AGENDA SONOMA CLEAN POWER AUTHORITY COMMUNITY ADVISORY COMMITTEE March 30, :00 A.M.

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1 AGENDA SONOMA CLEAN POWER AUTHORITY COMMUNITY ADVISORY COMMITTEE March 30, :00 A.M. 50 Santa Rosa Avenue, 5 th Floor Santa Rosa, California I. CALL TO ORDER II. PUBLIC COMMENT ON MATTERS NOT LISTED ON THE AGENDA (Comments are restricted to matters within the Committee jurisdiction. The Committee will hear public comments at this time for up to thirty minutes. Please be brief and limit your comments to three minutes.) III. COMMUNITY ADVISORY COMMITTEE REGULAR CALENDAR 1. Review the February 14, 2017 draft meeting minutes of the Community Advisory Committee 2. Receive report on operations, financial performance and audited financial statements 3. Form subcommittee to work with staff on preparing a detailed proposal for program evaluation 4. Review draft Budget and Rates for FY 2017/2018 IV. COMMITTEE MEMBER ANNOUNCEMENTS V. ADJOURN DISABLED ACCOMMODATION: If you have a disability which requires an accommodation, an alternative format, or requires another person to assist you while attending this meeting, please contact the Clerk at (707) , as soon as possible to ensure arrangements for accommodation. 1/64

2 MINUTES SONOMA CLEAN POWER AUTHORITY COMMUNITY ADVISORY COMMITTEE Tuesday, February 14, 2017 I. CALL TO ORDER The meeting was called to order at 9:00A.M. by Chair Dowd. Committee members present: Chair Dowd, Vice Chair Deicke, Committee Members Renfro, Wells, Nicholls, Mattinson, Como, Williamson, Beeler and Brophy. Absent: Committee Member Fenichel Staff present: CEO Geof Syphers, Internal Operations Manager Stephanie Reynolds II. COMMUNITY ADVISORY COMMITTEE REGULAR CALENDAR 1. Approve the November 30, 2016 meeting minutes of the Community Advisory Committee Motion to approve the 11/13/16 minutes by Member Nicholls Second: Member Wells Motion approved: Receive report on operations, financial performance and audited financial statements Internal Operations Manager, Stephanie Reynolds, stated the annual report was released and will be used as outreach for public events in Sonoma and Mendocino counties. She introduced SCP s new Customer Service Specialist Danielle Baker. She stated that staff recently attended the Wellness Health Fair in Gualala and there are several events coming up in Fort Bragg and Willits. She stated that budget planning began earlier this year and it will be complete well in advance of July 1. She also stated that there are four public meetings coming up to review the budget. CEO Syphers stated that there are two months of financials on page 25 of the packet and that this is the last month you will see additional sales for resale because SCP will start using the Mustang solar facility to serve its customers. He explained the lower-than-expected sales volume, lower revenues and lower expenses. CEO Syphers stated the Board approved the rates, they will go into effect March 1, and all customers will see a 1% savings. He stated that SCP will remain competitive on rates and overall the budget health is strong. He stated that there is just shy of $20 million 2/64

3 SONOMA CLEAN POWER AUTHORITY COMMUNITY ADVISORY COMMITTEE MEETING TUESDAY, FEBRUARY 14, 2017 in general reserves and $3.5 million in program reserves. CEO Syphers stated SCP is looking to add more staff and staffing has paced out exactly as the 2013 plan showed. He stated that CalCCA is getting more active and more CCAs are starting up and launching. He stated that MCE has over 40 people for program staff, although SCP is unlikely to need to grow to that size in the near future. He stated that there is a current opening for a program manager and good applications have been received. CM Deicke asked about the State Senate. CEO Syphers stated CalCCA held a two-hour briefing and met with eight senators and other lawmakers for general education. Public Comment: Woody Hastings: stated that the annual report looked great. He stated that he could not find any contact info or evidence of ability for public to participate and suggested for future to have contact info and some numbers on expansion of community choice in the state. He stated that in at least four other areas of California controversy is emerging about rates and to keep an eye on that. John Rosenblum: stated that it would be useful to know how many kilowatt-hours are used and how much is used by residential versus commercial customers. 3. Receive Procurement update Director of Power Services, Deb Emerson stated that SCP issued a request for offers for the additional load that SCP will be serving beginning in June. She stated that the requested offers were for shaped, carbon free and Renewable Portfolio Standard bundled energy products. She stated that the responses were due by January 20, 2017 and 11 suppliers responded to the RFO. She stated that an offer was accepted and will be reported on once finalized. CM Mattinson asked how subscribed SCP is and what are the open positions currently. Director Emerson stated SCP has about 90% of the forecast load which allows for opt-outs. CM Williamson asked for a general idea on the current cost of energy procured. Director Emerson stated carbon free was less than $2 per MWh. CEO Syphers explained that this is the premium above the cost of general energy. Director Emerson stated category 2 was less than $6 and category 1 less than $19. CEO Syphers stated bottom-line on these new purchases to provide energy for Mendocino reduced the average cost of energy for all customers. 3/64

4 SONOMA CLEAN POWER AUTHORITY COMMUNITY ADVISORY COMMITTEE MEETING TUESDAY, FEBRUARY 14, 2017 CM Brophy asked about the IRP process and estimated completion date. Director Emerson stated SCP wants to be involved in the process and completing of the components. She stated that she would like to have something in draft status by this summer. CEO Syphers stated the rules are set by the legislature and enforced by the CPUC. CM Deicke stated it would be helpful to see different sources of energy procured laid out over time so balancing could be seen. Director Emerson stated that this will be shown in the IRP. Chair Dowd stated he would like to see a system developed to see how under or oversubscribed SCP is to help guide continued success. Public comment; John Rosenblum: asked if we got different prices in the RPS and if there is any process for SCP to look at environmental impact. CEO Syphers stated that there are significant differences and that SCP considers each sources of energy individually, on its own merits. He stated that all forms of energy production have environmental impacts. June Brashares: spoke of reducing GHGs by using non-fossil fuel energy and putting money to improvements that are system wide. CEO Syphers stated that SCP needs to use renewables as a tool, not a goal and then we can compare efficiently with solar. Chair Dowd asked about the wet winter and the impacts it has had to supply and are portfolios secure. Director Emerson stated they are secure and the wet winter will drive down hydroelectric prices. 4. Receive Programs update Director McFarland stated that during the Drive Evergreen program, 556 certificates were issued, there were 173 approved and pending leases, and 34 approved purchases. She stated that there were 30 cars that could have been deployed to low income customers, but there was an issue with the credit scores needed. She stated that next year, SCP is considering a loan loss reserve fund and providing credit enhancements. CEO Syphers stated there is data to be collected and then the conversation will be brought back to the CAC. Director McFarland stated 376 chargers were ordered, 333 customers signed up for demand response. CEO Syphers stated the demand response in California is still a very young industry and a lot of people are still figuring it out. He stated that a letter is going out soon to customers that signed up for demand response to explain this issue. Director McFarland stated answers will be released to questions on the RFQ today on our website. 4/64

