Valley Clean Energy Board Meeting March 22, 2018 Woodland City - PowerPoint PPT Presentation

Valley Clean Energy Board Meeting March 22, 2018 Woodland City Council Chambers 1

Consent Agenda • Minutes – February 8, 2018 • Regulatory/Legislative Update • Typographical Correction in 2018 and 2019 Power Procurement Delegation • Regulatory Legal Services • Long Range Calendar 2

It Item 9 - Enterprise Ris isk Management Polic licy Request – Adopt resolution approving Enterprise Risk Management Policy 3

Enterprise Ris isk Management t Polic licy - Ris isk k Management Process Description Deliverable/Outcome Identify Find, recognize, and describe risks. Write a “risk statement”. Analyze Comprehend the nature of risk and Determine the risk’s potential impact, likelihood determine the level of risk. and velocity. Communicate Plan & Compare the results of risk analysis with Evaluate risk criteria to determine whether the risk Prioritize risks. is acceptable. Modify the risk by mitigating, avoiding, Decision as to how you will be responding and Respond transferring, or accepting the risk. execution plan for response. Inform and engage in dialogue with stakeholder Continually check the status of a risk to regarding the current state of risks and their Monitor identify change from performance level management. Develop key risk indicators where required or expected. appropriate. EROC report. 4

Enterprise Ris isk Management t Polic licy – Id Identify ify • Your Implementation Plan is a good starting point in identifying risks: • What are we trying to accomplish? • What’s got to go right? • What are we assuming could or will go wrong? • Survey/Interview with Executives and Directors • Survey staff • Benchmark to other entities • Include risk discussion in all meetings on strategic initiatives 5

Enterprise Ris isk Management t Polic licy – Id Identify ify, , Sample le Ris isk k Portf tfolio lio Residual Risk Description Response/Mitigation Risk 2% discount, marketing campaign, contacting Risk of higher than expected opt-out large customers, following up with large Opt-out risk level. customers who choose to opt out, community engagement. Risk of higher commodity prices Commodity combined with load forecast Hedges, day-ahead scheduling. risk variance. Risk of additional regulatory Regulatory Active in CalCCA. Monitoring regulatory requirements increasing complexity risk proceedings. Legislative advocacy. and cost of operations. Risk of PCIA increasing in the face of Build financial reserves to be able to withstand PCIA risk stable PG&E rates. negative PCIA impact. Energy Risk of power providers not Working with established, well capitalized contracting performing to contract. counterparties. Using proven technologies. risk 6

Enterprise Ris isk Management t Polic licy - Analyze What would the What would cause Risk Event consequence be if this event to happen? this event occurs? What are we doing to What plans do we have in prevent it? place to minimize the damage? Is what we’re doing enough or too much? Should we be doing more or less? 7

Enterprise Ris isk Management t Polic licy – Analyze cont’d, Heat Map Example Loss of key executives URGENCY (increases exponentially) Material sustainable Significant long-term erosion in customer reputational damage confidence Widespread public Several opinion criticism from customer leaders/customer groups and the community publicly critical Actual violations leading to severe regulatory scrutiny & sanctions Multiple negative media coverage Continuous negative media coverage Incremental Incremental Incremental Impact of Impact of <$1M Impact of >$2.5M <$250K SEVERITY (increases exponentially) 8

Enterprise Ris isk Management t Polic licy – Pla lan & Evalu luate Impact Likelihood Velocity What is the impact? How likely will it occur? How quickly will it happen? Legal, Regulatory & Severity Financial Operational Strategic Reputational Minor Moderate Major Critical Compliance Slight change in customer Minor impact to service Minor delays or metrics and surveys. <$50K impact to Minor Minor violations <$5K levels and business modifications to Limited public criticism annual net income Significant from a few media activities. goals and objectives. Modest decline in Major deterioration in platforms. deterioration in Modest decline in customer metrics and customer metrics and customer metrics and Slight change in customer metrics and Impacts service levels or Moderate delays or surveys. VCE is subject to <$250K impact to surveys. VCE is subject surveys. Irreparable Moderate Moderate violations <$100K creates moderate business modifications to criticism from several customer metrics and annual net income surveys. Negative opinion disruptions. goals and objectives. to criticism from negative media leaders/customers, media surveys. Limited public media reaches sources and the Board. several opinion coverage and damage Significant deterioration in criticism from a few headlines of several customer metrics and Significant delays or leaders/customers, to VCE’s reputation and Widespread disruption to surveys. Negative media media platforms. publications. <$1M impact to Significant violations reductions in scope Major service levels. Interruption reaches headlines of media sources and the credibility with the annual net income <$250K of goals and several publications. of business functions. Significant erosion of objectives. Significant erosion of trust Board. media and the Board. from the Board. trust from the Board. Major deterioration in customer metrics and surveys. Irreparable Cessation of business Violations resulting in loss Failure to meet VCE >$2.5M impact to negative media coverage Critical of data or license services for foreseeable annual net income and damage to VCE’s goals and objectives. qualifications >$250K future. Possible loss of life. reputation and credibility with the media and the Board. 9

