2) Ongoing Competition Transition Charge (CTC), and 3) Power Charge Indifference Adjustment(PCIA).The DWRBC and CTC are charged to SDG&E's bundled customers in the SDG&E delivery charge. It is therefore assumed that the CCA customers would pay these charges as part of the delivery charges, as well. As such,the only additional non-bypassable charge that is payable to SDG&E by a VSME Partner CCA is the PCIA.

6.2.1 Power Charge Indifference Adjustment
The PCIA is an exit fee that is added to CCA accounts to cover an IOU's stranded costs associated with energy purchases made to anticipated, but unrealized, demand. IOUs enter long-term power contracts prepared by E E S CONSULTING 44
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study anticipating load growth; however, with direct access and CCA programs, a significant share of SDG&E's loads will be unbundled by 2023.

With a launch date of April 2023,the VSME Partner CCA customers would pay the 2022 PCIA vintage rate.

The 2022 vintage PCIA will first be set in Q4 of 2021 and be effective January 1, 2022. The rate will then be updated in fall of 2022 for the 2023 calendar year. Because the rate will not be set for some time,the 2021 Vintage rate is used to forecast the 2022 vintage rate in 2023. The forecast considers the balancing accounts and adjustments made for the 2021 calendar year. The system PCIA rate averages$0.02 in 2023 and increases 5% per year after. These assumptions are conservative as it is more likely that the PCIA will decrease within the 10-year timeframe. SDG&E reports that over 1,200 MW in contracts will expire by 2030.32 Section 8 of this study discusses the risks associated with the PCIA.

6.3 RETAIL RATE COMPARISON
Based on the CCA's projected power supply costs, PCIA, operating costs, and SDG&E's power supply and delivery costs, forecasts of CCA and SDG&E total rates are developed. The analysis balances the rate discount, collection of reserves, and the share of renewable and GHG-free resources purchased. If the discount is too high, the CCA will not be able to collect sufficient reserves to meet reserve targets within the first 5 years. If it is assumed that the CCA will purchase 100% renewable energy, then rates will have to be set close to SDG&E's rates in order for the CCA to collect sufficient revenues to meet costs and reserve requirements. Figure 7-1 compares the forecast SDG&E generation rate with generation costs for the CCA under each power supply portfolio option plus the PCIA. Figure 6-1 illustrates that there is an opportunity for the CCA to offer lower rates while collecting reserves and offering programs.

FIGURE 6-1.AVERAGE GENERATION COST COMPARISON
$0.16
$0.14
$0.12
t
$0.10
$0.08
$0.06
$0.04
$0.02
$0.00
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 SDG&E -RPS Portfolio+PCIA 90%Renewable by 2030+PCIA 100%Renewable+PCIA 32 SDG&E 2020 IRP Appendix 2. Table 2-1 page 9.
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study A financial pro forma in support of these rates is available in Appendix A. As noted above,there is a viable business case for a VSME Partner CCA. Given this feasibility, the balance of this Study will complete the Business Plan scope. The Business Plan will address the environmental, economic, risk, and governance options associated with a VSME Partner CCA.
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study 7 Environmental and Macroeconomic Impacts
This section provides an overview of the potential environmental and macroeconomic impacts to San Diego County from the implementation of a VSME Partner CCA. In addition, potential future programs that could be offered by a VSME Partner CCA are outlined.

7.1 IMPACT OF RESOURCE PLAN ON GREENHOUSE GAS (GHG) EMISSIONS According to SDG&E's power content label, SDG&E's resource mix is 43%33 renewable. While SDG&E reports a large share of renewable energy, some of this share is due to SDG&E's accounting of unbundled RECs. These RECs are not considered GHG free, and when they are excluded, it reduces SDG&E's renewable energy share to 31%.34 This Study evaluated a VSME CCA assuming that all RPS qualifying resources would be GHG free resulting in portfolios that would significantly reduce the GHG emissions compared with continued service from SDG&E. Through a CCA program,the VSME Cities could choose to offer 100% GHG free power and reduce emissions by at least 890,000 metric tons over the study period compared with continued service from SDG&E. This reduction in GHG emissions was estimated based on SDG&E's most recent IRP filing, and are considered conservative. Additionally, a CCA program would have full control over its power supply portfolio. CCAs have historically set portfolio goals and have been able to achieve those goals while offering competitive rates. If the VSME Cities choose to continue bundled service through SDG&E,the options for achieving GHG-free power supply prior to state mandates will be limited. Currently the state requires that zero-carbon (Clean Energy) resources supply 100%of all retail sales of electricity to California end-use customers no later than December 31, 2045 (Senate Bill 100).

7.2 LOCAL RESOURCES/BEHIND THE METER CCA PROGRAMS
The CCA would have the option to invest in a range of programs to expand renewable energy use and enhance economic development in the county. Increased renewable energy use can be accomplished by supporting customers wishing to install small renewable generation facilities (net energy metering), purchasing from small local for-profit renewable generators (feed-in tariffs), purchasing renewable resources directly, and supporting electric vehicle use. The VSME Partners can identify other program goals in the areas of: building energy efficiency and electrification, energy efficient construction, clean energy transportation enhancement, and energy storage. CCAs are a viable mechanism for developing and implementing these types of programs using funding from a variety of sources, including CCA operating revenues,the CPUC, and the California Energy Commission (CEC). 31 2018 SDG&E Power Content Label.
34 Elmer, MacKenzie. SDG&E Walks Back Claim it Delivers 45 Percent Renewable Energy. Voice of San Diego May 3, 2021. Available at: https://www.voiceofsandiego.org/topics/news/sdge-walks-back-claim-it-delivers-45-percent- renewable-energy/
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study Each of these programs also yields economic development benefits by stimulating spending locally and reducing costs for local customers. Economic development can also be accomplished by providing additional support for low-income customers or extra support for new or growing businesses. The following sections discuss these programs in further detail.

7.3 ECONOMIC DEVELOPMENT RATE INCENTIVE
There are several programs that CCAs can offer to stimulate local economic development in their service area. One is a special economic development rate to encourage job providers to locate within the CCA jurisdiction.

Another type of program that promotes economic development is one that provides incentives for businesses to locate in the service area, remain there, or expand. For instance,the CCA could offer rebate programs or fund infrastructure costs for a business to target the business sectors of interest to their service area. For example, if a large industrial customer would like to locate within the CCA service area, increased efficiency may result in decreased costs to all other customers due to overhead cost sharing, allowing an incentive to be paid to the new industrial customer.

7.4 NET ENERGY METERING (NEM) PROGRAM
The CCA could establish a Net Energy Metering (NEM) program for qualified customers in their service territory to encourage wider use of distributed energy resources (DER) such as rooftop solar, energy storage, demand-side management, energy efficiency, demand response, and electric vehicle charging.

The CPUC is currently piloting programs for these DERs where actual savings and system benefits are measured through customer meters rather than using DER equipment modeling. NEM programs allow energy customers who generate some or all of their own power and sell excess generation to the grid to accrue credit, all while inherently providing additional grid supportive services such as volt/var support, frequency regulation, and transmission and distribution line-loss reduction.

SDG&E currently offers a NEM program for solar generation in which customers receive an annual "true- up" statement at the end of every 12-month billing cycle.This allows customers to balance credit earned in summer months (when solar energy generation is highest) with charges accrued in the winter (when solar generation is lower, and customers rely more on SDG&E's bundled service). Customers earn power credits at the value of electricity and the value of renewable energy credits,though they are not paid for excess generation. Credits unused at the end of each year expire. This policy therefore incentivizes customers to limit the size of their generation system, as excess generation supplied to the grid will not provide a return.

All of the CCAs currently operating in California also offer NEM programs, and three of the most recently operational CCAs have offered them at the launch of service.35 All of these CCA-managed NEM programs offer greater incentives than IOUs for customers in their service area to invest in more and larger " https://pioneercommunitVenergy.ca.gov/home/nem-solar/,https://www.poweredbyprime.org/fag , http://www.applevalley.org/home/showdocument?id=18607
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study Distributed Energy Resources. Higher incentives up to the full retail rate have been offered. This has the benefit of increasing the supply of renewable resources available to these CCAs as well as encouraging high participation rates among current and potential NEM customers. A VSME Partner CCA would have the option to implement a similar NEM program and the ability to stimulate local economic development in the form of new DER system investments and associated business activity.

7.5 FEED-IN TARIFFS
Feed-in tariffs (FIT) offer terms by which electric service providers such as IOUs and CCAs purchase power from small-scale renewable electricity projects within their service territory. In contrast with NEM programs, which typically target owners of homes and small businesses who wish to install a rooftop photovoltaic (PV) system, FIT programs target owners of larger generation projects, in the range of 0.5-3 MW. These could be larger rooftop photovoltaic (PV) systems located at industrial sites or ground- mounted solar shade structures in parking lots. In developing a FIT program of its own,the VSME Partner CCA could incentivize customers in their service area to develop local renewable resources.

7.6 LOCAL GENERATION RESOURCES DEVELOPMENT
A final option to drive investment in local renewable generation resources within the CCA service area is for the CCA itself to build or acquire generation resources. For example, Marin Clean Energy (MCE) currently has 10.5 MW of CCA-owned local solar PV projects under development and is planning to develop or purchase up to 25 MW of locally constructed, utility scale renewable generating capacity by 2021.36 This model of CCA-owned resources provides CCAs with a guaranteed renewable power source as well as local economic stimulus.

7.7 ELECTRIC VEHICLE (EV) PROGRAMS AND CHARGING STATIONS Encouraging electric vehicle use can both increase load serving entity (LSE) total load and reduce greenhouse gas emissions within its service area. Many LSEs offer special rates for electric vehicle charging. SDG&E offers two non-tiered, time-of-use (TOU) plans for electric vehicle charging, EV-TOU-2 and EV-TOU-5,that combine the load of vehicle charging with the load of the residence.The two programs offer different TOU periods. EV-TOU customers install a separate meter explicitly for vehicle charging,31 and TOU rates encourage vehicle charging at times when energy is cheapest, or system load is lowest.

MCE offers a similar program for their customers with lower rates than PG&E, the incumbent IOU.38 In addition to targeted rate programs,CCAs can encourage electric vehicle use by investing in local electric vehicle charging stations. Silicon Valley Power (SVP) opened the largest public electric vehicle-charging center in the State in April 2016. The facility features 48 Level 2 chargers and one DC Fast Charger.39 Sonoma Clean Power(SCP)also provided qualified customers with incentives to purchase EVs in 2016 and 3l https://www.mcecleanenergy.org/wp-content/uploads/2017/11/MCE-2018-Integrated-Resource-Plan-FINAL- 2017.11.02.pdf
37 https://www.sdge.com/residential/pricing-plans/about-our-pricing-plans/electric-vehicle-plans 38 https://www.mcecleanenergy.org/electric-vehicles/
39 http://www.siliconvalleypower.com/Home/Components/News/News/5036/2065 prepared by E E S CONSULTING 49
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study continued the program in 2017.40 A VSME Partner CCA could invest in similar projects to promote electric vehicle use within its service area.

7.8 LOW INCOME PROGRAMS
SDG&E offers assistance to low-income customers on both one-time and long-term bases. For customers in need of sustained assistance, SDG&E offers rates that are up to 30% lower for qualifying households under the California Alternate Rate Energy (CARE)41 program. The CARE program is mandatory for IOUs per California Public Utilities Code 739.1.The program is set up for electric corporations that have 100,000 or more customer accounts to provide a 30-35%discount on electric utility bills on households that are at or below 200%of the federal poverty line. Funding for CARE is collected on an equal cents/kWh basis from all customer classes except street lighting. This program, like other SDG&E low-income programs, would continue to be available to CCA customers through SDG&E.

In addition, the Family Electric Rate Assistance (FERA) Program provides a monthly discount on electric bills. This program is designed for income-qualified households of three or more persons. Finally, the California Department of Community Services and Development (CSD) oversees a federal program, Low- Income Home Energy Assistance Program (LIHEAP), which offers support for heating, cooling, and weatherproofing homes. Further federally assisted programs managed by the state offer home weatherization assistance for qualifying low-income customers.

7.9 ECONOMIC IMPACTS IN THE COMMUNITY
The analyses contained in this Study for the formation of a VSME Partner CCA have focused only on the direct economic effects of this formation. However, in addition to direct effects, indirect macroeconomic effects are also expected.

The indirect effects of creating a CCA include the effects of increased commerce and disposable income.

Within this Study, an input-output (10) analysis is undertaken to analyze these indirect effects. The 10 model estimated the impact on the economy of forming a CCA that would lead to lower energy rates for CCA customers. Three types of indirect impacts are analyzed in the 10 model. These are described below.

Local Investment — The CCA may choose to implement programs to incentivize investments in local distributed energy resources (DER). The CCA may choose to invest in local DER generation projects in the form of behind the meter or community projects where several customers participate in a centrally located project (e.g. "community solar"). Demand for local renewable resources resulting from these projects would lead to an increase in the manufacturing and installation of DER, along with an increase in employment in the related manufacturing and construction sectors. 40 https://sonomacleanpower.org/sonoma-clean-power-launches-ev-incentive-program/ 41 https://www.sdge.com/residential/pay-bill/get-payment-bill-assistance/assistance-programs prepared by E E S CONSULTING 50
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study Increased Disposable Income—Establishing a CCA could lead to reduced customer rates for energy, more disposable income for individuals, and greater revenues for businesses. These cost savings would then lead to more investment by individuals and businesses for personal or business purposes. Increases in spending would in turn lead to increased employment for multiple sectors such as retail, construction, and manufacturing.

Environmental and Health Impacts — With the creation of a CCA, other non-commerce indirect effects would occur. These may be environmental, such as improved air quality or improved human health due to the CCA utilizing more renewable energy sources, versus continuing use of traditional energy sources, which may have a greater GHG footprint. While a change in GHG emissions is not modeled directly in economic development models used in this Study, reductions in these emissions are captured in indirect effects projected by the models to the extent that carbon prices are accounted for in the input-output matrix."
Input-Output Modeling (10 Modeling)—County-wide electric rate savings and growth in manufacturing jobs and other energy intensive industries are expected to spur economic development impacts.Table 7- 2 shows the effect of$9.3 million in rate savings could have on the county economy as estimated in the County of San Diego IMPLAN model.43 The $9.3 million rate savings represents the minimum annual bill savings projected to occur once the CCA has achieved full operation if all of the load is included (SDG&E- Equivalent Renewable portfolio or 90% Renewable by 2030). The IMPLAN model is an 10 model that estimates impacts to an economy due to a change to various inputs such as industry income,supply costs, or changes to labor and household income. Both positive and negative impacts can be measured using 10 modeling. 10 modeling produces results broken down into several categories. Each of these is described below:
■ Direct Effects—Increased purchases of inputs used to produce final goods and services purchased by residents. Direct effects are the input values in an 10 model, or first round effects. ■ Indirect Effects—Value of inputs used by firms affected by direct effects (inputs). Economic activity that supports direct effects.
■ Induced Effects — Results of Direct and Indirect effects (calculated using multipliers). Represents economic activity from household spending.
■ Total Effects—Sum of Direct, Indirect, and Induced effects. ■ Total Output—Value of all goods and services produced by industries. ■ Value Added—Total Output less value of inputs, or the Net Benefit/Impact to an economy. ■ Employment—Number of additional/reduced full time employment resulting from direct effects. 42 Decreased health care costs have been modeled to make a major contribution to the local economy. e.g., DT Shindell,Y. Lee&G. Faluvegi,Climate and health impacts of US emissions reductions consistent with 2°C;Nature Climate Change volume 6, pages 503-507 (2016)
as http://www.implan.com/
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study This Study uses Value Added and Employment figures to represent the total additional economic impact of the rate savings associated with CCA formation.

The projected rate savings are modeled for residential, commercial, industrial, and agricultural sectors.

For residential,the rate savings are modeled at different household income levels to estimate the impact on the economy from reduced bills. Estimated household income distribution is based on the income percentiles from the County-wide statistical atlas.44 The change in household income assumes that all households are impacted proportionately; however, in practice lower income households typically see the most significant benefit due to the disproportionate amount of total household income that goes to costs associated with household electricity use. Generally, lower income families are not able to reduce their utility bills as easily through efficiency upgrades or modified behavior due to lack of disposable income. Therefore, the overall impacts of rate savings are likely underestimated.

Table 7-1 details the macroeconomic impacts anticipated from the generation rate savings after forming the CCA. The total output for one year of rate savings is estimated at $13.5 million. In addition, the rate savings are estimated to produce an additional 113 full time jobs.

TABLE 7-1. POTENTIAL ECONOMIC IMPACTS FROM RATE SAVINGS' EmploymentImpact Type Output
Direct Effect 52 2,556,000 2,592,000 4,767,000 Indirect Effect 10 663,000 1,074,000 1,798,000 Induced Effect 48 2,349,000 - 4,285,000 6,936,000 Total Effect 113 5,567,000 7,950,000 13,501,000

1. Based on$9.3 million in rate savings per year. The full impact to the County is estimated,though,it can be expected that a large share of these impacts would be realized across the entire VSME Partner CCA service territory.

These savings are based on the economic construct that households would spend some share of the increased disposable income on more goods and services.This increased spending on goods and services would then lead to producers either increasing the wages of their current employees or hiring additional employees to handle the increased demand. Increases in wages or additional hires would in turn give new or existing employees a larger disposable income,which they would then presumably spend on goods and services,thus repeating the cycle of increased demand. In addition, reduced inputs to production for non- residential electric customers would allow companies to invest in other areas to promote growth such as hiring new employees, offering additional training, and purchasing upgraded equipment. 44 Statistical Atlas. San Diego,California. Available online: https://statisticalatlas.com/countv/California/San- Diego-County/Household-Income data from U.S. Census Bureau. preparedbyEES CONSULTING 52
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study 8Sensitivity and Risk Analysis
The economic analysis provides a Base Case scenario for forming a CCA. The Base Case is predicated on numerous assumptions and estimates that influence the overall results. This section of the Study will provide the range of impacts that could result from changes in the most significant variables for the portfolios described in the Power Supply Strategy and Cost of Service sections of this Study. In addition, this section will address uncertainties that should be addressed and mitigated to the maximum extent possible.

8.1 NO ACTION OPTION REVIEW
Prior to engaging in the Sensitivity and Risk analysis,it is important to also assess the option to not proceed with a CCA. Under this option,the VSME Partners may elect to not move forward at this time and possibly reconsider at a later date. This would leave the VSME Partners' customers with SDG&E service and there would be no further action to take at this time.

Reasons for pursuing this option may include avoiding any risk to the VSME Partners from a CCA, keeping the VSME Partners out of the energy procurement business—which is not a core function for many cities, avoiding concerns that SDG&E or the CPUC could change legislative rules that impact future costs making CCA operation more difficult, or determining that the VSME Partners and other local agencies lack sufficient technical experience to set-up and manage a CCA or JPA. Risks to a VSME Partner CCA are described in more detail in Table 8-1.

Risks in pursuing the no action option include missing the opportunity to negotiate favorable terms in a JPA partnership other jurisdictions.Without a CCA,customers located in the cities would not have a choice in their power supply, and they could miss out on potential program benefits discussed in the previous chapter such as NEM, energy efficiency programs, or electric vehicle programs.

8.2 CCA RISK ANALYSIS
The following analysis is an overview of risks and their relative severity, followed by a discussion of each factor. For variables where uncertainty is quantified, key assumptions are discussed, and a reasonable range of outcomes is established. The range in variable assumptions is meant to reflect probable futures, but do not demonstrate the full scope of possible outcomes. The CCA's rate impacts are estimated using a range of likely outcomes and presented in a scenario analysis.