5 SONOMA CLEAN POWER AUTHORITY COMMUNITY ADVISORY COMMITTEE MEETING TUESDAY, FEBRUARY 14, 2017 CM Mattinson asked about the RFQ and is SCP expecting to engage with multiple experts and if the new programs position will be filled in time to be a part of this. Director McFarland stated yes and the new position will hopefully be filled by March. CM Como thanked staff and stated that he wants to make sure to try to get as much input from customers that have already purchased or leased the vehicles. Director McFarland stated we are hoping to get people to participate in a survey. CM Beeler stated some sort of study of our customers is needed. CM Williamson asked if the different groups of customers and how they might use their EVs was taken into consideration. Director McFarland stated a lot of different survey questions are being asked. CEO Syphers stated that it is important to look at how much they use it, are they replacing a car, the effects of spillover and free-riders, etc. SCP is figuring out questions, data and a story that point to refinements for future programs. CM Brophy asked how many went through the process and did certificates have a closing date on them. CEO Syphers stated that the process was efficient. Director McFarland stated SCP wanted to make sure of not overselling and the certificates were allocated to the car dealerships. Public Comment: Jeff Mathias: complimented the EverGreen program and that he is excited about new programs. He stated that he likes the idea of moving away from gas and propane. Tom Conlin: asked about goals with programs and if this was just a pilot. He asked if there were fleets participating, did customers buy two or more, and if there was a dollar number on the chargers. He asked what is the general CARE ratio for SCP. Director McFarland stated that SCP has an overall goal of 10,000 EVs by 2020 and 100,000 EVs by She stated that an RFP was sent to every electric vehicle dealer in Sonoma County. CEO Syphers stated that 18% of all customers receive the CARE discount, the limit on chargers is $1,000 per unit (including the demand response bonus) and the effective cost ranges from $750 to $800 per level 2 unit. Chris Meyer: stated that she has low income renters and expressed the need to provide them a way to participate in the program and made suggestions for charging. 5/64

6 SONOMA CLEAN POWER AUTHORITY COMMUNITY ADVISORY COMMITTEE MEETING TUESDAY, FEBRUARY 14, 2017 June Brashares: stated that she took advantage of the charging program and is very happy with the benefit of the level 2 charger. She asked if marketing and contract services are being reported. Director McFarland stated that this information will come out in the evaluation in April. Woody Hastings: asked about the 30% and getting the number of vehicles accessed by the CARE customers. Director McFarland stated that this information will be in the evaluation. Chair Dowd stated that Item 6 will be discussed prior to Item 5 due to Member Deicke having to leave early. 6. Discussion on future meeting dates, frequency and schedule The Committee discussed future meeting dates and preferred days and times for the remainder of The Committee agreed on future meeting dates of March 30 and April 18. Public comment: Woody Hastings: asked if there will still be monthly meetings. Internal Operations Manager Stephanie Reynolds stated that typically SCP holds bi-monthly CAC meetings and due to the budget we are holding them in both March and April this year. 5. Review Draft Program Evaluation Process CEO Syphers stated that this item came about because previous Director Schwartz requested that SCP develop evaluation criteria before approving funding for specific programs in the future. He stated that he would like preliminary input from the CAC and will bring back a refined proposal in the future. He stated the first take on this from staff is that programs seem to break down into things like market transformation, construction or retrofits, tools, and codes and standards.he stated SCP is coming up with evaluation ideas and goals. CM Deicke commented that reserves were not looked at and every program going forward should be looked at and shouldn t be tied to cost. CM Deicke left the meeting at 11:01A.M. CM Wells asked what category the EV program would go into. CEO Syphers stated a lot of programs fit into more than one type and the car program is a good example of market transformation, 6/64

7 SONOMA CLEAN POWER AUTHORITY COMMUNITY ADVISORY COMMITTEE MEETING TUESDAY, FEBRUARY 14, 2017 technology/hardware, and tools (i.e., demand response). CM Williamson stated we shouldn t just restrict this to customer-based programs and that something complicated may be difficult to measure. He stated that the confidence factor in the measurement process is very important and that if we duplicate PG&E s existing programs, we have to be careful. CM Brophy stated the four types cover just about everything. He doesn t see need for change. He stated he would like to focus more on individual programs for customers and the selection of programs. He stated that is where some prioritization could be put. CEO stated that staff, the CAC and the Board are all going to be sensitive to different dynamics at any given time. Public Comment: June Brashares: stated that she thinks it would be good to have a measure across each of the categories such as cost per ton of greenhouse gas avoided. Woody Hastings: stated he has used a multi-criteria decision making model and that member jurisdiction customers and engagement possibilities are important. John Rosenblum: stated the draft methods are good, however, it is only part of what is needed for the resource plan. He stated that competitive costs are different from rates and it needs to be clarified. He stated there are numerous models which can be applied to the existing data. Tom Conlin: stated he likes to see the emphasis on transformational programs and the way to success is working closely with the County climate action goals. He stated SCP needs to have long-term goals and to hold themselves accountable on progress over the next 10 to 20 years. Chair Dowd stated this is a great start and he will be discussing with CEO Syphers on moving forward. CM Mattinson asked about forming committees. CEO Syphers stated that a subcommittee can be formed at the next meeting. III. COMMITTEE MEMBER ANNOUNCEMENTS None. IV. PUBLIC COMMENT ON MATTERS NOT LISTED ON THE AGENDA Public Comment: Geoffrey Smith: suggested moving public comment to the beginning of agenda. He 7/64

8 SONOMA CLEAN POWER AUTHORITY COMMUNITY ADVISORY COMMITTEE MEETING TUESDAY, FEBRUARY 14, 2017 stated that the Center for Climate Protection has a very successful program of solar house parties in peoples homes. Jeff Mathias: stated he was asked to speak on behalf of Solar of Sonoma County and they offer a unique opportunity to SCP. He stated that the local vendors are the experts in rate schedules, fuel switching technology and integrating solar. He stated that they bring opportunities to the CAC to work with Solar Sonoma County. He stated as a local vendor we are supporting SCP 100% and would like to assist SCP in being successful as possible. Chris Meyer: stated she is a solar customer since 2015 on the E6 rating schedule with PG&E and is working with Geoffrey Smith on hosting a house solar party. She stated that she encourages SCP to work with people and solar in the future. Woody Hastings: stated on April 6 the CPUC is holding a voting meeting at Santa Rosa City Hall and on May 5 the Center for Climate Protection is holding a Business of Local Energy Symposium in Long Beach. V, ADJOURN (11:40A.M.) Respectfully submitted, Braiden Gugel Executive Assistant 8/64

