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HomeMy WebLinkAbout2020-05-12; City Council; ; Clean Energy Alliance UpdateClean Energy Alliance implementation The alliance is meeting its milestones for the implementation of its community choice aggregation, or CCA, program and is on track to begin serving customers in May 2021. The Clean Energy Alliance achieved a significant milestone March 16 with the California Public Utilities Commission's certification of the alliance's Community Choice Energy Implementation Plan and Statement of Intent (Exhibit 4). The alliance has submitted all regulatory compliance filings required to date, including the most recent filing of the Year-Ahead Resource Adequacy Forecast. That forecast informs the California Energy Commission and the state Public Utility Commission of the alliance's projected energy load for 2021. The two state commissions use the forecast to determine how much electricity-generating capacity the alliance will need to procure. Clean Energy Alliance staff and consultants have been working with SDG&E to ensure the forecasts align with SDG&E's assumptions related to how much of the energy that is now being provided by SDG&E will be provided by the alliance. The Clean Energy Alliance has until May 15, 2020 to make any revisions to the initial forecast. The milestone is significant because, under Section 8.1.1 of the Clean Energy Alliance agreement (Exhibit 2 - Attachment A), the first filing of the Year-Ahead Resource Adequacy Forecast is the last point at which a member agency may unilaterally withdraw from the alliance without having to give a one-year notice and without potentially incurring further financial obligations other than each city's already committed initial share of the alliance's startup costs of $150,000. CEA Initial Draft Pro Forma, FY 2020-21 Budget and FinancingStrategy At its April 16 meeting (Exhibit 6), the Clean Energy Alliance Board reviewed the initial draft of the alliance's CCA financial pro forma2 (Exhibit 5). Assumptions that served as the basis for the initial draft included: •A default energy product with at least 50% of the energy coming from renewable power sources,3 increasingto 100% by 2035. •No category 3 renewable energy credits4 2 Pro forma refers to a method of calculating financial results using certain projections or presumptions.3 The alliance will establish the energy product options available to its customers. Each member of the alliance can select its default energy product, with at least 50% of the power coming from renewable sources. Individual customers can accept their city's default product or choose from other options. The larger the share of renewable energy, the higher the costs of the energy. 4 Renewable energy credits are measures of renewable energy production that show electricity has been generated from an eligible renewable energy resource and delivered to the electric grid. The three categories are: o Category 1: Renewable energy that is delivered from eligible renewable resources within California. o Category 2: Renewable energy that is generated outside of California-but within the Western Electricity Coordinating Council -and coupled with an equivalent volume of energy from an alternative source, typically hydroelectric or natural gas. o Category 3: Renewable energy generated within the Western Electricity Coordinating Council but are not attached to any physical energy. This category of REC allows businesses, organizations, and institutions to claim the environmental benefits of renewable energy generation to satisfy their own sustainability goals or requirements. May 12, 2020 Item #8 Page 2 of 137 Clean Energy Alliance's remaining start-up costs, and which could enable the alliance to repay its member agencies' $150,000 advances sooner. The updated proforma with the requested scenarios will be brought before the board at its May 7 meeting. The direction provided by the board related to the policy decisions discussed above will be used to develop the fy 2020-21 budget to be adopted by the board at its June 18 meeting. Advising the city's representatives to the Clean Energy Alliance Board As members of the alliance's Joint Powers Authority Boar.d of Directors, the city's CEA Board representatives have a fiduciary responsibility to serve that independent public agency. As such, the City Council cannot give direction to its alliance board representatives pertaining to taking specific actions or casting specific votes on matters before the Clean Energy Alliance Board. The City Council may, however, offer advice to its board representatives on such matters, if it chooses to do so. Furthermore, the CEA Joint Powers Agreement identifies several specific actions for which the City Council acts as the deciding body, including: • Assuming any responsibility for the debts, liabilities, and obligations of the alliance. (Section 3.5) • Selection of a city's default power supply product. (Section 6.5) • Directing funds into programs, projects, or other ratepayer benefits, pursuant to CEA Board policies concerning the expenditure of discretionary revenues. (Section 7.6) • Withdrawal of membership in the alliance. (Sections 8.1.1, 8.1.2 and 8.1.3) Fiscal Analysis No city funding is being requested and actions taken by the Clean Energy Alliance Board of Directors impose no financial commitments or associated fiscal impacts on the City of Carlsbad. Next Steps The Clean Energy Alliance is proceeding with the implementation of its community choice aggregation program and is on track to begin serving customers in May 2021. Environmental Evaluation (CEQA) Pursuant to Public Resources Code Section 21065, this action of receiving an update on the Clean Energy Alliance and considering providing advice to the city's Clean Energy Alliance Board representatives does not constitute a "project" within the meaning of the California Environmental Quality Act in that it has no potential to cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, and therefore does not require environmental review. Public Notification This item was noticed in accordance with the Ralph M. Brown Act and was available for public viewing and review at least 72 hours prior to scheduled meeting date. May 12, 2020 Item #8 Page 4 of 137 Exhibits 1. April 17 request from Mayor Hall to place an item on the May 12 City Council agenda 2. City Council Resolution No. 2019-197 3. City Council Resolution No. 2019-229 4. Clean Energy Alliance CCA Implementation Plan and Statement of Intent 5. Clean Energy Alliance DRAFT Pro Forma Projections 6. Agenda Packet for April 16 Clean Energy Alliance Board of Directors Meeting 7. Agenda Packet for May 7 Clean Energy Alliance Board of Directors Meeting May 12, 2020 Item #8 Page 5 of 137 From: Matthew Hall <Matt.Hall@carlsbadca.gov> Date: April 17, 2020 at 8:28:41 AM PDT Exhibit 1 To: Scott Chadwick <scott.chadwick@carlsbadca.gov>, Celia Brewer <Celia.Brewer@carlsbadca.gov>, Sheila Cobian <Sheila.Cobian@carlsbadca.gov> Subject: CEA As mayor and following the municipal code I would like to have an update, discussion, and the ability to give direction to representatives of our CEA members placed on the May 12th meeting agenda . Sent from my Verizon, Samsung Galaxy smartphone May 12, 2020 Item #8 Page 6 of 137 Exhibit 2 RESOLUTION NO. 2019-197 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD APPROVING AND AUTHORIZING THE EXECUTION OF THE JOINT EXERCISE OF POWERS AGREEMENT CREATING THE CLEAN ENERGY ALLIANCE, A COMMUNITY CHOICE AGGREGATION JOINT POWERS AUTHORITY WHEREAS, 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 a Joint Powers Authority ("JPA"); and WHEREAS, Public Utilities Code Section 366.2(c)(12) specifically authorizes two or more cities, counties or a combination of two or more cities and counties to conduct a community choice aggregation (CCA) program through the creation of a JPA; and WHEREAS, the creation of a CCA JPA would allow its members to share resources and jointly provide and achieve the environmental and economic benefits of a CCA program on a regional basis; and WHEREAS, the City of Carlsbad desires to enter into a Joint Exercise of Powers Agreement to establish the Clean Energy Alliance, a CCA JPA along with the Cities of Del Mar, Santee, Solana Beach and the County of San Diego, and any additional members approved by the JPA Board in the future. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California as follows: 1. The Joint Exercise of Powers Agreement Creating the Clean Energy Alliance, a Community Choice Aggregation Joint Powers Authority (Clean Energy Alliance) ("Agreement") is hereby approved, and the City Manager is authorized to execute the Agreement in substantially the form attached hereto as Attachment A, together with minor technical or clerical corrections, if any. 2. Staff is authorized and directed to take such further actions as may be necessary and appropriate to implement the intent and purposes of this Resolution. 3. This Resolution and the creation of the Clean Energy Alliance 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).) Oct. 8, 2019 Item #5 Page 8 of 38 May 12, 2020 Item #8 Page 7 of 137 PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 8th day of October 2019, by the following vote, to wit: AYES: Hall, Blackburn, Bhat-Patel, Schumacher, Hamilton. NAYS: None. ABSENT: None. (SEAL) Oct. 8, 2019 Item #5 Page 9 of 38 May 12, 2020 Item #8 Page 8 of 137 Attachment A Clean Energy Alliance Joint Powers Agreement Effective: November 4, 2019 May 12, 2020 Item #8 Page 9 of 137 CLEAN ENERGY ALLIANCE JOINT POWERS AGREEMENT This Joint Powers Agreement (the "Agreement"), effective as of f'(_ou, l/,;}Ol'f , is made by the Founding Members 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; -2 - May 12, 2020 Item #8 Page 10 of 137 (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 oflocal 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 (i) 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: -3 - May 12, 2020 Item #8 Page 11 of 137 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 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 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 -4 - May 12, 2020 Item #8 Page 12 of 137 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 3 31.1 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; 3.2.2 employ agents and employees, including but not limited to a Chief Executive Officer; -5 - May 12, 2020 Item #8 Page 13 of 137 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 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. · -6 - May 12, 2020 Item #8 Page 14 of 137 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 adopt additional conflict of interest regulations in the Operating Policies and Procedures. -7 - May 12, 2020 Item #8 Page 15 of 137 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. b. Unauthorized disclosure of confidential information or documents from a closed session or the unauthorized disclosure of information -8 - May 12, 2020 Item #8 Page 16 of 137 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.l 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; 4.6.4 Adopt policies for procuring electric supply and operational needs such as professional services, equipment and supplies; -9 - May 12, 2020 Item #8 Page 17 of 137 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 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 -10 - May 12, 2020 Item #8 Page 18 of 137 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: (a) Section 2.3 (Purpose of Agreement) -11 - May 12, 2020 Item #8 Page 19 of 137 (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 if: (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 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 -12 - May 12, 2020 Item #8 Page 20 of 137 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 employed by the Parties or by reason of their employment by the Authority, to be subject to any of the requirements of the Parties. -13 - May 12, 2020 Item #8 Page 21 of 137 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)(l2) 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. 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 -14 - May 12, 2020 Item #8 Page 22 of 137 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. 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. -15 - May 12, 2020 Item #8 Page 23 of 137 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 oflnitial 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 CCA Program does not become operational, no Party shall be entitled to any reimbursement of these costs from the Authority or any Party. -16 - May 12, 2020 Item #8 Page 24 of 137 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. 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 -17 - May 12, 2020 Item #8 Page 25 of 137 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 Party'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 liabilities, as described in Section 8.5 (Continuing Liability; Refund) of this Agreement, including, but not limited to, power purchase -18 - May 12, 2020 Item #8 Page 26 of 137 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, wTitten 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. 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 -19 - May 12, 2020 Item #8 Page 27 of 137 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 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 -20 - May 12, 2020 Item #8 Page 28 of 137 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. -21 - May 12, 2020 Item #8 Page 29 of 137 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. -22 - May 12, 2020 Item #8 Page 30 of 137 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 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 May 12, 2020 Item #8 Page 34 of 137 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. -2 - May 12, 2020 Item #8 Page 35 of 137 Exhibit B: List of Founding Members Any public agency that becomes a member by October 1, 2020 City of Carlsbad City of Del Mar City of Solana Beach May 12, 2020 Item #8 Page 36 of 137 Exhibit 3 RESOLUTION NO. 2019-229 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD ACCEPTING THE PEER REVIEW OF NORTH SAN DIEGO COUNTY CITIES COMMUNITY CHOICE ENERGY TECHNICAL FEASIBILITY STUDY AND AUTHORIZING THE CITY MANAGER TO NEGOTIATE, EXECUTE AND FUND A COST REIMBURSEMENT FOR MEMBER AGENCY SUPPORT AGREEMENT ALLOWING FOR THE CITY OF CARLSBAD'S PARTICIPATION IN FUNDING THE FISCAL YEAR 2019-20 INITIAL BUDGET OF THE CLEAN ENERGY ALLIANCE JOINT POWERS AUTHORITY IN THE AMOUNT OF $150,000 WHEREAS, Community Choice Energy is a mechanism that allows local governments to purchase and supply electrical power to customers within their jurisdictions as an alternative to the service provided by an investor-owned utility; and WHEREAS, the terms 'Community Choice Energy' (CCE) and 'Community Choice Aggregation' (CCA) are used interchangeably; and WHEREAS, on April 16, 2019, the Carlsbad City Council received the final North San Diego County Cities Community Choice Energy Technical Feasibility Study (Study), dated March 28, 2019;and WHEREAS, the Study determined that a CCA program is both technically and financially feasible, and could provide environmental and economic benefits to residents and businesses in the City of Carlsbad; and WHEREAS, on August 20, 2019, the Carlsbad City Council directed staff to obtain a peer review analysis of the Study; and WHEREAS, the city engaged Pacific Energy Advisors, Inc., to provide a Peer Review of the Study; and WHEREAS, Pacific Energy Advisors' Peer Review of the Study, dated November 4, 2019, did not discover any fatal flaws that would jeopardize anticipated feasibility of the CCA program; and WHEREAS, on October 8, 2019, the Carlsbad City Council adopted Resolution No. 2019- 197 approving and authorizing the execution of the Joint Exercise of Powers Agreement creating the Clean Energy Alliance, a CCA Joint Powers Authority; and WHEREAS, on October 15, 2019, the Carlsbad City Council approved Ordinance No. CS- 362 authorizing the implementation of a CCA program in Carlsbad; and WHEREAS, on November 5, 2019, the Clean Energy Alliance (CEA) Joint Powers Authority Board of Directors reviewed CEA's draft fiscal year 2019-20 Initial Budget, which estimates initial costs