When evaluating risks, it is important to note that power supply costs are approximately 60%of the total costs, SDG&E non-by-passable (PCIA/CTC) charges account for 30%, and operating costs and reserve contributions account for 10%of total CCA revenue requirement. Figure 8-1 illustrates this breakdown of CCA costs. Table 8-1 provides discussion of each risk factor. preparedbyEES CONSULTING 53
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study FIGURE 8-1. GENERATION RATE COMPARISON 90% RENEWABLE BY 2030 PORTFOLIO

0.14 0.12

0.10 � 0.08

0.06 0.04

0.02 0.00
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 �Energy �Capacity �Renewable GHG Free
�Other Power �O&M �PCIA SDG&E Rate
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study TABLE 8-1. UNCERTAINTY AND MITIGATION STRATEGIES
Potential to
Risk Description Problem Mitigation Strategy Likelihood of Problem Severity of Problem "Suspend" CCA
1 SDG&E Rates SDG&E's CCA rates • Establish Rate Stabilization Fund High — most operating Medium - CCAs have Medium — and generation rates exceed SDG&E • Invest in a balanced energy CCAs in California have been able to buffer rate CCAs may Surcharges decrease or its • Increased supply portfolio to remain agile in undergone short periods impacts using financial need to rely non-bypassable customer opt- power market of rate competition from reserves, then adjust on reserves charges out rate 0 Emphasize the value of the incumbent IOU. power supply to regain to manage (PCIA/CTC) programs, local control, and rate advantage. short-term increase environmental impact in fluctuations. marketing
2 Regulatory Energy policy is • New costs • Coordination with CCA Low—existing regulatory High — a worst-case Medium — Risks enacted that incurred community on regulatory precedent and a growing scenario regulatory energy compromises CCA . Reduced involvement market share makes the legislative decision policy competitiveness authority • Hire lobbyists and regulatory likelihood of state limiting CCA autonomy severe or independence representatives to advocate for policies that severely or enforcing additional enough to CCA disadvantage CCAs low. costs could hinder CCA make CCA viability. infeasible is
not likely.
3 Power Supply Power prices • CCA rates • Long-term contracts Low— market prices are Medium—a poorly timed Low — CCA Costs increase at crucial exceed SDG&E • Draw on CCA reserves to stabilize unlikely to spike enough price spike combined and IOU face time for CCA 0 Increased rates through price spike to make CCA financially with poor power supply the same customer opt- infeasible prior to CCA contract management market for out rate launch. From that point could require CCA to dig power. on, the CCA can limit its into reserves or delay
exposure through launch.
contract selection.
4 SDG&E RPS SDG&E's RPS or Increased Increase renewable power Medium — SDG&E's Low — CCA would have Very Low — Share GHG-free power customer opt- portfolio power portfolio is capability to increase CCA is likely portfolio grows to out rate • Emphasize rates and local dynamic and could renewable energy to respond match or exceed programs in marketing change rapidly as a purchases to match or effectively if CCA's result of other CCA exceed SDG&E if the this occurs. departures. event occurs. In addition,
CCA would promote
other benefits of its
service to customers.
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study Potential to
Risk Description Problem Mitigation Strategy Likelihood of Problem Severity of Problem "Suspend" CCA
5 Availability of Unexpectedly high • CCA unable • Shift emphasis to GHG-free or Low — power Medium — if CCA were Low — RPS/GHG- market demand or to provide RPS resources depending on procurement providers unexpectedly unable to negligible free power loss of supply of target power availability are projecting a plethora procure enough RPS or chance of renewable products • Secure long-term contracts of RPS and GHG-free GHG-free power, it could occurring. resources • Invest in local renewable bids available on the emphasize other market. program strengths to
resources retain customers until
new resources came
online.
6 Financial CCA is unable to • Slower or • Adopt gradual program roll-out Low — CCAs have Medium — in the event Low Risks acquire desired delayed • Establish Rate Stabilization Fund become sufficiently CCA is limited in financing or credit program • Minimize overhead costs established in California, financing options, it can launch such that financing is adopt a more • Unable to almost certainly conservative program build available. design and gradual roll-
out.
generation
projects
7 Loads and Unprecedented • Excess • Increase marketing Low — as CCAs have Low — CCA would have Low customer opt-out rate power . Reduce overhead become more common numerous viable options participation reduces contracts • Expand to new customer in California, and CCA in the event they suffer competitiveness . Poor margins markets marketing firms have unexpectedly low Net Zero homes • Consider merging with existing become more participation.

CCA experienced, opt-out
rates have declined.
• Consistent CCA rate review Current saturation of net zero or NEM customers
is low
8 Direct Access CPUC opens DA to • Excess • County loads are>50% Low — CPUC has Low — with the large Low Changes a broader power residential discussed opening up DA customer base in customer base contracts • Charge exit fee to departing to all non-residential, unincorporated county, and the CCA loses . Lower loads after 60 day opt-out but have only slowly a VSME Partner CCA is commercial load margins notice issued increased the cap. feasible even without commercial accounts.
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study The various sensitivities are discussed below followed by the results of the sensitivity analysis.

8.3 SDG&E RATES AND SURCHARGES
Sensitivity analyses were conducted for two components of SDG&E rates: generation rate and the PCIA.

Delivery rates are paid by both CCA and SDG&E bundled customers. As such, changes in delivery rates impact all customers equally.

8.3.1 Generation Rate
SDG&E generation rates are projected to increase on average by 2%per year over the next 10 years based on the projected market prices, SDG&E's current resource mix and future requirements. To explore the impact in the case that SDG&E's generation rate changes significantly relative to the CCA's generation cost, SDG&E's generation rates and power costs are modeled in the high and low case by incorporating higher(3%) and lower(-1%) generation rate growth rates.

8.3.2 PCIA
When legislation was introduced to allow the formation of CCAs, it was recognized that the IOUs currently serving the potential CCA customers might face stranded generation costs. The PCIA methodology was established by the CPUC as a means for IOUs to recover those stranded costs. The PCIA faces several issues, however, including the source and transparency of data used for its calculation and the fact that the PCIA level is variable and contains a great amount of uncertainty.

The level of the PCIA, or other non-bypassable charge that will potentially replace the PCIA, would impact the cost competitiveness of the VSME Partner CCA. In order to be competitive, the CCA's power supply costs plus PCIA and other surcharges must be at or lower than SDG&E's generation rates. Many factors influence the PCIA, but primarily the PCIA is determined by the cost of power contracts and the cost to SDG&E from departing load. Uncertainties surrounding the PCIA include methodology assumptions unique to SDG&E, as well as to what degree previously acquired power contracts can be retired. The potential for the PCIA to increase sharply occurs when SDG&E must sell previously contracted power at times when wholesale power prices are much lower. The PCIA also has potential to decrease since it reflects SDG&E's own resources and signed contracts obtained prior to load departure; once those contracts expire, the related PCIA would disappear. The PCIA would therefore vary over time, but it is expected that it would decline as market prices increase and grandfathered contracts expire.

The uncertainty associated with forecasted PCIA rates is modeled considering historic PCIA increases as well as the adopted methodology used for the PCIA calculation (October 11, 2018) and proposed changes currently ongoing within the new rulemaking process. In addition to the base case, low and high PCIA forecasts are modeled. High PCIA rates have historically not been maintained and often become implemented as a result of the accounting and rate setting process the IOUs go through each year. The PCIA rate will also vary by vintage where some vintages may see large temporary rate increases while other vintages may experience rate reductions. A high PCIA rate scenario increases the PCIA by $0.005/kWh above the base case for 3 years. A low PCIA rate scenario is not modeled as it would only inform the additional rate savings available to CCA customers and does not change the result showing program viability.
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study

8.4 REGULATORY UNCERTAINTIES
There are numerous factors that could impact SDG&E's rates in addition to the market price impacts described above. Regulatory changes, plant or technology retirements, inflation, and gas prices could all impact SDG&E's rates in the future. Regulatory issues continue to arise that may impact the competitiveness of a VSME Partner CCA. The impact of these factors is difficult to assess and model quantitatively. However, California's operating CCAs have worked aggressively to address any potentially detrimental changes through effective lobbying at the California state legislature and at the California Public Utilities Commission.

New legislation could also impact a VSME Partner CCA. For example,new legislation that recently affected CCAs is SB 350. The CCA-specific changes reflected in SB 350 are generally positive, providing for ongoing autonomy with regard to resource planning and procurement. CCAs must be aware, however, of this legislation's long-term contracting requirements associated with renewable energy procurement.

Specifically, CCAs are required to contract 65%of renewable resources for 10 years or more by 2020, and thereafter.

In addition, there is a risk that additional capacity resource costs are pushed onto CCAs via the Cost Allocation Mechanism (CAM). The CCA would need to continually monitor and lobby at the Federal,State, and local levels to ensure fair and equitable treatment related to CCA charges.

8.5 POWER SUPPLY COST RISK
There are several attributes of CCA power supply costs that introduce uncertainty. The two described in this section include price volatility and weather events and under or over procurement.

8.5.1 Price Volatility
Southern California is becoming increasingly reliant on wind and solar resources which rely on availability of wind and the sun. The increasing distributed generation (DG) saturation has led to regular pricing events in which prices may move $1,000/MWh from one hour to the next, especially during July and August. This volatility occurs as DG generation reaches its peak and again as the sun sets and load remains high. This volatility is difficult to mitigate and is expected to worsen as carbon legislation becomes more aggressive in California. Figure 8-2 shows the average hourly pricing compared to the day ahead pricing for both July and August. Figure 8-3 shows the maximum difference in the same months. preparedbyEES CONSULTING 58
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study FIGURE 8-2. HOURLY VS. DAY-AHEAD PRICING
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preparedbyEES CONSULTING 59
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study FIGURE 8-3. SUMMER PRICE VOLATILITY
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8.5.2 Procurement
Second to price uncertainty, under or over procurement of resources can significantly impact power supply costs. Variance in load forecast and actualized loads can increase power costs if a load serving entity under-procures energy hedges. CCAs must make procurement decisions before knowing how loads will materialize. Program participation,weather,and data inconsistencies can all impact the procurement quantities and resulting market exposure. Additionally, resource development risk can introduce uncertainty in long-term planning. The CCA's portfolio manager is charged with developing a resource strategy to mitigate these risks while meeting California's mandates for renewable energy and technology acquisitions at least cost.

Uncertainty in power costs are modeled such that the entire portfolio is 15% more expensive than forecast. The high case illustrates market exposure during the summer, under procurement and higher than expected power prices. In the low case,the portfolio costs are 10% lower. The low scenario reflects the CCA's ability to procure low-cost high-quality resources (baseload or energy plus capacity products) and lower than expected market prices.

8.6 FINANCIAL RISKS
Starting a new venture carries financial risks that will have to be considered and mitigated before proceeding with a CCA. Depending on the organization structure, a third-party may take on the financial obligations of the CCA. These include establishing start-up financing,working capital funding such as lines of credit, and entering into contracts with suppliers and consultants. Other cities and counties have protected their General Funds by establishing JPAs or lockbox arrangements with vendors.

A VSME Partner CCA could manage many of the financial risks associated with the uncertainty surrounding a CCA start-up. While the goal is to provide clean power competitively with SDG&E, the most important consideration to the third-party financer is that the CCA can increase rates if needed to ensure sufficient revenues are collected to meet costs. In addition, the CCA can plan carefully by minimizing staff initially and only growing as fast as the size of the CCA can support,thereby minimizing the fixed costs of operating the CCA.

A VSME Partner CCA would need to manage the financial risk associated with power supply costs by managing power market and load exposure through prudent hedging and power portfolio management.

In addition, the establishment of rate stabilization reserves and sufficient working capital can mitigate financial risks to the third-party financer and to customers.The success of existing CCAs in managing the financial challenges of a CCA start-up and setting rates that are competitive with the SDG&E and the other IOUs can be a valuable guide for a VSME Partner CCA.

8.7 LOADS AND CUSTOMER PARTICIPATION RATES
The Study bases the load forecasts on expected load growth, load profiles, and participation rates. In order to evaluate the potential impact of varying loads, low, medium, and high load forecasts have been developed for the sensitivity analysis.

Another assumption that can impact the costs of the CCA is the overall CCA customer participation rates.

This Study uses a conservative participation rate of 95% for residential customers and 90% for non- residential customers as its base case. A higher participation rate, such as has been experienced by all of California's operating CCAs to date, would increase energy sales relative to the base case and decrease preparedbyEES CONSULTING 61
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study the fixed costs paid by each customer. On the other hand, a reduced participation rate would increase the fixed costs to a VSME Partner CCA. For reference, recent CCAs have experienced participation rates in the 90-97% range.

Sensitivity to changes in projected loads has been tested for the high and low load forecast scenarios. For the sensitivity analysis, the high case assumes an additional 5% participation rate for non-residential customers, while the low case assumes the participation rate is reduced by 10% for all customers. The low case assumes a -0.14%growth in energy and customers after 2019, while the high scenario assumes a 1.36%growth in energy and customers.

The experience of existing CCAs suggests that only a small number of customers opt-out. For example, PCE has an opt-out rate of 2%,while CPA has a current opt-out rate of 0.7%. Once a CCA is operating,the number of customers switching back to the incumbent IOU has also been less than 5%. In order to mitigate the potential switching of customers, it would be important for the CCA to implement prudent power supply strategies to address potential load swings from changes in participation and weather uncertainty, plus establish a rate stabilization fund. Keeping rates low as well as providing excellent customer service would lead to strong customer retention.

The CPUC recently increased the cap on DA customers which translates to a very small increase in the number of commercial customers that might not join a VSME Partner CCA. The participation rate for commercial rate classes was adjusted to account for the expected impact of this change. However, if the CPUC decides in the future to open up DA to all non-residential accounts, the VSME Partner CCA could lose nearly half of its load. This possibility is not very likely; however, it is estimated that the number of residential customers could sustain a VSME Partner CCA.

8.8 SENSITIVITY RESULTS
Figure 8-4 provides the results of the sensitivity analysis for the 90% Renewable by 2030 Portfolio. The scenarios assume the following:
■ High Power Costs: 15% increase in total power supply costs ■ Low Power Costs: 10% lower than forecast
■ High PCIA: 25% higher for 3 years
■ Low Participation: Program Participation is 80% (vs. 90-95%) ■ Low SDG&E Generation Rate: -1%annual change from 2021 ■ High SDG&E Generation Rate: 3%annual change from 2021 The figure illustrates that the viability of a rate discount is most sensitive to power costs. preparedbyEES CONSULTING 62
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study FIGURE 8-4. BASE CASE PORTFOLIO SENSITIVITY

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While the CCA would not be able to impact SDG&E's generation rates,the CCA does have the opportunity to monitor and actively opine on the costs and methodology used to allocate non-bypassable costs to CCAs in SDG&E's service area, including the PCIA. Given recent history, this task would be shared with other CCAs and is an important and time-consuming task that can mitigate the impact on the CCA's costs.

SDG&E's PCIA is at a historic high; however,the design of the PCIA implies that the PCIA will decrease over time as SDG&E's high-cost contracts expire and market prices increase.

This Study assumes a relatively high customer opt-out percentage (10% for non-residential customers) compared to the more modest opt-out rates experienced by California's actively operating CCAs,which is closer to 2-5%overall. While there is a possibility that a VSME Partner CCA does not reach the projected participation rates,careful monitoring and planning can reduce the potential impact of low loads through flexible power supply contracts and regular monitoring of administrative and general expenses.

The CCA should also implement a rate stabilization fund so that short-term events that result in lower SDG&E rates,or higher PCIA rates,can be mitigated with reserves rather than by rate increases. Reserves would help the CCA remain competitive and provide rate stabilization for customers. A rate stabilization reserve account balance equal to 10% of annual revenues would mitigate most rate impacts CCAs have observed to date where CCA costs have been 1-5% higher than the incumbent IOU. preparedbyEES CONSULTING 63
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study 9 CCA Governance Options
The technical feasibility analysis assumes that the VSME Partners form a JPA for purposes of operating A CCA program. This section of the Study further discusses this and other governance options that may be available to the VSME Partners. Rate impacts, timing of launch, staffing organization, and local control aspects of these options are explored. Each CCA governance option is discussed below.

9.1 ENTERPRISE CCA
With this governance option, the VSME Partners form a CCA that functions as a department within the Cities' government structure subject to the direct control of the Board of Supervisors and Cities' administration.
■ Financial Viability: This option is viable (see Appendix). Based on the analysis in this Study, individual CCAs are economical for all three cities.
• Escondido: Power Portfolio is 100%Renewable by 2030 and can offer a 2%discount • San Marcos:Power Portfolio is 95%Renewable by 2030 and can offer a 2%discount • Vista:Power Portfolio is 90%Renewable by 2030 and can offer a 2%discount ■ Governance: The CCA operates as a city department and is governed by the City Council. ■ Local Control: Decision-making is totally focused on the needs of the individual cities. ■ Other Attributes: Operating an Enterprise CCA may require specific measures to protect city general funds from CCA obligations.

Table 9-1 summarizes key metrics for an Enterprise CCA model. All metrics are calculated assuming VSME City financing for pre-launch costs; however, these can also be externally financed. Working capital assumes each VSME City meets its respective CAP goals.

TABLE 9-1. ENTERPRISE CCA MODEL METRICS
Pre-Launch Costs for Each City $600,000
Working Capital&Collateral Escondido:$9 million
San Marcos:$9 million
Vista:$9 million
Estimated Bundled Rate Discount 2%
Power Supply Cost Allocation ower supply obtained under direct control of each city Another permutation of an Enterprise arrangement could be to form a JPA for shared overhead expenses with other CCAs. In this study,this operating arrangement is referred to as the Enterprise JPA. Each VSME City would form a standalone CCA and then join other independent CCAs to form a JPA that shares some of the administrative costs and possibly a common power and data management vendor. In this case, each CCA maintains control over the makeup of its power supply portfolio. This option therefore maintains local control over power supply and rates.There are some costs that would likely not be shared such as regulatory filings, CAISO-related expenses, and portfolio modeling and risk management.

9.2 VSME PARTNER JPA CCA
Under the VSME Partner JPA CCA, the VSME Partners establish a CCA that includes one or more other jurisdictions. This structure implies shared decision-making rights in accordance with a specified voting preparedbyEES CONSULTING 64
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study structure. Additionally, under a JPA CCA model, administrative and consultant costs are pooled and covered by the collective JPA CCA revenues.
■ Financial Viability: This option is viable even if each VSME City has a different portfolio supply mix, or should other cities join the JPA at the same or different portfolio supplies. There are lower administrative costs compared with Enterprise CCA governance or Enterprise JPA organizational structure.
■ Governance: The VSME Partners would establish the governing board. Having a limited number of board members helps to enable flexible governance and maintain focus on local control. ■ Local Control: The VSME Partners share decision making with other members. ■ Other Attributes: Potential partners should share the VSME Partners' intentions for CCA goals, local programs, and operations design. Operational savings on non-power supply costs (administration, legal, regulatory, and other services) would likely occur due to economies of scale. A JPA agreement provides express financial protection of jurisdiction general funds from CCA contractual obligations.

Table 9-2 details estimated start-up costs for a VSME Partner JPA.

TABLE 9-2.VSME PARTNER JPA CCA MODEL METRICS
Pre-Launch Costs $600,000
Working Capital&Collateral $18 million
Estimated Bundled Rate Discount 2%
Power Supply Cost Allocation Power supply obtained for all members but can accommodate special requests such as 100% Renewable
options. Different power supply portfolio costs can be
allocated to each member city.

9.3 SAN DIEGO COMMUNITY POWER
This JPA would likely accept new members with future launch dates. Membership may require upfront financial commitments from the VSME Partners to cover the cost of filing a new implementation plan and any additional working capital needs.
■ Financial Viability: This will be the largest CCA in SDG&E service territory and will likely provide the greatest potential for economies of scale savings in overhead expense. ■ Governance: When the Board of Directors becomes large, decision-making is often delegated to committees. Risk sharing is greatly reduced as the size of the JPA increases considerably. Each City's vote and local control may be impacted if based on weighted voting instruments. ■ Local Control: As part of a larger CCA with a greater number of board members, each City's relative voice becomes a smaller share. As of yet, this CCA includes only 5 cities, but could be expanded to include many more.
■ Other Attributes: Due to the size of this CCA,and the proposed launch of 2023,SDCP may have already accrued a large share of its working capital and reserves by the time service would begin to the Cities.

In this case, it is possible that the VSME Partners'financial obligation for reserves and start-up capital would be greatly reduced compared with the other two options discussed so far. In addition,the VSME Partners could reduce pre-launch costs by up to $600,000 plus avoid the CPUC bond commitment of $147,000 and the CAISO deposit of$500,000.
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study Table 9-3 shows that the start-up costs borne by the cities is uncertain at this time, but that the likelihood of higher rate savings is high given the size of SDCP.

TABLE 9-3.VSME CITIES JOIN SDCP
Pre-Launch Costs TBD: Based on offer from SDCP
Working Capital TBD: Based on offer from SDCP
Estimated Bundled Rate Discount Not available
Power Supply Cost Allocation TBD,Current rates are SO%renewable with 5%additional GHG free power
Launch Date Potentially as early as 2023

9.4 CLEAN ENERGY ALLIANCE (CEA)
As with SDCP, this JPA would likely accept new members with future launch dates. Membership may require upfront financial commitments from the VSME Partners to cover the cost of filing a new implementation plan and any additional working capital needs. ■ Financial Viability: Joining CEA is likely technically feasible as there would be economies of scale savings beyond what the three VSME Partners could obtain by themselves. This JPA will likely remain smaller in size compared with SDCP, since the City of San Diego, founding member of SDCP, is a significant share of regional loads.
■ Governance: The three member cities in CEA are roughly the same size as the VSME Partner Cities.

Therefore,it is likely that governance by a JPA board would not be significantly impacted by a doubling CCA size in the number of members as well as the load served. ■ Local Control: The current size of this JPA is three jurisdictions. Even if all three Cities join, the six- member Board is a still a manageable size.
■ Other attributes: CEA will have been operating for 1-2 years by 2023, the proposed launch date for the VSME Partners. In addition to the collection of operating reserves,CEA will already have contracts in place reducing star-up costs for the VSME Partners.Together,the VSME Partners could reduce pre- launch costs by up to$600,000 plus to avoid the CPUC bond commitment of$147,000 and the CAISO deposit of$500,000 as shown in Table 9-4.