9 Staff Update Item 2 To: From: Issue: Sonoma Clean Power Authority Community Advisory Committee Stephanie Reynolds, Internal Operations Manager Geof Syphers, CEO Operations Report Date: March 30, 2017 NEWS & MILESTONES Mendocino outreach in high gear CPUC Voting meeting in Santa Rosa on April 6 Reserve funds to be invested in County Investment Pool Load data: 48% residential and 52% commercial; 1,161 EverGreen accounts MENDOCINO COUNTY OUTREACH SCP s Customer Service and Marketing teams have continued to make presentations throughout Mendocino County. Overall response has been quite positive. Staff has also been presenting at City Council meetings and meeting separately with staff from each of the cities to help with the overall understanding of what SCP does, how SCP provides service and to ease tensions regarding the changeover from PG&E bundled services. CPUC LOCAL VOTING MEETING The California Public Utilities Commission has begun holding regular voting meetings outside of San Francisco. The April 6 th meeting is scheduled to be held at the Santa Rosa City Hall Council Chambers at 100 Santa Rosa Avenue starting at 9:30 A.M. Staff will the agenda to all Board and Community Advisory Committee members as soon as it is posted. We encourage everyone with an interest in community choice to attend. The CPUC is also planning another en banc meeting of all five Commissioners on May 19 in Sacramento to hear presentations and discuss Retail Choice. 9/64

10 PCIA WORKGROUP UPDATE The six-month PCIA workgroup process will come to an end the first week of April. Over the last 5 months, SCP and Southern California Edison (SCE) have co-hosted 5 all-day meetings with interested parties with a goal of developing a joint proposal to improve data access and transparency. We are on track to file a petition to modify previous Commission Decisions to enable consistent presentation of PCIA data across all IOU territories. SCP advocated for an additional petition to modify the Decision establishing confidentiality provisions, but the IOUs appear unlikely to support this petition. Throughout this process we ve learned much more about the PCIA, and CalCCA is urging the Commission to open a rulemaking to transparently evaluate a mechanism to replace the PCIA with a more transparent and accurate fee. In addition to the petitions required by the Commission, SCP and SCE are writing a report outlining other solutions discussed during this process. These range from a cap on the PCIA, to a lump-sum buyout of future exit fees. The goal of this report is to formalize these concepts and create a foundation for continued discussion. INVESTMENT OF RESERVE FUNDS IN COUNTY POOL To increase the return on investment of funds held by SCP as reserves, staff has started discussions with the Sonoma County Auditor-Controller-Treasurer-Tax Collector (ACTTC) about the possibility of placing SCP s reserve funds in the Sonoma County Pooled Investment Fund. This Fund holds assets of the County of Sonoma and school districts and other public agencies located in Sonoma County. The Fund has assets of about $2 billion, and is managed by the ACTTC under an approved Investment Policy, which complies with State law restrictions on the investment of public funds, and is designed to maximize and balance security, liquidity, and return, Staff believe that the return on funds invested in the County Pooled Investment Fund will be higher than the return currently available at the private banks where SCP reserve funds are now held, and could result in an annual increase in interest income of about $150,000. LEGISLATIVE UPDATE SCP staff and consultants are working to oppose SB 618 (Bradford). SB 618 proposes to shift the authority about electricity supply contracts and customer programs from our local Board of Directors to the CPUC. The CalCCA trade association has taken a strong oppose position to protect our interest in maximizing local value and minimizing costs to customers. We have requested that our Board members reach out to members of the Senate Energy Utilities Committee and ask them to vote no, while it is still in committee. 10/64

11 The main reasons for opposition include: (1) SB350 was just signed into law at the end of 2015 and requires CCAs to submit Integrated Resource Plans to the CPUC for certification. We agree with that law and supported it. (2) To shift the decision-making authority on programs and power contracts from locally-elected officials to the CPUC is a mistake. We have seen the high costs of PG&E contracts and do not want to repeat that mistake. We care about rates and need to protect our lowincome customers and small businesses. (3) CCAs have to comply with all of the same compliance and planning requirements as PG&E. The only difference with CCAs is that locally-elected officials get to decide HOW we meet those requirements. SCP has consistently delivered lower emissions electricity at lower costs than PG&E. JANUARY 2017 MONTHLY COMPILED FINANCIAL STATEMENTS Sonoma Clean Power continued to add to a strong net position in January, with projections of further growth in net position over the remainder of the year. Average customer rates have been reduced as of the beginning of the fiscal year, as SCP intends to keep rates attractive compared to those of PG&E. The winter rate season, a period where aggregate rates are less than in the summer season, continues in January. The year-to-date growth in net position is above projections due primarily to less than anticipated energy costs. Net position is expected to increase through the end of the fiscal year. Year-to-date operating revenues reached $101,315,000. Electricity sales (as reported on the Statement of Revenues, Expenses and Changes in Net Assets) is being offset by our estimate of uncollectible accounts, which is currently set at approximately 0.5% of electricity sales. As historical data is gathered on the collection patterns specific to SCP customers, this rate will be revisited and adjusted as necessary. Note that the accounts receivable line on the Statement of Net Position is presented net of allowance for uncollectibles. SCP continues to procure electricity from multiple sources. Included in these purchases is energy that is being re-sold to another reseller. Net position increased to a positive $51,045,000, which indicates healthy growth as SCP continues to make progress towards its reserve goals. Of this net position, approximately $19,890,000 and $3,510,000 is considered set aside for operating and project reserves, respectively. Overall, other operating expenses continued near or slightly below planned levels for the year. BUDGETARY COMPARISON SCHEDULE The accompanying budgetary comparison includes the 2016/17 budget amendment approved by the Board of Directors in December The budget is formatted to make comparisons for both the annual and the year-to-date perspective. The first column, 2016/17 YTD Budget, allocates the Board approved annual budget at expected 11/64

12 levels throughout the year with considerations for the timing of additional customers, usage volumes, staffing needs etc. This column represents our best estimates and this granular approach was not part of the Board approved budget. Revenue from electricity sales to customers is on-line with the year-to-date budget. The cost of electricity is around 98% of budget-to-date, mostly due to fluctuating market cost of energy on open position purchases. Major operating categories of Data Management fees and PG&E Service fees, which are tied to the customer account totals, are closely aligned to the annual budgeted amount. Other than the items mentioned above, SCP continues its trend of remaining near or under budget for most of its operating expenses. UPCOMING PUBLIC MEETINGS: California Public Utilities Commission Voting Meeting, Santa Rosa: April 6, 9:30 A.M. SCPA Board of Directors meeting: April 13, 8:45 A.M. SCPA Community Advisory Committee meeting: April 18, 9:00 A.M. SCPA Board of Directors meeting: May 8:45 A.M. 12/64