to be $450,000; and May 12, 2020 Item #8 Page 37 of 137 eventual operating outcomes for the prospective CCA program could be somewhat better than reflected in the Study (based on current market conditions, which are subject to change). Overall cost of service projections for the prospective CCA program were noted as consistent with ranges observed for other CCA organizations. During its review, PEA observed that certain, relatively recent changes related to California's legislative and regulatory landscape may require further consideration as the Partners continue evaluating CCA as an alternative to traditional electric services provided by SDG&E. These items include Senate Bill 350's1 long-term Renewables Portfolio Standard (RPS) contracting requirement, and California Public Utilities Commission (CPUC) Ruling 17-09-020's2 multi-year local resource adequacy (RA) procurement requirement. While neither item materially alters PEA's impressions regarding CCA program viability, it is important for the Partners to be aware of resultant impacts to the resource planning obligations that pertain to CCA organizations, as neither topic was addressed in the Study. Additional detail related to each of these topics is provided in greater detail below under the "Other Considerations" section. While the Partners were provided with four distinct governance options, this Review focuses on the Base Case scenario, which assumed that all of the Partners would proceed with the formation of a single Joint Powers Authority (the members of which would be the Partners' respective communities) that would administer the CCA Program -this CCA governance structure has been successfully deployed in numerous regions throughout California. Key aspe'cts of PEA's Review were intended to address: 1) the appropriateness of key assumptions upon which the Study was based; 2) the reasonableness of noted operating projections relative to the experience of similar CCA organizations; 3) the identification of any noteworthy inconsistencies between key elements of the Study and observations derived from PEA's direct experience launching and supporting numerous California CCAs; and 4) descriptions of any recent developments, including market-related and/or policy-related changes, that could materially alter expected operating results relative to projections reflected in the Study. Assessment of Key Considerations Rates In forecasting generation and delivery rates charged by SDG&E, the Study calculated the delivery component using SDG&E's General Rate Case filing for 2019-2021 as a starting point, with an annual escalation rate of 2% that was generally based on inflationary expectations. The forecast for SDG&E's generation rate was based on an assumed resource mix that was comprised of market purchases and long-term renewable energy contracts. While the cost of market purchases is expected to increase over time, the Study suggests that costs associated with long-term renewable contracts are expected to decrease, resulting in a net 1% annual growth rate (in SDG&E's anticipated generation rates) starting in 2020. Overall, both projected delivery and generation rates seem reasonable in consideration of the base year forecast and related escalation rates during the 10-year study period. 1 SB 350 399.13.8{b): A retail seller may enter into a combination of long-and short-term contracts for electricity and associated renewable energy credits. Beginning January 1, 2021, at least 65 percent of the procurement a retail seller counts toward the renewables portfolio standard requirement of each compliance period shall be from its contracts of 10 years or more in duration or in its ownership or ownership agreements for eligible renewable energy resources. 2 CPUC R.17-09-020 states that as of the 2020 compliance year, local requirements are set three years ahead and updated each year. Local requirements are further broken down into sub-local areas. 2 May 12, 2020 Item #8 Page 40 of 137 Financing Costs The Study envisioned pre-launch financing costs of $2 million in 2020 (consisting primarily of start-up costs), and $14 million in 2021 for working capital. Based upon PEA's observations related to the experiences of currently operational CCAs, projected financing costs reflected in the Study seem reasonable and in alignment with our expectations. Further, the assumption to pay off debt within three years of service commencement are also in line with the experiences of other CCAs. As CCAs have become more prevalent and successful operational track records continue to build (note that two CCAs now have investment grade credit ratings), obtaining necessary funding via bank loans or other sources should not be an issue. In fact, PEA has observed that one or more financial institutions has now created a clean energy division that caters to this growing market segment. Power Supply Cost and Operating Expense Assumptions PEA reviewed the Study's price forecasts for the following energy products, each of which was included in projected power supply costs, the largest component of a CCA program's operating budget: • Power purchased within the California Independent System Operator (CAISO) market; • Renewable energy purchased under long-term power supply contracts; • Renewable energy/renewable energy credits purchased under short-term power supply contracts; • Greenhouse gas (GHG) free energy supply; and • Resource adequacy capacity On an overall basis, projected power supply costs were reasonable and tended to be conservative relative to similar projections prepared by PEA (see Table 1 below). The Study's assumptions related to market prices, long-term renewable energy prices, and short-term renewable energy prices were generally higher compared to similar forecasts prepared by PEA. GHG-free and RA prices were generally lower than those projected by PEA. After netting the offsetting impacts of these differences, there is a non- substantive impact to overall power cost estimates. When verifying the appropriateness of such costs, PEA benchmarked the Study's "Power Supply Costs as a Percentage of Revenues" against similar ratios for PEA's CCA clientele operating within Southern California. The comparative results indicated that over the 10-year period spanning the 2021-2030 calendar years, power supply costs reflected in the Study represented 86% of projected revenues, a figure that falls well within the range of 83%-93% which was observed for other CCA programs. Similarly, PEA reviewed the following additional (non-power supply) operational cost components, or "other operating expenses": • Fees related to billing and data management services; • SDG&E fees; • Technical Consulting and Legal fees; • Staffing costs; and • General and Administrative expenses 3 May 12, 2020 Item #8 Page 41 of 137 Similar to PEA's assessment of projected power supply costs, anticipated other operating expenses were also found to be reasonable (see Table 1 below). After performing a similar benchmarking exercise for "Other Operating Expenses as a Percentage of Revenues" (net of energy costs and debt service payments), PEA determined that these projected cost estimates were also within reasonable ranges. In particular, the Study indicated an estimated average ratio of 5% (representing other operating expenses, divided by revenues), which is also in line with PEA's expectations for this component of a CCA program's operating budget. Table 1: Summary of Power Supply Cost Forecasts and Ratios 2021-2030 Period Averages EESStudy PEA Notes All-in Power Supply Cost ($/MWh) $72.61 $70.15 PEA forecast based on most recent forward curves Power Supply Cost/Revenue 86% 83%-93% PEA forecasted range based on similar CCAs Operating Expense/Revenue 5% 5% PEA forecast based on similarCCAs Other Considerations: Potential Impacts to Resource Planning and Procurement Activities During PEA's review of the Study, there were several additional items that, while not critically important in determining program feasibility, will need to be addressed as the Partners continue evaluating CCA formation. There are also various ongoing efforts related to the disposition of utility power resources, including renewable energy and carbon-free supply. Such processes may result in allocations of such resources to CCAs, which could beneficially impact resource planning and procurement efforts. These items are further described below. SB 350 Long-term RPS Requirement SB 350 requires all load serving entities to have at least 65% of their Renewables Portfolio Standard ("RPS") procurement mandate secured via contracts of ten years or longer during each compliance period starting on January 1, 2021. The Study does not mention this requirement, but compliance with this element of SB 350 should be included in portfolio planning. According to the Study, the Base Case assumes an average long-term renewable energy price of $42/MWh, and an average short-term renewable energy price of $62/MWh. The Study assumes the exclusive procurement of short-term renewable energy for the first three years of program operation with the layering of increasing proportions of long-term renewable energy over time, growing from 10% in year 4, to 20% in year 5, and 25% in years 6 through 20. Relative to assumptions reflected in the Study, the phasing of long-term renewable energy purchases will need to occur more quickly and significantly under the requirements of SB 350, but current pricing trends within renewable energy markets suggest that longer-term purchases can be more cost effective (when compared to short-term purchases), reducing overall energy supply costs for the Partners if current market conditions continue to persist. Regarding long-term renewable energy contracting, there is some risk related to the ability of a CCA to secure such contracts in time to meet pertinent compliance deadlines. However, the multi-year compliance periods reflected in SB 350 (i.e., Compliance Period 4, which begins January 1, 2021 and continues through December 31, 2024; Compliance Period 5, which begins January 1, 2025 and continues through December 31, 2027; and Compliance Period 6, which beings January 1, 2028 and continues through December 31, 2030) are intended to promote some flexibility in achieving these long-term contracting obligations and should ease challenges ofthe CCA Program in meeting this compliance obligation during initial operations. 4 May 12, 2020 Item #8 Page 42 of 137 Further, any concerns related to creditworthiness of the CCA (during early-stage operations) when pursuing long-term renewable energy contracts can be effectively addressed through the implementation of various contracting/structural strategies, including lock-box structures, credit assurances, and demonstration of agreed upon debt-to-income ratios by the CCA program, amongst others. R.17-09-020 Multi-year Local RA Requirement CPUC Ruling 17-09-020 is a relatively recent requirement, which obligates the advance procurement of local RA in three-year compliance cycles. PEA understands that this requirement was not addressed in the Study, so the Partners should be aware of this obligation. Based on current conditions within California's RA market, securing requisite supply in multi-year cycles has become increasingly challenging and typically requires considerable coordination within the procurement function. As a mitigating factor, there currently is a compliance waiver option for local RA (for non-compliant LSEs that can demonstrate commercially reasonable attempts to procure, even though such efforts were unsuccessful). An effort is underway, spearheaded by the California Community Choice Association, to expand the waiver program for system and flexible RA as well. Finally, because the local RA requirement is effective on January 1st of the year in which a new CCA commences service, the Partners should consider an earlier 2021 launch date if economically feasible. Greenhouse Gas (GHG) Free Allocation Work in Progress On October 11, 2018 the CPUC issued Decision (D.)18-10-019 modifying the Power Charge Indifference Adjustment {PCIA) Methodology and opening a second phase of this proceeding to enable parties to further develop proposals for portfolio optimization and cost reduction for future consideration by the Commission. On February 1, 2019, the Commission issued the Phase 2 Scoping Memo R.17-06-26, which directed the parties to convene three working groups to further develop PCIA-related proposals for consideration by the Commission. One of the working groups, Working Group 3 (WG 3) is focused on portfolio optimization and is tasked with answering the question of 11what are the structures, processes, and rules governing portfolio optimization that the Commission should consider in addressing excess resources in utility portfolios?" One of the excess resources unde_r consideration focuses on a proposal to allocate the investor-owned utilities' {IOU) GHG-free portfolios, which consists of large hydro and nuclear generating facilities. The draft proposal would allocate on a voluntary basis to eligible load serving entities (LSEs) their proportionate share of GHG-free resources based on their respective load (meaning, energy required to serve customers) relative to total load within the incumbent IOU's service territory. The impacts to participating LSEs, including the CCA Program would be the reduction of GHG-free energy costs due to the allocation, and potential price reductions (due to lower demand) for any additional market purchases (e.g., some LSEs may have already procured GHG-free energy and want to monetize their allocations, thereby flooding the market with supply). Resource Adequacy Allocation Work in Progress Also a part of WG 3's PCIA portfolio optimization efforts, the allocation of local, system, and flex RA is being considered. Allocation will be based on an LSE's forecasted monthly, peak-load share as a percentage of peak load reflected within the incumbent IOU's service territory at large. The draft proposal contemplates a mandatory allocation for local RA, and a voluntary allocation for system and flex RA. This would give new CCAs a head start on procurement and access to an RA market within which scarcity of 5 May 12, 2020 Item #8 Page 43 of 137 supply is becoming increasingly common (potential risk mitigating options including a waiver are listed above). Renewable Energy Allocation Work in Progress The other resource category being considered for allocation within WG 3 is the renewable energy associated with RPS contracts of the IOUs. As discussed, the RPS allocation share would be based on an LSE's annual load share as a percentage of the relevant IOU service area. The draft proposal would allow LSEs to decide whether they wish to accept all or a portion of their respective allocation. The potential benefit to newly launching LSEs like the CCA Program would be the opportunity to be allocated some RPS- eligible long-term energy from the beginning, and especially important if the CCA launch date is closer to the end of a compliance period. As stated above, the CCA Program's expected launch date in early 2021 should provide ample time to meet applicable compliance obligations focused on renewable energy procurement. Conclusion The Study provided a comprehensive analysis of the items that should be considered in assessing the feasibility of a newly forming CCA. The energy supply costs and operating expenses used in developing the proforma were reasonable, as were the projected SDG&E generation and distribution rates used -to determine feasibility. Two key items to consider for further assessment and/or inclusion are compliance with SB 350's long- term RPS compliance requirements, and CPUC R.17-09-020's multi-year local RA requirements. The inclusion of the former should help reduce energy procurement costs due to the inclusion of lower-priced long-term contracts, while the inclusion of the latter would likely increase energy procurement costs from the expected increase in market prices The overall impact of the two items may marginally alter anticipated power supply costs, but such changes are not expected to undermine the Study's findings with regard to program feasibility. Some other items to consider are the various efforts that are under way from the PCIA Phase 2 proceedings with respect to the allocation of GHG-free energy, local, system and flex RA, and RPS attributes. The allocation of all three energy products would greatly assist all newly forming CCAs to meet their GHG-free, RPS, and RA compliance requirements. The allocation of GHG-free energy would also reduce energy supply costs both through the structure of the allocation, and the potential decrease in pricing due to reduced demand from LSEs. 6 May 12, 2020 Item #8 Page 44 of 137 IN ITIAL BUDGET Staffing/Consultants Legal Services Professional Services CCA Bond CalCCA Membership & Dues Graphic Design Services/Marketing TOTAL PROJECTED BUDGET Clean Energy Alliance DRAFT FY 2019/2020 Initial Budget FY 19/20 NOTES $ 50,000.00 FY 19/20 Partial Year, Part Time CEO and Administrative Support 130,000.00 General Counsel & Special Counsel 115,000.00 Website Development; Technical Support 147,000.00 Required to be paid by March 2020 1,500.00 Affliliate Membership 19/20 $6,500 Logo/Mailers $450,000.00 Costs could be funded through traditional bank financing and/or deferred fees/partner support Attachment B May 12, 2020 Item #8 Page 45 of 137 CLEAN ENERGY ALLIANCE Community Choice Aggregation Implementation Plan and Statement of Intent December 2019 Exhibit 4 May 12, 2020 Item #8 Page 46 of 137 Clean Energy Alliance Implementation Plan i December 2019 TABLE OF CONTENTS 1 Introduction .................................................................................................................................... 