TABLE 9-4.VSME CITIES JOIN CEA
Pre-Launch Costs TBD: Based on offer from CEA
Working Capital TBD: Based on offer from CEA
Estimated Bundled Rate Discount Not available
Power Supply Cost Allocation TBD,Current portfolio considered includes 50%renewable with up to 75%total GHG free power
Launch Date Potentially as early as 2023

9.5 SUMMARY OBSERVATIONS ON GOVERNANCE OPTIONS
If the VSME Partners move towards CCA adoption, it should further investigate each of these governance options. EES recommends that the VSME Partners further discuss the options to consider the respective pros and cons. The VSME Partners should develop a more detailed assessment of the options of joining existing organizations or developing new, local/regional organizations. preparedbyEES CONSULTING 66
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9.6 CCA OPERATIONAL OPTIONS
If the VSME Partners operate as a JPA, there are several staffing options available. One option would be to operate the CCA with minimal staff,such as a General Manager, Power Supply Manager,and Customer Service Manager,to oversee consultants that would perform all necessary technical tasks. Another option is to minimize the use of outside consultants and hire sufficient staff in-house to manage all necessary tasks. Most operating CCAs have started with minimal staffing and then transitioned over time to additional staff in-house. A third option is to have an independent third party completely operate the CCA.

For this Study, it is assumed that the VSME Partners would operate a CCA with limited staff supported by consultants experienced in power procurement, data management, and utility operations. If the VSME Partners decide to transition some administrative and operational responsibilities to internally staffed positions, the CCA could reach a full-time staff of approximately 4 employees to perform its responsibilities, primarily related to program and contract management, legal and regulatory,finance and accounting, energy efficiency, marketing, and customer service. Technical functions associated with managing and scheduling power suppliers and those related to retail customer billing would likely still be performed by an experienced third-party consultant.
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study 10 Conclusions and Recommendations
The first impact associated with forming a VSME Partner CCA would be lower electricity bills for VSME Partner CCA customers. CCA customers should see no obvious changes in electric service other than the lower price and more renewable power procurement, consistent with the VSME Partner city CAP goals.

Customers would pay the power supply charges set by the CCA and no longer pay the costs of SDG&E power supply but would still pay the costs of SDG&E distribution.

Given this Study's findings,the CCA can establish a goal of providing rates that are equal to or lower than the equivalent rates offered by SDG&E even under the 90% Renewable by 2030 Portfolio option. The projected CCA and SDG&E rates are illustrated in Figure 10-1.

FIGURE 10-1. RATE COMPARISON

0.14 0.12

0.10 � 0.08
ti 0.06

0.04 0.02

0.00 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 �Energy �Capacity �Renewable GHG Free
�Other Power �O&M �PCIA SDG&E Rate
Once the CCA gives notice to SDG&E that it will commence service, the CCA customers will not be responsible for costs associated with SDG&E's future electricity procurement contracts or power plant investments. This is an advantage to the CCA customers, as they would then have local control of power supply costs through the CCA.

10.1 LOCAL CONTROL
A second outcome of forming a CCA is that the CCA can help the member cities meet their CAP renewable energy target. The cities CAP goals are 90%, 95%, and 100% renewable electric supply by 2030 for Vista, San Marcos, and Escondido respectively. Achievement of these CAP goals are under the total control of the VSME Partners under the CCA business model.

10.1.1 Energy Programs
A third outcome of forming a CCA would be an increase in energy efficiency program investments and activities. The existing energy efficiency programs administered by SDG&E are not expected to change as a result of forming a CCA (i.e., they would still be available). The CCA customers would continue to pay prepared by E E S CONSULTING 68
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study public goods charges-which fund energy efficiency programs for all customers, regardless of supplier—to SDG&E. The energy efficiency programs ultimately planned for the CCA would be in addition to the level of investment that would continue in the absence of a CCA. Thus, the CCA has the potential to increase energy investment and savings while further reducing emissions through expanded energy efficiency programs.

10.2 FINDINGS AND CONCLUSIONS
Based on the analysis conducted in this Study, the following findings and conclusions are made:
■ The formation of a CCA is technically and financially feasible and could yield benefits for all participating residents and businesses.
■ Financial benefits include electric retail rates that are 2% lower compared with SDG&E rates. ■ Benefits are also achieved through local decision-making about power supply, rates, and customer programs. Specific programs could include economic development incentives and targeted energy efficiency and demand response programs.CCA start-up costs could be fully recovered within the first five years of CCA operations.
■ After this cost recovery, revenues that exceed costs could be used to finance a rate stabilization fund, new local renewable resources, economic development projects, and/or lower customer electric rates.
■ The sensitivity analysis shows that the ranges of prices for different market conditions will for the most part not negatively impact CCA rates compared to SDG&E rates. Where negative impacts may exist, risks can be mitigated.
■ The CCA could be a means to achieve local control of energy supply, and to help the Cities achieve their CAP measures to reduce GHG emissions.
■ There are risks associated with a VSME Partner CCA. If formed, this will be a new and competitive effort for the Cities. New skill sets and strong policy guidance will be needed for a VSME Partner CCA to succeed.

If the relative impacts of a CCA for the VSME Partners and their residents persuade the VSME Partners to form a CCA, the VSME Partners should consider the following next steps: select a governance option, begin pre-startup operations, and develop and file an Implementation Plan.

10.3 SUMMARY AND NEXT STEPS TIMELINE
This Study concludes that the formation of a VSME Partner CCA is technically and financially feasible and could yield benefits in excess of costs for all participating residents and businesses. These benefits are summarized in Table 10-1 below and could include lower rates for electricity. prepared by E E S CONSULTING 69
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study TABLE 10-1. KEY CCA STATISTICS
VSME Partner City of Vista City of San Marcos
•0' ..

Power Supply Portfolio Renewable •0' 00 Portfolio . Renewable Portfolio
2024 Operating Budget,$million $105 $31 $31 $46 2024 Revenues,$million $118 $32 $32 $50 2024 Load Served,GWh 1,527 484 431 666 Startup Loan (Including Pre-Startup
Costs and Working Capital,
_Collateral),$million $18 $9 $9 $9
Startup Loan and repayment,years 5 5 5 _ 5 Average Rate Discount,% 2 1% 2.0% 2.0%

2.0°
Table 10-2 provides a high-level timeline of next steps for the different governance options. A detailed CCA implementation schedule is provided in the Appendix. This schedule could apply to any new CCA (enterprise or JPA structure).

TABLE 10-2. NEXT STEPS OVERVIEW
Enterprise CCA VSME Partner JPA CCA Join Existing JPA CCA Select Governance Form Enterprise Fund. Draft JPA and obtain at Select Representative for least 1 Partner. Board. Pass CCA ordinance
and sign JPA agreement.

File Implementation File Implementation File Implementation plan Existing JPA would file Plan plan two calendar years by December 2021 for Implementation Plan in Dec before launch. File in January 2023 launch. 2021.

December 2021 for
January 2023 launch.

Hire Staff Each city would hire Hire minimum staff to Existing JPA will begin all pre- minimum staff(4)to begin pre-start-up startup operations. JPA Board begin pre-start-up operations. makes contract and hiring operations. decisions. Cities may
Secure Financing Have financing in place Have financing in place to designate a board member to facilitate contracting facilitate contracting for depending on JPA agreement. for power and services. power and services.

Contract for Power Secure power contracts, Secure power contracts, and Data Management Resource Adequacy Resource Adequacy must Services must be secured before be secured before launch. launch.

Launch 2023 2023 2023
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CC4 Technical Feasibility Study 11 Appendix A - Base Case Pro Forma Analyses
TABLE 11-1. BASE CASE ANNUAL PROFORMA, ALL 3 CITIES, 90% RENEWABLE BY 2030 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Revenues from Operations($)
Electric Sales Revenue 50 $96,192,135 $117,959,710 $120,637,22' $122,693,656 $125,467,388 $128,297,541 $131,184,998 $134,130,640 $137,135,352 $140,200,015 Less Uncollected Accounts 50 $192,384 $235,919 $241,2]4 $245,387 $250,935 $256,595 $262,370 $268,261 $274,271 $280,400 Total Revenues $0 $95,999,750 $117,723,791 $120,395,954 $122,448,269 $125,216,453 $128,040,946 $130,922,628 $133,862,379 $136,861,081 $139,919,615 Cost of Operations($)
Cost of Energ, $0 $74,289,743 $96,805,507 $98,156,661 $99,804,425 $104,361,185 $105,973,910 $107,826,378 $109,651,986 $111,339,330 $113,067,274 PCC1 $0 $1,303,186 $1,935,604 $1,974,222 $2,121,756 $6,749,237 $6,540,288 11610,695 $6,504,679 $6,675,908 $6,951,645 PCC2 $0 $1,865,757 $2,665,959 $2,898,072 $3,140,245 $3,299,539 $3,465,044 $3,636,975 $3,815,557 $3,915,998 $4,019,083 Resource Adequacy $0 $18,094,473 $24,243,601 $24,901,083 $25,504,443 $26,170,619 $26,854,195 $27,555,627 $29,275,390 $29,013,933 $29,771,777 CF Requirement $0 $1,322,036 $1,845,867 $1,966,170 $2,092,785 $2,204,398 $2,320,438 $2,441,059 $2,566,423 $2,633,981 $2,703,318 Miscellaneous CAISO $0 $4,916,798 $6,674,290 $6,917,141 $7,168,828 $7,357,540 $7,551,220 $7,749,998 $7,954,009 $8,163,390 $8,378,283 LT Renewable Contracts $0 $22,676,683 $30,743,836 $31,793,738 $32,855,4T $23,385,130 $25,425,473 $26,827,872 $28,633,168 $28,810,693 $28,989,319 Block Ene y $0 $24,110,811 $28,796,350 $27,706,236 1 $26,920,992 $35,194,722 $33,817,253 $33,004,152 $31,902,771 $32,125,426 $32,353,849 Operating&Administrative
Billing&Data Management $0 $1,177,210 $1,608,247 $1,650,583 $1,694,033 $1,739,627 $1,784,394 $1,931,367 $1,879,576 $1,929,053 $1,979,834 SDG&E Fees $0 $357,428 $441,480 $453,101 $465,029 $477,270 $489,834 $502,728 $515,962 $529,544 $543,485 Consulting Services $278,333 $957,300 $1,122,714 $985,987 $1,005,707 $1,025,821 $1,046,337 $1,067,264 $1,088,609 $1,110,392 $1,132,589 Staffing $0 $696,165 $1,096,525 $1,278,369 $1,303,936 $1,330,015 $1,356,615 $1,383,747 $1,411,422 $1,439,651 $1,469,444 General&Administrative expenses $0 $158,763 $181,238 $163,639 $166,911 $190,649 $194,058 $177,127 $180,670 $204,693 $199,373 Debt Service $0 $2,977,881 $3,985,605 $3,985,605 $3,985,605 $3,995,605 $0 $0 $0 $0 $0 Total O&ACostt $278,333 $6,3-- 11,435,808 $8,517,283 $8,621,220 $8,747,986 $4,961,239 $4,962,234 $5,076,239 $5,213,313 $5,322,725 Total Cast $278,333 $80,614,489 $105,24113. $106,673,944 $108,425,645 $113,109,171 $110,935,149 $112,788,612 $114,728,225 $116,552,644 $118,390,001 Net Income from Operations ($278,333) $15,395,261 $12,492,476 $13,722,010 $14,022,624 $12,107,282 $17,205,797 $19,134,016 $19,134,154 $20,308,437 $21,529,614 Cash from Operations and Financing
Net Income ($278,333) $15,395,261 $12,492,476 $13,722,010 $14,022,624 $12,107,292 $17,205,797 $18,134,016 $19,134,154 $20,308,437 $21,529,614 Cash from Financin $600,000 $17,OOD,000 $O $0 $0 $0 $0 $O $0 $0 $0 Total Cash Available $321,667 $32,385,261 $12,492,476 $13,722,010 $14,022,624 $12,107,282 $17,205,797 $18,134,016 $19,134,154 $20,309,437 $21,529,614 Available For Reserves $921,667 $33,306,928 $45,789,404 $59,511,413 $73,534,037 $85,641,319 $1.2,947,116 $120,981,131 $140,115,285 $160,423,722 $181,953,336 Reserve Targets $91,507 $26,503,394 $34,599,894 $35,070,886 $35,646,787 $37,186,577 $36,438,953 $37,081,188 $37,718,869 $38,318,677 $38,922,740 Reserve Outlays
CPUC Bond $297,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 New Pro rams $0 $6,506,534 $4,385,985 $13,251,008 $13,446,722 $10,567,492 $17,953,421 $17,491,781 $18,496,473 $19,708,628 $20,925,552 Total Reserve0utlays $297,000 $6,506,534 $4,395,985 $13,251,008 $13,446,722 $10,567,492 $17,953,421 $17,491'781 $18,496,473 $19,708,628 $20,925,552 Rate Stabilization Reserve Balance $624,667 $26,503,394 $34,599,884 $35,070,886 $35,646,797 $37,186,577 $36,438,953 $37,081,188 $37,718,869 $38,318,677 $38,922,740 CCA Total Bill $O $297,714,U9 $389,1%,008 $399,472,Q!5 $009,344,443 $420,156,825 $431,255,172 $442,647,059 $454,340,264 $466,342,T71 $478,662,T8 SDG&ETotal Bill $0 $304,291,969 $397,802,511 $408,274,264 $419,021,676 $430,052,002 $441,372,691 $452,991,386 $464,915,931 $477,154,378 $489,714,990 Difference $0 $6,577,240 $8,606,502 $8,801,858 $9,677,233 $9,895,177 $10,117,520 $10,344,328 $10,575,668 $10,811,607 $11,052,212 Total Bill Discount 0.0% 2.2% 2.2% 2.2% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% 2.3% Effective Generation Rate Discount 4.8% 5.0% 5.0% 5.3% 5.3% 5.3% 5.3% 5.3% 5.2% 5.2% preparedbyEES CONSULTING 71
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CC4 Technical Feasibility Study TABLE 11-2. BASE CASE ANNUAL PROFORMA, ESCONDIDO ONLY, 100% RENEWABLE BY 2030 2022 2023 202A 2025 2026 2021 2028 2029 2030 2031 2032 MI Revenues from Operations($)
Electric 5a1es Revenues $0 $W,924,260 $49,984,606 $51,119,786 $51,Bso,119 $53,053,753 $54,251,293 $55,473,115 $56,719,594 $57,991,SW $59,288,028 $W,630,734 Less Uncollected Accounts $0 $81,849 $99,969 $102,240 $103,7 0 $1W,108 $30%, 3 $110,946 $113,439 $115,%2 $118,576 $121,221 Total Revenues $0 $40,842,411 $49,-,- $S1,017,54J $51,]]6,359 $52,94],646 $54,142,191 $55,362,169 $56,6W,155 $57,875,124 $59,169,452 $6014891512 Cost of Operations($)
Cost of Ene $0 $31,458,673 $40,882,201 541,450,963 $41,915,160 $44,889,029 $45,690,W2 $46,598,W2 $47,503,941 $48,250,063 $49,014,318 $49,797,138 PCC1 $0 $550,849 $-,308 _ $-,781 $855,571 $3,475,508 $3,478,338 $3,603,361 $3,658,485 $3,]54,]91 $3,853,632 $3,955,075 PCC2 $0 $788,638 _$1,124,579 $1,222,492 $1,272,069 $1,503,902 $1,589,936 $1,6]9,459 $1,]]2,592 $1,819,254 $1,867,144 $1,916,295 Resource Adequacy $0 $7,&16,613 $10,223,878 $10,4%,689 $W,]86,926 $111068,680 $11,35],]94 $11,654,460 $11,958,874 $12,2]1,240 $12,591,765 $12,920,662 CIF Requirement $0 $558,812 $'B- $829,388 $MWl $1,012,536 $1,0]3,449 $1,136,86] $1,202,880 $1,234,545 $1,267,W3 $1,3W,397 Miscellaneous CAI50 $0 $2,078,285 $2,815,411 $2,917,852 $3,024,021 $3,103,625 $3,185,325 $3,269,176 $3,355,234 $3,443,557 $3,534,205 $3,627,239 LT Renewable Contracts $0 $9,585,214 $12,968,658 $13,411,537 $13,250,SB2 $9,864,532 $10,]25,2W $11,316,781 $12,078,308 $12,153,193 %2,228,543 $12,304,3W Block Energy $0 $10,250,261 $12,196,721 $11,137,223 $11,882,011 $14,8FA,246 $14,280,W3 $13,938,]98 $13,4T1,568 $13,5T3,483 $13,671,986 $13,]]3,110 Operating&Administrative
Billing&Data Management $0 $507,]]9 $693,658 $]31,918 $T,658 $]49,892 $]69,632 $]89,892 $810,1585 $832,026 $853,9]S $8]6,40] SDG&E Fees $0 $173,662 $190,416 $195,428 $2W,573 $205,853 $211,272 $216,833 $222,541 $228,3W $234,413 $240,584 Consulting Services $278,333 $95],300 $1,122,]14 $985,98] $1,W5,]O7 $1,025,821 $1,096,33] $1,06],264 $1,C88,609 $1,110,382 $1,132,589 $1,155,241 Staffing $0 $696,165 $1,W6,5251 $1,278,369 $1,303,936 $1,330,015 $L21M,615 $1,383,747 $1,411,422 $1,439,651 $1,468,444 $1,497,82 General&Administmtive expenses $0 $158,763 5181,238 $163,638 $166,911 $190,649 $1841058 $1T1,127 $180,670 $204,683 $198,313 $1911T28 Debt Service $0 $1,449,311 $1,94J,511 $1,947,511 $1,94],511 $1,947,511 $0 $0 $0 $0 $0 $0 Total 0&A Costs $2]8,333 $3,942,980 $5,232,%1 $5,282,851 $5,355,292 $5,449,]41 $3,567,915 $3,634,864 $3,713,928 $3,815,140 $3,88],]46 $3,961,T13 Total Cost $218,333 $35,-!B $46,114,262 $46,]33,814 $47,270,456 $50,338,T10 $49,251,966 $50,233,]66 $51,217,869 $52,065,205 $52,902,W7 $53,758,913 Net Income from Operations ($278,333) $5,440,759 $3,]70,3]4 $4,283,733 $4,505,%3 $2,608,875 $4,884,824 $5,128,403 $5,388,286 $5,809,919 $6,267,385 $6,730,5% Cash from Operations and Financing
Net Income ($278,333) $5,4 ,759 $3,770,374 $4,283,133 $4,SW,903 $2,W8,875 $4,884,824 $5,128,403 $5,388,286 $5,8W,919 $6,26],385 $6,]30,599 Ca sh from Ana ncin $600,000 $81W0,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Cash Available $32t,66] $13,440,159 _$3,]J0,3J4 $4,283,733 $4,SW,903 $2,6W,875 $4,884,824 $5,128,493 $5,388,286 $5,809,919 $6,261,385 $6,)30,599 Available For Reserves $921,66] $14,362,425 $18,132,J99 $22,416,532 $26,922,435 $29,531,310 $34,416,135 $39,544,538 $44,932,824 $50,742,743 $57,030,128 $63,]40,T2] Reserve Targets $91,507 $11,638,899 $15,1WB53 $L5,364,542 $15,W,972 $16,549,733 $16,194,4W $16,515,211 $16,838,752 $1],11],328 $17,392,460 $1],6]4,163 Reserve Ootlays
CPUC Bond $29],000 $0 $0 $0 $0 _$0 % _ $0 $0 $0 $0 $0 New Pro rams $0 $2,426,526 $248,420 $4,080,045 $4,329,472 $1,6W,114 $5,240,15] $4,80],592 $5,064,745 $5,531,343 $5,992,252 Total Reserve Outlays $297,000 $;426,526 $2Q,420 $4,080,045 $4,329,472 $1,600,114 $5,240,157 $4,807,592 $5,064,745 $5,531,343 $5,992,252 Rate Stabilization Reserve Balance %24,667 $11,638,899 $]5,160,853 $15,364,542 $15,540,972 $36,549,]33 $16,194,4gg $16,515,211 $16,838,]52 $1],11],328 $11,392,460 $17,674,10 CCA Total Bill $0 $126,457,045 $164,870,088 $169,223,306 $173,293,439 $1]],8]1,W8 $182,570,271 $187,393,536 $192,344,39J $197,426,237 $202,642,526 $207,996,830 $0G&ETotal Bill $0 _ $129,-,285 $168,S1J,033 $1R,953,075 $1T/,SW,892 $182,1]$55] $186,9]4,226 $191,896,135 $196,94],1- $202,132,058 $207,452,982 $212,913,974 Difference $0 $2,]98,240 $3,646,945 $3,729,770 $4,21453 $4,30],249 $4,403,955 $4,502,600 $4,603,212 $4,J05,821 $4,810,456 $4,917,145 Total Bill Discount 0.0% 2.2% 2.2% 1.2% 2.4% 2.4% 2.4% 2.3% :,1% 2.3% 2.3% Eff,dive Generation Rate Discount 48% 5.0% 5.0% 5.5% 5.5% 5.4% 5.4% .4% 5.4% 5.4% 5.3% preparedbyEES CONSULTING 72
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CC4 Technical Feasibility Study TABLE 11-3. BASE CASE ANNUAL PROFORMA, SAN MARCOS ONLY, 95% RENEWABLE BY 2030 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Revenues from Operations
Electric Sales Revenues 50 $25,947,262 $32,010,382 $32,736,350 $33,310,794 $34,063,153 $34,830,787 $35,613,933 $36,412,827 $37,227,IW $38,058,815 Less Uncollected Accounts $0 $51,895 $64,021 $65,473 $66,622 $69,126 $69,662 $71,228 $72,826 $74,455 $76,118 Total Revenues $0 $25,895,367 $31,946,361 $32,670,877 $33,244,173 $33,995,027 $34,761,126 $35,542,705 $36,340,002 $37,153,254 $37,982,697 Cost of Operations($)
Cost of Energy 50 $20,099,980 $26,362,951 $26,732,046 $27,182,238 $28,421,422 $28,863,277 $29,369,946 $29,869,036 $30,330,172 $30,802,347 PCC1 $0 $352,861 $5W,231 $538,006 $578,211 $1,839,315 $1,782,372 $1,801,559 $1,772,668 $1,819,331 $1,867,223 PCC2 $0 $505,202 $726,532 $789,799 $855,786 $999,197 $944,300 $991,156 $1,039,823 $1,067,195 $1,095,288 Resource Adequacy $0 $4,901,510 $6,609,336 $6,789,589 $6,954,102 $7,135,744 $7,322,129 $7,513,383 $7,709,633 $7,911,WB $8,117,644 CF Requirement $0 $357,976 $503,039 $535,825 $570,330 $600,747 $632,370 $665,242 $699,406 $717,818 $736,713 Miscellaneous CAISO $0 $1,331,351 $1,818,890 $1,885,072 $1,953,663 $2,005,091 $2,057,873 $2,112,044 $2,167,642 $2,224,703 $2,283,266 LT Renewable Contracts $0 $6,140,332 $8,378,400 $8,664,522 $8,953,870 $6,372,961 $6,928,999 $7,311,183 $7,803,166 $7,851,546 $7,900,225 Block Energy $0 $6,5W,747 $7,826,524 $7,529,244 $7,316,276 $9,568,369 $9,195,234 $9,975,378 $8,676,698 $8,738,570 $8,801,987 Operating&Administrative
Billing&Data Management $0 $344,301 $470,543 $482,930 $495,643 $509,690 $522,081 $535,824 $549,929 $564,405 $579,263 SDG&E Fees 50 $128,786 $1291169 $132,569 $136,059 $139,640 $143,316 $147,089 $150,961 $154,935 $159,014 Consulting Services $278,333 $957,300 $1,122,714 $985,987 $I,W5,7097 $1,025,821 $1,046,337 $1,067,264 $1,088,609 $1,110,392 $1,132,589 Staffing $0 $696,165 $1,096,525 $1,278,369 $1,303,936 $1,330,015 $1,356,615 $1,383,747 $1,411,422 $1,439,651 $1,468,444 General&Administrative expenses $0 $158,763 $181,238 $163,638 $166,911 $190,649 $184,058 $177,127 $180,670 $204,693 $199,373 Debt Service $0 $1,449,311 $1,947,511 $1,947,511 $1,99],511 $1,947,511 $0 50 $0 $0 $0 Total O&ACosts $278,333 $3,734,625 $4,947,700 $4,991,004 $5,055,767 $5,142,327 $3,252,408 $3,311,052 $3,381,592 $3,474,056 $3,537,683 Total Cost $278,333 $23,824,606 $31,310,651 $31,723,051 $32,238,0M $33,563,749 $32,115,685 $32,680,998 $33,250,628 $33,804,228 $34,340,032 Net Income from Operations ($278,333) $2,070,762 $635,710 $947,826 $1,006,168 $431,278 $2,645,440 $2,861,707 $3,089,374 $3,349,025 $3,642,665 Cash from Operations and Financing
Net Income ($278,333) $2,070,762 $25,710 $94],826 $1,W6,168 $431,278 $2,645,440 $2,861,707 $3,W9,374 $3,349,025 $3,642,665 Cash from Financing $600,000 $8,000,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Cash Available $321,667 $10,070,762 $635,710 26 $1,W6,168 $431,278 $2,645,440 $2,861,707 $3,089,374 $3,399,025 $3,642,665 Available For Reserves $921,667 $10,992,428 $11,628,138 $12,575,964 $13,582,132 $14,013,410 $16,658,850 $19,520,558 $22,609,932 $25,958,957 $29,601,621 Reserve Targets $91,507 $7,832,747 $10,293,913 $10,429,496 $10,598,796 $11,034,657 $10,558,581 $10,744,438 $10,931,713 $11,113,719 $11,289,874 Reserve Outlays
CPUC Bond $297,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 _ $0 New Programs $0 $2,862,681 $0 $0 $0 $0 $2,940,588 $2,675,851 $2,902,098 $3,16],212 $3,466,510 Total Reserve Outlays $297,OW $2,862,681 $0 $0 $0 $0 $2,940,588 $2,6]5,851 $2,902,098 $3,16],019 $3,466,510 Rate Stabilization Reserve Balance $624,667 $7,832,747 $8,468,457 $9,416,283 $10,422,4S1 $10,853,729 $10,558,581 $10,744,438 $10,931,713 $11,113,719 $11,289,974 CCA Total Bill $0 $80,712,008 $106,090,012 $108,891,238 $111,600,125 $114,547,834 $117,573,500 $120,679,189 $123,867,022 _$127,139,173 $130,497,878 SDG&E Total Bill $0 $82,486,179 $108,425,533 $111,279,727 $114,209,055 $117,215,494 $120,301,075 $123,467,890 $126,718,049 $130,053,774 $133,477,310 Difference 10 $1,774,172 $2,335,521 $2,388,489 $2,608,930 $2,667,660 $2,727,574 $2,788,691 $2,851,027 $2'914,W1 $2,979,432 Total Bill Oiscaunt 0.0% 2.2% 2.2% 2.1% 2.3% 2.3% 2.3% 2.3% 2.2% 2.2%1 2.2% Effective Generation Rate Discount 4.8% 5.0% 5.0% 5.3% 5.3% 5.3% 5.2%1 5.2% 5.2% 5.2% preparedbyEES CONSULTING 73
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study TABLE 11-4. BASE CASE ANNUAL PROFORMA, VISTA ONLY, 90% RENEWABLE BY 2030 2022 2023 2024 2025 2026 2027 20M 2029 2030 2031 2032 Revenues from Operations
Electric Sales Revenues $0 $25,947,262 $32,010,382 $32,736,350 $33,310,794 $34,063,153 $34,930,787 $35,613,933 $36,412,827 $37,227,709 $38,058,815 Less Uncollected Accounts $0 $51,895 $64,021 $65,473 $66,622 $68,126 %9,662 $71,228 $72,826 $74,455 $76,118 Total Revenues $0 $25,895,367 $31,946,361 $32,670,877 $33,2M,173 $33,995,027 $34,761,126 $35,542,705 $36,340,002 $37,153,254 $37,982,697 Cost of Operations($)
Cost of Energy $0 $20,089,980 $26,362,951 $26,732,046 $27,182,238 $28,421,422 $28,863,277 $29,369,946 $29,869,036 $30,330,172 $30,902,347 PCC' $0 $352,861 $500,231 $538,006 $578,211 $1,839,315 $1,782,372 $1,801,559 $1,772,668 $1,819,331 $1,867,223 $0 $505,202 $726,532 $789,798 $855,786 $899,197 $944,300 $991,156 $1,039,823 $1,067,195 $1,095,288 Resource Adequacy $0 $4,901,510 $6,609,336 $6,789,589 $6,954,102 $7,135,744 $7,322,129 $7,513,383 $7,709,633 $7,911,008 $8,117,644 CF Requirement $0 $357,976 $503,039 $535,825 $570,330 $600,747 $632,370 $665,242 $699,406 $717,818 $736,713 Miscellaneous CAISO $0 $1,331,351 $118181890 $1,895,072 $1,953,663 $2,005,091 $2,057,873 $2,112,044 $2,167,642 $2,224,703 $2,283,266 LT Renewable Contracts $0 $6,140,332 $8,378,400 $8,664,522 $8,953,870 $6,372,961 $6,928,999 $7,311,183 $7,803,166 $7,851,546 $7,900,225 Block Energy $D $6,50D,747 $7,826,524 $7,529,244 $7,316,276 $9,568,369 $9,195,234 $8,975,378 $8,676,698 $8,738,570 $9,801,987 Operating&Administrative
Billin &Data Management $0 $344,301 $470,543 $482,930 $495,643 $508,690 $522,081 $535,824 $549,929 $564,405 $579,263 SDG&E Fees $0 $128,786 $129,169 $132,569 $136,059 $1391640 $143,316 $147,089 $150,961 $154,935 $159,014 Consulting Services $278,333 $957,300 $1,122,714 $985,987 $1,005,707 $1,025,921 $1,046,337 $1,067,264 $1,088,609 $1,110,382 $1,132,589 Staffing $0 $696,165 $1,096,525 $1,278,369 $1,303,936 $1,330,015 $1,356,615 $1,383,747 $1,411,422 $1,439,651 $1,469,444 General&Administrative expenses $0 $159,763 $181,238 $163,638 $166,911 $190,649 $184,058 $177,127 $180,670 $204,693 $199,373 Debt Service $0 $1,49,311 $1,947,511 $1,947,511 $1,947,511 $1,947,511 $0 $0 $0 $0 $0 1 Total O&ACosts $278,333 $3,734,62� $4,947,700 $4,991,004 $5,055,767 $5,142,327 $3,252,408 $3,311,052 $3,381,592 $3,474,056 $3,537,633 Total Cost $278,333 $23,824,606 $31,310,651 $31,723,051 $32,238,OD5 $33,563,749 $32,115,685 $32,680,996 1 $33,250,628 $33,804,228 $34,340,032 Net Income from Operations ($278,333) $2,070,762 $635,710 $947,826 $1,006,169 $431,278 $2,645,440 $2,861,707 $3,089,374 $3,349,025 $3,642,665 Cash from Operations and Financing
Net Income ($278,333) $2,070,762 $635,710 $947,826 $1,006,168 $431,278 $2,645,440 $2,861,707 $3,089,374 $3,349,025 $3,642,665 Cash from Financin $600,000 $8,000,000 % $0 $0 $0 $0 % $0 $0 $0 Total Cash Availahle $321,667 $10,070,762 $635,710 $947,826 $1,006,168 $431,278 $2,645,440 $2,861,707 $3,089,374 $3,349,025 $3,642,665 Available For Reserves $921,667 $10,992,428 $11,628,138 $12,575,964 $13,582,132 $14,013,410 $16,658,850 $19,520,558 $22,609,932 $25,958,957 $29,601,621 Reserve Targets $91,507 $7,832,747 $10,293,913 $10,429,496 $30,598,796 $11,034,657 $10,558,581 $10,744,438 $10,931,713 $11,113,719 $11,289,874 Reserve Outlays
CPUC Bond $297,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 New Pr m $0 $2,862,681 $0 50 $0 $0 $2,940,588 $2,675,851 $2,902,09B $3,167,019 $3,466,510 Total Reserve0utlays $297,000 $2,862,681 $0 50 $0 $0 $2,940,588 $2,675,851 $2,902,098 $3,167,019 $3,466,510 Rate Stabilization Reserve Balance $624,667 $7,832,747 $8,468,457 $9,416,20 $10,422,451 $10,853,729 $30,558,581 $30,744,438 $10,931,713 $11,113,719 $11,289,874 CCATotal Bill $0 $80,712,008 $106,090,012 $109,891,238 $111,600,125 $114,547,934 $117,573,500 $120,679,189 $123,867,022 $127,139,173 $130,497,878 SDG&ETotal Bill $0 $82,496,179 $109,425,533 $111,279,727 $114,209,055 $117,215,494 $120,301,075 $123,467,890 $126,718,049 $130,053,774 $133,477,310 Difference $0 $1,774,172 $2,335,521 $2,388,489 $2,608,930 $2,667,660 $2,727,574 $2,788,691 $2,851,027 $2,914,601 $2,979,432 Total Bill Discount 0.0•% 2.2% 2.2% 2.1% 2.3%1 2.3% 2.3% 2.3% 2.2% 2.2% 2.2% Effective Generation Rate Discount 1 4.8% 5.0% 5.0% 5.3%1 5.3% 5.3% 5.2% 5.2% 5.2% 5.29s preparedbyEES CONSULTING 74
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study 12Appendix B — Glossary
AB:Assembly Bill
Ancillary Services:Those services necessary to support the transmission of electric power from seller to purchaser given the obligations of control areas and transmitting utilities within those control areas to maintain reliable operations of the interconnected transmission system. aMW:Average annual Megawatt.A unit of energy output over a year that is equal to the energy produced by the continuous operation of one megawatt of capacity over a period of time (8,760 megawatt-hours) Base Case: The base case is defined as the expected case involving expected power prices and electric loads.