13 California Califoia Community Choice Association March 1, 2017 Board Officers Barbara Hale, CleanPowerSF President Geof Syphers, Sonoma Clean Power Vice President The Honorable Ben Hueso, Chair Senate Energy, Utilities & Communications Committee State Capitol, Room 4035 Sacramento, CA Re: SB 618 (Bradford) OPPOSE Dawn Weisz, MCE Secretary Tom Habashi, Silicon Valley Clean Energy Treasurer Joseph Moon, Apple Valley Choice Energy Jason Caudle, Lancaster Choice Energy Jan Pepper, Peninsula Clean Energy Matthew Marshall, Redwood Coast Energy Authority Affiliate Members Central Coast Power (Santa Barbara, San Louis Obispo, and Ventura County) City of Corona City of Hermosa Beach City of San Jose County of Los Angeles County of Placer Valley Clean Energy (City of Davis and Yolo County) California Community Choice Association 1125 Tamalpais Ave San Rafael, CA (415) Dear Senator Hueso, The California Community Choice Association (CalCCA) writes to oppose SB 618 (Bradford), because it is unnecessary and contrary to the legislative and regulatory framework governing local control of Community Choice Aggregators (CCAs). The California Public Utilities Commission (CPUC) is already charged with certifying the resource plan of each CCA to ensure that it meets State law requirements. CCAs have a mission to provide reliable, clean and affordable power while addressing the local needs of their communities. CalCCA's membership consists of 7 preoperational and 8 CCA members operating in more than 10 coastal and inland counties currently serving a peak load of 1917 MW and growing. CCAs are local, non-profit agencies that are formed to respond to and invest in the needs of their communities. They are established by local governments to advance local policy priorities including procuring GHG-free renewable energy beyond the renewable portfolio standard, providing ratepayers with energy choice, providing less expensive energy and creating local programs for energy efficiency, storage and distributed generation, all while exercising local control over energy procurement. CCAs are governed and operated by boards consisting entirely of local elected officials who are directly accountable to their ratepayers/voters. Members of the community and public are active in this process and often show up to participate in city council meetings to hold accountable those ultimately responsible for the CCA. In contrast, Investor Owned Utilities (IOUs) are for-profit corporations with a legal obligation to maximize profits for their shareholders. CPUC and CEC regulators exist, in part, to balance this motivation with the public interest. The CPUC must regulate IOUs to provide a degree of consumer protection including in the context of resource planning compliance with the RPS. The CCAs were proud to support SB 350 (DeLeon, Clean Energy and Pollution Reduction Act of 2015), as it shared our mission of procuring more in-state renewable resources, while encouraging energy efficiency programs for our customers. SB 350 requires CCAs to participate in the same renewable portfolio standard program, subject to the same terms and conditions as an investor owned utility (IOU). In addition, all CCAs must submit an Integrated Resource Plan (IRP) 13/64

14 Page 2 of 2 with the CPUC demonstrating that the CCA will meet regulatory mandates related to RPS, Greenhouse Gas reductions and Resource Adequacy. These plans are thoughtfully and substantively deliberated upon then approved by our own public governing boards in an open process. Given CCAs are locally governed electricity providers without profit motive, SB 350 did not require CPUC approval of CCA IRPs. Rather, CCAs are required to submit these plans to the CPUC for certification. This ensures that CCAs meet the requirements of state law. Thus, like the California Energy Commission in the case of publicly owned utilities, the CPUC is already charged with ensuring that CCAs meet their statutory obligations. SB 618 vests the CPUC with authority to approve or disapprove a CCA's IRP beyond assuring compliance with the requirements of state law. This unduly interferes with the ability of CCAs to locally control electricity procurement, subject to state mandates applicable to all load serving entities. Finally, SB 350 became effective law on January 1, 2015, only 14 months ago. The CPUC is still in the process of implementing the CCA IRP process as directed in SB 350 and approved by the Senate. Thus, nothing has occurred since the passage of SB 350 that would warrant a change to the CCA IRP process established in The Legislature should allow the CCA IRP process it created in SB 350 to operate before determining whether changes are needed. For the above reasons, CalCCA must respectfully oppose SB 618 and asks that you not support the bill when it comes before your committee. Sincerely, Barbara Hale President CalCCA Cc: Members of the Senate Energy, Utilities & Communications Committee Jay Dickinson, Consultant, Senate Energy, Utilities & Communications Committee Nidia Bautista, Consultant, Senate Energy, Utilities & Communications Committee Kerry Yoshida, Republican Consultant, Senate Energy, Utilities & Communications Committee 2 14/64

15 SENATE BILL No. 618 Introduced by Senator Bradford February 17, 2017 An act to amend Section of the Public Utilities Code, relating to electricity. legislative counsel s digest SB 618, as introduced, Bradford. Load-serving entities: integrated resource plans. Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations. Existing law requires the commission to adopt a process for each load-serving entity, defined as including electrical corporations, electric service providers, and community choice aggregators, to file an integrated resource plan and a schedule for periodic updates to the plan to ensure that load-serving entities accomplish specified objectives. Existing law requires each load-serving entity to prepare and file an integrated resource plan consistent with those objectives on a time schedule directed by the commission and subject to commission review. This bill would require that the integrated resource plan filed by a load-serving entity be reviewed and approved by the commission. The bill would require that the plans of all load-serving entities contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply that provides optimal integration of renewable energy in a cost-effective manner and meets the specified emissions limits for greenhouse gases in proportion to each load-serving entity s load share so that there is no cost shifting among load-serving entities. The bill would declare that these revisions are declaratory of existing law /64

16 SB Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime. Because the provisions of this bill would be a part of the act and because a violation of an order or decision of the commission implementing its requirements would be a crime, the bill would impose a state-mandated local program by creating a new crime. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes. The people of the State of California do enact as follows: line 1 SECTION 1. Section of the Public Utilities Code is line 2 amended to read: line (a) (1) Commencing in 2017, and to be updated line 4 regularly thereafter, the commission shall adopt a process for each line 5 load-serving entity, as defined in Section 380, to file an integrated line 6 resource plan, and a schedule for periodic updates to the plan, to line 7 ensure that load-serving entities do the following: line 8 (A) Meet the greenhouse gas emissions reduction targets line 9 established by the State Air Resources Board, in coordination with line 10 the commission and the Energy Commission, for the electricity line 11 sector and each load-serving entity that reflect the electricity line 12 sector s percentage in achieving the economywide greenhouse gas line 13 emissions reductions of 40 percent from 1990 levels by line 14 (B) Procure at least 50 percent eligible renewable energy line 15 resources by December 31, 2030, consistent with Article 16 line 16 (commencing with Section ) of Chapter 2.3. line 17 (C) Enable each electrical corporation to fulfill its obligation to line 18 serve its customers at just and reasonable rates. line 19 (D) Minimize impacts on ratepayers bills. line 20 (E) Ensure system and local reliability. line 21 (F) Strengthen the diversity, sustainability, and resilience of the line 22 bulk transmission and distribution systems, and local communities /64

17 3 SB 618 line 1 (G) Enhance distribution systems and demand-side energy line 2 management. line 3 (H) Minimize localized air pollutants and other greenhouse gas line 4 emissions, with early priority on disadvantaged communities line 5 identified pursuant to Section of the Health and Safety Code. line 6 (2) (A) The commission may authorize all source procurement line 7 for electrical corporations that includes various resource types line 8 including demand-side resources, supply side resources, and line 9 resources that may be either demand-side resources or supply side line 10 resources, taking into account the differing electrical corporations line 11 geographic service areas, to ensure that each load-serving entity line 12 meets the goals set forth in paragraph (1). line 13 (B) The commission may approve procurement of resource line 14 types that will reduce overall greenhouse gas emissions from the line 15 electricity sector and meet the other goals specified in paragraph line 16 (1), but due to the nature of the technology or fuel source may not line 17 compete favorably in price against other resources over the time line 18 period of the integrated resource plan. line 19 (b) (1) Each load-serving entity shall prepare and file an line 20 integrated resource plan consistent with paragraph (2) of line 21 subdivision (a) on a time schedule directed by the commission and line 22 subject to commission review. review and approval. line 23 (2) Each electrical corporation s plan shall follow the provisions line 24 of Section line 25 (3) The plan of a community choice aggregator shall be line 26 submitted to its governing board for approval and provided to the line 27 commission for certification, certification and approval, consistent line 28 with paragraph (5) of subdivision (a) of Section 366.2, and shall line 29 achieve the following: line 30 (A) Economic, reliability, environmental, security, and other line 31 benefits and performance characteristics that are consistent with line 32 the goals set forth in paragraph (1) of subdivision (a). line 33 (B) A diversified procurement portfolio consisting of both line 34 short-term and long-term electricity and electricity-related and line 35 demand reduction products. line 36 (C) The resource adequacy requirements established pursuant line 37 to Section 380. line 38 (4) The plan of an electric service provider shall achieve the line 39 goals set forth in paragraph (1) of subdivision (a) through a 99 17/64