4 1.1Statement of Intent ............................................................................................................................ 5 1.2Organization of this Implementation Plan .......................................................................................... 6 2 Aggregation Process ........................................................................................................................ 7 2.1Introduction ........................................................................................................................................ 7 2.2Process of Aggregation ....................................................................................................................... 8 2.3Consequences of Aggregation ............................................................................................................ 9 2.3.1 Rate Impacts ................................................................................................................... 9 2.3.2 Renewable Energy Impacts .......................................................................................... 10 2.3.3 Greenhouse Gas Reduction .......................................................................................... 10 3 Organization and Governance Structure ....................................................................................... 11 3.1Organizational Overview .................................................................................................................. 11 3.2Governance ...................................................................................................................................... 11 3.3Management .................................................................................................................................... 11 3.4Administration .................................................................................................................................. 12 3.5Finance ............................................................................................................................................. 12 3.6Marketing & Public Affairs ................................................................................................................ 12 3.7Power Resources & Energy Programs .............................................................................................. 13 3.7.1 Electric Supply Operations ........................................................................................... 13 3.8Governmental Affairs & Legal Support ............................................................................................. 14 4 Startup Plan and Funding .............................................................................................................. 15 4.1Startup Activities .............................................................................................................................. 15 4.2Staffing and Contract Services .......................................................................................................... 16 4.3Capital Requirements ....................................................................................................................... 16 4.4Financing Plan ................................................................................................................................... 17 5 Program Phase-In .......................................................................................................................... 18 6 Load Forecast & Resource Plan ..................................................................................................... 19 May 12, 2020 Item #8 Page 47 of 137 Clean Energy Alliance Implementation Plan ii December 2019 6.1Introduction ...................................................................................................................................... 19 6.2Resource Plan Overview ................................................................................................................... 20 6.3Supply Requirements ........................................................................................................................ 21 6.4Customer Participation Rates ........................................................................................................... 22 6.5Customer Forecast ............................................................................................................................ 22 6.6Sales Forecast ................................................................................................................................... 23 6.7Capacity Requirements ..................................................................................................................... 23 6.8Renewables Portfolio Standards Energy Requirements ................................................................... 25 6.8.1 Basic RPS Requirements ............................................................................................... 25 6.8.2 CEA’s Renewables Portfolio Standards Requirement .................................................. 25 6.9Purchased Power .............................................................................................................................. 25 6.10Renewable Resources ..................................................................................................................... 26 6.11Small, Local and Diverse Business Enterprise Procurement ........................................................... 26 6.12Energy Efficiency ............................................................................................................................. 26 7 Financial Plan ................................................................................................................................ 27 7.1Description of Cash Flow Analysis .................................................................................................... 27 7.2Cost of Program Operations ............................................................................................................. 27 7.3Revenues from CCA Program Operations ......................................................................................... 27 7.4Cash Flow Analysis Results ............................................................................................................... 28 7.5Program Implementation Pro Forma ............................................................................................... 28 7.6Clean Energy Alliance Financings ...................................................................................................... 29 7.7Renewable Resource Project Financing ............................................................................................ 29 8 Rate Setting, Program Terms and Conditions ............................................................................... 30 8.1Introduction ...................................................................................................................................... 30 8.2Rate Policies ...................................................................................................................................... 30 8.3Rate Competitiveness ....................................................................................................................... 30 8.4Rate Stability ..................................................................................................................................... 31 8.5Equity among Customer Classes ....................................................................................................... 31 8.6Customer Understanding ................................................................................................................. 31 May 12, 2020 Item #8 Page 48 of 137 Clean Energy Alliance Implementation Plan iii December 2019 8.7Revenue Sufficiency .......................................................................................................................... 31 8.8Rate Design ....................................................................................................................................... 32 8.9Net Energy Metering ........................................................................................................................ 32 8.10Disclosure and Due Process in Setting Rates and Allocating Costs among Participants ................. 32 9 Customer Rights and Responsibilities ........................................................................................... 33 9.1Customer Notices ............................................................................................................................. 33 9.2Termination Fee ............................................................................................................................... 34 9.3Customer Confidentiality .................................................................................................................. 34 9.4Responsibility for Payment ............................................................................................................... 34 9.5Customer Deposits ........................................................................................................................... 35 10 Procurement Process .................................................................................................................... 36 10.1Introduction .................................................................................................................................... 36 10.2Procurement Methods ................................................................................................................... 36 10.3Key Contracts .................................................................................................................................. 36 10.3.1 Electric Supply .............................................................................................................. 36 10.3.2 Data Management Contract ......................................................................................... 37 11 Contingency Plan for Program Termination .................................................................................. 37 11.1Introduction .................................................................................................................................... 37 11.2Termination by Clean Energy Alliance ............................................................................................ 37 12 Appendix A: Clean Energy Alliance Resolution No. 2019-003 (Adopting Implementation Plan) .. 39 May 12, 2020 Item #8 Page 49 of 137 Clean Energy Alliance Implementation Plan Introduction 4 December 2019 1 INTRODUCTION The Clean Energy Alliance (“CEA” or “Alliance”), located within San Diego County, is a Joint Powers Authority (“JPA”) pursuing the implementation of a community choice aggregation program (“CCA” or “Program”). Founding Member Agencies of CEA include the following three (3) municipalities within the County of San Diego, which have elected to allow the JPA to provide electric generation service within their respective jurisdictions: City of Carlsbad City of Del Mar City of Solana Beach This Implementation Plan and Statement of Intent (“Implementation Plan”) describes CEA’s plans to implement a voluntary CCA program for electric customers within the jurisdictional boundaries of the Member Agencies. Electric customers within the Cities of Carlsbad and Del Mar currently take bundled electric service from San Diego Gas and Electric (“SDG&E”). Electric customers within the City of Solana Beach currently have the option of taking electric service from Solana Energy Alliance (“SEA”), an existing Community Choice Aggregation program, or as a bundled customer of SDG&E. The Program will provide electricity customers the opportunity to jointly procure electricity from competitive suppliers, with such electricity being delivered over SDG&E’s transmission and distribution system. The planned start date for the Program is May 1, 2021. All current SDG&E customers within the Del Mar and Carlsbad service area will receive information describing the CEA Program and will have multiple opportunities to opt out and choose to remain full requirement (“bundled”) customers of SDG&E, in which case they will not be enrolled. Current SEA customers will receive information describing the CEA Program and their transition from SEA to CEA. They will also have multiple opportunities to opt out. Thus, participation in the CEA Program is completely voluntary. However, as provided by law, customers will be automatically enrolled according to the anticipated schedule later described in Chapter 5 unless they affirmatively elect to opt- out. Once, and as long as CEA is operational and all SEA customers have transitioned to CEA, SEA will cease to be an operational CCA. Implementation of CEA will enable customers within CEA’s service area to take advantage of the opportunities granted by Assembly Bill 117 (“AB 117”), the Community Choice Aggregation Law. CEA’s primary objectives in implementing this Program are to: 1) Procure an electric supply portfolio with higher renewable content than SDG&E; 2) Provide cost competitive electric services when compared to SDG&E; 3) Gain local control in rate setting to provide long-term rate stability for residents and businesses; 4) Meet Climate Action Plan goals of the Member Agencies. The California Public Utilities Code provides the relevant legal authority for the Alliance to become a Community Choice Aggregator and invests the California Public Utilities Commission (“CPUC” or “Commission”) with the responsibility for establishing the cost recovery mechanism that must be in place before customers can begin receiving electrical service through the CEA Program. The CPUC also has responsibility for registering the JPA as a Community Choice Aggregator and ensuring compliance with May 12, 2020 Item #8 Page 50 of 137 Clean Energy Alliance Implementation Plan Introduction 5 December 2019 basic consumer protection rules. The Public Utilities Code requires adoption of an Implementation Plan at a duly noticed public hearing. The plan must then be filed with the Commission. The Alliance is also aware that a CCA Program-specific Renewables Portfolio Standard (“RPS”) Procurement Plan must be completed and submitted to the CPUC during its CCA registration process – the Alliance anticipates that the renewable energy targets reflected in this Implementation Plan will meet or exceed applicable procurement mandates, including prudent planning reserves. On December 19, 2019, the JPA, at a duly noticed public hearing, adopted this Implementation Plan, through Resolution No. 2019-003 (a copy of which is included as part of Appendix A). The Commission has established the methodology to use to determine the cost recovery mechanism, and SDG&E has approved tariffs for imposition of the cost recovery mechanism. The cities of Del Mar and Carlsbad have adopted an ordinance to implement a CCA program through its participation in CEA and Solana Beach adopted its ordinance to implement a CCA program as part of implementing SEA. Each of the Members has adopted a resolution permitting CEA to provide service within its jurisdiction1. Having accomplished these milestones, CEA submits this Implementation Plan to the CPUC. Following the CPUC’s acknowledgement of its receipt of this Implementation Plan and resolution of any outstanding issues, CEA will submit a draft customer notice, file a draft Renewable Portfolio Standards Procurement Plan, submit the Financial Security Requirement and execute the Service Agreement with San Diego Gas & Electric as established in CPUC Resolution E-4907. CEA will take the final steps needed to register as a CCA and participate in the year-ahead Resource Adequacy (“RA”) process prior to initiating the customer notification and enrollment process. 