Baseload Resources: Base load power generation resources are resources such as coal, nuclear, hydropower, and geothermal heat that are cheapest to operate when they generate approximately the same output every hour.

Basis Difference (Natural Gas):The difference between the price of natural gas at the Henry Hub natural gas distribution point in Erath, Louisiana, which serves as a central pricing point for natural gas futures, and the natural gas price at another hub location (such as for Southern California).

Bundled Customers: Electricity customers who receive all their services (transmission, distribution and supply)from the Investor-Owned Utility.

Bundled and Unbundled Renewable RECs: Unbundled Renewable Energy Credits (RECs) are those that have been disassociated from the electricity production originally represented and are sold separately from energy. Bundled RECs are delivered with the associated energy.

California Independent System Operator (CAISO): The organization responsible for managing the electricity grid and system reliability within the former service territories of the three California IOUs.

California Balancing Authority: A balancing authority is responsible for operating a transmission control area. It matches generation with load and maintains consistent electric frequency of the grid,even during extreme weather conditions or natural disasters. California has 8 balancing authorities. SDG&E is in CAISO.

California Clean Power(CCP): A private company providing wholesale supply and other services to CCAs.

California Energy Commission(CEQ The state regulatory agency with primary responsibility for enforcing the Renewable Portfolio Standards law as well as a number of other electric-industry related rules and policies.

California Public Utilities Commission(CPUQ The state agency with primary responsibility for regulating IOUs, as well as Direct Access (ESP) and CCA entities.

Capacity Factor:The ratio of an electricity generating resource's actual output over a period of time to its potential output if it were possible to operate at full nameplate capacity continuously over the same period. Intermittent renewable resources, like wind and solar, typically have lower capacity factors than traditional fossil fuel plants because the wind and sun do not blow or shine consistently.

CARE: California Alternative Rates for Energy,a low-income program for affordable electric rates available to all IOU and CCA customers.

Climate Zone: A geographic area with distinct climate patterns necessitating varied energy demands for heating and cooling.

Coincident Peak: Demand for electricity among a group of customers that coincides with peak total demand on the system.
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study Community Choice Aggregation (CCA): Method available through California law to allow cities and Counties to aggregate their residents and become their electric generation provider.

Community Choice Energy: A City, County, or Joint Powers Agency procuring wholesale power to supply to retail customers.

Congestion Charges:When there is transmission congestion, i.e. more users of the transmission path than capacity,the CAISO charges all users of the congested transmission path a "Usage Charge".

Congestion Revenue Rights (CRRs): Financial rights that are allocated to Load Serving Entities to offset differences between the prices where their generation is located and the price that they pay to serve their load. These rights may also be bought and sold through an auction process. CRRs are part of the CAISO market design.

Cost Allocation Mechanism (CAM): is a regulatory process developed by the CPUC for allocating capacity costs of utility procurement equitably across all benefitting customers.

CO2e: Carbon dioxide equivalent.

Demand Side Resources: Energy efficiency and load management programs that reduce the amount of energy that would otherwise be consumed by a customer of an electric utility.

Demand Response (DR): Electric customers who have a contract to modify their electricity usage in response to requests from a utility or other electric entity.Typically, will be used to lower demand during peak energy periods, but may be used to raise demand during periods of excess supply.

Departing Load: Electric customer loads that were previously served by an investor-owned utility but are now served through direct access, municipalization, or CCA.

Direct Access: Large power consumers which have opted to procure their wholesale supply independently of the IOUs through an Electricity Service Provider.

EEI (Edison Electric Institute) Agreement: A commonly used enabling agreement for transacting in wholesale power markets.

Electric Service Providers (ESP): An alternative to traditional utilities. They provide electric services to retail customers in electricity markets that have opened their retail electricity markets to competition. In California the Direct Access program allows large electricity customers to opt-out of utility-supplied power in favor of ESP-provided power. However,there is a cap on the amount of Direct Access load permitted in the state.

Electric Tariffs: The rates and terms applied to customers by electric utilities. Typically have different tariffs for different classes of customers and possibly for different supply mixes.

Enterprise Model: When a City or County establishes a CCA by themselves as an enterprise within the local government entity.

Federal Tax Incentives: There are two Federal tax incentive programs. The Investment Tax Credit (ITC) provides payments to solar generators. The Production Tax Credit (PTC) provides payments to wind generators.

Feed-in Tariff(FIT): A tariff that specifies what generators who are connected to the distribution system are paid.

Firming: Firm capacity is the amount of energy available for production or transmission that can be (and in many cases must be)guaranteed to be available at a given time. Firm energy refers to the actual energy preparedbyEES CONSULTING 76
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study guaranteed to be available. Firming refers to the financial instrument to change non-firm power to firm power.

Flexible Resource Adequacy: Flexible capacity need is defined as the quantity of economically dispatched resources needed by the California ISO to manage grid reliability during the greatest three-hour continuous ramp in each month.

Forward Prices: Prices for contracts that specify a future delivery date for a commodity or other security.

There are active, liquid forward markets for electricity to be delivered at a number of Western electricity trading hubs, including SP15, which corresponds closely to the price location that the County will pay to supply its load.

FTE: Full Time Equivalent.

Greenhouse Gas(GHG): Refers mainly to carbon dioxide.

GWh: Gigawatt Hour, 1,000 MWh.

IMPLAN: IMPLAN Group LLC's Input-Output Model.

Implied Heat Rate: A calculation of the day-ahead electric price divided by the day-ahead natural gas price. Implied heat rate is also known as the 'break-even natural gas market heat rate,' because only a natural gas generator with an operating heat rate(measure of unit efficiency) below the implied heat rate value can make money by burning natural gas to generate power. Natural gas plants with a higher operating heat rate cannot make money at the prevailing electricity and natural gas prices.

Integrated Resource Plan:A utility's plan for future generation supply needs.

Investor-Owned Utility(IOU): For profit regulated utilities.Within California there are three IOUs-Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric.

ISDA (international Swaps and Derivatives Association): Popular form of bilateral contract to facilitate wholesale electricity trading.

Joint Powers Agency (JPA): A legal entity comprising two or more public entities. The JPA provides a separation of financial and legal responsibility from its member entities. kW: Kilowatt, equal to 1,000 watts, is measure of electric demand. kWh: Kilowatt Hour.

Lancaster Choice Energy (LCE): A single-jurisdiction CCA serving residents of the City of Lancaster in Southern California. LCE launched service in October 2015 and served 51,000 customers.

Load Forecast: A forecast of expected load over some future time horizon. Short-term load forecasts are used to determine what supply sources are needed. Longer-term load forecasts are used for budgeting and long-term resource planning.

Local Resource Adequacy: Local requirements are determined based on an annual CAISO study using a 1- 10 weather year and an N-1-1 contingency.

Load Serving Entity(LSE): Includes IOUs, POUs, and Electric Service Providers, and CCAs.

Marginal Unit:An additional unit of power generation to what is currently being produced.At an electric power plant, the cost to produce a marginal unit is used to determine the cost of increasing power generation at that source.

Marin Clean Energy(MCE):The first CCA in California now serving residents and businesses in the Counties of Marin and Napa,and the cities of Richmond, Benicia, El Cerrito,San Pablo,Walnut Creek,and Lafayette.

Market Redesign and Technology Upgrade (MRTU): CAISO's redesigned, nodal (as opposed to zonal) market that went live in April of 2009.

Metric Tons (MT): 2,000 lbs.
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study MW: Megawatt equal to 1,000 kW.

MWh: Megawatt Hours equal to 1,000 kWh.

Net Energy Metering (NEM): The program and rates that pertain to electricity customers who also generate electricity,typically from rooftop solar panels.

Non-bypassable Charges: Charges applied to all customers receiving service from Investor-Owned Utilities in California, but which are separated into a separate charge for departing load customers, such as Community Choice Aggregation and Direct Access Customers. These charges include charges for the Public Purpose Programs (PPP), Nuclear Decommissioning (ND), California Department of Water Resources Bond (CDWR), Power Charge Indifference Adjustment (PCIA), Energy Cost Recovery Amount (ECRA), Competition Transition Charge (CTC), and Cost Allocation Mechanism (CAM).

Non-Coincident Peak: Energy demand by a customer during periods that do not coincide with maximum total system load.

Non-Renewable Power: Electricity generated from non-renewable sources or a source that does not come with a Renewable Energy Credit(REC).

On-Bill Repayment (OBR): Allows electric customers to pay for financed improvements such as energy efficiency measures through monthly payments on their electricity bills.

Operate on the Margin: Operation of a business or resource at the limit of where it is profitable.