18 SB line 1 diversified portfolio consisting of both short-term and long-term line 2 electricity, electricity-related, and demand reduction products. line 3 (5) The plans of all load-serving entities shall contribute to a line 4 diverse and balanced portfolio of resources needed to ensure a line 5 reliable electricity supply that provides optimal integration of line 6 renewable energy in a cost-effective manner and meets the line 7 emissions limits for greenhouse gases described in subdivision (a) line 8 of Section in proportion to each load-serving entity s load line 9 share so that there is no cost shifting among load-serving entities. line 10 (c) To the extent that additional procurement is authorized for line 11 the electrical corporation in the integrated resource plan or the line 12 procurement process authorized pursuant to Section 454.5, the line 13 commission shall ensure that the costs are allocated in a fair and line 14 equitable manner to all customers consistent with , that line 15 there is no cost-shifting among customers of load-serving entities, line 16 and that community choice aggregators may self-provide renewable line 17 integration resources consistent with Section line 18 (d) In order to eliminate redundancy and increase efficiency, line 19 the process adopted pursuant to subdivision (a) shall incorporate, line 20 and not duplicate, any other planning processes of the commission. line 21 SEC. 2. The amendment of Section of the Public line 22 Utilities Code made by this act does not constitute a change in, line 23 but is declaratory of, existing law. line 24 SEC. 3. No reimbursement is required by this act pursuant to line 25 Section 6 of Article XIIIB of the California Constitution because line 26 the only costs that may be incurred by a local agency or school line 27 district will be incurred because this act creates a new crime or line 28 infraction, eliminates a crime or infraction, or changes the penalty line 29 for a crime or infraction, within the meaning of Section of line 30 the Government Code, or changes the definition of a crime within line 31 the meaning of Section 6 of Article XIII B of the California line 32 Constitution. O 99 18/64

19 1101 FIFTH AVENUE SUITE 200 SAN RAFAEL, CA ACCOUNTANTS COMPILATION REPORT Board of Directors Sonoma Clean Power Authority Management is responsible for the accompanying special purpose statement of Sonoma Clean Power Authority (a California Joint Powers Authority) which comprise the budgetary comparison schedule for the period ended January 31, 2017, and for determining that the budgetary basis of accounting is an acceptable financial reporting framework. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the accompanying statement nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor provide any assurance on this special purpose budgetary comparison statement. The special purpose statement is prepared in accordance with the budgetary basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. This report is intended for the information of the Board of Directors of SCP. Management has elected to omit substantially all of the disclosures required by accounting principles generally accepted in the United States of America. If the omitted disclosures were included in the special purpose budgetary comparison statement, they might influence the user s conclusions about the Authority s results of operations. Accordingly, this special purpose budgetary comparison statement is not designed for those who are not informed about such matters. We are not independent with respect to the Authority because we performed certain accounting services that impaired our independence. Maher Accountancy San Rafael, CA February 22, /64

20 SONOMA CLEAN POWER AUTHORITY OPERATING FUND BUDGETARY COMPARISON SCHEDULE July 1, 2016 through January 31, 2017 REVENUE AND OTHER SOURCES: 2016/17 YTD Budget 2016/17 YTD Actual 2016/17 YTD Budget Variance (Under) Over YTD Actual/ Budget % 2016/17 Amended Budget 2016/17 Budget Remaining Revenue - Electricity (net of allowance) * $ 92,324,557 $ 93,415,887 $ 1,091, % $ 147,824,136 $ 54,408,249 Revenue - Evergreen Premium (net of allowance) 121, ,053 10, % 196,000 63,947 Revenue - Electricity sales for resale ** 8,792,000 7,398,819 (1,393,181) 84% 8,792,000 1,393,181 Revenue - Interest income 88, ,437 24, ,000 38,563 Revenue - Liquidated damages - 368, , (368,441) Total revenue and other sources 101,326, ,427, , % 156,963,136 55,535,499 EXPENDITURES AND OTHER USES: CURRENT EXPENDITURES Cost of energy and scheduling 86,435,566 84,879,863 (1,555,703) 98% 133,748,000 48,868,137 Data management 1,773,760 1,688,002 (85,758) 95% 2,902,250 1,214,248 Service fees- PG&E 626, ,782 (18,518) 97% 1,076, ,018 Personnel 1,596,000 1,358,354 (237,646) 85% 2,736,000 1,377,646 Outreach and communications 438, ,380 (57,870) 87% 737, ,620 Required noticing 305, ,058 (186,609) 39% 474, ,942 Legal 230, ,250 (87,167) 62% 395, ,750 Accounting and auditing 107,917 90,847 (17,070) 84% 185,000 94,153 Technical consultants 327,292 51,613 (275,679) 16% 445, ,387 Legislative consultants 179,167 45,500 (133,667) 25% 275, ,500 Other consultants 177, ,473 (59,235) 67% 385, ,527 Program implementation and development 2,041,667 1,111,186 (930,481) 54% 3,500,000 2,388,814 General and administration 277, ,480 (38,228) 86% 460, ,520 Total current expenditures 94,517,419 90,833,788 (3,683,631) 96% 147,319,050 56,485,262 OTHER USES Collateral deposit payments 3,750,000 3,470,000 (280,000) 93% 3,750, ,000 Collateral deposit payments returned (450,000) (300,000) 150,000 67% (450,000) (150,000) Capital outlay 87,125 18,646 (68,479) 21% 119, ,354 Total expenditures, Other Uses and Debt Service 97,904,544 94,022,434 (3,882,110) 96% 150,738,050 56,715,616 Net increase (decrease) in available fund balance $ 3,421,468 $ 7,405,203 $ 3,983, % $ 6,225,086 $ (1,180,117) * Represents sales of approximately 1,304,000 MWh for 2016/17 YTD actual. ** Electricity sales for resale is the result of sales to other utilities for resale purposes. RESERVES Balance Operating Cash Reserve $ 19,897,023 Program Cash Reserve 3,511,239 $ 23,408,262 20/64 See accountants' compilation report. 2