1.1 STATEMENT OF INTENT The content of this Implementation Plan complies with the statutory requirements of AB 117. As required by Public Utilities Code Section 366.2(c)(3), this Implementation Plan details the process and consequences of aggregation and provides the Alliance’s statement of intent for implementing a CCA program that includes all of the following: Ø Universal access; Ø Reliability; Ø Equitable treatment of all customer classes; and Ø Any requirements established by state law or by the CPUC concerning aggregated service. 1 Copies of individual ordinances adopted by the Clean Energy Alliance’s Members are included within Appendix A May 12, 2020 Item #8 Page 51 of 137 Clean Energy Alliance Implementation Plan Introduction 6 December 2019 1.2 ORGANIZATION OF THIS IMPLEMENTATION PLAN The remainder of this Implementation Plan is organized as follows: Chapter 2: Aggregation Process Chapter 3: Organizational Structure Chapter 4: Startup Plan & Funding Chapter 5: Program Phase-In Chapter 6: Load Forecast & Resource Plan Chapter 7: Financial Plan Chapter 8: Rate setting Chapter 9: Customer Rights and Responsibilities Chapter 10: Procurement Process Chapter 11: Contingency Plan for Program Termination Appendix A: Clean Energy Alliance Resolution No. 2019-XXX (Adopting Implementation Plan) The requirements of AB 117 are cross-referenced to Chapters of this Implementation Plan in the following table. May 12, 2020 Item #8 Page 52 of 137 Clean Energy Alliance Implementation Plan Aggregation Process 7 December 2019 AB 117 Cross References AB 117 REQUIREMENT IMPLEMENTATION PLAN CHAPTER Statement of Intent Chapter 1: Introduction Process and consequences of aggregation Chapter 2: Aggregation Process Organizational structure of the program, its operations and funding Chapter 3: Organizational Structure Chapter 4: Startup Plan & Funding Chapter 7: Financial Plan Disclosure and due process in setting rates and allocating costs among participants Chapter 8: Rate setting Rate setting and other costs to participants Chapter 8: Rate setting Chapter 9: Customer Rights and Responsibilities Participant rights and responsibilities Chapter 9: Customer Rights and Responsibilities Methods for entering and terminating agreements with other entities Chapter 10: Procurement Process Description of third parties that will be supplying electricity under the program, including information about financial, technical and operational capabilities Chapter 10: Procurement Process Termination of the program Chapter 11: Contingency Plan for Program Termination Methods for ensuring procurement from small, local, and diverse business enterprises in all categories, including, but not limited to, renewable energy, energy storage system, and smart grid projects. Chapter 6: Load Forecast and Resource Plan 2 AGGREGATION PROCESS 2.1 INTRODUCTION This Chapter describes the background leading to the development of this Implementation Plan and describes the process and consequences of aggregation, consistent with the requirements of AB 117. May 12, 2020 Item #8 Page 53 of 137 Clean Energy Alliance Implementation Plan Aggregation Process 8 December 2019 In 2017 the cities of Del Mar, Carlsbad and other interested partner agencies engaged the assistance of a technical consultant to evaluate the feasibility of establishing a CCA program, considering various agency member formations. The studies revealed that a CCA program was viable, offering customers rates competitive with SDG&E. Throughout early 2019 the Member Agencies evaluated several different options related to the provision of CCA services to their service territories. SEA has been a financially stable CCA since launching in June 2018. The financial model reflected in Section 7, Table 9, demonstrates that the proposed CEA is a financially viable CCA program. The CEA was formed with the following objectives: 1) procure a power supply from a minimum 50% renewable energy sources; 2) help meet the goals of the Member Agency’s Climate Action Plans to reduce GHG emissions; 3) provide cost-competitive electric services to the customers of CEA; 4) gain local control of the territory’s energy procurement needs; and 5) provide local clean energy programs and benefits. The City of Solana Beach (“Solana Beach”) currently operates SEA, the only CCA that is currently serving customers in SDG&E territory. Solana Beach intends to transition its customers from SEA to CEA during CEA’s launch month of May 2021. Once its customers are fully transferred to CEA, Solana Beach will no longer operate SEA. Solana Beach will submit an amended Implementation Plan, concurrent with this CEA Implementation Plan, that reflects its customers transitioning to CEA. The Alliance released a draft Implementation Plan in November 2019, which described the planned organization, governance and operation of the CCA Program. Following consideration of comments related to the draft document, a final Implementation Plan was prepared and duly adopted by the CEA Board of Directors. The CEA Program represents a culmination of planning efforts that are responsive to the expressed needs and priorities of the residents and business community within the service territory. The Alliance plans to expand the energy choices available to eligible customers through creation of innovative new programs for voluntary purchases of renewable energy and net energy metering to promote customer-owned renewable generation. 2.2 PROCESS OF AGGREGATION Before they are enrolled in the Program, prospective CEA customers in Carlsbad and Del Mar will receive two written notices in the mail that will provide information needed to understand the Program’s terms and conditions of service and explain how customers, if they desire, can opt-out of the Program. All customers that do not follow the opt-out process specified in the customer notices will be automatically enrolled, and service will begin at their next regularly scheduled meter read date following the date of automatic enrollment, subject to the service phase-in plan described in Chapter 5. The initial enrollment notices will be provided to customers in March 2021, with a second notice being provided in April 2021. Customers currently being served by SEA were provided the required enrollment notices during their transition from SDG&E service in 2018. These customers are not subject to the four required notices for customers leaving SDG&E service, however, they will be provided at least one notice notifying them of the transition from SEA service to CEA service and any rate or service impacts. Customers enrolled in the CEA Program will continue to have their electric meters read and to be billed for electric service by the distribution utility (SDG&E). The electric bill for Program customers will show May 12, 2020 Item #8 Page 54 of 137 Clean Energy Alliance Implementation Plan Aggregation Process 9 December 2019 separate charges for generation procured by CEA as well as other charges related to electricity delivery and other utility charges assessed by SDG&E. After service cutover, customers will have approximately 60 days (two billing cycles) to opt-out of the CEA Program without penalty and return to the distribution utility (SDG&E). CEA customers will be advised of these opportunities via the distribution of two additional enrollment notices provided within the first two months of service. Customers that opt-out between the initial cutover date and the close of the post enrollment opt-out period will be responsible for program charges for the time they were served by CEA but will not otherwise be subject to any penalty for leaving the program. Customers that have not opted- out within thirty days of the fourth enrollment notice will be deemed to have elected to become a participant in the CEA Program and to have agreed to the CEA Program’s terms and conditions, including those pertaining to requests for termination of service, as further described in Chapter 8. 2.3 CONSEQUENCES OF AGGREGATION 2.3.1 Rate Impacts CEA customers will pay the generation charges set by the Alliance and no longer pay the costs of SDG&E generation. Customers enrolled in the Program will be subject to the Program’s terms and conditions, including responsibility for payment of all Program charges as described in Chapter 9. The Alliance’s rate setting policies described in Chapter 7 establish a goal of providing rates that are competitive with the projected generation rates offered by the incumbent distribution utility (SDG&E). The Alliance will establish rates sufficient to recover all costs related to operation of the Program, and the CEA Board will adopt actual rates. Initial CEA Program rates will be established following approval of the Alliance’s inaugural program budget, reflecting final costs from the CEA Program’s energy procurement. The Alliance’s rate policies and procedures are detailed in Chapter 7. Information regarding final CEA Program rates will be disclosed along with other terms and conditions of service in the pre-enrollment and post-enrollment notices sent to potential customers. Once CEA gives definitive notice to SDG&E that it will commence service, CEA customers will generally not be responsible for costs associated with SDG&E’s future electricity procurement contracts or power plant investments. Certain pre-existing generation costs and new generation costs that are deemed to provide system-wide benefits will continue to be charged by SDG&E to CCA customers through separate rate components, called the Cost Responsibility Surcharge and the New System Generation Charge. These charges are shown in SDG&E’s electric service tariffs, which can be accessed from the utility’s website, and the costs are included in charges paid by both SDG&E bundled customers as well as CCA and Direct Access customers2. SEA customers that transition to CEA will maintain their current Power Charge Indifference Adjustment (“PCIA”) vintage of 2017, having already departed from SDG&E generation services. Eligible Del Mar and Carlsbad customers who transition to CEA service will be assigned a 2020 PCIA vintage. 2 For SDG&E bundled service customers, the Power Charge Indifference Adjustment element of the Cost Responsibility Surcharge is contained within the CCA-CRS rate tariff. May 12, 2020 Item #8 Page 55 of 137 Clean Energy Alliance Implementation Plan Aggregation Process 10 December 2019 2.3.2 Renewable Energy Impacts A second consequence of the Program will be an increase in the proportion of energy generated and supplied by RPS-eligible renewable resources. The resource plan includes procurement of renewable energy in excess of California’s renewable energy procurement mandate, and SDG&E’s forecast renewable percentage, with a goal of providing a minimum of 50% renewable energy at launch, for all enrolled customers. Consistent with Senate Bill 100, CEA renewable energy will increase toward 60% by 2030. CEA customers may also voluntarily participate in a higher renewable supply option, potentially up to 100%. To the extent that customers choose CEA’s voluntary renewable energy option, the renewable content of CEA’s aggregate supply portfolio will further increase. Initially, requisite renewable energy supply will be sourced through one or more short-term power purchase agreements; however, shortly after launching operations, long-term procurement of renewable energy will begin to meet California’s long-term renewable energy contracting requirements that become effective in Compliance Period 4 and beyond3. Over time, the Alliance will also consider independent development of new renewable generation resources. 2.3.3 Greenhouse Gas Reduction A third consequence of the Program will be an anticipated reduction in the greenhouse gas emissions attributed to the CEA supply portfolio as compared to SDG&E. An important objective of the CEA formation is to support the Climate Action Plans of the Member Agencies. Therefore, CEA will set aggressive GHG-emissions reduction targets and acquire zero or low GHG-emitting supply to achieve those targets. 3 Under California’s RPS Program, 65 percent of mandated renewable energy purchases must be sourced from eligible long-term contracts beginning in calendar year 2021. May 12, 2020 Item #8 Page 56 of 137 Clean Energy Alliance Implementation Plan Organization and Governance Structure 11 December 2019 3 ORGANIZATION AND GOVERNANCE STRUCTURE This section provides an overview of the organizational structure of CEA and its proposed implementation of the CCA program. Specifically, the key agreements, governance, management, and organizational functions of CEA are outlined and discussed below. 3.1 ORGANIZATIONAL OVERVIEW CEA is a joint powers authority formed under the California Joint Exercise of Powers Act. It was established on November 4, 2019 with a Board of Directors serving as its Governing Board. The Board is responsible for establishing CEA’s Program policies and objectives and overseeing CEA’s operation. In December 2019, the Board appointed an Interim Chief Executive Officer (“CEO”) to manage the operation of the Alliance in accordance with policies adopted by the Board. 3.2 GOVERNANCE The CEA Program will be governed by the CEA Board, which shall include one appointed designee from each of the Member Agencies. The Members of CEA include three (3) municipalities within the County of San Diego, Del Mar, Carlsbad and Solana Beach, all of which have elected to allow CEA to provide electric generation service within their respective jurisdictions. The Alliance’s Board will be comprised of representatives appointed by each of the Members in accordance with the JPA agreement. The CEA Program will be operated under the direction of an CEO appointed by the Board, with legal and regulatory support provided by a Board appointed General Counsel. The Board’s primary duties are to establish program policies, approve rates and provide policy direction to the CEO, who has general responsibility for program operations, consistent with the policies established by the Board. The Board will elect a Chair and Vice Chair and may form various standing and ad hoc committees, as appropriate, which would have responsibility for evaluating various issues that may affect the Alliance and its customers, including rate-related and power contracting issues, and would provide analytical support and recommendations to the Board in these regards. 3.3 MANAGEMENT The CEA CEO has management responsibilities over the functional areas of Administration & Finance, Marketing & Public Affairs, Power Resources & Energy Programs, and Government Affairs, as well as the assisting the Board with overall supervision of the legal services provided by the Alliance’s General Counsel. In performing the defined obligations to CEA, the CEO may utilize a combination of internal staff and/or contractors. Certain specialized functions needed for program operations, namely the electric supply and customer account management functions described below, will be performed by experienced third-party contractors. Major functions of the Alliance that will be managed by the CEO are summarized below. May 12, 2020 Item #8 Page 57 of 137 Clean Energy Alliance Implementation Plan Organization and Governance Structure 12 December 2019 3.4 ADMINISTRATION CEA’s CEO will be responsible for managing the organization’s human resources and administrative functions and will coordinate with the CEA Board, as necessary, with regard to these functions. The functional area of administration will include oversight of any employee hiring and termination, compensation and benefits management, identification and procurement of requisite office space and various other issues. It is likely that existing Member Agency staff will initially assist with this function. 