Opt-Out: Community Choice Aggregation is, by law,an opt-out program.Customers within the borders of a CCA are automatically enrolled within the CCA unless they proactively opt-out of the program.

Opt-Up:The portion of CCA customers selecting 100% renewable portfolio content energy.

Peninsula Clean Energy(PCE): Community Choice Aggregation program serving residents and businesses of San Mateo County. PCE launched in October of 2016.

Photovoltaic(PV): Solar PV.

Power Cost Indifference Adjustment (PCIA): A charge applied to customers who leave IOU service to become Direct Access or CCA customers.The charge is meant to compensate the IOU for costs that it has previously incurred to serve those customers.

Power Purchase Agreement (PPA): The standard term for bilateral supply contracts in the electricity industry.

Portfolio Content Category: California's RPS program defines all renewable procurement acquired from contracts executed after June 1, 2010 into three portfolio content categories.

Pricing Nodes: The ISO wholesale power market prices electricity based on the cost of generating and delivering it from particular grid locations called nodes.

Renewable Energy Credits (RECs): The renewable attributes from RPS-qualified resources that must be registered and retired to comply with RPS standards.

Resource Adequacy (RA): The requirement that a Load-Serving Entity own or procure sufficient generating capacity to meet its peak load plus a contingency amount(1S% in California) for each month.

Renewable Portfolio Standard (RPS): The state-based requirement to procure a certain percentage of load from RPS-certified renewable resources.

Scheduling Coordinator: An entity that is approved to interact directly with CAISO to schedule load and generation. All CAISO participants must be or have an SC. A scheduling coordinator provides day-ahead and real-time power and transmission scheduling services.

Scheduling Agent: A person or service that forecasts and monitors short term system load requirements and meets these demands by scheduling power resources to meet that demand. prepared by E E S CONSULTING 78
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study Shaping: Function that facilitate and supports the delivery of energy generation to periods when it is needed most.

Silicon Valley Clean Energy (SVCE): CCA serving customers in twelve communities within Santa Clara County including the cities of Campbell, Cupertino, Gilroy, Los Altos, Los Altos Hills, Los Gatos, Monte Sereno, Morgan Hill, Mountain View, Saratoga, Sunnyvale, and the County of Santa Clara.

Sonoma Clean Power(SCP):A CCA serving Sonoma County and Sonoma County cities. On December 29tn SCP received approval of their implementation plan from the California Public Utilities Commission to extend service into Mendocino County.

SP15: Refers to a wholesale electricity-pricing hub-South of Path 15 -which roughly corresponds to SCE and SDG&E's service territory. Forward and Day-Ahead power contracts for Northern California typically provide for delivery at SP15. It is not a single location, but an aggregate based on the locations of all the generators in the region.

Spark Spread: The theoretical growth margin of a gas-fired power plant from selling a unit of electricity, having bought the fuel required to produce this unit of electricity. All other costs (capital, operation and maintenance, etc.) must be covered from the spark spread.

Supply Stack: Refers to the generators within a region, stacked up according to their marginal cost to supply energy. Renewables are on the bottom of the stack and peaking gas generators on the top. Used to provide insights into how the price of electricity is likely to change as the load changes.

System Resource Adequacy: System requirements are determined based on each LSE's CEC adjusted forecast plus a 15% planning reserve margin.

Time-of-Use (TOU): Electric rate design where prices vary by time of electricity usage where on-peak periods are priced higher than off-peak periods.

Vintage:The vintage of CRS applicable to a CCA customer is determined based on when the CCA commits to begin providing generation services to the customer. CCAs may formally commit to become the generation service provider for a group of customers
Weather Adjusted: Normalizing energy use data based on differences in the weather during the time of use. For instance, energy use is expected to be higher on extremely hot days when air conditioning is in higher demand than on days with comfortable temperature. Weather adjustment normalizes for this variation.

Western Electric Coordinating Council (WECC): The organization responsible for coordinating planning and operation on the Western electric grid.

Wholesale Power: Large amounts of electricity that are bought and sold by utilities and other electric companies in bulk at specific trading hubs. Quantities are measured in MWs, and a standard wholesale contract is for 25 MW for a month during heavy-load or peak hours (7am to 10 pm, Mon-Sat), or light- load or off-peak hours (all the other hours).

Western States Power Pool (WSPP)Agreement: Common, standardized enabling agreement to transact in the wholesale power markets.
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CITIES OF ESCONDIDO, SAN MARCOS, AND VISTA CCA Technical Feasibility Study 13Appendix C — Implementation Schedule
Q4 2021 Q12022 Q2 2022 Q3 2022 Q4 2022 Q12023 Q2 2023 IMPLEMENTATION TIMELINE o N D J I F M .1. J J A S O N D J F M A M J FirstJPA Board Meeting(meets monthly) ONGOING RegisterJPA with Sec of State _
Determine City staff support/roles;prepare cooperative services agreement _ Continue weekly or bi-weekly planning team calls;include program vendors as needed ONGOING _ Prepare reports,provide updates for Member Agency City Council(s) ONGOING _ Obtain General and Regulatory Counsel _
Set up Website _
Obtain Technical Consultant _
Obtain Financial Consultant and issue Banking Services RFP _ Multiple Services RFP and Contracting:Power Mgmt,Scheduling,Cust Service Call Center&Data Mgmt _ Prepare and adopt implementation budget;update and track ONGOING _ Determine scope/selection of Board Committees and Advisory Committees _ Prepare Utility Service Agreement,Deposit and Bond Posting _ Select banking partner _
Determine Agency financial and accounting policies _ Review 2021 customer load data;verify load projections and proforma estimates _ Prepare resource adequacy procurement plan and RA compliance filings _ RPS Procurement Plans(2019 and 2020) _
Issue RFP for Marketing/Outreach _
Draft and Adopt Agency policies _
Secure necessary credit guarantees and establish access to credit line _ Secure marketing firm;develop public outreach and marketing plan _ Year Ahead RA _
Submit Registration Packet CPUC _
CEO Recruitment/Hire _
Develop and adopt FY 2020/2021 Budget _
Determine power supply mix for 2-3 product options _ IRP _
Approve staffing plan/initial staff hires and employment policies ONGOING _ Determine plan for annual audits/begin monthly financials _ RPS Compliance Report _
Coordinate with SDG&E and data mgmt vendor to test for deposits&controls _ EDI certification(utility and bank) _
Develop and issue power supply RFP(s) _ Prepare/design customer enrollment notices _ Regulatory registrations for program compliance(CPUC,CAISO,WREGIS) _ Develop website 2.0with translation and opt-out features _ Negotiate and finalize terms of initial power contracts _ Rate design&rate setting(incl PCIA,NEM and utility cost comparisons) _ Call center traini ng/go live _
1st opt-out period(60 days out) _
2nd opt-out period(30 days out) _
Utility account set up(dead period) _
Account Switches/Customer enrollments _
3rd opt-out period _
4th opt-out period
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City of Vista
Assessment Summary
April 41 2022
�EHH�IB'TS �
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Vista Customer Information
Customer Accounts WAnnual .
y Im
Classification (MWh) Customer Usage
150,000
120,000
90,000
Residential 34,520 141,779 342 60,000 3o,000
Com/Ind 41899 209,349 31561
Ag/Pumping 28 831 21472 ■CEA Vista Street Lighting 146 1,761 11005
Total 39,593 353,719 744 Energy Consumption i,5/0�/0�
L 1,200
L
900
Peak Demand 74
goo
(MW) 300
■CEA ■Vista
Expansion to Vista customers in total would represent an approximate 27% increase to CEA retail sales. ENERGY Data above are unadjusted for opt-out assumptions.

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Average ResidentiaL Rate Comparison
SDG&E Generation Rate* $0.15390
Current CEA Generation Rate $0.11049
2021/22 Vintage Exit Fees* $0.03004
CEA Generation Rate + Exit Fees* $0.14053
Comparison to Bundled SDG&E Service -9%
*Reflects SDG&E generation rates and exit fees at 2022 levels **Current CEA customers on the 2020 vintage PCIA are realizing a 2% discount relative to bundled SDG&E generation service CLEAN ENERGY

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Average Customer BiLL
Comparmisoii
CEA CEA
CEA Clean Impact Green
SDG&E 50% Plus Impact
31% Renewable 75% Carbon 100%
Residential: DR Renewable Clean Impact Free Renewable Generation $ 52.63 $ 37.79 $ 37.79 $ 37.79 Clean Impact Plus/Green Impact
Premium $ - $ - $ 0.34 $ 2.57 SDG&E PCIA+FFS-2022 Vintage $ - $ 11.90 $ 11.90 $ 11.90 Generation Related Costs $ 52.63 $ 49.69 $ 50.03 $ 52.26 SDG&E Delivery $ 89.32 $ 89.32 $ 89.32 $ 89.32 Total Average Monthly Bill $ 141.95 $ 139.01 $ 139.35 $ 141.58 Average 342 kWh Usage
$ Savingsto SDG&E $ (2.94) $ (2.60) $ (0.37) CLEAN % Savings to SDG&E -2.07% -1.83% -0.26% ENERGY

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Key Assumptions
• Start Date: April 24' is the fiscally-optimal month for enrollment under current assumptions and is reflected in current analysis; earliest possible enrollment date is January 2024 per CPUC rules • Customers and Sales. forecast based on historical SDG&E data, and assumes go% customer participation for all customer classes other than Street Lighting
• Revenues. assumes current CEA rate levels maintained through analysis
• Incremental Costs. include power supply (per CEA portfolio specifications), customer billing , customer noticing , and SDG&tLEAN service fees ENERGY

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FiscaL Service to
SDG & E Accounts (.SMM )
lm- -1 " I—
_ on .

Revenue $6.19 $32.96 $33.12 Power Supply Costs $5.41 $27.67 $27.35 Billing and Other Costs $0.27 $0.81 $0.81 Net Operating Margin $0.52 $4.48 $4.95 Reserve contribution $0.31 $1.65 $1.66 Net Surplus $0.21 $2.84 $3.30 Electric Sales (MWh) 611790 3221478 324,090 * Reflects partial year of service for fiscal year ending June 30, 2024, with enrollments commencing in April 2024. CLEAN Other implementation costs would be incurred leading up to expansion. Such costs include staff and other costs related to marker RGY outreach, regulatory and legal representation, internal operations, resource planning and electric procurement.

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Conclusions
• Overall positive fiscal impact under base case assumptions • Due to wholesale power market volatility, actual outcomes may vary from projections
• Expansion would require a meaningful increase in CEA resource acquisition
• Advance coordination With SDG&E for RA and RPS resource transfers Would be strongly advised
• Achieving long-term RPS compliance in Compliance Period 4 (2021-2024) will require early procurement attention CLEAN ENERGY

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TimeLine
ACTIVITY TIMING
Assessment Report Results 11191117 CEA B111 111 oardApril 21., 2022 Vista - Resolution to Join CEA and 15t Reading of Ordinance toJune 2022 Establish a CCA
Vista - 2"d Reading of Ordinance2022
CEA - Resolution approving Vista joining CEA/DirectJuly 2022 preparation of Implementation Plan Amendment
Draft Implementation Plan Amendment to CEA Board October 1 File Implementation Plan AmendmentDecember 21
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Questions / Discussion

Oceanside , Vista , San CLemente
Updated
g- -
Revenue $20.51 $110.34 $110.89
Power • • -$18.48 -$104.43 -$102.29 -$0.35 -$0.35 -$0.35
Billing • Other Costs -$0.83 -$2.76 -$2.77 Net Operating Margin $0.85 $2.79 $5.48
' , Reserve $1.03 $5.52 $5.54
Reserve Shortfall/Excess
Reserve by year:
2024 — 4% Reserve Contribution (short 1%)
2025 — 2.5% Reserve Contribution (short 2.5%)
2026 — 4.9% Reserve Contribution (short .1%) CLEAN ENERGY
Rates would need to be increased 2.5% to achieve a minimum 5% reserve contribution in each � year. DCHIBfT6

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Vista Updated BiLL
Bill Comparison - Current Rates Bill Comparison - 2.5% Rate Increase City of Vista CEA CEA City of Vista CEA CEA CEA Clean Impact Green CEA Clean Impact Green SDG&E 50% Plus Impact SDG&E 50% Plus Impact 31% Renewable 75%Carbon 100% 31% Renewable 75%Carbon 100% Residential: DR Renewable Clean Impact Free Renewable Residential: DR Renewable Clean Impact Free Renewable Generation $ 52.63 $ 37.79 $ 37.79 $ 37J9 Generation $ 52.63 $ 38.73 $ 38.73 $ 38.73 Clean Impact Plus/Green Impact Clean Impact Plus/Green Impact Premium $ - $ - $ 0.34 $ 2.57 Premium $ - $ - $ 0.34 $ 2.57 SDG&E PCIA+FFS-2022 Vintage $ - $ 10.26 $ 10.26 $ 10.26 SDG&E PCIA+FFS-2022 Vintage $ - $ 10.26 $ 10.26 $ 10.26 Generation Related Costs $ 52.63 $ 48.05 $ 48.39 $ 50.62 Generation Related Costs $ 52.63 $ 48.99 $ 49.34 $ 51.56 SDG&E Delivery $ 77.14 $ 77.14 $ 77.14 $ 77.14 SDG&E Delivery $ 77.14 $ 77.14 $ 77.14 $ 77.14 Total Average Monthly&II $ 129.77 $ 125.19 $ 125.53 IS 127.76 ITotall Average Monthly Bill $ 129.77 $ 126.13 $ 126.48 $ 128.70 Average 342 kWh Usage I I Average 342 kWh Usage $Savings to SDG&E $ (4.58) $ (4.24) $ (2.02) $Savings to SDG&E $ (3.64) $ (3.29) $ (1.07) %Savings to SDG&E -3.53% -3.27% -1.55% %Savings to SDG&E -2.80% -2.54% -0.83% CLEAN
ENERGY

ALLIANCE
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Procurement Considerations
• Resource Adequacy
• Requires Working closely with SDG&E to acquire excess RA related to the departures of the new members from SDG&E to CEA
• Risk of non-compliance to CEA if unable to reach agreement with SDG&E • Long-Term Renewable Energy
• Long-Term Renewable Energy contracts required for existing generating facilities immediately upon service establishment
• Current compliance period ends December 2024
• April 2024 launch results in only 8 months to meet long-term contracting requirement for expansion cities
• Cooperation With SDG&E to acquire excess long-term renewable energy supply related to the departures of the new members CLEAN • Risk to non-compliance to CEA if unable to reach agreement with ENERGY SDG&E �

ALLIANCE
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Next S
ACTIVITY TIMING
Assessment Report Results to CEA Board May 26, 2022 Cities - Resolution to Join CEA and 1st Reading of June 2022 Ordinance to Establish a CCA
Cities - 2nd Reading of Ordinance June/July 2022 CEA - Resolution approving Cities joining CEA/Direct July 2022 preparation of Implementation Plan Amendment —
Review Updated Financial Impact
Draft Implementation Plan Amendment to CEA Board October 2022 Review Updated Financial Impact
File Implementation Plan Amendment with CPUC December 2022 CLEAN ENERGY

ALLIANCE
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CLEAN ENERGY ALLIANCE BY-LAWS

ARTICLE I

FORMATION
The Clean Energy Alliance ("CEA")was established on November 4, 2019 pursuant to the execution of the Clean Energy Alliance Joint Powers Agreement(the "Agreement")by the Cities of Carlsbad, Del Mar and Solana Beach.

ARTICLE II

PURPOSE BY-LAWS
The purpose of these By-laws is to establish procedural rules for the conduct of CEA business that are consistent with the provisions of the Agreement.

ARTICLE III

BOARD OF DIRECTORS
Section 1. Establishment of Board of Directors. The establishment of the Board of Directors, the appointment and removal of Directors, the responsibilities of the Board, and the voting requirements of the Board are addressed by Section 4 of the Agreement.

Section 2. Board Agendas. The agendas for all Board meetings shall be prepared by the Chief Executive Officer in consultation with the Chair of the Board. Two or more members of the Board at a duly noticed Board meeting may direct the Chief Executive Officer to place a specified matter on the agenda for a subsequent regular or special meeting of the Board.

ARTICLE IV

COMMITTEES
Section 1. Establishment of Committees. As provided by Section 5.9 of the Agreement, the Board may establish any advisory commissions, boards, and committees as the Board deems appropriate to assist the Board in carrying out its functions and implementing the CCA Program, related energy programs, and the provisions of the Agreement.

Section 2. Community Advisory Committee. The Board has established a Community Advisory Committee (CAC) to advise it on those matters concerning the operation of its Community Choice Aggregation program as directed by the Board of Directors in an annual workplan for the CAC that is adopted by the Board The objectives of the CAC are to provide feedback to the Board, act as a liaison between the Board and the community and serve as a forum for community input on those matters assigned to the CAC in the annual workplan. The CAC shall not have any decision-making authority but will serve as an advisory body to the Board. The EXHIBIT 7 1
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composition of the CAC and the requirements governing its operation are set forth in a Board adopted policy.

ARTICLE V

MEETINGS
Section 1. Regular Meetings. The regular meetings of the Board of Directors of CEA shall be held on the third Thursday of each month at the hour of 2 p.m. in the Council Chambers at the City Hall of each of the Parties to the Agreement on a rotating basis or as otherwise authorized by law. Prior to the commencement of each fiscal year, the Board shall adopt a calendar of meetings for such fiscal year showing the specific location of each meeting.

Section 2. Special Meetings. Special meetings of the Board may be called at any time and may be held in any location within the jurisdiction of CEA as provided by the notice for the special meeting.

Section 3. Annual Meeting. The Board shall hold an annual meeting in July of each year at which time it will appoint Board officers and Committee members.

Section 4. Open Meeting_Requirements. The meetings of the Board, the Community Advisory Committee and all other committees established by the Board shall be governed by the provisions of the Ralph M. Brown Act (Government Code Section 54950 et seq.).

ARTICLE VI

AMENDMENTS
These By-Laws may be amended by a majority vote of the full membership of the Board but only after such amendment has been proposed at a regular meeting and acted upon at the next or later regular meeting of the Board for final adoption. The proposed amendment shall not be finally acted upon unless each member of the Board has received written notice of the amendment at least 10 days prior to the date of the meeting at which final action on the amendment is to be taken. The notice shall include the full text of the proposed amendment. 2 06/28/2022 PH1 111 of 145

Certificate of Secretary
I certify that I am the duly appointed and acting Secretary of the Clean Energy Alliance, created in accordance with the provisions of the Joint Exercise of Powers Act (Cal. Gov't. Code §§6500 et seq.); that these By-laws, consisting of a total of three (3)pages, consist the By-Laws of the Authority as adopted by the Board of Directors on September 17, 2020; and that these By-laws have not been amended or modified since that date.

Executed on October 8, 2020, at Carlsbad, California
Secretary
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F Clean Energy Alliance Joint Powers Agreement
Effective: November 4, 2019
As amended by Resolution 2021-012 dated September 30, 2021 As further amended by Resolution 2021-014 dated November 18, 2021 and attached Amendment No. 1.

As further amended by Resolution 2021-015 dated December 17, 2021 1 13045-0001\2606345v1:doe C/�C y H I B I T 8
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CLEAN ENERGY ALLIANCE JOINT POWERS AGREEMENT
This Joint Powers Agreement(the"Agreement"), effective as of November 4, 2019, is made by the Parties of the Clean Energy Alliance and entered into pursuant to the provisions of Title 1, Division 7, Chapter 5,Article 1 (Section 6500 et seq.)of the California Government Code relating to the joint exercise of powers among the public agencies set forth in Exhibit B.

RECITALS

1. The Parties are public agencies sharing various powers under California law, including but not limited to the power to purchase, supply, and aggregate electricity for themselves and their customers.

2. SB 350, adopted in 2015,mandates a reduction in greenhouse gas emissions to 40 percent below 1990 levels by 2030 and to 80 percent below 1990 levels by 2050. In 2018,the State Legislature adopted SB 100,which directs the Renewable Portfolio Standard to be increased to 60%renewable by 2030 and establishes a policy for eligible renewable energy resources and zero-carbon resources to supply 100 percent of electricity retail sales to California end-use customers by 2045.

3. The purposes for the Founding Members (as such term is defined in Exhibit A) entering into this Agreement include procuring/developing electrical energy for customers in participating jurisdictions, addressing climate change by reducing energy-related greenhouse gas emissions,promoting electrical rate price stability and cost savings, and fostering consumer choice and local economic benefits such as job creation, local energy programs and local power development. It is the intent of this Agreement to promote the development and use of a wide range of renewable energy sources and energy efficiency programs, including but not limited to state, regional, and local solar and wind energy production and energy storage.

4. The Parties to this Agreement desire to establish a separate public agency, known as the Clean Energy Alliance ("Authority"), under the provisions of the Joint Exercise of Powers Act of the State of California(Government Code Section 6500 et seq.) ("Act") in order to collectively study, promote, develop, conduct, operate, and manage energy programs.

5. The Founding Members have each adopted an ordinance electing to implement through the Authority a Community Choice Aggregation program pursuant to California Public Utilities Code Section 366.2 ("CCA Program"). The first priority of the Authority will be the consideration of those actions necessary to implement the CCA Program on behalf of participating jurisdictions.