21 SONOMA CLEAN POWER AUTHORITY OPERATING FUND BUDGET RECONCILIATION TO STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION July 1, 2016 through January 31, 2017 Net increase (decrease) in available fund balance per budgetary comparison schedule: $ 7,405,203 Adjustments needed to reconcile to the changes in net position in the Statement of Revenues, Expenses and Changes in Net Position: Subtract depreciation expense (27,868) Add back capital asset acquisitions 18,646 Subtract collateral deposits returned (300,000) Add back collateral deposits 3,470,000 Change in net position $ 10,565,981 21/64 See accountants' compilation report. 3

22 1101 FIFTH AVENUE SUITE 200 SAN RAFAEL, CA ACCOUNTANTS COMPILATION REPORT Management Sonoma Clean Power Authority Management is responsible for the accompanying financial statements of Sonoma Clean Power Authority (a California Joint Powers Authority) which comprise the statement of net position as of January 31, 2017, and the related statement of revenues, expenses, and changes in net position, and the statement cash flows for the period then ended in accordance with accounting principles generally accepted in the United States of America. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the accompanying statements nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, conclusion, nor provide any assurance on these financial statements. Management has elected to omit substantially all of the disclosures required by accounting principles generally accepted in the United States of America. If the omitted disclosures were included in the financial statements, they might influence the user s conclusions about the Authority s financial position, results of operations, and cash flows. Accordingly, the financial statements are not designed for those who are not informed about such matters. We are not independent with respect to the Authority because we performed certain accounting services that impaired our independence. Maher Accountancy San Rafael, CA February 23, /64

23 SONOMA CLEAN POWER AUTHORITY STATEMENT OF NET POSITION As of January 31, 2017 ASSETS Current assets Cash and cash equivalents $ 38,410,772 Accounts receivable, net of allowance 15,795,492 Other receivables 72,489 Accrued revenue 6,475,803 Prepaid expenses 25,068 Deposits 305,941 Investments 7,007,726 Total current assets 68,093,291 Noncurrent assets Capital assets, net of depreciation 191,932 Deposits 3,714,666 Total noncurrent assets 3,906,598 Total assets 71,999,889 Current liabilities LIABILITIES Accounts payable 524,093 Accrued cost of electricity 19,639,727 Other accrued liabilities 250,145 User taxes and energy surcharges due to other governments 391,203 Total current liabilities 20,805,168 Noncurrent liabilities Supplier security deposits 150,000 Total liabilities 20,955,168 NET POSITION Net investment in capital assets 191,932 Unrestricted 50,852,789 Total net position $ 51,044,721 See accountants' compilation report. 23/642

24 SONOMA CLEAN POWER AUTHORITY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION July 1, 2016 through January 31, 2017 OPERATING REVENUES Electricity sales, net $ 93,415,887 Evergreen electricity premium 132,053 Electricity sales for resale 7,398,819 Liquidated damages 368,441 Total operating revenues 101,315,200 OPERATING EXPENSES Cost of electricity 84,879,863 Staff compensation 1,358,354 Data manager 1,688,002 Service fees - PG&E 607,782 Consultants and other professional fees 613,705 Legal 143,250 Communications 499,438 General and administration 239,806 Program rebates and incentives 803,588 Depreciation 27,868 Total operating expenses 90,861,656 Operating income 10,453,544 NONOPERATING REVENUES (EXPENSES) Interest income 112,437 CHANGE IN NET POSITION 10,565,981 Net position at beginning of period 40,478,740 Net position at end of period $ 51,044,721 See accountants' compilation report. 24/643

25 SONOMA CLEAN POWER AUTHORITY STATEMENT OF CASH FLOWS July 1, 2016 through January 31, 2017 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from electricity sales $ 96,229,379 Receipts from electricity sales for resale 8,380,028 Receipts from liquidated damages 368,441 Receipts from supplier security deposits 150,000 Tax and surcharge receipts from customers 1,421,962 Payments to purchase electricity (85,081,217) Payments for staff compensation (1,281,807) Payments for contract services (3,125,000) Payments for communications (534,659) Payments for general and administration (261,065) Payments for program rebates and incentives (898,588) Tax and surcharge payments to other governments (1,493,811) Net cash provided (used) by operating activities 13,873,663 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Deposits and collateral paid (3,470,000) Deposits and collateral returned 300,000 Net cash provided (used) by non-capital financing activities (3,170,000) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets (24,231) CASH FLOWS FROM INVESTING ACTIVITIES Interest income received 100,173 Net change in cash and cash equivalents 10,779,605 Cash and cash equivalents at beginning of year 27,631,167 Cash and cash equivalents at end of period $ 38,410,772 See accountants' compilation report. 25/64 4

26 SONOMA CLEAN POWER AUTHORITY STATEMENT OF CASH FLOWS (continued) July 1, 2016 through January 31, 2017 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income $ 10,453,544 Adjustments to reconcile operating income to net cash provided (used) by operating activities Depreciation expense 27,868 Revenue reduced for uncollectible accounts 473,958 (Increase) decrease in net accounts receivable (641,624) (Increase) decrease in other receivables 981,209 (Increase) decrease in accrued revenue 2,849,104 (Increase) decrease in prepaid expenses (4,920) (Increase) decrease in current deposits (95,941) Increase (decrease) in accounts payable (127,660) Increase (decrease) in accrued cost of electricity (750,447) Increase (decrease) in accrued liabilities 630,421 Increase (decrease) in user taxes and energy surcharges due to other governments (71,849) Increase (decrease) in supplier security deposits 150,000 Net cash provided (used) by operating activities $ 13,873,663 See accountants' compilation report. 26/64 5

27 Staff Update Item 3 To: From: Issue: Sonoma Clean Power Authority Community Advisory Committee Geof Syphers, CEO Form a Subcommittee to work with staff on preparing a detailed proposal for program evaluation Date: March 30, 2017 REQUESTED ACTION At the request of the Community Advisory Committee s Chair, the committee should form a subcommittee to meet with staff and develop specific recommendations for SCP program selection and evaluation criteria. Background Staff recommend that the duration of this subcommittee is 3 to 4 months, likely with 2 to 3 meetings during that time. The goal of the subcommittee should be to produce a recommended standard for evaluating program performance, and guidelines for program selection. Staff ask the Chair to make a recommendation on the number of subcommittee members. 27/64

28 Staff Report Item 04 To: From: Item: Sonoma Clean Power Authority Community Advisory Committee Geof Syphers, CEO Rebecca Simonson, Power Services Manager Stephanie Reynolds, Internal Operations Manager Mike Maher, CPA Discuss and provide recommendations on draft SCP annual budget and customer electric generation rates Date: March 30, 2017 Requested Actions: Review, discuss, and provide recommendations on the Fiscal Year draft budget and customer electric generation rates. Background Sonoma Clean Power (SCP) sets an annual budget each year in advance of the July 1 to June 30 fiscal year. SCP seeks to provide rate stability, and sets new rates only once per year whenever possible. For the past two years, however, large January increases in PG&E s fees on SCP customers led staff to consider rate changes earlier in the year to help reduce the impact on customer bills. In March 2017, SCP rates were adjusted to provide 1% savings on total electric charges relative to PG&E s January rates. Under the Joint Powers Agreement governing SCP, the Community Advisory Committee has the following role with respect to the review of SCP s proposed budget and rates: The proposed annual budget of the CCA Program and any rates or charges proposed to be imposed by the Authority for CCA Program power or services shall be submitted to the Community Advisory Committee for review and comment. Following review by the Community Advisory Committee of any such matter, the committee shall recommend to the Board that the matter be approved, approved as amended, or disapproved by the Board. 28/64