3.5 FINANCE The CEO is also responsible for managing the financial affairs of the Alliance, including the development of an annual budget, revenue requirement and rates; managing and maintaining cash flow requirements; arranging potential bridge loans as necessary; and other financial tools. Revenues via rates and other funding sources (such as a rate stabilization fund, when necessary) must, at a minimum, meet the annual budgetary revenue requirement, including recovery of all expenses and any reserves or coverage requirements set forth in bond covenants or other agreements. The Alliance will have the flexibility to consider rate adjustments, administer a standardized set of electric rates, and may offer optional rates to encourage policy goals such as encouraging renewable generation and incentivizing peak demand reduction, provided that the overall revenue requirement is achieved. CEA’s finance function will be responsible for preparing the annual budget, arranging financing necessary for any capital projects, preparing financial reports, managing required audits and ensuring sufficient cash flow for successful operation of the CEA Program. The finance function will play an important role in risk management by monitoring the credit of energy suppliers so that credit risk is properly understood and mitigated. In the event that changes in a supplier’s financial condition and/or credit rating are identified, the Alliance will be able to take appropriate action, as would be provided for in the electric supply agreement(s). 3.6 MARKETING & PUBLIC AFFAIRS The marketing and public affairs functions include general program marketing and communications as well as direct customer interface ranging from management of key account relationships to call center and billing operations. The Alliance will conduct program marketing to raise consumer awareness of the CEA Program and to establish its “brand” in the minds of the public, with the goal of retaining and attracting as many customers as possible into the CEA Program. Communications will also be directed at key policy-makers at the state and local level, community business and opinion leaders, and the media. In addition to general program communications and marketing, a significant focus on customer service, particularly representation for key accounts, will enhance the Alliance’s ability to differentiate itself as a highly customer-focused organization that is responsive to the needs of the community. CEA, through its data services provider, will also establish a customer call center designed to field customer inquiries and routine interaction with customer accounts. The customer service function also encompasses management of customer data. Customer data management services include retail settlements/billing-related activities and management of a customer database. This function processes customer service requests and administers customer enrollments and departures from the CEA Program, maintaining a current database of enrolled customers. This function May 12, 2020 Item #8 Page 58 of 137 Clean Energy Alliance Implementation Plan Organization and Governance Structure 13 December 2019 coordinates the issuance of monthly bills through SDG&E’s billing process and tracks customer payments. Activities include the electronic exchange of usage, billing, and payments data with SDG&E and CEA, tracking of customer payments and accounts receivable, issuance of late payment and/or service termination notices (which would return affected customers to bundled service), and administration of customer deposits in accordance with credit policies of the Alliance. The customer data management services function also manages billing-related communications with customers, customer call centers, and routine customer notices. The Alliance will contract with an experienced third party to perform the customer account and billing services functions. 3.7 POWER RESOURCES & ENERGY PROGRAMS CEA must plan for meeting the electricity needs of its customers utilizing resources consistent with its policy goals and objectives as well as applicable legislative and/or regulatory mandates. CEA’s long-term resource plans (addressing the 10-20-year planning horizon) will comply with California Law and other pertinent requirements of California regulatory bodies. In particular, CEA is aware of compulsory Integrated Resource Planning requirements, as identified in Senate Bill 350 (de Léon, 2015), which require, among other provisions, that CCAs periodically submit integrated resource planning documents and related materials to the CPUC. Specifically, the Public Utilities Code requires that, “The plan of a community choice aggregator shall be submitted to its governing board for approval and provided to the commission for certification, consistent with paragraph (5) of subdivision (a) of section 366.2”. The Alliance intends to comply with this requirement similar to the manner in which other CCA organizations have complied and will rely on the experience gained by such organizations in completing pertinent data templates and documentation during future processes. Integrated resource planning efforts of the Alliance will make use of demand side energy efficiency, distributed generation and demand response programs as well as traditional supply options, which rely on structured wholesale transactions to meet customer energy requirements. Integrated resource plans will be updated and adopted by the Board as required by state law and applicable regulations. The Alliance is also aware of the need to periodically prepare and submit RPS Procurement Plans, which shall address the manner in which the CEA Program will achieve compliance with pertinent provisions of California’s RPS mandate. As required, the first RPS Procurement Plans will be developed and submitted during the 90-day certification period related to this Implementation Plan. The Alliance may develop and administer complementary energy programs that may be offered to CEA customers, including green pricing, energy efficiency, net energy metering and various other programs that may be identified to support the overarching goals and objectives of the Alliance. 3.7.1 Electric Supply Operations Electric supply operations encompass the activities necessary for wholesale procurement of electricity to serve end use customers. These highly specialized activities include the following: Ø Electricity Procurement – assemble a portfolio of electricity resources to supply the electric needs of Program customers. Ø Risk Management – application of standard industry techniques to reduce exposure to the volatility of energy and credit markets and insulate customer rates from sudden changes in wholesale market prices. May 12, 2020 Item #8 Page 59 of 137 Clean Energy Alliance Implementation Plan Organization and Governance Structure 14 December 2019 Ø Load Forecasting – develop load forecasts, both long-term for resource planning, short-term for the electricity purchases, and sales needed to maintain a balance between hourly resources and loads. Ø Scheduling Coordination – scheduling and settling electric supply transactions with the California Independent System Operator (“CAISO”). The Alliance will contract with one or more experienced and financially sound third-party energy services firms to perform most of the electric supply operations for the CEA Program. These requirements include the procurement of energy, capacity and ancillary services, scheduling coordinator services, short-term load forecasting and day-ahead and real-time electricity trading. 3.8 GOVERNMENTAL AFFAIRS & LEGAL SUPPORT The CEA Program will require ongoing regulatory and legislative representation to manage various regulatory compliance filings related to resource plans, RA, compliance with California’s RPS program and overall representation on issues that will impact CEA customers. The Alliance will maintain an active role at the CPUC, the California Energy Commission, the California Independent System Operator (“CAISO”), the California legislature and, as necessary, the Federal Energy Regulatory Commission with either in- house staff or contracted third parties with experience in the energy market arena. CEA’s General Counsel is hired by and reports to the Board of Directors. However, the CEO will assist the Board in supervising the legal services as provided by General Counsel. The Alliance may retain specialized outside legal services, as necessary, to review power purchase agreements, give advice on regulatory matters, and provide other specialized legal services related to activities of the CEA Program. In addition, CEA’s wholesale services provider may assist with regulatory filings related to wholesale procurement. May 12, 2020 Item #8 Page 60 of 137 Clean Energy Alliance Implementation Plan Startup Plan and Funding 15 December 2019 4 STARTUP PLAN AND FUNDING This Chapter presents the Alliance’s plans for the start-up period, including necessary expenses and capital outlays. As described in the previous Chapter, the Alliance will utilize a mix of internal staff and contractors in its CCA Program implementation and operation. 4.1 STARTUP ACTIVITIES The initial program startup activities include the following: Ø Hire staff and/or contractors to manage implementation Ø Adopt policies and procedures for the operation of CEA Ø Identify qualified suppliers (of requisite energy products and related services) and negotiate supplier contracts • Electric supplier and scheduling coordinator • Data management provider (if separate from energy supply) Ø Define and execute communications plan • Customer research/information gathering • Media campaign • Key customer/stakeholder outreach • Informational materials and customer notices • Customer call center • Website Ø Post financial security requirement and complete requisite registration requirements Ø Establish reserves that may be required by energy suppliers Ø Pay utility service initiation, notification and switching fees Ø Perform customer notification, opt-out and transfers Ø Conduct load forecasting Ø Establish rates Ø Legal and regulatory support Ø Financial management and reporting Some costs related to starting up the CEA Program may be the responsibility of the CEA Program’s contractors. These may include capital requirements needed for collateral/credit support for electric May 12, 2020 Item #8 Page 61 of 137 Clean Energy Alliance Implementation Plan Startup Plan and Funding 16 December 2019 supply expenses, customer information system costs, bond requirements, electronic data exchange system costs, call center costs, and billing administration/settlements systems costs. 4.2 STAFFING AND CONTRACT SERVICES Personnel in the form of Alliance staff, Member Agency staff, or contractors will be utilized as needed to match workloads involved in forming CEA, managing contracts, and initiating customer outreach/marketing during the pre-operations period. During the startup period, minimal personnel requirements may include a CEO, legal support, and other personnel needed to support regulatory, procurement, finance, legal, marketing, and communications activities. This support will come from existing Member Agency staff and contractors. Once operational, additional staff and/or contractors may be retained, as needed, to support the rollout of additional value-added services (e.g., efficiency projects) and local generation projects and programs. 4.3 CAPITAL REQUIREMENTS The start-up of the CCA Program will require capital for three major functions: (1) staffing and contractor costs; (2) deposits and reserves; and (3) operating cash flow. Based on the Alliance’s anticipated start-up activities and implementation schedule, a total need of $4.4M has been identified to support the aforementioned functions. Out of the $4.4 capital requirements, $450,000 will be funded from member advances for costs incurred in fiscal year 19/20, $959,000 is related to the implementation/startup efforts (i.e., rate setting, power procurement and contract negotiations, marketing and communications, regulatory compliance, SDG&E security deposit, etc.) in order to serve customers by May 2021. A deposit in the amount of $500,000 will also need to be posted to CAISO for the Alliance to be a Congestion Revenue Rights Holder. The remaining $2,500,000 is the “float” required for CEA to pay its monthly bills before the program generates enough internal cash to self-fund its working capital needs. The capital requirement is further broken down as follows: FY 19/20 FY 20/21 Staffing/Consultants 50,000.00$ 235,000.00$ Legal Services 130,000.00 200,000.00 Professional Services 115,000.00 200,000.00 CCA Bond 147,000.00 CAISO Fee 500,000.00 CalCCA Membership & Dues 1,500.00 130,000.00 Print/Mail Services 132,000.00 Advertising 10,000.00 Graphic Design Services 6,500.00 10,000.00 Website Maintenance 2,500.00 Audit Services 40,000.00 Cash Flow & Lockbox Reserves 2,500,000.00 TOTAL PROJECTED BUDGET 450,000.00$ 3,959,500.00$ Clean Energy Alliance Draft Budget Fiscal Years 19/20 and 20/21 May 12, 2020 Item #8 Page 62 of 137 Clean Energy Alliance Implementation Plan Startup Plan and Funding 17 December 2019 The finance plan in Chapter 7 provides additional detail regarding the Alliance’s expected capital requirements and general Program finances. All the capital required for start-up will be provided through in-kind support from Member Agencies, deferred fees, Member advances and direct loans. Related to the Alliance’s initial capital requirement, this amount is expected to cover staffing and contractor costs during startup and pre-startup activities, including direct costs related to public relations support, technical support, and customer communications. Requisite deposits and operating reserves are also reflected in the initial capital requirement, including the following items: 1) operating reserves to address anticipated cash flow variations; 2) deposit with the CAISO prior to commencing market operations (if required); 3) Financial Security Requirement (CCA bond posted with the CPUC); and 4) SDG&E service fee deposit, if required. Operating revenues from sales of electricity will be remitted to CEA beginning approximately sixty days after the initial customer enrollments. This lag is due to the distribution utility’s standard meter reading cycle of 30 days and a 30-day payment/collections cycle. CEA will need working capital to support electricity procurement and costs related to program management, which is included in CEA’s initial $4,400,000 capital requirement. 