6. By establishing the Authority, the Parties seek to:
(a) Provide electricity service to residents and businesses located within the jurisdictional boundaries of the public agencies that are members of the Authority in a responsible, reliable, innovative, and efficient manner;
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F (b) Provide electric generation rates to all ratepayers that are competitive with those offered by the Investor Owned Utility, San Diego Gas &Electric (SDG&E), for similar products with a target generation rate at least 2 percent below SDG&E's base product generation rate;
(c) Offer a mix of energy products for standard commodity electric service that provide a cleaner power portfolio than that offered by SDG&E for similar service and other options, including a 90 percent and a 100 percent renewable content options in which communities and customers may "opt-up"and voluntarily participate,with the ultimate objective of achieving—and sustaining—the Climate Action Plan goals of the Parties, at competitive rates;
(d) Develop an aggregate electric supply portfolio with overall lower greenhouse gas (GHG) emissions than SDG&E, and one that supports near-term achievement of the Parties' greenhouse gas reduction goals and renewable electricity goals; (e) Promote an energy portfolio that incorporates energy efficiency and demand response programs and pursues ambitious energy consumption reduction goals; (f) Pursue the procurement of local generation of renewable power developed by or within member jurisdictions with an emphasis on local jobs, where appropriate, without limiting fair and open competition for projects or programs implemented by the Authority;
(g) Provide a range of energy product and program options, available to all Parties and customers, that best serve their needs,their local communities, and support regional sustainability efforts;
(h) Support low-income households having access to special utility rates including California Alternative Rates for Energy(CARE) and Family Electric Rate Assistance (FERA)programs;
(i) Use discretionary program revenues to support the Authority's long-term financial viability, enhance customer rate stability, and provide all Parties and their customers with access to innovative energy programs,projects and services throughout the jurisdiction of the Authority; and
(j) Create an administering Authority that seeks to maximize economic benefits and is financially sustainable,well-managed and responsive to regional and local priorities.

AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants, and conditions hereinafter set forth, it is agreed by and among the Parties as follows:
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F

1. DEFINITIONS AND EXHIBITS

1.1 Definitions. Capitalized terms used in this Agreement shall have the meanings specified in Exhibit A,unless the context requires otherwise.

1.2 Documents Included. This Agreement consists of this document and the following exhibits, all of which are hereby incorporated into this Agreement:

Exhibit A: Definitions
Exhibit B: List of Founding Members and Parties added on or after October 1, 2020,per Section 2.4

2. FORMATION OF THE COMMUNITY CHOICE ENERGY AUTHORITY

2.1 Effective Date and Term. This Agreement shall become effective and the Authority shall exist as a separate public agency on the date this Agreement is executed by at least three Founding Members after the adoption of the ordinances required by Public Utilities Code Section 366.2(c)(12). The Authority shall provide notice to the Parties of the Effective Date. The Authority shall continue to exist, and this Agreement shall be effective,until the Agreement is terminated in accordance with Section 8.4 (Mutual Termination), subject to the rights of the Parties to withdraw from the Authority under Section 8.1.

2.2 Formation of the Authority. Under the Act,the Parties hereby create a separate joint exercise of power agency named the Clean Energy Alliance. Pursuant to Sections 6506 and 6507 of the Act,the Authority is a public agency separate from the Parties. The jurisdiction of the Authority shall be all territory within the geographic boundaries of the Parties;however, the Authority may, as authorized under applicable law,undertake any action outside such geographic boundaries as is necessary to the accomplishment of its purpose.

2.3 Purpose. The purpose of this Agreement is to establish the Authority,to provide for its governance and administration, and to define the rights and obligations of the Parties. This Agreement authorizes the Authority to provide opportunities by which the Parties can work cooperatively to create economies of scale and implement sustainable energy initiatives that reduce energy demand, increase energy efficiency, and advance the use of clean,efficient, and renewable resources in the region for the benefit of all the Parties and their constituents, including,but not limited to, establishing and operating a CCA Program.

2.4 Addition of Parties. After the initial formation of the Authority and prior to October 1, 2020, any incorporated municipality, county, or other public agency authorized to be a community choice aggregator under Public Utilities Code Section 331.1 and located within the service territory of SDG&E may become a member of the Authority if it has completed a positive CCE Feasibility Study, adopted a CCA ordinance pursuant to Public Utilities Code Section 366.2(c)(12), approved and executed this Agreement, and paid or agrees to pay its share of the 4 13045-0001\2606345v l.doc
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F Initial Costs pursuant to Section 7.3.2 of this Agreement. Notwithstanding the foregoing, such public agency may be denied membership in the Authority if the Board determines within 60 days after the submittal of the CCE Feasibility Study that the addition of the public agency would create an undue risk or financial burden to the Authority or to the achievement of the CAP goals of the Parties.

On or after October 1, 2020, any incorporated municipality, county, or other public agency authorized to be a community choice aggregator under Public Utilities Code Section 331.1 and located within the service territory of SDG&E may apply to and become a member of the Authority if all the following conditions are met:

2.4.1 Adoption of a resolution by a two-thirds vote of the entire Board authorizing membership in the Authority;

2.4.2 Adoption by the proposed member of a CCA ordinance as required by Public Utilities Code Section 366.2(c)(12) and approval and execution of this Agreement and other necessary program agreements by the proposed member;

2.4.3 Payment of a membership fee, if any, as may be required by the Board to cover Authority costs incurred in connection with adding the new party; and

2.4.4 Satisfaction of any other conditions established by the Board.

2.5 Continuing Participation. The Parties acknowledge that membership in the Authority may change by the addition, withdrawal and/or termination of Parties.

The Parties agree to participate with such other Parties as may later be added by the Board, as described in Section 2.4(Addition of Parties) of this Agreement.

The Parties also agree that the withdrawal or termination of a Party shall not affect this Agreement or the remaining Parties' continuing obligations under this Agreement.

3. POWERS

3.1 General.Powers. The Authority shall have the powers common to the Parties which are necessary or appropriate to the accomplishment of the purposes of this Agreement, subject to the restrictions set forth in Section 3.4 (Limitation on Powers) of this Agreement.

3.2 Specific Powers. Specific powers of the Authority shall include, but not be limited to, each of the following powers,which may be exercised at the discretion of the Board:

3.2.1 make and enter into contracts;
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3.2.2 employ agents and employees, including but not limited to a Chief Executive Officer;

3.2.3 acquire, own, contract,manage, maintain, and operate any buildings, public works, improvements or other assets including but not limited to public electric generation resources;

3.2.4 acquire property for the public purposes of the Authority by eminent domain, or otherwise, except as limited under Section 6508 of the Act and Sections 3.6 and 4.12.3 of this Agreement, and to hold or dispose of any property;provided, however,the Authority shall not exercise the power of eminent domain within the jurisdiction of a Party without its affirmative vote under Section 4.12.2;

3.2.5 lease any property;

3.2.6 sue and be sued in its own name;

3.2.7 incur debts, liabilities, and obligations, including but not limited to loans from private lending sources pursuant to its temporary borrowing powers authorized by law pursuant to Government Code Section 53850 et seq. and authority under the Act;

3.2.8 issue revenue bonds and other forms of indebtedness;

3.2.9 apply for, accept, and receive all licenses,permits, grants, loans or other aids from any federal, state or local public agency;

3.2.10 form independent corporations or entities, if necessary,to carry out energy supply and energy conservation programs;

3.2.11 submit documentation and notices, register, and comply with applicable orders, tariffs and agreements for the establishment and implementation of the CCA Program and other energy programs;

3.2.12 adopt rules,regulations,policies, bylaws and procedures governing the operation of the Authority;

3.2.13 make and enter into service agreements relating to the provision of services necessary to plan, implement, operate and administer the CCA Program and other energy programs, including the acquisition of electric power supply and the provision of retail and regulatory support services;.

3.2.14 receive revenues from sale of electricity and other energy-related programs; and
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3.2.15 Partner or otherwise work cooperatively with other CCA's on the acquisition of electric resources,joint programs, advocacy and other efforts in the interests of the Authority.

3.3 Additional Powers to be Exercised. In addition to those powers common to each of the Parties, the Authority shall have those powers that may be conferred upon it by law and by subsequently enacted legislation.

3.4 Limitation on Powers. As required by Section 6509 of the Act, the powers of the Authority are subject to the restrictions upon the manner of exercising power possessed by the City of Solana Beach and any other restrictions on exercising the powers of the Authority that may be adopted by the Board.

3.5 Obligations of the Authority. The debts, liabilities, and obligations of the Authority shall not be the debts, liabilities, and obligations of any of the Parties unless a Party agrees in writing to assume any of the debts, liabilities, and obligations of the Authority with the approval of its Governing Body, in its sole discretion. A Party that has not agreed in writing, as duly authorized by its Governing Body, to assume an Authority debt,liability, or obligation shall not be responsible in any way for such debt, liability, or obligation, regardless of any action by the Board. Further, the debts, liabilities and obligations of the City of Solana Beach related to or arising from its existing CCA program, commonly known as the Solana Energy Alliance, shall not be the debts, liabilities or obligations of the Authority or any of the Parties except the City of Solana Beach unless the Board approves assuming specific contracts entered into by the City of Solana Beach. Any such contracts assumed by the Authority shall be obligations of the Authority only and not of any of the Parties. Notwithstanding Sections 4.12.1 and 9.8 of this Agreement, this Section 3.5 shall not be amended or its liability limitations otherwise modified by an amendment to another part of this Agreement unless such amendment is approved by the Governing Body of each Party.

3.6 Compliance with Local Zoning and Building Laws. Notwithstanding any other provisions of this Agreement or state law, any facilities,buildings, structures or other projects (the"project") developed, constructed or installed or caused to be developed, constructed or installed by the Authority within the territory of the Authority(which consists of the territorial jurisdiction of the Parties) shall comply with the General Plan, zoning, land use regulations, building laws and any applicable local Coastal Plan of the local jurisdiction within which the project is located.

3.7 Compliance-with the Political Reform Act and Government Code Section 1090. The Authority and its officers and employees shall comply with the Political Reform Act(Government Code Section 81000 et seq.) and Government Code Section 1090 et seq. The Board shall adopt a Conflict of Interest Code pursuant to Government Code Section 87300. The Board may 7 13045-0001\2606345v1.doc
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F adopt additional conflict of interest regulations in the Operating Policies and Procedures.

4. GOVERNANCE

4.1 Board of Directors.

4.1.1 The Governing Body of the Authority shall be a Board of Directors ("Board")consisting of one Director for each Party appointed in accordance with Section 4.2 (Appointment and Removal of Directors) of this Agreement.

4.1.2 Each Director must be a member of the Governing Body of the appointing Party. Each Director shall serve at the pleasure of the Governing Body of the Party that appointed such Director and may be removed as Director by such Governing Body at any time. If at any time a vacancy occurs on the Board,then a replacement shall be appointed to fill the position of the previous Director within 45 days after the date that position becomes vacant.

4.1.3 The Governing Body of each Party also shall appoint an alternate to serve in the absence of the primary Director. The alternate also shall be a member of the Governing Body of the appointing Party. The alternate shall have all the rights and responsibilities of the primary Director when serving in his/her absence.

4.1.4 Any change to the size and composition of the Board other than what is described in this section shall require an amendment of this Agreement in accordance with Section 4.12.

4.2 Appointment and Removal of Directors. The Directors shall be appointed and may be removed as follows:

4.2.1 The Governing Body of each Party shall appoint and designate in writing one regular Director,who shall be authorized to act for and on behalf of the Party on matters within the powers of the Authority. The Governing Body of each Party shall appoint and designate in writing one alternate Director who may vote on matters when the regular Director is absent from a Board meeting. The alternate Director may vote on matters in committee,chair committees, and fully participate in discussion and debate during meetings. All Directors and alternates shall be subject to the Board's adopted Conflict of Interest Code.

4.2.2 A Director may be removed by the Board for cause in accordance with procedures adopted by the Board. Cause shall be defined for the purposes of this section as follows:
a. Unexcused absences from three consecutive Board meetings. 8 13045-0001\2606345vl.doc
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F b. Unauthorized disclosure of confidential information or documents from a closed session or the unauthorized disclosure of information or documents provided to the Director on a confidential basis and whose public disclosure may be harmful to the interests of the Authority.

C. Violation of any ethics policies or code of conduct adopted by the Board.

Notwithstanding the foregoing,no Party shall be deprived of its right to seat a Director on the Board and any such Party for which its Director and/or alternate Director has been removed may appoint a replacement.

4.3 Director Compensation. The Board may adopt by resolution a policy relating to the compensation or expense reimbursement of its Directors.

4.4 Terms of Office. Each Party shall determine the term of office for its regular and alternate Director.

4.5 Purpose of Board. The general purpose of the Board is to:

4.5.1 Provide structure for administrative and fiscal oversight;

4.5.2 Retain a Chief Executive Officer to oversee day-to-day operations of the Authority;

4.5.3 Retain legal counsel;

4.5.4 Identify and pursue funding sources;

4.5.5 Set policy;

4.5.6 Optimize the utilization of available resources; and

4.5.7 Oversee all Committee activities.

4.6 Specific Responsibilities of the Board. The specific responsibilities of the Board shall be as follows:

4.6.1 Formulate and adopt an annual budget prior to the commencement of the fiscal year;

4.6.2 Develop and implement a financing and/or funding plan for ongoing Authority operations and capital improvements, if applicable;

4.6.3 Retain necessary and sufficient staff and adopt personnel and compensation policies, rules and regulations;
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4.6.4 Adopt policies for procuring electric supply and operational needs such as professional services, equipment and supplies;

4.6.5 Develop and implement a Strategic Plan to guide the development, procurement, and integration of renewable energy resources consistent with the intent and priorities identified in this Agreement;

4.6.6 Establish standing and ad hoc committees as necessary;

4.6.7 Set retail rates for power sold by the Authority and set charges for any other category of retail service provided by the Authority;

4.6.8 Wind down and resolve all obligations of the Authority in the event the Authority is terminated pursuant to Section 8.2;

4.6.9 Conduct and oversee Authority operational audits at intervals not to exceed three years including review of customer access to Authority programs and benefits,where applicable;

4.6.10 Arrange for an annual independent fiscal audit;

4.6.11 Adopt such bylaws,rules and regulations necessary or desirable for the purposes set forth in this Agreement and consistent with this Agreement;

4.6.12 Exercise the Specific Powers identified in Sections 3.2 and 4.6 except as those which the Board may elect to delegate to the Chief Executive Officer; and

4.6.13 Discharge other duties as appropriate or necessary under this Agreement or required by law.

4.7 Startup Responsibilities. The Authority shall promptly act on the following matters:

4.7.1 Oversee the preparation of, adopt, and update an implementation plan for electrical load aggregation pursuant to Public Utilities Code Section 366.2(c)(3);

4.7.2 Prepare a statement of intent for electrical load aggregation pursuant to Public Utilities Code Section 366.2(c)(4);

4.7.3 Obtain financing and/or funding as is necessary to support start up and ongoing working capital for the CCA Program; and

4.7.4 Acquire and maintain insurance in accordance with Section 9.3.

4.8 Meetings and Special Meetings of the Board. The Board shall hold at least four regular meetings per year,but the Board may provide for the holding of regular 10 13 045-000 1\2606345v 1.doc
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F meetings at more frequent intervals. The date,hour, and place of each regular meeting shall be fixed annually by resolution of the Board. The location of regular meetings may rotate for the convenience of the Parties, subject to Board approval and availability of appropriate meeting space. Regular meetings may be adjourned to another meeting time. Special meetings of the Board may be called in accordance with the provisions of Government Code Section 54956. Directors may participate in meetings telephonically, with full voting rights, only to the extent permitted by law. Board meeting agendas generally shall be set, in consultation with the Board Chair, by the Chief Executive Officer appointed by the Board pursuant to Section 5.5. The Board itself may add items to the agenda upon majority vote pursuant to Section 4.11.1.

4.9 Brown Act Applicable. All meetings of the Board shall be conducted in accordance with the provisions of the Ralph M. Brown Act(Government Code Section 54950, et seq.).

4.10 Quorum. A simple majority of the Directors shall constitute a quorum. No actions may be taken by the Board without a quorum of the Directors present.

4.11 Board Voting. Except for matters subject to Special Voting under Section 4.12, Board action shall require the affirmative votes of a majority of the Directors on the entire Board. The consequence of a tie vote shall be"no action"taken.

4.12 Special Voting.

4.12.1 The affirmative vote of two-thirds of the Directors of the entire Board shall be required to take any action on the following:
a. Issuing bonds or other forms of debt;
b. Adding or removing Parties or removing Directors; and C. Amending or terminating this Agreement or adopting or amending the bylaws of the Authority except as provided in Sections 3.5 and

4.12.3. At least 30 days advance written notice to the Parties shall be provided for such actions. Such notice shall include a copy of any proposed amendment to this Agreement or the bylaws of the Authority. The Authority shall also provide prompt written notice to all Parties of the action taken and attach the adopted amendment,resolution or agreement.

4.12.2 An affirmative vote of three-fourths of the entire Board shall be required to initiate any action for Eminent Domain and no eminent domain action shall be approved within the jurisdiction of a Party without the affirmative vote of such Party's Director.

4.12.3 An unanimous vote of the entire Board shall be required to amend the following provisions in this Agreement:
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F a. Section 2.3 (Purpose of Agreement)
b. Section 3.6 (Compliance with Local Zoning)
C. Sections 4.11 and 4.12 (Voting Requirements)
d. Section 4.12.2 (Eminent Domain)
e. Section 6.5 (Power Supply Requirements)
f. Section 6.6 (Solana Energy Alliance Transition)

5. INTERNAL ORGANIZATION

5.1 Elected and Appointed Officers. For each fiscal year, the Board shall elect a Chair and Vice Chair from among the Directors and shall appoint a Secretary and a Treasurer as provided in Government Code section 6505.5. No Director may hold more than one such office at any time. Appointed officers shall not be elected officers of the Board.

5.2 Chair and Vice Chair. For each fiscal year,the Board shall elect a Chair and Vice Chair from among the Directors. The term of office of the Chair and Vice Chair shall continue for one year,but there shall be no limit on the number of terms held by either the Chair or Vice Chair. The Chair shall be the presiding officer of all Board meetings, and the Vice Chair shall serve in the absence of the Chair. The Chair shall perform duties as may be required by the Board. In the absence of the Chair,the Vice-Chair shall perform all of the Chair's duties. The office of the Chair or Vice Chair shall be declared vacant and a new selection shall be made i£ (a)the person serving dies,resigns, or the Party that the person represents removes the person as its representative on the Board, or(b)the Party that he or she represents withdraws from the Authority pursuant to the provisions of this Agreement. Upon a vacancy, the position shall be filled at the next regular meeting of the Board held after such vacancy occurs or as soon as practicable thereafter.

5.3 Secretary. The Board shall appoint a qualified person who is not on the Board to serve as Secretary. The Secretary shall be responsible for keeping the minutes of all meetings of the Board and all other office records of the Authority. If the appointed Secretary is an employee of any Party, such Party shall be entitled to reimbursement for any documented out of pocket costs it incurs in connection with such employee's service as Secretary of the Authority, and full cost recovery for any documented hours of service provided by such employee during such Party's normal working hours.

5.4 Treasurer/Chief Financial Officer and Auditor. The Board of Directors shall appoint a Treasurer who shall function as the combined offices of Treasurer and Auditor and shall strictly comply with the statutes related to the duties and responsibilities specified in Section 6505.5 of the Act. The Treasurer for the 12 13045-0001\2606345v l.doc
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F Authority shall be the depository and have custody of all money of the Authority from whatever source and shall draw all warrants and pay demands against the Authority as approved by the Board. The Treasurer shall cause an independent audit(s) of the finances of the Authority to be made by a certified public accountant, or public accountant, in compliance with Section 6505 of the Act.

The Treasurer shall report directly to the Board and shall comply with the requirements of treasurers of incorporated municipalities. The Board may transfer the responsibilities of Treasurer to any qualified person or entity as the law allows at the time. The duties and obligations of the Treasurer are further specified in Section 7. The Treasurer shall serve at the pleasure of the Board. if the appointed Treasurer is an employee of any Party, such Party shall be entitled to reimbursement for any documented out of pocket costs it incurs in connection with such employee's service as Treasurer of the Authority, and full cost recovery for any documented hours of service provided by such employee during such Party's normal working hours.

5.5 Chief Executive Officer. The Board shall appoint a Chief Executive Officer for the Authority,who shall be responsible for the day-to-day operation and management of the Authority and the CCA Program. The Chief Executive Officer may not be an elected member of the Board or otherwise represent any Party to the Authority. The Chief Executive Officer may exercise all powers of the Authority, except those powers specifically reserved to the Board, including but not limited to those set forth in Section 4.6 (Specific Responsibilities of the Board) of this Agreement or the Authority's bylaws, or those powers which by law must be exercised by the Board. The Chief Executive Officer may enter into and execute power purchase agreements and other contracts, in accordance with criteria and policies established by the Board.

5.6 General Counsel. The Board shall appoint a qualified person to act as the Authority's General Counsel, who shall not be a member of the Board, or an elected official or employee of a Party.