29 The annual budget and rates are reviewed in a series of four public meetings: March 30, 2017 April 13, 2017 April 18, 2017 May 11, 2017 Community Advisory Committee review draft Board of Directors review draft Community Advisory Committee review final Board of Directors approve final Major Factors Affecting the Budget and Rates Energy Costs are Lower than Average SCP s Power Services team continues to take advantage of low energy prices while also executing long-term new renewable energy contracts, such as the 46MW Golden Hills wind facility in the Altamont Pass area. PCIA Risk is High SCP has made progress auditing the Power Charge Indifference Adjustment (PCIA) from PG&E. But the financial risk to SCP remains high because SCP has no ability to manage PG&E s costs feeding into the PCIA, and we have very limited ability to forecast the fee. As a result, continuing SCP s current practice of budgeting for an increase in net position to grow reserves remains important. Financial Policy B2 governs this practice, and is shown in Appendix 1. New Territory SCP starts service to all eligible areas in Mendocino County in June 2017, prior to the start of the next fiscal year. As a result, revenues and most expenses are proportionally higher. Due to the low market for energy costs, the procurement for the expansion to Mendocino is causing average energy costs to decline for all SCP customers. Program Experience The Drive EverGreen pilot program was a success at the end of 2016, and staff are planning program activities that will leverage the lessons in order to design a larger and longer-running program. We expect that program expenditures will more closely align with budget planning each year over the next two to three years as we gain additional experience and confidence. Any unspent Program funds return to reserves at the end of each year, where they are divided 85% to the general reserves and 15% to the program reserves. 29/64

30 Summary of Draft Budget and Rates The good news is that SCP could maintain the March 2017 rates through June 2018 without a need for a rate increase, while expanding program activities and generating expected net income in excess of the 4% minimum required for reserves. It is staff s recommendation that no changes in customer rates be made on July 1, 2017, but that SCP leave open the possibility of making new rates in March 2018, in case PG&E s fee to our customers significantly increases at the beginning of Staff s draft budget makes adjustments for a slowly growing staff, adding service to Mendocino, updated sales forecasts and market costs of electricity, and a reduction in expected collateral needs. Budget and Rate Alternatives Alternative scenarios can be generated by using the following metric: a 1% change in total electric bill costs changes SCP revenues by a little over $4 million. Since SCP s current rates save about 1% relative to PG&E s March 2017 rates, increasing SCP rates to match PG&E s current rates would increase SCP revenues by about $3.5 million. In the other direction, adjusting SCP rates to provide 2% total savings would decrease revenues by $4.5 million. Any number of scenarios can be generated using this metric. Example Alternatives: Average Total Savings 1 (%) Forecast Total Revenues ($ millions) Possible Scenarios ($ millions) 0% +3.5 $178.2 $6.5 Prog / $15.6 Rsrvs 0.5% +$1.5 $176.2 $6.0 Prog / $14.1 Rsrvs no change (~0.9%) $0.0 $174.7 $6.0 Prog / $12.6 Rsrvs 1.5% $2.5 $172.2 $5.0 Prog / $11.1 Rsrvs 2.0% $4.5 $170.2 $4.0 Prog / $10.1 Rsrvs 1 Relative to PG&E s March 1, 2017 rates. 30/64

31 Some Achievements through March 2017 Greenhouse Gas Reductions. SCP has made rapid progress in reducing its use of highcarbon energy sources. SCP s CleanStart emissions factor was verified by The Climate Registry to be 224 lbs CO2e/MWh in 2014 and 218 lb CO2e/MWh in 2015, 46% lower than PG&E s 2015 emissions factor. Competitive Rates. In SCP s first three years of operations, the program has kept average rates below PG&E s average rates. According to PG&E s rate comparison data, SCP customers saved $8,780,853 in 2016 relative to PG&E s rates. Local Benefits. SCP negotiated discounts of $10,000 or more from the manufacturers and dealers for new electric cars during the Drive EverGreen pilot, and helped get 207 EVs sold to customers during a seven-week pilot program. The NetGreen program continues to pay customers for overproducing solar energy, with an estimated $700,000 for 2016 overproduction. PCIA The PCIA is a fee set by the CPUC, intended to ensure that no cost shifting occurs between PG&E s remaining bundled service customers and those staying with SCP. This could occur, for example, if SCP incurred costs that benefitted PG&E s customers or vice versa. SCP has concerns that the policies governing the PCIA were established before any community choice programs existed, and may unfairly charge our customers a higher fee than appropriate, and may not reflect the expenses SCP s customers incur which benefit PG&E s customers. Fundamentally, the utilities have no motivation to reduce expenses that feed into the PCIA. The process for calculating the fee is also complex and the underlying contract data, which feeds into the PCIA, are held as confidential. SCP and other CCAs raised these issues at a CPUC workshop last March, which resulted in an October Commission Decision directing SCP to work with Southern California Edison (SCE) to develop modifications to improve PCIA transparency. Through this six-month process, staff at SCP and other CCAs have learned significantly more about the PCIA. The recommendations developed by SCP and SCE will likely be limited to presenting the data in a uniform manner. However, SCP and other CCAs will continue to advocate for access to additional data. In addition, SCP plans to develop an internal PCIA forecast for help with budgeting and planning decisions. 31/64

32 DRAFT BUDGET The draft budget is presented first in the form that will be used for adoption, and then is followed by supplemental information. The budget categories are intentionally general enough to allow some measure of staff discretion, without requiring the presentation of frequent budget adjustments. The Total Expenditures, Other Uses and Debt Service plus the planned contribution to operating reserves (shown as Net Increase/ (Decrease) in Available Fund Balance ) equals the Revenue Requirement, which is the amount necessary to recover from customers through rates. Certain assumptions were used to create this budget, including: Opt out rates end up around 13%. Current rate is 12%. The amount of uncollectible funds is assumed to be 0.5% based on advice from SCP s accountant and data from the first 30 months of service. Normal errors in load forecasting can produce large costs, and SCP s ability to manage forecast risk is still limited, so a 1% expense to cover unforeseen energy costs is assumed in the Energy and Resource Adequacy line item. Important notes on budget sensitivity and exposure: SCP has entered into contracts that will meet 92% of its expected energy requirements through the full fiscal year, meaning that electric energy and resource adequacy costs are reasonably well known, although changes in energy market prices will still have an impact on SCP s costs. SCP has $19.9 million in operating reserves (plus about $6 million from the current fiscal year) toward its goal of $50 million. That goal may also be revised upward at a future time, since Mendocino expands the size of the program. In addition, up to 50% of the reserve account is available for use as collateral to purchase energy at favorable prices. The dramatic increases in PG&E s departing load charges (the PCIA ) that began in January 2016 and escalated further in January 2017 are assumed to persist at high levels for several years. Because PG&E has no incentive to minimize these costs, the PCIA represents a larger financial risk than the energy market. 32/64