4.4 FINANCING PLAN CEA’s initial capital requirement will be met through a combination of financing mechanisms. CEA will be seeking assistance through deferred fees from contractors and vendors, loans and/or lines of credit from financial institutions and in-kind services and advances provided by Member Agencies (to be reimbursed in the future). CEA will repay back the principal and interest costs associated with the start-up funding via retail generation rates charged to CEA customers. It is anticipated that the start-up costs will be fully recovered through such customer generation rates within the first three years of operations. May 12, 2020 Item #8 Page 63 of 137 Clean Energy Alliance Implementation Plan Program Phase-In 18 December 2019 5 PROGRAM PHASE-IN CEA plans to roll out its service offering to all eligible customers in a single phase at start-up. There are approximately 58,000 eligible customer accounts within the Alliance’s boundaries, resulting in a single- phase roll-out being reasonable and the most efficient way for CEA to serve customers beginning in May 2021. Solana Beach is currently providing energy to its residents and businesses through SEA, its community choice aggregation program. During May 2021, SEA customers will transfer from SEA to CEA. Once, and as long as CEA is operational and all SEA customers have transitioned to CEA, SEA will cease operating as a community choice aggregation program. It is possible that Net Energy Metering (“NEM”) customers may be enrolled over multiple periods to mitigate the impact of SDG&E NEM true-up treatment. May 12, 2020 Item #8 Page 64 of 137 Clean Energy Alliance Implementation Plan Load Forecast & Resource Plan 19 December 2019 6 LOAD FORECAST & RESOURCE PLAN 6.1 INTRODUCTION This Chapter describes the planned mix of electric resources that will meet the energy demands of CEA customers using a diversified portfolio of electricity supplies. Several overarching policies govern the resource plan and the ensuing resource procurement activities that will be conducted in accordance with the plan. The key policies are as follows: • Develop a portfolio with a minimum 50% renewable energy and lower greenhouse gas (“GHG”) emissions than SDG&E. • Manage a diverse resource portfolio to increase control over energy costs and maintain competitive and stable electric rates. • Comply with RA procurement requirements as established by CPUC Resolution E-4907. • Comply with applicable renewable energy procurement mandates, as increased under Senate Bill 100 (“SB 100”; de Léon, 2018). • Comply with SB 350, periodically preparing and submitting (for certification by the CPUC) an Integrated Resource Plan (“IRP”). • Comply with applicable requirements for ensuring procurement from small, local and diverse business enterprises in all categories, including, but not limited to, renewable energy, energy storage system, and smart grid projects as required by SB 255 (“SB 255”; Bradford, 2019). • As applicable, annually prepare and submit a detailed and verifiable plan to the CPUC for increasing procurement from small, local and diverse business enterprises in all categories, including, but not limited to, renewable energy, energy storage system, and smart grid projects as required by SB 255. • As applicable, annually prepare and submit a report to the CPUC regarding its procurement from women, minority, disabled veteran and LGBTQ business enterprises in all categories, including, but not limited to, renewable energy, energy storage system, and smart grid projects as required by SB 255. The plan described in this section would accomplish the following: Ø Procure Competitive Supply: Procure energy, RA, renewables and low-GHG supply through competitive processes in the open market to support the potential offering of service options to include a 100% renewable energy voluntary opt-up product. Ø Use Best Practices Risk Management: Maintain rate competitiveness by using a dollar-cost- averaging approach with particular attention to the methodology used in the power charge indifference adjustment (“PCIA”) calculation. Use stochastic modeling to measure and achieve risk management objectives. Ø Achieve Environmental Objectives: Procure supply to offer two distinct generation rate tariffs: 1) a voluntary 100% renewable energy offered to CEA customers on a price premium basis relative May 12, 2020 Item #8 Page 65 of 137 Clean Energy Alliance Implementation Plan Load Forecast & Resource Plan 20 December 2019 to CEA’s default retail option; and 2) a default CEA service option that is sourced from a minimum 50% renewable energy. Ø Provide NEM Tariff: Encourage distributed renewable generation in the local area through the offering of a net energy metering tariff that is more remunerative than SDG&E’s NEM tariff. Ø Compliance: Ensure compliance with participation in the Annual and Monthly RA process. Ø Diversity: Encourage procurement from small, local and diverse business enterprises. CEA will comply with regulatory rules applicable to California load serving entities. CEA will arrange for the scheduling of sufficient electric supplies to meet the demands of its customers. CEA will adhere to capacity reserve requirements established by the CPUC and the CAISO designed to address uncertainty in load forecasts and potential supply disruptions caused by generator outages and/or transmission contingencies. These rules also ensure that physical generation capacity is in place to serve CEA’s customers, even if there were a need for the Alliance’s Program to cease operations and return customers to SDG&E. In addition, the Alliance will be responsible for ensuring that its resource mix contains sufficient production from renewable energy resources needed to comply with the statewide RPS mandate (33 percent renewable energy by 2020, increasing to 60 percent by 2030). The resource plan will meet or exceed all of the applicable regulatory requirements related to RA and the RPS. In relation to its RPS procurement obligation, CEA is aware that SB 100 was signed into law by Governor Brown on September 10, 2018, with an effective date of January 1, 2019. One of SB 100’s key requirements is to increase California’s RPS procurement mandate to 44 percent by December 31, 2024, 52 percent by December 31, 2027, and 60 percent by December 31, 2030. The Alliance is also aware of applicable long-term renewable energy contracting requirements and plans to satisfy such requirements with one or more eligible contracts put in place prior to or during early-stage operation of the CCA Program. As a local governmental agency, the Alliance’s resource planning and procurement activities are subject to and overseen by its Board through an open and public process. In relation to its small, local and diverse business enterprise procurement requirement, the Alliance is aware that SB 255 was signed into law by Governor Newsom on October 2, 2019. SB 255 requires the CEA Implementation Plan that to include the methods for ensuring procurement from small, local and diverse business enterprises in all categories, including, but not limited to, renewable energy, energy storage system, and smart grid projects. These methods are described in the Small, Local and Diverse Business Enterprise Procurement section. 6.2 RESOURCE PLAN OVERVIEW To meet the aforementioned objectives and satisfy the applicable regulatory requirements pertaining to CEA’s status as a California load serving entity, CEA’s resource plan includes a diverse mix of power purchases, renewable energy, and potentially, new energy efficiency programs, demand response, and distributed generation. A diversified resource plan minimizes risk and volatility that can occur from over- reliance on a single resource type or fuel source, and thus increases the likelihood of rate stability. The planned power supply will initially be comprised of power purchases from third party electric suppliers and, in the longer-term, may include renewable generation assets owned and/or controlled by CEA. May 12, 2020 Item #8 Page 66 of 137 Clean Energy Alliance Implementation Plan Load Forecast & Resource Plan 21 December 2019 Once the CEA Program demonstrates it can operate successfully, CEA may begin evaluating opportunities for investment in renewable generating assets, subject to then-current market conditions, statutory requirements and regulatory considerations. Any renewable generation owned by CEA or controlled under a long-term power purchase agreement with a proven public power developer, could provide a portion of CEA’s electricity requirements on a cost-of-service basis. Depending upon market conditions and, importantly, the applicability of tax incentives for renewable energy development, electricity purchased under a cost-of-service arrangement can be more cost-effective than purchasing renewable energy from third party developers, which will allow the CEA Program to pass on cost savings to its customers through competitive generation rates. Any investment decisions in new renewable generating assets will be made following appropriate environmental reviews and in consultation with qualified financial and legal advisors. As an alternative to direct investment, CEA may consider partnering with an experienced public power developer or other Joint Powers Authorities and could enter into a long-term (15-to-30 year) power purchase agreement that would support the development of new renewable generating capacity. Such an arrangement could be structured to reduce the CEA Program’s operational risk associated with capacity ownership while providing its customers with all renewable energy generated by the facility under contract. CEA’s indicative resource plan for the years 2021 through 2030 is summarized in the following table. Note that CEA’s projections reflect a portfolio mix of renewable energy compliant with the annual RPS requirement and all other supply coming in the form of conventional resources or CAISO system power4. Table 1: Proposed Resource Plan 6.3 SUPPLY REQUIREMENTS The starting point for CEA’s resource plan is a projection of participating customers and associated electric consumption. Projected electric consumption is evaluated on an hourly basis and matched with resources best suited to serving the aggregate of hourly demands or the program’s “load profile.” The electric sales forecast and load profile will be affected by CEA’s plan to introduce the CEA Program to customers in one 4 The Alliance has applied known RPS procurement targets, as reflected in SB 100, for calendar years 2024, 2027 and 2030. In the intervening years, the Alliance has assumed a general straight-line trajectory between each of the aforementioned years (which are associated with the final years of Compliance Periods 4, 5 and 6 respectively). 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Demand (MWh)Retail 144,022 928,654 949,406 965,616 980,219 990,867 997,196 1,017,140 1,037,482 1,058,232 Losses 6,193 39,932 40,824 41,521 42,149 42,607 42,879 43,737 44,612 45,504 Wholesale 150,215 968,586 990,230 1,007,137 1,022,368 1,033,474 1,040,075 1,060,877 1,082,094 1,103,736 Supply (MWh) Renewable 72,011 464,327 474,703 482,808 490,109 495,433 518,542 556,036 594,823 634,939 System 78,204 504,259 515,527 524,329 532,259 538,041 521,533 504,840 487,271 468,797 Total Supply 150,215 968,586 990,230 1,007,137 1,022,368 1,033,474 1,040,075 1,060,877 1,082,094 1,103,736 Clean Energy Alliance Proposed Resource Plan (MWh) 2021 - 2030 May 12, 2020 Item #8 Page 67 of 137 Clean Energy Alliance Implementation Plan Load Forecast & Resource Plan 22 December 2019 single phase and the degree to which customers choose to remain with SDG&E during the customer enrollment and opt-out period. The Alliance’s rollout plan and assumptions regarding customer participation rates are discussed below. 6.4 CUSTOMER PARTICIPATION RATES Customers will be automatically enrolled in the CEA Program unless they opt-out during the customer notification process conducted during the 60-day period prior to enrollment and continuing through the 60-day period following commencement of service. The Alliance anticipates an overall customer participation rate of approximately 90 percent of eligible SDG&E bundled service customers, based on reported opt-out rates for already operating CCAs. It is assumed that customers taking direct access service from a competitive electricity provider will continue to remain with their current supplier. The participation rate is not expected to vary significantly among customer classes, in part because the Alliance will offer two distinct rate tariffs that will address the needs of cost-sensitive customers as well as the needs of both residential and business customers that prefer a highly renewable energy product. The assumed participation rates will be refined as CEA’s public outreach and market research efforts continue to develop. 6.5 CUSTOMER FORECAST Once customers enroll, they will be transferred to service by CEA on their regularly scheduled meter read date over an approximately thirty-one-day period. Approximately 2,900 service accounts per day will be transferred during the first month of service. The number of accounts anticipated to be served by CEA at the end of the enrollment period is shown in Table 2. Table 2: Total Customer Counts at the end of First Month of Operation, here presuming enrollment occurs in May 2021. The Alliance assumes that customer growth will generally offset customer attrition (opt-outs) over time, resulting in a relatively stable customer base (<1% annual growth) over the noted planning horizon. While the successful operating track record of California CCA programs continues to grow, there is a relatively short history with regard to CCA operations, which makes it difficult to anticipate the actual levels of customer participation within the CEA Program. The Alliance believes that its assumptions regarding the offsetting effects of growth and attrition are reasonable in consideration of the historical customer growth (based on SDG&E data) within the JPA and the potential for continuing customer opt-outs following mandatory customer notification periods. The following table shows the forecast of service accounts (customers) served by CEA for each of the next ten years. Table 3: Customer Accounts by Year May-21 Residential 49,800 Commercial & Agriculture 8,000 Street Lighting & Traffic 200 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030Residential49,800 49,800 49,900 49,900 50,000 50,100 50,100 51,100 52,200 53,200 Commercial & Agriculture 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,200 8,400 8,500 Street Lighting & Traffic 200 200 200 200 200 200 200 200 200 200 May 12, 2020 Item #8 Page 68 of 137 Clean Energy Alliance Implementation Plan Load Forecast & Resource Plan 23 December 2019 6.6 SALES FORECAST The Alliance’s forecast reflects the rollout and customer enrollment schedule shown above. Annual energy requirements are shown in Table 4. Table 4: Demand Forecast in MWh, 2021-2030 6.7 CAPACITY REQUIREMENTS The CPUC’s RA standards applicable to the CEA Program require a demonstration one year in advance that CEA has secured physical capacity for 90 percent of its projected peak loads for each of the five months May through September, plus a minimum 15 percent reserve margin. Additionally, the Alliance must demonstrate one year in advance that it has secured physical capacity for 100 percent of its local RA obligation across all months in the upcoming compliance year 2021 and the following compliance year 2022 and 50 percent across all months in 2023. On a month-ahead basis, CEA must demonstrate 100 percent of the peak load plus a minimum 15 percent reserve margin. Per CPUC Resolution E-4907, the Alliance must participate in the year-ahead RA compliance cycle in order to serve customers in the following calendar year. The Alliance will follow the prescribed year-ahead RA compliance timeline outlined within Appendix A of Resolution E-4907; this includes: • Submission of year-ahead load forecast to the CEC and CPUC in April 2020; • Submission of updated year-ahead load forecast to the CEC and CPUC in August 2020; • Submission of year-ahead compliance materials in October 2020; and • Submission of month-ahead load migration forecast by February 2021. A portion of CEA’s capacity requirements must be procured locally, from the San Diego – Imperial Valley local capacity area as defined by the CAISO. The Alliance would be required to demonstrate its local capacity requirement for each month of the following calendar year. The local capacity requirement is a percentage of the total (SDG&E service area) local capacity requirements adopted by the CPUC based on CEA’s forecasted peak load. CEA must demonstrate compliance or request a waiver from the CPUC requirement as provided for in cases where local capacity is not available. CEA is also required to demonstrate that a specified portion of its capacity meets certain operational flexibility requirements under the CPUC and CAISO’s flexible RA framework. 