5.7 Bonding of Persons Having Access to Property. Pursuant to the Act, the Board shall designate the public officer or officers or person or persons who have charge of,handle, or have access to any property of the Authority exceeding a value as established by the Board, and shall require such public officer or officers or person or persons to file an official bond in an amount to be fixed by the Board.

5.8 Privileges and Immunities from Liability. All of the privileges and immunities from liability, exemption from laws, ordinances and rules, all pension, relief, disability,workers' compensation and other benefits which apply to the activities of officers, agents or employees of a public agency when performing their respective functions shall apply to the officers, agents or employees of the Authority to the same degree and extent while engaged in the performance of any of the functions and other duties of such officers, agents or employees under this Agreement. None of the officers, agents or employees directly employed by the Board shall be deemed,by reason of their employment by the Authority to be 13 13045-0001\2606345v l.doc
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F employed by the Parties or by reason of their employment by the Authority,to be subject to any of the requirements of the Parties.

5.9 Commissions,Boards and Committees. The Board may establish any advisory commissions,boards, and committees as the Board deems appropriate to assist the Board in carrying out its functions and implementing the CCA Program,related energy programs, and the provisions of this Agreement. To the extent possible, the commissions, boards, and committees should have equal representation from each Party. The Board may establish criteria to qualify for appointment on its commissions,boards, and committees. The Board may establish rules, regulations,policies, or procedures to govern any such commissions,boards, or committees and shall determine whether members shall be entitled to reimbursement for expenses. The meetings of the commissions,boards, or committees shall be held in accordance with the requirements of the Ralph M.

Brown Act, as applicable.

6. IMPLEMENTATION ACTION AND AUTHORITY DOCUMENTS

6.1 Preliminary Implementation of the CCA Program.

6.1.1 Enabling Ordinance. In addition to the execution of this Agreement, each Party shall adopt an ordinance in accordance with Public Utilities Code Section 366.2(c)(12) for the purpose of specifying that the Party intends to implement a CCA Program by and through its participation in the Authority.

6.1.2 Implementation Plan. The Authority shall secure Board approval of an Implementation Plan meeting the requirements of Public Utilities Code Section 366.2 and any applicable Public Utilities Commission regulations, and consistent with the terms of this Agreement, as soon after the Effective Date as reasonably practicable but no later than December 31, 2019.

6.2 Authority Documents. The Parties acknowledge and agree that the affairs of the Authority will be implemented through various documents duly adopted by the Board through Board resolution or minute action, including but not necessarily limited to operational procedures and policies, the annual budget, and specific plans such as a local renewable energy development and integration plan and other policies defined as the Authority Documents by this Agreement. All such Authority Documents shall be consistent with and designed to advance the goals and objectives of the Authority as expressed in this Agreement. The Parties agree to abide by and comply with the terms and conditions of all such Authority Documents that may be adopted by the Board, subject to the Parties' right to withdraw from the Authority as described in Section 8 (Withdrawal and Termination) of this Agreement.
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6.3 Integrated Resource Plan and Regulatory Compliance. The Authority shall cause to be prepared an Integrated Resource Plan in accordance with California Public Utilities Commission regulations,and consistent with the terms of this Agreement,that will ensure the long-term development and administration of a variety of energy programs that promote local renewable resources, conservation, demand response, and energy efficiency,while maintaining compliance with other regulatory requirements including the State Renewable Portfolio Standard (RPS)and customer rate competitiveness.

6.4 Renewable Portfolio Standards. The Authority shall provide its customers energy primarily from Category 1 and Category 2 eligible renewable resources, as defined under the California RPS and consistent with the goals of the CCA Program. The Authority shall avoid the procurement of energy from Category 3 eligible renewable resources(unbundled Renewable Energy Credits or RECs)to the extent feasible. The Authority's ultimate objective shall be to achieve—and sustain—a renewable energy portfolio with 100 percent renewable energy availability and usage, at competitive rates,within the Authority service territory by no later than 2035, and then beyond.

6.5 Power Supply Requirements. The Authority's power supply base product will be greater than or equal to 50%qualified renewable resources. The Board shall establish product options with higher renewable and/or GHG-free content that each Party may select(such as 75%or 100%renewable content). In no event will the Authority's power supply base product contain a lesser amount of renewable resources than the base product provided by SDG&E to its customers. Power supply options established by the Board will allow each Party the flexibility to achieve its CAP goals without impeding any other Party from doing the same.

6.6 Continuation and Transition of City of Solana Beach's Existing CCA Program. The City of Solana Beach has been operating a CCA program within its jurisdiction since 2018. The City of Solana Beach shall be permitted to continue to operate its existing CCA program until the Authority's CCA Program commences service to customers within the jurisdiction of the City of Solana Beach. The transition of CCA customers within the City of Solana Beach to the Authority's CCA Program shall be implemented in accordance with the Authority's implementation plan approved by the Board and certified by the CPUC and any policies and requirements established by the Board.

7. FINANCIAL PROVISIONS

7.1 Fiscal Year. The Authority's fiscal year shall be 12 months commencing July 1 and ending June 30. The fiscal year may be changed by Board resolution.

7.2 Depository.
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F

7.2.1 All funds of the Authority shall be held in separate accounts in the name of the Authority and not commingled with funds of any Party or any other person or entity.

7.2.2 All funds of the Authority shall be strictly and separately accounted for, and regular reports shall be rendered of all receipts and disbursements, at least quarterly during the fiscal year. The books and records of the Authority shall be open to inspection and duplication by the Parties at all reasonable times. Annual financial statements shall be prepared in accordance with Generally Accepted Accounting Principles of the United States of America within 6 months of the close of the fiscal year. The Board shall contract with a certified public accountant to make an annual audit of the financial statements of the Authority, which shall be conducted in accordance with the requirements of Section 6505 of the Act.

7.2.3 All expenditures shall be made in accordance with the approved budget and upon the approval of any officer so authorized by the Board in accordance with its policies and procedures.

7.3 Budget and Recovery Costs.

7.3.1 Budget. The initial budget shall be approved by the Board. The Board may revise the budget from time to time as may be reasonably necessary to address contingencies and unexpected expenses. All subsequent budgets of the Authority shall be prepared and approved by the Board in accordance with its fiscal management policies that should include a deadline for approval.

7.3.2 Funding of Initial Costs. The Initial Costs of establishing the Authority and implementing its CCA Program shall be divided equally among the Founding Members. In the event that the CCA Program becomes operational,these Initial Costs paid by the Founding Members shall be included in the customer charges for electric services to the extent permitted by law. The Authority may establish a reasonable time period over which such costs are recovered and reimbursed to the Founding Members. In the event that the CCA Program does not become operational,the Founding Members shall not be entitled to any reimbursement of the Initial Costs they have paid from the Authority or any Party.

7.3.3 CCA Feasibility and Governance Report Costs. In the event that the CCA Program becomes operational, any costs incurred by the Parties in preparing CCA Feasibility or Governance Reports in connection with establishing the Authority shall be included in the customer charges for electric services to the extent permitted by law. The Authority may establish a reasonable time period over which such costs are recovered and reimbursed to the Parties that incurred such costs. In the event that the 16 13045-0001\2606345vl.doc
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F CCA Program does not become operational,no Party shall be entitled to any reimbursement of these costs from the Authority or any Party.

7.3.4 Program Costs. The Parties intend that all costs incurred by the Authority that are directly or indirectly attributable to the provision of electric or other services under the CCA Program, including the establishment and maintenance of various reserve and performance funds, shall be recovered through appropriate charges to CCA customers receiving such services.

7.3.5 No Requirement for Contributions or Payments. Parties are not required under this Agreement to make any financial contributions or payments to the Authority,and the Authority shall have no right to require such a contribution or payment unless expressly set forth herein(for example, as provided in Section 2.4.3,with respect to Additional Members, Section 7.3.2 with respect to Initial Costs and Section 8.1,with respect to Withdrawal),or except as otherwise required by law.

Notwithstanding the foregoing,a Party may voluntarily enter into an agreement with the Authority to provide the following:
a. contributions of public funds for the purposes set forth in this Agreement;
b. advances of public funds for the purposes set forth in this Agreement, such advances to be repaid as provided by such written agreement;or
C. its personnel,equipment or property in lieu of other contributions or advances.

No Party shall be required,by or for the benefit of the Authority,to adopt any local tax,assessment, fee or charge under any circumstances.

7.4 Accounts and Reports. The Treasurer shall establish and maintain such funds and accounts as may be required by good accounting practice or by any provision of any trust agreement entered into with respect to the proceeds of any bonds issued by the Authority. The books and records of the Authority in the hands of the Treasurer shall be open to inspection and duplication at all reasonable times by duly appointed representatives of the Parties. The Treasurer,within 180 days after the close of each fiscal year, shall give a complete written report of all financial activities for such fiscal year to the Parties. The Treasurer shall cooperate with all audits required by this Agreement.

7.5 Funds. The Treasurer shall receive,have custody of and/or disburse Authority funds in accordance with the laws applicable to public agencies and generally accepted accounting practices,and shall make the disbursements required by this Agreement in order to carry out any of the purposes of this Agreement. 17 13045-000112606345v i.doc
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F

7.6 Discretionary Revenues. The Board shall establish policies concerning the expenditure of discretionary revenues. As determined by the Board in such policies, discretionary revenues may be used to (1)provide programs and develop projects of the Authority or(2) allow Parties to direct funds into qualified Authority programs and projects, or provide other ratepayer benefits. The Board shall endeavor to achieve a balanced distribution of program and project benefits substantially commensurate with each Party's energy load("balanced distribution"). The Board shall conduct periodic audits no less than every two years in order to verify the balanced distribution of program and project benefits and take any corrective action necessary to achieve or continue to maintain a balanced distribution.

7.7 Rate Related Programs. The Authority will maintain residential net energy metering and low-income rate discount programs.

8. WITHDRAWAL AND TERMINATION

8.1 Withdrawal

8.1.1 Withdrawal by Parties. Any Party may withdraw its membership in the Authority, effective as of the beginning of the Authority's fiscal year, by giving no less than one year advance written notice of its election to do so, which notice shall be given to the Authority and each Party. The Board, in its discretion, may approve a shorter notice period on a case by case basis.

In addition, a Party may immediately withdraw its membership in the Authority upon written notice to the Board at any time prior to the Authority filing its first year-ahead load forecast with the CPUC that included the Party's load(anticipated to occur in April 2020)without any financial obligation other than its share of Initial Costs that shall not be reimbursed and any costs directly related to the resulting amendment of the Implementation Plan. Withdrawal of a Party shall require an affirmative vote of the Parry's Governing Body.

8.1.2 Amendment. Notwithstanding Section 8.1.1 (Withdrawal by Parties) of this Agreement, a Party may withdraw its membership in the Authority upon approval and execution of an amendment to this Agreement provided that the requirements of this Section 8.1.2 are strictly followed. A Party shall be deemed to have withdrawn its membership in the Authority effective one year(or earlier if approved by the Board) after the Board approves an amendment to this Agreement if the Director representing such Party has provided notice to the other Directors immediately preceding the Board's vote of the Party's intention to withdraw its membership in the Authority, should the amendment be approved by the Board.

8.1.3 Continuing Liability; Further Assurances. A Party that withdraws its membership in the Authority may be subject to certain continuing 18 13 045-000 1\2606345v 1.doc
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F liabilities, as described in Section 8.5 (Continuing Liability; Refund) of this Agreement, including,but not limited to,power purchase agreements and other Authority contracts and operational obligations. The withdrawing Party and the Authority shall execute and deliver all further instruments and documents and take any further action that may be reasonably necessary, as determined by the Board, to effectuate the orderly withdrawal of such Party from membership in the Authority. The Board shall also consider,pursuant to Section 3.2.12, adoption of a policy that allows a withdrawing Party to negotiate assignment to the Party of costs of electric power or other resources procured on behalf of its customers by the Authority upon its withdrawal. In the implementation of this Section 8.1.3,the Parties intend, to the maximum extent possible, without compromising the viability of ongoing Authority operations, that any claims, demands, damages, or liabilities covered hereunder, be funded from the rates paid by CCA Program customers located within the service territory of the withdrawing Party, and not from the general fund of the withdrawing Party itself.

8.2 Termination of CCA Program. Nothing contained in Section 6 or elsewhere in this Agreement shall be construed to limit the discretion of the Authority to terminate the implementation or operation of the CCA Program at any time in accordance with any applicable requirements of state law.

8.3 Involuntary Termination. This Agreement may be terminated with respect to a Party for material non-compliance with provisions of this Agreement or Authority Documents upon a two-thirds vote of the entire Board excluding the vote of the Party subject to possible termination. Prior to any vote to terminate this Agreement with respect to a Party,written notice of the proposed termination and the reason(s) for such termination shall be delivered to the Party whose termination is proposed at least 30 days prior to the regular Board meeting at which such matter shall first be discussed as an agenda item. The written notice of proposed termination shall specify the particular provisions of this Agreement or the Authority Documents that the Party has allegedly violated. The Party, subject to possible termination, shall have the opportunity at the next regular Board meeting to respond to any reasons and allegations that may be cited as a basis for termination prior to a vote regarding termination. A Party that has had its membership in the Authority terminated may be subject to certain continuing liabilities, as described in Section 8.5 (Continuing Liability; Refund) of this Agreement.

8.4 Mutual Termination. This Agreement may be terminated by mutual agreement of all the Parties; provided, however, the foregoing shall not be construed as limiting the rights of a Party to withdraw its membership in the Authority, and thus terminate this Agreement with respect to such withdrawing Party, as described in Section 8.1 (Withdrawal) of this Agreement. 19 13045-0001\2606345v 1.doc
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F

8.5 Continuing Liability; Refund. Upon a withdrawal or involuntary termination of a Party, the Party shall be responsible for any claims, demands, damages, or liabilities attributable to the Party through the effective date of its withdrawal or involuntary termination, it being agreed that the Party shall not be responsible for any claims, demands, damages, or liabilities commencing or arising after the effective date of the Party's withdrawal or involuntary termination.

Notwithstanding the foregoing or any other provisions of this Agreement, such Party also shall be liable to the Authority for(a) any damages, losses, or costs incurred by the Authority which result directly from the Party's withdrawal or termination, including but not limited to costs arising from the resale of capacity, electricity, or any attribute thereof no longer needed to serve such Party's load; and(b) any costs or obligations associated with the Party's participation in any program in accordance with the program's terms,provided such costs or obligations were incurred prior to the withdrawal of the Party. From and after the date a Party provides notice of its withdrawal or is terminated, the Authority shall reasonably and in good faith seek to mitigate any costs and obligations to be incurred by the withdrawing or terminated Party under this Section through measures reasonable under the circumstances,provided that this obligation to mitigate does not impose any obligation on the Authority to transfer any cost or obligation directly attributable to the membership and withdrawal or termination of the withdrawing or terminated party to the ratepayers of the remaining members. Further,the liability of the withdrawing or terminated Party shall be based on actual costs or damages incurred by the Authority and shall not include any penalties or punitive charges imposed by the Authority. The Authority may withhold funds otherwise owing to the Party or may require the Party to deposit sufficient funds with the Authority, as reasonably determined by the Authority,to cover the Party's liability for the costs described above. The withdrawing or terminated Party agrees to pay any such deposit determined by the Authority.

Any amount of the Party's funds held on deposit with the Authority above that which is required to pay any liabilities or obligations shall be returned to the Party. In the implementation of this Section 8.5,the Parties intend, to the maximum extent possible,without compromising the viability of ongoing Authority operations, that any claims, demands, damages, or liabilities covered hereunder,be funded from the rates paid by CCA Program customers located within the service territory of the withdrawing Party, and not from the general fund of the withdrawing Party itself. The liability of a withdrawing Party under this Section shall be only to the Authority and not to any other Party.

8.6 Disposition of Authority Assets. Upon termination of this Agreement and dissolution of the Authority by all Parties, after payment of all obligations of the Authority,the Board may sell or liquidate Authority property and shall distribute any remaining assets to the Parties in proportion to the contributions made by the existing Parties. Any assets provided by a Party to the Authority shall remain the asset of that Party and shall not be subject to distribution under this section.

9. MISCELLANEOUS PROVISIONS
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F

9.1 Dispute Resolution. The Parties and the Authority shall make reasonable efforts to settle all disputes arising out of or in connection with this Agreement. Before exercising any remedy provided by law, a Party or the Parties and the Authority shall engage in nonbinding mediation in the manner agreed upon by the Party or Parties and the Authority. The Parties agree that each Party may specifically enforce this section. In the event that nonbinding mediation is not initiated or does not result in the settlement of a dispute within 60 days after the demand for mediation is made, any Party and the Authority may pursue any remedies provided by law.

9.2 Liability of Directors,Officers,and Employees. The Directors, officers, and employees of the Authority shall use ordinary care and reasonable diligence in the exercise of their powers and in the performance of their duties pursuant to this Agreement. No current or former Director, officer,or employee will be responsible for any act or omission by another Director, officer,or employee.

The Authority shall defend, indemnify and hold harmless the individual current and former Directors, officers, and employees for any acts or omissions in the scope of their employment or duties in the manner provided by Government Code Section 995 et seq. Nothing in this section shall be construed to limit the defenses available under the law,to the Parties, the Authority,or its Directors, officers,or employees. In addition,pursuant to the Act,no Director shall be personally liable on the Authority's bonds or be subject to any personal liability or accountability by reason of the issuance of bonds.

9.3 Insurance and Indemnification of Parties. The Authority shall acquire such insurance coverage as is necessary to protect the interests of the Authority and the Parties. The Authority shall defend, indemnify and hold harmless the Parties and each of their respective governing board members,officers, agents and employees, from any and all claims, losses,damages,deductibles or self-insured retentions, costs, fines,penalties, injuries and liabilities of every kind arising directly or indirectly from the conduct, activities,operations,acts, errors, omissions or negligence of the Authority or its officers,employees, agents, contractors, licensees or volunteers.

9.4 No Third Party Beneficiaries. The provisions of this Agreement are for the sole benefit of the Parties and the Authority and not for the benefit of any other person or entity. No third party beneficiary shall be created by or arise from the provisions of this Agreement.

9.5 Notices. Any notice required or permitted to be made hereunder shall be in writing and shall be delivered in the manner prescribed herein at the principal place of business of each Party. The Parties may give notice by (1)personal delivery; (2)e-mail; (3)U.S. Mail, first class postage prepaid, or a faster delivery method; or(3)by any other method deemed appropriate by the Board.

Upon providing written notice to all Parties, any Party may change the designated address or e-mail for receiving notice.
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F All written notices or correspondence sent in the described manner will be deemed given to a party on whichever date occurs earliest: (1)the date of personal delivery; (2) the third business day following deposit in the U.S. mail, when sent by"first class"mail; or(3)the date of transmission,when sent by e- mail or facsimile.

9.6 Successors. This Agreement shall be binding upon and shall inure to the benefit of the successors of each Party.

9.7 Assignment. Except as otherwise expressly provided in this Agreement,the rights and duties of the Parties may not be assigned or delegated without the advance written consent of all of the other Parties, and any attempt to assign or delegate such rights or duties in contravention of this section shall be null and void. This Agreement shall inure to the benefit of, and be binding upon,the approved assigns of the Parties. This section does not prohibit a Party from entering into an independent agreement with another agency,person, or entity regarding the financing of that Party's contributions to the Authority, or the disposition of the proceeds which that Party receives under this Agreement, so long as such independent agreement does not affect, or purport to affect, the rights and duties of the Authority or the Parties under this Agreement. .9.8 Amendment. This Agreement may be amended by a written amendment approved by the Board in accordance with the Special Voting requirements of Section 4.12.

9.9 Severability. If any one or more of the terms,provisions,promises, covenants, or conditions of this Agreement were adjudged invalid or void by a court of competent jurisdiction, each and all of the remaining terms,provisions,promises, covenants, and conditions of this Agreement shall not be affected thereby and shall remain in full force and effect to the maximum extent permitted by law.

9.10 Governing Law. This Agreement is made and to be performed in the State of California, and as such California substantive and procedural law shall apply.

9.11 Headings. The section headings herein are for convenience only and are not to be construed as modifying or governing the language of this Agreement.

9.12 Counterparts. This Agreement may be executed in any number of counterparts, and upon execution by all Parties, each executed counterpart shall have the same force and effect as an original instrument and as if all Parties had signed the same instrument. Any signature page of this Agreement may be detached from any counterpart of this Agreement without impairing the legal effect of any signatures thereon and may be attached to another counterpart of this Agreement identical in form hereto but having attached to it one or more signature pages.

The Parties hereto have executed this Joint Powers Agreement establishing the Clean Energy Alliance.
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CITY
By: ( 7
C ager
DATE: Ib bc�r
ATTEST:

By:

City Clerk
APPROVED AS TO FORM:

City Attorney
-23 -
Oct. 8, 2019 Item#5 Page 32 of 42
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CITY OF
By:

Seat W. Huth, City Manager
DATE: ((f`t Z61 1
ATTEST:

By:

Ashley Jones,CIV qlerk
APPROVED AS TO FORM:

By:

Leslie E. Devaney,City I"oey
-23 -
Oct. 8, 2019 Item #5 Page 33 of 42
06/28/2022 PH1 136 of 145

CITY OF 5 o LArf A
By:
ity Manager
DATE: // _ * —
ATTEST: ```�a�»uti►arr��
i
By. A. i� ��4
ity Clerk v
moots,.r°
APPROVED AS TO FORM:

By:

Ci ttorney
-23 -
Oct. 8, 2019 Item #5 Page 34 of 42
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CLEAN ENERGY ALLIANCE JOINT POWERS AGREEMENT

CITY OF ESCONDIDO
By,•
City Manager
DATE: { 4 .

