CCA s WHERE ARE THEY NOW? Dan Aschenbach AGVP Advisory Justin - PowerPoint PPT Presentation

CCA ’s – WHERE ARE THEY NOW? Dan Aschenbach –AGVP Advisory Justin Riddell –The Energy Authority

Introduction  Created to provide choice in energy  California  Physical Power  Mission: S ustainable energy initiatives  Vision: Energy conservation and efficiency; Locally-sourced energy needs  Types of CCAs  Joint Powers Authority  S ingle Jurisdiction  Commercial Vendor Package

CCAs and IOUs S ource: ht t ps:/ / cal-cca.org/ cca-impact / S ource: ht t ps:/ / ww2.energy.ca.gov/ maps/ serviceareas/ elect ric_service_areas.ht ml

CCAs and IOUs CCA IOU  S ecure bulk power  Billing & Collection   S ource locally Transmission  Rate-setting authority  Distribution  Opt-Out  Opt-Up

Qualitative Considerations  CCAs are self-regulated and have local control on power resource planning after CPUC approves initial plan  Rate-setting authority is responsibility of CCA governing board  Territory that the CCA is serving

Opt-Out-Different from IOU and Municipal Electric Utilities  Customers in service area of IOU are automatically CCA customers once CCA governing board approves program.  But CCA customer can opt-out and go back to IOU  CCA can charge an exit fee which could compensate CCA for any costs incurred on customer’s behalf-no experience thus far on implementing fee

CCA Rate S etting Examples and % of Renewable Energy CCA Base Choice 100% Solar Rate NEM AVCCE 35% 50% 100% 100% CPS F 39% 48% 100% CP A 36% 50% 100% MCE 60% 100% 100% PRIME 50% 100% 100% RMEA 50% 100% 100% S JCE 45% 100% 100% S VCE 50% 100% S EA 50% 100% 100%

CCA Credit Risks & Mitigations  S tart-up funding  Inherently the largest risk is during the start-up phase  Invoicing and Payment schedule  IOU Payments  PG&E Bankruptcy  Judge ruled that funds do not belong to the IOU (PG&E), must flow to CCA  Implicit vs Explicit support  Linkage to county/ city  Lockbox

S trengths Strengths Comment  Rate-setting autonomy  Local control and flexibility  Focus on popular renewable energy  Targeted service provides and efficiency programs reputational strength  Few legacy out -of-the-money  Thus far discount to maj or IOUs contracts  Accepted role and continued  Competitiveness evidence of legislative support  Broad political support from city mayors to legislators and statutory basis for CCA role

Risks Comment Risks  Opt-out risk  Uncertainty about future cost recovery  Market risk  Long-term fixed power supply vs. adequacy of cost recovery   Competitiveness Relates to opt-out risk  Pressure to keep rates lower than IOU  S ection 6.2 untested  Judge ruling on CCA revenues are  JP A withdrawal CCA revenues  PGE bankruptcy

Power Cost Indifference Adj ustment (PCIA)   A charge in the rate-setting Exit-fee to all IOU customers. structure that is meant to leave the IOU whole.  Represents the cost the IOU bears for power that was already  Determined by the California PUC. purchased for load prior to CCA establishment.  CCAs do not have the ability to alter this PCIA charge to customers.

Lockbox General Design S trengths and Concerns  Accounts Receivables from  Form of collateral, especially ratepayers, collected through the during start-up phase. IOU, are routed through the  Gives S upplier first right lockbox.  S uppliers have access to the lockbox and first right of withdraw.  How many S uppliers are in the  S uppliers have the right to future lockbox? cash flows through the lockbox in the event of default.  S hortfalls: Can take time to get full reimbursement.  Customizable.

Current Ratings  Moody’s Methodology: US Municipal Joint Action Agencies  Credit Quality & Cost Recovery Framework  Resource Risk Management  Competitiveness  Financial S trength & Liquidity  Willingness to Recover Costs  Marin Clean Energy: Baa2/ S table; Fitch-BBB/ S table  Peninsula Clean Energy Authority: Baa2/ S table

Financial S tatement Considerations   Little to no long-term debt Cash Balances  Indicative of the county and maturity  Positive Net Income  Look at the unrestricted cash  Cash Provided By (Used in)  Little to no CAPEX. Operations  Larger established CCAs have sizable Cash Provided by Operations.  S maller CCAs are much lower and even negative (used in).

Expansion on the horizon…  Monterey Bay Community Power expansion to include eleven cities.  Largest, geographically speaking, of all CCAs in California.  Marin Clean Energy added Contra Costa County in 2019.  S olano County will be added on April 1, 2020.  Desert Community Energy starts April 1, 2020.  Palm S prings, Cathedral City, and Palm Desert.  Western Community Energy starts S pring 2020.  Norco, Perris, and Wildomar launch April 2020.  Jurupa Valley, Hemet, and Eastvale will launch in May 2020.

Changes on the horizon…  Offsetting the effects of PG&E’s Public S afety Power S hutoffs  Infrastructure  S onoma Clean Power plans to begin exploring the possibility of taking over all or some of PG&E's infrastructure for the Northern California counties  Valley Clean Energy board made a $300 million offer for PG&E’s assets  Microgrids  CPUC Rulemaking  RA Requirements  Grants available from the S tate  Battery S torage  32.7 megawatts of battery energy storage devices

Milestones  The CCAs in Nov. 2019 passed 3,000 MW of contracted renewable energy.  10,000 MW of renewable energy contracts are planned by 2030.