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Demand (MWh) Retail 144,022 928,654 949,406 965,616 980,219 990,867 997,196 1,017,140 1,037,482 1,058,232 Losses 6,193 39,932 40,824 41,521 42,149 42,607 42,879 43,737 44,612 45,504 Wholesale 150,215 968,586 990,230 1,007,137 1,022,368 1,033,474 1,040,075 1,060,877 1,082,094 1,103,736 May 12, 2020 Item #8 Page 69 of 137 Clean Energy Alliance Implementation Plan Load Forecast & Resource Plan 24 December 2019 The estimated forward RA requirements for 2021 through 2023 are shown in the following tables5: Table 5: Forward Capacity Requirements (Total) for 2021-2023 in MW, presuming service starts in May 2021 CEA’s plan ensures that sufficient reserves will be procured to meet its peak load at all times. The projected CEA annual capacity requirements are shown in the following table: Table 6: Annual Maximum Capacity Requirements 2021-2030 Local capacity requirements are a function of the SDG&E area RA requirements and CEA’s projected peak demand. CEA will need to work with the CPUC’s Energy Division and staff at the California Energy Commission to obtain the data necessary to calculate its monthly local capacity requirement. A preliminary estimate of CEA’s annual maximum local capacity requirement for the ten-year planning period ranges between 132-155 MW as shown in Table 7. Table 7: Annual Maximum Local Capacity Requirements 2021-2030 The CPUC assigns local capacity requirements during the year prior to the compliance period; thereafter, the CPUC provides local capacity requirement true-ups for the second half of each compliance year. CEA will coordinate with SDG&E and appropriate state agencies to manage the transition of responsibility for RA from SDG&E to CEA during CCA program phase-in. For system RA requirements, CEA will make month-ahead showings for each month that CEA plans to serve load, and load migration issues would be addressed through the CPUC’s approved procedures. CEA will work with the California Energy 5 The figures shown in the tables are estimates. CEA’s RA requirements will be subject to modification due to application of certain coincidence adjustments and resource allocations relating to utility demand response and energy efficiency programs, as well as generation capacity allocated through the Cost Allocation Mechanism. These adjustments are addressed through the CPUC’s RA compliance process. May 12, 2020 Item #8 Page 70 of 137 Clean Energy Alliance Implementation Plan Load Forecast & Resource Plan 25 December 2019 Commission and CPUC prior to commencing service to customers to ensure it meets its local and system RA obligations through its agreement(s) with its chosen electric supplier(s). 6.8 RENEWABLES PORTFOLIO STANDARDS ENERGY REQUIREMENTS 6.8.1 Basic RPS Requirements CEA will be required by statute and CPUC regulations to procure a certain minimum percentage of its retail electricity sales from qualified renewable energy resources. For purposes of determining CEA’s renewable energy requirements, many of the same standards for RPS compliance that are applicable to the distribution utilities will apply to CEA. California’s RPS program is currently undergoing reform. On October 7, 2015, Governor Brown signed Senate Bill 350 (“SB 350”; De Leon and Leno), the Clean Energy and Pollution Reduction Act of 2015, which increased California’s RPS procurement target from 33 percent by 2020 to 50 percent by 2030 amongst other clean-energy initiatives. The RPS program was further amended on September 10, 2018 when Governor Brown signed SB 100, increasing California’s RPS procurement target to 60 percent by 2030 amongst other clean-energy initiatives. Many details related to SB 100 implementation will be developed over time with oversight by designated regulatory agencies. However, it is reasonable to assume that interim annual renewable energy procurement targets will be imposed on CCAs and other retail electricity sellers to facilitate progress towards the 60 percent procurement mandate. For planning purposes, CEA has assumed straight-line annual increases (1.7 percent per year) to the RPS procurement target beginning in 2021, as the state advances on the 60 percent RPS in 2030. CEA will also adopt an integrated resource plan in compliance with SB 350. Furthermore, the Alliance will ensure that all long-term renewable energy contracting requirements, as imposed by SB 350, will be satisfied through appropriate transactions with qualified suppliers and will also reflect this intent in ongoing resource planning and procurement efforts. 6.8.2 CEA’s Renewables Portfolio Standards Requirement CEA’s annual RPS procurement requirements, as specified under California’s RPS program, are shown in Table 8. Table 8: Renewable Procurement Obligation and Target Percentages and Volumes 2021-2030 6.9 PURCHASED POWER Power purchased from power marketers, public agencies, generators, and/or utilities will be a significant source of supply during the first several years of CEA Program operation. CEA will initially contract to obtain all of its electricity from one or more third party electric providers under one or more power supply agreements, and the supplier(s) will be responsible for procuring the specified resource mix, including CEA’s desired quantities of renewable energy, to provide a stable and cost-effective resource portfolio for the CEA Program. 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030Retail Load (MWh)144,022 928,654 949,406 965,616 980,219 990,867 997,196 1,017,140 1,037,482 1,058,232 RPS % Target 36% 39% 41% 44% 47% 49% 52%55%57%60% RPS Obligation (MWh)51,560 357,532 392,105 424,871 457,762 488,497 518,542 556,036 594,823 634,939 CEA % Target 50% 50% 50% 50% 50% 50% 52%55%57%60% CEA Target (MWh)72,011 464,327 474,703 482,808 490,109 495,433 518,542 556,036 594,823 634,939 May 12, 2020 Item #8 Page 71 of 137 Clean Energy Alliance Implementation Plan Load Forecast & Resource Plan 26 December 2019 6.10 RENEWABLE RESOURCES CEA will initially secure necessary renewable power supply from its third-party electric supplier(s). CEA may supplement the renewable energy provided under the initial power supply contract(s) with direct purchases of renewable energy from renewable energy facilities or from renewable generation developed and owned by CEA. At this point in time, it is not possible to predict what projects might be proposed in response to future renewable energy solicitations administered by CEA, unsolicited proposals or discussions with other agencies. Renewable projects that are located virtually anywhere in the Western Interconnection can be considered as long as the electricity is deliverable to the CAISO control area, as required to meet the Commission’s RPS rules and any additional guidelines ultimately adopted by the Alliance. The costs of transmission access and the risk of transmission congestion costs would need to be considered in the bid evaluation process if the delivery point is outside of CEA’s load zone, as defined by the CAISO. 6.11 SMALL, LOCAL AND DIVERSE BUSINESS ENTERPRISE PROCUREMENT CEA’s procurement processes will be developed to ensure compliance with SB 255 regarding procurement from small, local and diverse business enterprises as applicable. These methods may include, but are not limited to, providing preferences to small, local and diverse business enterprises as permitted by law, developing specifications that encourage responses by small, local and diverse business enterprises, conducting outreach to these enterprises and other methods as may be directed by the CEA Board. CEA will request from contractors and information related to the hiring of small, local and diverse business enterprises that will be reported to commission. 6.12 ENERGY EFFICIENCY CEA does not currently anticipate running locally managed energy efficiency programs. In the future, CEA may apply to become EE program administrators. In the meantime, CEA will support already existing energy efficiency efforts within its service territory. May 12, 2020 Item #8 Page 72 of 137 Clean Energy Alliance Implementation Plan Financial Plan 27 December 2019 7 FINANCIAL PLAN This Chapter examines the monthly cash flows expected during the startup and customer phase-in period of the CEA Program and identifies the anticipated financing requirements. It includes estimates of program startup costs, including necessary expenses and capital outlays. It also describes the requirements for working capital and long-term financing for the potential investment in renewable generation, consistent with the resource plan contained in Chapter 6. 7.1 DESCRIPTION OF CASH FLOW ANALYSIS The Alliance’s cash flow analysis estimates the level of capital that will be required during the startup and phase-in period. The analysis focuses on the CEA Program’s monthly costs and revenues and the lags between when costs are incurred and revenues received. 7.2 COST OF PROGRAM OPERATIONS The first category of the cash flow analysis is the Cost of CCA Program Operations. To estimate the overall costs associated with CCA Program Operations, the following components were taken into consideration: Ø Electricity Procurement; Ø Ancillary Service Requirements; Ø Exit Fees; Ø Staffing and Professional Services; Ø Data Management Costs; Ø Administrative Overhead; Ø Billing Costs; Ø Scheduling Coordination; Ø Grid Management and other CAISO Charges; Ø CCA Bond and Security Deposit; and, Ø Pre-Startup Cost Reimbursement. 7.3 REVENUES FROM CCA PROGRAM OPERATIONS The cash flow analysis also provides estimates for revenues generated from CCA operations or from electricity sales to customers. In determining the level of revenues, the analysis assumes the customer phase-in schedule described herein, and assumes that CEA charges a standard, default electricity tariff similar to the generation rates of SDG&E for each customer class and an optional renewable energy tariff (with a renewable energy content that exceeds the CEA default retail option) at a premium reflective of incremental renewable power costs. More detail on CEA Program rates can be found in Chapter 8. May 12, 2020 Item #8 Page 73 of 137 Clean Energy Alliance Implementation Plan Financial Plan 28 December 2019 7.4 CASH FLOW ANALYSIS RESULTS The results of the cash flow analysis provide an estimate of the level of capital required for the Alliance to move through the CCA startup and phase-in periods. This estimated level of capital is determined by examining the monthly cumulative net cash flows (revenues from CCA operations minus cost of CCA operations) based on assumptions for payment of costs or other cash requirements (e.g., deposits) by CEA, along with estimates for when customer payments will be received. This identifies, on a monthly basis, what level of cash flow is available in terms of a surplus or deficit. The cash flow analysis identifies funding requirements in recognition of the potential lag between revenues received and payments made during the phase-in period. The estimated financing requirements for the startup and phase-in period, including working capital needs associated with the customer enrollments, is determined to be $4.4M. Of the $4.4M in capital requirements, $1.4 is related to the implementation/startup efforts, to be incurred during fiscal years 19/20 and 20/21, (i.e., rate setting, power procurement and contract negotiations, marketing and communications, regulatory compliance, CPUC bond, SDG&E security deposit, etc.) in order to serve customers by May 2021. A deposit in the amount of $500,000 will also need to be posted to CAISO for the Alliance to be a Congestion Revenue Rights Holder. The other $2,500,000 is the “float” required for CEA to pay its monthly bills before the program generates enough internal cash to self-fund its working capital needs. Working capital requirements peak soon after enrollment of all CEA customers. 7.5 PROGRAM IMPLEMENTATION PRO FORMA In addition to developing a cash flow analysis that estimates the level of working capital required to move CEA through full CCA phase-in, a summary pro forma analysis that evaluates the financial performance of the CCA program during the phase-in period is shown in Table 9. The difference between the cash flow analysis and the CCA pro forma analysis is that the pro forma analysis does not include a lag associated with payment streams. In essence, costs and revenues are reflected in the month in which service is provided. All other items, such as costs associated with CCA Program operations and rates charged to customers remain the same. Cash provided by financing activities are not shown in the pro forma analysis, although payments for loan repayments are included as a cost item. The results of the pro forma analysis are shown in Table 9. In particular, the summary of CCA program startup and phase-in addresses projected CEA Program operations for the period beginning May 2021 through June 2030. The Alliance has also included a summary of Program reserves, which are expected to accrue over this same period. Table 9: Pro Forma including Reserves Accumulation 2021-2030 May 12, 2020 Item #8 Page 74 of 137 Clean Energy Alliance Implementation Plan Financial Plan 29 December 2019 The surpluses achieved during the phase-in period serve to build CEA’s net financial position and credit profile and to provide operating reserves for CEA in the event that operating costs (such as power purchase costs) exceed collected revenues for short periods of time. 7.6 CLEAN ENERGY ALLIANCE FINANCINGS It is anticipated that CEA will need financing for its start-up activities. CEA plans to seek financing through its service providers that will amortize their start-up costs over the subsequent months following when revenues begin flowing, through a loan or line of credit from a financial institution and through in-kind services and advances from its Member Agencies that will be repaid in the future. Subsequent capital requirements will be self-funded from accrued CEA financial reserves. 7.7 RENEWABLE RESOURCE PROJECT FINANCING CEA may consider project financings for renewable resources, likely local wind and solar projects. These financings would only occur after a sustained period of successful CEA Program operation and after appropriate project opportunities are identified and subjected to appropriate environmental review. In the event that such financing occurs, funds would include any short-term financing for the renewable resource project development costs and would likely extend over a 20 to 30-year term. The security for such bonds would be the revenue from sales to the retail customers of CEA. May 12, 2020 Item #8 Page 75 of 137 Clean Energy Alliance Implementation Plan Rate Setting, Program Terms and Conditions 30 December 2019 8 RATE SETTING, PROGRAM TERMS AND CONDITIONS 8.1 INTRODUCTION This Chapter describes the initial policies proposed for CEA in setting its rates for electric aggregation services. These include policies regarding rate design, rate objectives, and provision for due process in setting Program rates. Program rates are ultimately approved by the CEA Board. The Alliance would retain authority to modify program policies from time to time at its discretion. 8.2 RATE POLICIES The Alliance will establish rates sufficient to recover all costs related to operation of the CEA Program, including any reserves that may be required as a condition of financing and other discretionary reserve funds that may be approved by CEA. As a general policy, rates will be uniform for all similarly situated customers enrolled in the CEA Program throughout the JPA service territory. The primary objectives of the rate setting plan are to set rates that achieve the following: Ø Rate competitive tariff option (default service offering), including a proportionate quantity of renewable energy in excess of California’s prevailing renewable energy procurement mandate; Ø Voluntary renewable energy supply option (renewable content greater than the CEA default retail service offering); Ø Rate stability; Ø Equity among customers in each tariff; Ø Customer understanding; and Ø Revenue sufficiency. Each of these objectives is described below. 