ATTEST
sy:
r� City Clerl
APPROVED A" RM:

By .
t `CIL" hcj�-a Vr, City Attorney
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F

CLEAN ENERGY ALLIANCE JOINT POWERS AGREEMENT
CIT I 410MARCOS
By.r
at►c -,bqi,,
sac ri VinCity Manager
DATE: 1/13/2022
AT gacusigned by:

By. plumy Sce &
Phi 11 i p scol 1 i ck City Clerk
AP DeA S TO FORM:

By:

Hel en Hol mes I Vahy Attorney
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F Exhibit A: Definitions
"AB 117"means Assembly Bill 117(Stat. 2002, Ch. 838, codified at Public Utilities Code Section 366.2), which created Community Choice Aggregation. "Act"means the Joint Exercise of Powers Act of the State of California(Chapter 5, Division 7, Title 1 of the Government Code commencing with Section 6500). "Agreement"means this Joint Powers Agreement.
"Authority"means the Clean Energy Alliance.
"Authority Document(s)"means document(s) duly adopted by the Board by resolution or motion implementing the powers, functions and activities of the Authority, including but not limited to the Operating Policies and Procedures, the annual budget, and plans and policies.
"Board"means the Board of Directors of the Authority.
"Community Choice Aggregation"or"CCA"means an electric service option available to cities, counties, and other public agencies pursuant to Public Utilities Code Section 366.2.
"CCA Program"means the Authority's Community Choice Aggregation program established, conducted and operated under Public Utilities Code Section 366.2. "Days" shall mean calendar days unless otherwise specified by this Agreement. "Director"means a member of the Board representing a Party appointed in accordance with Sections 4.1 (Board of Directors) and 4.2 (Appointment and Removal of Directors) of this Agreement.
"Effective Date"means the date on which the Agreement shall become effective and the Authority shall exist as a separate public agency, as further described in Section 2.1 (Effective Date and Term) of this Agreement. "Founding Member"means any jurisdiction that becomes a member of the Authority before October 1, 2020, as identified in Exhibit B.
"Governing Body"means for any city, its City Council; and for any other public agency, the equivalent policy making body that exercises ultimate decision-making authority over such agency.
"Initial Costs"means reasonable and necessary implementation costs advanced by the Founding Members in support of the formation of the Authority and approved by the Board for reimbursement,which are (a) directly related to the establishment of the 23 13045-0001\2606345v 1.doc
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F Authority and its CCA program,and(b) incurred by the Authority or its Members relating to the initial operation of the Authority, such as the hiring of the executive and operations staff, any required accounting, administrative, technical and legal services in support of the Authority's initial formation activities or in support of the negotiation, preparation and approval of power purchase agreements, and activities associated with drafting and obtaining approval of the Authority's implementation plan. Initial Costs do not include costs associated with the investigation of the CCA model, attendance at routine planning meetings, or a Party's pre-formation reports related to their decision to pursue CCA or join the Authority. Initial costs also do not include the costs incurred by the City of Solana Beach relating to the termination of its CCA program. The Authority Board shall determine the repayment timing and termination date for the Initial Costs. "Investor Owned Utilities"means a privately-owned electric utility whose stock is publicly traded and is subject to CPUC regulation.
"Parties"means, collectively,the signatories to this Agreement that have satisfied the conditions as defined above for"Founding Members"or in Section 2.4(Addition of Parties) of this Agreement, such that they are considered members of the Authority. "Party"means, singularly, a signatory to this Agreement that has satisfied the conditions as defined above for"Founding Members" or in Section 2.4 (Addition of Parties) of this Agreement, such that it is considered a member of the Authority. 24 13045-0001\2606345v l.doc
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F Exhibit B: List of Founding Members and Parties added on or after October 1,2020,per Section 2.4
Any public agency that becomes a member by October 1, 2020 City of Carlsbad
City of Del Mar
City of Solana Beach
Any public agency that becomes a member after October 1, 2020 City of Escondido
City of San Marcos
1 13045-0001\2606345v1.doc
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DocuSign Envelope ID:B6417318-68FD-480D-8ADD-7A197A78682F AMENDMENT NO. 1 TO CLEAN ENERGY ALLIANCE JOINT POWERS

AGREEMENT
This Amendment No. 1 to the Clean Energy Alliance Joint Powers Agreement, dated November 4, 2019,by and among the Parties (hereinafter referred to as the"Agreement') amends the Agreement as follows:

1. Section 5.1 Elected and Appointed Officers is hereby amended to amend the first sentence of this section to read:
"For each calendar year,the Board shall elect a Chair and Vice Chair from among the Directors and for each fiscal year shall appoint a Secretary and a Treasurer as provided in Government Code Section 6505.5.

2. Section 5.2 Chair and Vice Chair is hereby amended to amend the first sentence of this section to read:
"For each calendar year, the Board shall elect a Chair and Vice Chair from among the Directors."

3. Except as specifically amended above, all other provisions of the Agreement shall remain in full force and effect.

This proposed Amendment No. 1 was presented to the Board of Directors of the Clean Energy Alliance on July 29, 2021, and was adopted as amended by the Board at its September 30,2021, meeting per Resolution 2021-012, attached hereto.
2 13045-0001\2606345v 1.doc
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DocuSign Envelope ID:56D38309-50D4-488D-B04D-AAD0228E5BCF

CLEAN ENERGY ALLIANCE
RESOLUTION NO. 2021-012

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CLEAN ENERGY ALLIANCE APPROVING AMENDMENT NO. 1 TO THE JOINT POWERS

AUTHORITY AGREEMENT REGARDING TERM OF CHAIR AND VICE CHAIR WHEREAS, the Clean Energy Alliance (CEA) is a joint powers agency, formed in November 2019, by the founding member cities of Carlsbad, Del Mar, and Solana Beach; and WHEREAS, Sections 5.1 and 5.2 of the Clean Energy Alliance Joint Powers Agreement (JPA) provides that for each fiscal year, the Board shall elect a Chair and Vice Chair from among the Directors; and
WHEREAS, the calendar year aligns the term of Chair and Vice Chair to coincide with the term of elected office for each Board Director; and
WHEREAS, proposed Amendment No. 1 to the JPA was presented to the Board at its July 29, 2021, meeting for review and the Board directed that this amendment be presented to the Board for adoption at its September 30, 2021, meeting; and WHEREAS, the member cities were provided a minimum 30-days advance written notice of the proposed amendment, including a copy of the Amendment No. 1.

NOW,THEREFORE, BE IT RESOLVED, by the Board of Directors of the Clean Energy Alliance, as follows:

Section 1. The Board of Directors of the Clean Energy Alliance hereby adopts Amendment No. 1 to the Clean Energy Alliance Joint Powers Agreement amending Sections 5.1 and 5.2 as follows:
"Section 5.1. Elected and Appointed Officers. For each 4&&M calendar year, the Board shall elect a Chair and Vice Chair from among the Directors and for each fiscal year shall appoint a Secretary and Treasurer as provided in Government Code section 6505.5. " "Section 5.2. Chair and Vice Chair. For each fiscal calendar year, the Board shall elect a Chair and Vice Chair from among the Directors. "
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DocuSign Envelope ID:56D38309-50D4-488D-B04D-AAD0228E5BCF The foregoing Resolution was passed and adopted this 301" day of September 2021, by the following vote:

AYES: Druker, Bhat-Patel, Becker
NOES: None
ABSENT: None
APPROVED:

DocuSigned by:
6Sh f tAW
7E04F23CDAA04F8_.

Kristi Becker, Chair
ATTEST:
5DocuSigned by: eedd''AA��AA
WA r. (AMj YVI.YV�C
23A7871B710246C...

Sheila Cobian, Interim Board Secretary
06/28/2022 Phi 1 145 of 145

From:Gabaldon, Joseph M
To:Judy Ritter; John Franklin; Corinna Contreras; Joe Green; Katie Melendez Cc:Patrick Johnson; John Conley; Kathy Valdez; Britton, Joseph C Subject:Public Hearing #1 - Membership in the Clean Energy Alliance Date:Friday, June 24, 2022 4:21:12 PM
Attachments:image001.jpg
image004.png
image005.png
image006.png
image003.jpg
CCA Letter 6-28-22.pdf
Good afternoon Mayor Ritter and members of the City Council, As SDG&E’s Public Affairs Manager to the City of Vista, I am pleased to share our support of the City Manager’s recommendation. Attached is a copy of our letter for your consideration.

Let us know if you have any questions.

Thank you,
Joe
Joe Gabaldon
Public Affairs Manager
M 760.445.0771
E [email protected]
Follow Us:

For more information about privacy at SDG&E visit sdge.com/privacy.

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PH1

Joe Gabaldon
Public Affairs Manager

8330 Century Park Court, CP31D
San Diego, CA 92123

tel: 858-650-6121
[email protected]
June 24, 2022

Honorable Mayor and City Council
City of Vista
200 Civic Center Drive
Vista, CA 92084

RE: Public Hearing #1 – Membership in the Clean Energy Alliance, a Community Choice Energy program

Dear Mayor Ritter and members of the City Council,

I welcome the opportunity to express SDG&E’s support as you consider moving toward Community Choice Energy. As you know, SDG&E appreciates the long-standing collaboration we have with the City of Vista and we look forward to continuing this partnership into the future.

We respect our customers’ right to choose the energy provider or program that best fits their need s and will collaborate closely with you and the Clean Energy Alliance to serve Vista’s residents and businesses. SDG&E will continue to operate a safe and reliable grid to deliver the energy mix you procure and will continue to handle customer billing and core programs to support our most vulnerable shared customers.

SDG&E has more than 140 years of experience in energy delivery. Given the complexities of the energy industry, we are actively working with various jurisdictions and CCA programs around the re gion, including the Clean Energy Alliance, to share the information and tools in energy procurement and support the success of customer choice-driven programs.

We are excited for the ongoing collaboration with the City of Vista as we continue work to upgrade and modernize our power grid to achieve the goal of net-zero GHG emissions by 2045 through the investment in innovative clean energy technologies such as zero-emissions hydrogen, energy storage and electric vehicle charging to benefit all our customers.

SDG&E is committed to maintaining a strong relationship with the City regardless of the choice you make with respect to energy procurement. Thank you again for this opportunity to share our perspective.

Although I will be out of the office for the next two weeks, please feel free to reach out to Joe Britton, my team lead, with any questions. Joe can be reached at [email protected].

Sincerely,

Joe Gabaldon
Public Affairs Manager

cc: Patrick Johnson, City Manager
Kathy Valdez, City Clerk
Joe Britton, Regional Public Affairs Manager

From:Chris McCardle
To:Public Comments
Subject:CEA REPRESENTATIVE
Date:Tuesday, June 28, 2022 10:39:30 AM
I was very pleased to read about the proposal to join the Clean Energy Alliance. This seems a very positive group endeavor that will hopefully grow and benefit many communities.

However, I am concerned about the designation of Councilmember Franklin as our liason since in the past he has represented somewhat of an impediment in this process. I do support someone who could be a full-throated, enthusiastic participant and I believe Councilmember Melendez or Contreras could be much more effective in this role.

Thank you,
Chris Mcardle
Sent from Yahoo Mail on Android

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From:Kevin Lee
To:Public Comments
Cc:Darcy Shiber-Knowles
Subject:PH1. Membership in the Clean Energy Alliance, a Community Choice Program (June 28, 2022) Date:Tuesday, June 28, 2022 11:35:31 AM
Dear Mayor Ritter and Vista City Councilmembers,

Dr. Bronner’s believes in Treating the Earth Like Home – it’s part of our Cosmic Principle! We would like to congratulate the City of Vista in moving forward with Community Choice Energy.

We write in support of the following:

1. Approve d implementation of the City of Vista to join the Clean Energy Alliance at the June 28, 2022 City Council meeting.

2. Given Councilmembers Contreras’ and Melendez’s experience and expertise in clean energy, appoint both Councilmembers as the primary and alternate members representing Vista to the Board of Directors of the Clean Energy Alliance.

Dr. Bronner’s is appreciative of the efforts so far, and especially of City staff, in pursuing Community Choice Energy. As always, please let us know how we and the business community can support Vista’s path to a renewable energy future!

Best,

Darcy Shiber-Knowles (Director of Operational Sustainability & Innovation) Kevin Lee (Environmental Impact & Compliance Specialist)

Kevin Lee (He/Him)
Environmental Impact & Compliance Specialist
760-743-2211 x446

Dr. Bronner’s
Family Soapmakers Since 1858
P.O. Box 1958, Vista, CA 92085 | F 760-745-6675
ALL-ONE!

TA-DA! Introducing Dr. Bronner’s Magic All-One Chocolate – 70% dark chocolate in six flavors – all vegan, coconut sugar sweetened, and perfectly balanced. Delicious and good, for Earth and Farmers! Learn more at drbronner.com.

From:James Riggenbach
To:Public Comments
Subject:PH1 - Clean Energy Alliance Membership
Date:Tuesday, June 28, 2022 12:31:06 PM
I support the city joining the CEA. For board membership, I recommend choosing a person who has been engaged on the issue, has a history of cooperating with other municipalities and has a disposition to work collaboratively with the rest of the board. I also think the person who represents Vista should be free from conflicts of interest which include taking campaign contributions from SDGE, Sempra, or special interest groups that work in opposition to the community choice energy model..

Thank you for considering my input.

Jim Riggenbach
Madrid Dr.

Vista, CA 92081

From:Nanci Oechsle
To:Public Comments
Subject:PH 1 Membership in CEA
Date:Tuesday, June 28, 2022 1:33:11 PM
Dear Madam Mayor and fellow Councilmembers,
Tonight you will be making a decision that will pave the pathway to clean energy for the community of Vista. I thank you for getting to this point in time. My only request is that in considering an appointment to the board of CEA that you take into consideration who that should be. That should be someone who shows an active interest in bring clean energy to our community. They will be in a position to bring projects to Vista that would include jobs. They need to be able to make decisive decisions, accept information as it comes and ask questions to staff and other key players.

Thank you for your consideration.

Nanci Oechsle/Alta Vista/33 year resident of Vista
she/her/hers

From:[email protected]
To:Public Comments
Subject:CEA (Clean Energy Alliance)
Date:Tuesday, June 28, 2022 1:57:05 PM
Dear Honorable Mayor Ritter and Councilmembers,
I appreciate and applaud the Council’s recent efforts as you update Vista’s Climate Action Plan, specifically the addition of CAP Staff and CCE consideration. I would like to urge you to join the proposed CEA JPA.

Additionally, Mayor Ritter, I urge you to appoint Councilmember Melendez as our representative.

Councilmember Melendez has demonstrated a distinct interest in and knowledge of CCA JPAs and I think she will best represent our interests.

Thank you,
Lynne Mitschke
Mar Vista Drive, Vista

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CITY OF VISTA C A L I F 0 R N I A
PHI : Membership in Clean
CEA Energy Alliance, a Community
i Choice Energy Program
June 28, 2022

CITY Of VISTA
PHI : Membership in Clean Energy Alliance
Climate Action Plan Update r
• CAP Strategy 5 : Increase Renewable and
;r
Zero-Carbon Energy `
• Measure E-3 : Join a Program to Increasezm Grid-Supply Renewable and Zero-
Carbon Electricity
• GHG Reduction Potential in 2030 CIWOFVISTA

CLIMATE
( MTCO2e) : 28,338

CITY OF VISTA
PHI : Membership in Clean Energy Alliance
Previous Actions
• April 2019: Directed staff to prepare RFP for CCE feasibility study.
• June 2019: Released RFP and initiated feasibility study. • October 2021: Updated Climate Action Plan (CAP) adopted, including a measure to join a CCE program. Feasibility study results were shared. Staff presented options for CCE programs for Council's consideration.
• May 2022: Discussed possible membership in CEA and directed staff to pursue membership.

CITY OF VISTA
PHI : Membership in Clean Energy Alliance
Clean Energy Alliance (CEA)
• Formed in 2019 through a JPA including Carlsbad, Del Mar, and Solana Beach; service launched in 2021.
• Escondido and San Marcos became members in 2021. • Oceanside will become a member in Fall 2022.
• San Clemente considering membership.

CITY OF VISTA
PHI : Membership in Clean Energy Alliance
Clean Energy Alliance (CEA)
• 93% customer participation rate across member cities. • Three power products available :
— Clean Impact (50% Renewable)
— Clean Impact Plus (75% Carbon-Free)
— Green Impact (100% Renewable)
• For 2024 service launch, City will choose default product by December 2023.

CITY Of
PHI : Membership in Clean Energy Alliance
April 2022 CEA Analysis
Table 2: Average Monthly Customer Bill Comparison
CEA: Clean CEA: CleanCEA: Green
Rate Type SDG&E: 31 Impact 50 Impact Plus Impact 100 Residential: DR percent percent 75 percent percent Renewable Renewable Carbon- Renewable
Free
Generation $52.63 $37.79 $37.79 $37.79
Clean Impact+/ Green Impact - - $0.34 $2.57 Premium
SDG&E PCIA-FFS—2022 Vintage - $11.90 $11.90 $11.90 Generation Related Costs $52.63 $46.69 $50.03 $52.26 SDG&E Delivery* $89.32 $89.32 $89.32 $89.32 Total Average Monthly Bill 1 $141.95 $139.01 1 $139.95 1 $141.58 The average kWh used to calculate the SDG&E Delivery costs in this assessment was incorrect. The SDG&E Delivery costs in Table 5 are correct.

Cost Saving to SDG&E $(2.94) $(2.60) $(0.37) Percentage Saving to SDG&E -2.07% -1.83% -0.26%

CITY OF

CITY OF VISTA
PHI : Membership in Clean Energy Alliance
Current CEA Financial Assessment
Table 4: Revenue Projections
FYE 2024 FYE 2025 FYE 2026
Revenue $20.51 $110.34 $110.89
Power Supply Costs -$18.48 -$104.43 -$102.29 Staffing -$0.35 -$0.35 -$0.35
Billing and Other Costs -$0.83 -$2.76 -$2.77 Net Operating Margins $0.85 $2.79 $5.48
5% Reserve Contribution $1.03 $5.52 $5.54
Revenue Shortfall/Excess -$0.18 -$2.72 -$0.06 1 CITY OF VISTA

CIn Of
PHI : Membership in Clean Energy Alliance
Current CEA Financial Assessment
Table 5: Bill Comparison with 2.5% Rate Increase
CEA: Clean CEA: Clean CEA- Green
Rate Type SDG&E: 31 Impact 50 Impact Plus Impact 100 Residential: DR percent percent 75 percent percent Renewable Renewable Carbon- Renewable Free
Generation $52.63 $38.73 $38.73 $38.73 Clean Impact+ / Green Impact - - $0.34 $2.57 Premium
SDG&E PCIA-FFS—2022 Vintage $10.26 $10.26 $10.26 Generation Related Costs $52.63 $48.99 $49.34 $51.56 SDG&E Delivery $77.14 $77.14 $77.14
Total Average Monthly Bill $129.77 $126.13 $126.48 $128.70 Average 342 kWh usage
Cost Saving to SDG&E $(3.64) $(3.29) $(1.07) Percentage Saving to SDG&E -2.80% -2.54% -0.83% 1 CITY OF

CITY OF VISTA
PHI : Membership in Clean Energy Alliance
Governance
• CEA Board of Directors is comprised of one representative and one alternate representative from each member city • Upon CEA membership in August, the representative and alternate representative will be seated to partial terms • No additional staff resources are required for membership

CITY OF VISTA
PHI : Membership in Clean Energy Alliance
Fiscal Impact
• Projected cost of membership will not exceed $50,000 — With Oceanside joining and San Clemente considering membership, start-up costs will be reduced
• CEA is committed to reimbursing member agencies' start- up costs after three years of membership

CITY OF VISTA
PHI : Membership in Clean Energy Alliance
N ext Steps
• July 28, 2022: CEA approves Vista membership
• August 2022: Vista Board members seated
• November 2022: CEA approves Implementation Plan Amendment • December 2022: Implementation Plan Amendment filed with CPUC • March 2023: Implementation Plan Amendment approved by CPUC • April 2024 or 2025*: Anticipated launch of CEA service to Vista customers
*Dependent upon CEA power procurement actions

CITY OF VISTA

CITY OF VISTA
PHI : Membership in Clean Energy Alliance
Recommended Actions
• Close a public hearing to receive public testimony regarding membership in CEA.
• Authorize the execution of the Joint Exercise of Powers Agreement for membership in CEA, and allow the Mayor's appointment of a member and alternate member to the CEA board of directors.
• Obtain Council's decision to implement a Community Choice Aggregation program within the City of Vista by participating in CEA.

Vista City CouncilJune 28, 2022

Vista City Council
June 28, 2022