Enterprise Ris isk Management t Polic licy – Respond, , Example Response Pla lan Risk Event Response Plan Trigger/Control Owner High opt-out Reduce Identify root cause, Opt-out reports Director rates adjust marketing and survey Customer and responses Marketing Load forecast Reduce Update forecast Power budget AGM Power variance methodology, trade variance reports Services and in day-ahead and Programs forward markets 10

Enterprise Ris isk Management t Polic licy – Monit itor How do we know if a risk is increasing, decreasing, or remaining the same? • Subjective view based on dollars spent • Gut check • Data-driven analysis to support conclusion • Use metrics to measure 11

It Item 10 - Ult ltraGreen Rate Request – Adopt resolution approving recommended UltraGreen rate structure 12

Ultr ltraGreen - Recommendation Recommendation: • $ 0.015/kWh • Per kWh cost reflects REC costs • Competitive with PG&E on a total cost basis • Price level designed to fund new renewable projects • Flat rate would be expensive for NEM customers • Flat rate reduces certainty of covering expenses and transfers costs between customers, especially NEM customers • Procure with overall renewable portfolio • Simplifies procurement • Provides balanced mix of 52% PCC1 and 48% PCC2 • Green-e certification • Assures customer power portfolio meets green standards • Ensures best practices for marketing and program administration • Approximately $17,000/year • Charge NEM usage, but do not credit NEM production • VCEA needs to green entire NEM load, as RECs are not typically provided to VCEA • Intent of program is to increase renewables adoption Net Impact: • Expected enrollment of 3-5%, based on marketing efforts • Customers receive 100% renewable power • VCEA builds reserves of approximately $50k-100k/yr. to fund new renewable projects that will be added to the UltraGreen portfolio. 13

Ultr ltraGreen - Comparis ison to Other Products Premium Premium Entity Residential Commercial Name Green-e? Technology Marin Clean Energy $0.010 $0.010 Deep Green Yes 75% Wind, 25% Solar Sonoma Clean Power $0.025 $0.025 EverGreen No 100% Geothermal CleanPowerSF $0.020 $0.014 SuperGreen Yes 100% Wind Peninsula Clean Energy $0.010 $0.010 ECO100 Yes 100% Wind Silicon Valley Clean Energy $0.008 $0.008 GreenPrime Yes 100% Wind Redwood Coast Energy Authority $0.010 $0.010 REpower+ No 100% Renewable City of Lancaster $10.00/mo $0.015 SMARTChoice Yes 100% Wind Apple Valley Choice Energy $2.00/mo $0.002 MoreChoice No 50% Renewable Pico Rivera Innovative Municipal Energy $11.00/mo $0.010 Prime Future No 100% Renewable East Bay Community Energy 1.5% of PG&E Gen 1.5% of PG&E Gen Brilliant 100 No 40% Renew., 100% Clean Valley Clean Energy $0.015 $0.015 UltraGreen Yes 100% Renewable PG&E $0.026 $0.0149 - $0.0334 Solar Choice Yes 100% Solar 14

Ultr ltraGreen - Alt lternative Alternative: • $0.015/kWh • Change - Procure 100% PCC2 • Green-e certification • Charged to usage from NEM, but not credited for production Net Impact: • VCEA builds reserves of approximately $200k-300k/yr., allowing for more rapid adoption of new local renewable power sources. 15

Ultr ltraGreen - Next xt Steps • Development of marketing and communication materials 16