33 Sonoma Clean Power Authority DRAFT Fiscal Year Operating Budget -- Page 1 of 2 Budget FY16-17 DRAFT Budget FY17-18 REVENUES AND OTHER SOURCES Electricity Sales 1 (net of allowance) 147,824, ,150,000 EverGreen Premium 2 (net of allowance) 196, ,000 Electricity Sales for Resale 8,792,000 0 Interest Income 151, ,000 Total Revenues 156,963, ,726,000 EXPENDITURES Product Energy and Resource Adequacy 3 133,748, ,934,000 Data Management 2,902,250 3,210,000 Service Fees to PG&E 1,076,800 1,228,000 Product Subtotal 137,727, ,372,000 Personnel 2,736,000 3,330,000 Outreach and Communications 737, ,000 Customer Service 474, ,000 General and Administration 460, ,000 1 Forecast sales are 2,600,000 MWh, and includes an allowance of 0.5% of sales for uncollectible accounts. 2 Incremental revenues from participating EverGreen customers for the premium on 100% renewable energy produced in Sonoma or Mendocino Counties. 3 Includes NetGreen costs, ProFIT payments, California ISO fees and schedule coordination. 33/64

34 Sonoma Clean Power Authority DRAFT Fiscal Year Operating Budget -- Page 2 of 2 Budget FY16-17 DRAFT Budget FY17-18 EXPENDITURES continued Other Professional Services Legal 395, ,000 Accounting 185, ,000 Technical 445, ,000 Legislative and regulatory advocacy 275, ,000 Other consultants 385, ,000 Other Professional Services Subtotal 1,685,000 1,359,000 Programs Program Implementation 3,200,000 5,650,000 Program Development and Evaluation 300, ,000 Other Professional Services Subtotal 3,500,000 6,000,000 Total Expenditures 147,319, ,979,000 Revenues Less Expenditures 9,644,086 14,747,000 OTHER USES Capital Outlay 119, ,000 Collateral Deposits 3,300,000 2,000,000 Total Expenditures, Other Uses and Debt Service 150,738, ,143,000 Net Increase/(Decrease) in Available Fund Balance 6,225,086 12,583,000 Note: Debt Service is not shown because SCP is not expected to have any debt this year. 34/64

35 INFORMATION ONLY - SUPPLEMENTAL TO THE DRAFT BUDGET Details on the draft budget are provided in this section along with projections of the next five years. The five-year outlook reflects SCP s favorable contract positions as well as increasing use of renewable energy (assumed 2.5% increase each year) and an increase in local renewable energy from geothermal and solar. For the purpose of this projection, SCP s customer rates for energy and demand are assumed to remain flat until July 2019 and then rise 2% each year. While the table shown reflects a reasonable estimate of future costs, it is important to stress that actual revenues and expenses will vary from this forecast. FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 REVENUES AND OTHER SOURCES Electricity Sales 174,150, ,230, ,811, ,814, ,426,000 Evergreen Premium 257, , , , ,000 Interest Income 319, , , , ,074 Total Revenues and Other Sources 174,726, ,989, ,667, ,775, ,485,074 EXPENDITURES AND OTHER USES Product 147,372, ,173, ,367, ,470, ,133,000 Personnel 3,330,000 3,654,000 3,818,000 3,971,000 4,130,000 Outreach and Communications 951, , , , ,000 Customer Service 472, , , , ,000 Other Professional Services 1,359,000 1,400,000 1,442,000 1,485,000 1,530,000 General and Administration 495, , , , ,000 Programs 6,000,000 7,200,000 7,200,000 7,200,000 7,200,000 Total Expenditures 159,979, ,266, ,687, ,043, ,968,000 OTHER USES Collateral Deposits / (Returns) 2,000,000 1,000,000 0 (500,000) (1,500,000) Capital Outlay 164, , , , ,000 DEBT SERVICE Total Expenditures, Other Uses and Debt Service 162,143, ,408, ,799, ,659, ,588,000 Net Increase/(Decrease) in Available Fund Balance 12,583,000 5,581,000 5,868,763 5,116,122 4,897,074 Accumulated General Reserves (EOY) 25,847,000 30,591,000 35,579,000 39,928,000 44,091,000 Accumulated (or spent) Program Reserves (EOY) 4,561,000 5,398,000 6,278,000 7,045,000 7,780,000 35/64

36 Further detail on each of the proposed budget categories follows. REVENUES AND OTHER SOURCES The primary source of income is from the retail sale of electricity to CleanStart and EverGreen customers. Customers of both of these programs provide all of the Electricity Sales income. EverGreen costs 2.5 cents per kwh over the cost of CleanStart, and provides 100% renewable energy from sources in Sonoma and Mendocino Counties. The EverGreen premium covers the actual additional cost, and is not intended to produce surplus income. The total sales estimate is based on 88% of eligible customers (and load) participating in SCP, declining to 87% by the end of the fiscal year. The net financial performance of SCP is not sensitive to minor changes in the rate of participation because a majority of expenses are proportional to the load served. In other words, income and expenses generally go up and down together. An estimate of 0.5% is used for the portion of billings that will never be collected. Revenues shown in the budget are net of this reduction. As SCP continues to gather data on its own customers, the need for further adjusting this estimate will be considered. SCP places cash that is not needed as working capital in interest bearing accounts. Staff is working with the County of Sonoma to place funds into the County s investment pool of public funds in order to increase the total return. The pool s return fluctuates, but is estimated to return about 1.25% next fiscal year. Other potential sources of income include program funding from grants and/or customer funds administered by the CPUC. This funding could add to the available funds for programs, but it is unclear whether the rules governing the use of those funds would allow any of SCP s current program activities. None of these sources of income are shown in the budget because the amounts are not known and they would simply serve to augment the available funds without impacting rates. 36/64

37 EXPENDITURES Product Cost of Energy and Scheduling includes all of the various services purchased from the power market through our suppliers. This includes 2,700,000 MWh of energy, capacity, green attributes, scheduling services, CAISO fees and other miscellaneous power market expenses. The volume of purchased energy is between 5% and 8% greater than the volume sold because of normal system losses. SCP s load is almost half residential: SCP s suppliers include Constellation, Calpine, Recurrent, NextEra, Malaga, Calpeak, Morgan Stanley, RPS Advisors, Shell, Portland General, Powerex, Pristine Sun, Noble, 3 Phases, Transalta, and PG&E. These sources are reported on SCP s annual Power Content Label. Major amounts of SCP s customer load are also served by customer-owned solar arrays. Small amounts also reduce the load of other SCP customers through NetGreen overproduction, and ProFIT local feed-in tariff providers may turn on the first megawatt or two of production during Fiscal Year None of this production is reportable on SCP s Power Content Label, however, because it is treated as a load reduction rather than supply energy under California regulations. Many efforts are aimed at changing this paradigm and better recognizing the important contribution of distributed, small-scale renewable production. To put this in perspective, over 5% of Sonoma County s energy use comes from customer-owned renewable systems. 37/64