8.3 RATE COMPETITIVENESS The primary goal is to offer competitive rates for electric services that CEA would provide to participating customers. For participants in the CEA default energy product, the goal would be for CEA Program target generation rates to be initially at least two percent below, subject to actual energy product pricing and decisions of the Board, similar generation rates offered by SDG&E. For participants in the CEA’s Program’s voluntary 100% renewable energy product, the goal would be to offer the lowest possible customer rates with an incremental monthly cost premium reflective of the actual cost of additional renewable energy supply required to serve such customers. Competitive rates will be critical to attracting and retaining key customers. In order for CEA to be successful, the combination of price and value must be perceived as superior when compared to the bundled SDG&E alternative. As planned, the value provided by the CEA Program will include a local community focus, investment and control. May 12, 2020 Item #8 Page 76 of 137 Clean Energy Alliance Implementation Plan Rate Setting, Program Terms and Conditions 31 December 2019 As previously discussed, the CEA Program will increase renewable energy supply to program customers by offering two distinct energy products. The default product for CEA Program customers will increase renewable energy supply to a minimum 50%, while maintaining generation rates that are targeted to provide a minimum two percent discount from comparable SDG&E rates. The initial renewable energy content provided under CEA’s default product will exceed California’s prevailing renewable energy procurement mandate during the initial years of operation, increasing to 60% by 2030. CEA will also offer its customers a voluntary 100% renewable energy tariff at rates that reflect CEA’s cost for procuring related energy supplies. Participating qualified low- or fixed-income households, such as those currently enrolled in the California Alternate Rates for Energy (“CARE”) program, will be automatically enrolled in the default energy product and will continue to receive related discounts on monthly electricity bills through SDG&E. 8.4 RATE STABILITY CEA will offer stable rates by hedging its supply costs over multiple time horizons and by including renewable energy supplies that exhibit stable costs. Rate stability considerations may prevent CEA Program rates from directly tracking similar rates offered by the distribution utility, SDG&E, and may result in differences from the general rate-related targets initially established for the CEA Program. The Alliance plans to offer the most competitive rates possible after all Program operating costs are recovered and reserve targets are achieved. 8.5 EQUITY AMONG CUSTOMER CLASSES Initial rates of the CEA Program will be set based on cost-of-service considerations with reference to the rates customers would otherwise pay to SDG&E. Rate differences among customer classes will reflect the rates charged by the local distribution utility as well as differences in the costs of providing service to each class. Rate benefits may also vary among customers within the major customer class categories, depending upon the specific rate designs adopted by the Alliance. 8.6 CUSTOMER UNDERSTANDING The goal of customer understanding involves rate designs that are relatively straightforward so that customers can readily understand how their bills are calculated. This not only minimizes customer confusion and dissatisfaction but will also result in fewer billing inquiries to the CEA Program’s customer service call center. Customer understanding also requires rate structures to reflect rational rate design principles (i.e., there should not be differences in rates that are not justified by costs or by other policies such as providing incentives for conservation). 8.7 REVENUE SUFFICIENCY CEA Program rates must collect sufficient revenue from participating customers to fully fund the annual CEA operating budget. Rates will be set to collect the adopted budget based on a forecast of electric sales for the budget year. Rates will be adjusted as necessary to maintain the ability to fully recover all costs of the CEA Program, subject to the disclosure and due process policies described later in this chapter. To ensure rate stability, funds available in CEA’s rate stabilization reserve may be used from time to time to augment operating revenues. May 12, 2020 Item #8 Page 77 of 137 Clean Energy Alliance Implementation Plan Rate Setting, Program Terms and Conditions 32 December 2019 8.8 RATE DESIGN CEA will generally match the rate structures from SDG&E’s standard rates to avoid the possibility that customers would see significantly different bill impacts as a result of changes in rate structures that would take effect following enrollment in the CEA Program. 8.9 NET ENERGY METERING As planned, customers with on-site generation eligible for net metering from SDG&E will be offered a net energy metering rate from CEA. Net energy metering allows for customers with certain qualified solar or wind distributed generation to be billed on the basis of their net energy consumption. CEA’s net energy metering tariff will apply to the generation component of the bill, and the SDG&E net energy metering tariff will apply to the utility’s portion of the bill. CEA plans to pay customers for excess power produced from net energy metered generation systems in accordance with the rate designs adopted by the JPA. The goal is to offer a higher payout for surplus generation than SDG&E. In order to minimize the impact of mid-relevant period true-ups, NEM customers may be enrolled over multiple phases. 8.10 DISCLOSURE AND DUE PROCESS IN SETTING RATES AND ALLOCATING COSTS AMONG PARTICIPANTS Initial program rates will be adopted by the CEA Board following the establishment of the first year’s operating budget prior to initiating the customer notification process. Subsequently, CEA will prepare an annual budget and corresponding customer rates. Following the commencement of service, any proposed rate adjustment will be made to the Board and affected customers will be given the opportunity to provide comment on the proposed rate changes. After proposing a rate adjustment, CEA will furnish affected customers with a notice of its intent to adjust rates, either by mailing such notices postage prepaid to affected customers, by including such notices as an insert to the regular bill for charges transmitted to affected customers, by including a related message directly on the customer’s monthly electricity bill (on the page addressing CEA charges) or by following CEA’s public hearing noticing procedures adopted by the Board. The notice will provide a summary of the proposed rate adjustment and will include a link to the CEA Program website where information will be posted regarding the amount of the proposed adjustment, a brief statement of the reasons for the adjustment, and the mailing address of the CEA Program to which any customer inquiries relative to the proposed adjustment, including a request by the customer to receive notice of the date, time, and place of any hearing on the proposed adjustment, may be directed. May 12, 2020 Item #8 Page 78 of 137 Clean Energy Alliance Implementation Plan Customer Rights and Responsibilities 33 December 2019 9 CUSTOMER RIGHTS AND RESPONSIBILITIES This Chapter discusses customer rights, including the right to opt-out of the CEA Program and the right to privacy of customer usage information, as well as obligations customers undertake upon agreement to enroll in the CCA Program. All customers that do not opt out within 30 days of the fourth enrollment notice will have agreed to become full status program participants and must adhere to the obligations set forth below, as may be modified and expanded by the Board from time to time. By adopting this Implementation Plan, the Alliance will have approved the customer rights and responsibilities policies contained herein to be effective at Program initiation. The Alliance retains authority to modify program policies from time to time at its discretion. 9.1 CUSTOMER NOTICES At the initiation of the customer enrollment process, four notices will be provided to customers describing the Program, informing them of their opt-out rights to remain with utility bundled generation service, and containing a simple mechanism for exercising their opt-out rights. The first notice will be mailed to customers approximately sixty days prior to the date of automatic enrollment. A second notice will be sent approximately thirty days later. The Alliance will likely use its own mailing service for requisite enrollment notices rather than including the notices in SDG&E’s monthly bills. This is intended to increase the likelihood that customers will read the enrollment notices, which may otherwise be ignored if included as a bill insert. Customers may opt out by notifying CEA using the CEA Program’s designated telephone- based or Internet opt-out processing service. Should customers choose to initiate an opt-out request by contacting SDG&E, they would be transferred to the CEA Program’s call center to complete the opt-out request. Consistent with CPUC regulations, notices returned as undelivered mail would be treated as a failure to opt out, and the customer would be automatically enrolled. Following automatic enrollment, at least two notices will be mailed to customers within the first two billing cycles (approximately sixty days) after CEA service commences. Opt-out requests made on or before the sixtieth day following start of CEA Program service will result in customer transfer to bundled utility service with no penalty. Such customers will be obligated to pay charges associated with the electric services provided by CEA during the time the customer took service from the CEA Program, but will otherwise not be subject to any penalty or transfer fee from CEA. Customers who establish new electric service accounts within the Program’s service area will be automatically enrolled in the CEA Program and will have sixty days from the start of service to opt out if they so desire. Such customers will be provided with two enrollment notices within this sixty-day post- enrollment period. Such customers will also receive a notice detailing CEA’s privacy policy regarding customer usage information. CEA will have the authority to implement entry fees for customers that initially opt out of the Program, but later decide to participate. Entry fees, if deemed necessary, would aid in resource planning by providing additional control over the CEA Program’s customer base. May 12, 2020 Item #8 Page 79 of 137 Clean Energy Alliance Implementation Plan Customer Rights and Responsibilities 34 December 2019 9.2 TERMINATION FEE Customers that are automatically enrolled in the CEA Program can elect to transfer back to the incumbent utility without penalty within the first two months of service. After this free opt-out period, customers will be allowed to terminate their participation but may be subject to payment of a Termination Fee, which CEA reserves the right to impose, if deemed necessary. Customers that relocate within CEA’s service territory would have CEA service continued at their new address. If a customer relocating to an address within CEA’s service territory elected to cancel CCA service, the Termination Fee could be applied. Program customers that move out of CEA’s service territory would not be subject to the Termination Fee. If deemed applicable by CEA, SDG&E would collect the Termination Fee from returning customers as part of CEA’s final bill to the customer. If adopted, the Termination Fee would be clearly disclosed in the four enrollment notices sent to customers during the sixty-day period before automatic enrollment and following commencement of service. The fee could also be adopted or changed by the CEA Board subject to applicable customer noticing requirements. Other CCAs have adopted small or zero-dollar termination fees, and CEA would likely do the same initially. Customers electing to terminate service after the initial notification period would be transferred to SDG&E on their next regularly scheduled meter read date if the termination notice is received a minimum of fifteen days prior to that date. Such customers would also be liable for the reentry fees imposed by SDG&E and would be subject to SDG&E’s current terms and conditions, including being required to remain on bundled utility service for a period of one year, as described in the utility CCA tariffs. 9.3 CUSTOMER CONFIDENTIALITY CEA will establish policies covering confidentiality of customer data that are fully compliant with the required privacy protection rules for CCA customer energy usage information, as detailed within Decision 12-08-045. CEA will maintain the confidentiality of individual customers’ names, service addresses, billing addresses, telephone numbers, account numbers, and electricity consumption, except where reasonably necessary to conduct business of the CEA Program or to provide services to customers, including but not limited to where such disclosure is necessary to (a) comply with the law or regulations; (b) enable CEA to provide service to its customers; (c) collect unpaid bills; (d) obtain and provide credit reporting information; or (e) resolve customer disputes or inquiries. CEA will not disclose customer information for telemarketing, e-mail, or direct mail solicitation. Aggregate data may be released at CEA’s discretion. 9.4 RESPONSIBILITY FOR PAYMENT Customers will be obligated to pay CEA Program charges for service provided through the date of transfer including any applicable Termination Fees. Pursuant to current CPUC regulations, CEA will not be able to direct that electricity service be shut off for failure to pay CEA bills. However, SDG&E has the right to shut off electricity to customers for failure to pay electricity bills, and SDG&E Electric Rule 23 mandates that partial payments are to be allocated pro rata between SDG&E and the CCA. In most circumstances, customers would be returned to utility service for failure to pay bills in full and customer deposits (if any) would be withheld in the case of unpaid bills. SDG&E would attempt to collect any outstanding balance from customers in accordance with Rule 23 and the related CCA Service Agreement. The proposed process is for two late payment notices to be provided to the customer within 30 days of the original bill May 12, 2020 Item #8 Page 80 of 137 Clean Energy Alliance Implementation Plan Customer Rights and Responsibilities 35 December 2019 due date. If payment is not received within 45 days from the original due date, service would be transferred to the utility on the next regular meter read date, unless alternative payment arrangements have been made. Consistent with the CCA tariffs, Rule 23, service cannot be discontinued to a residential customer for a disputed amount if that customer has filed a complaint with the CPUC, and that customer has paid the disputed amount into an escrow account. 9.5 CUSTOMER DEPOSITS Under certain circumstances, CEA customers may be required to post a deposit equal to the estimated charges for two months of CCA service prior to obtaining service from the CEA Program. A deposit would be required for an applicant who previously had been a customer of SDG&E or CEA and whose electric service has been discontinued by SDG&E or CEA during the last twelve months of that prior service arrangement as a result of bill nonpayment. Such customers may be required to reestablish credit by depositing the prescribed amount. Additionally, a customer who fails to pay bills before they become past due as defined in SDG&E Electric Rule 11 (Discontinuance and Restoration of Service), and who further fails to pay such bills within five days after presentation of a discontinuance of service notice for nonpayment of bills, may be required to pay said bills and reestablish credit by depositing the prescribed amount. This rule will apply regardless of whether or not service has been discontinued for such nonpayment6. Failure to post deposit as required would cause the account service transfer request to be rejected, and the account would remain with SDG&E. 6 A customer whose service is discontinued by Clean Energy Alliance is returned to SDG&E generation service. May 12, 2020 Item #8 Page 81 of 137 Clean Energy Alliance Implementation Plan Procurement Process 36 December 2019 10 PROCUREMENT PROCESS 10.1 INTRODUCTION This Chapter describes CEA’s initial procurement policies and the key third party service agreements by which the Alliance will obtain operational services for the CEA Program. By adopting this Implementation Plan, the Alliance will have approved the general procurement policies contained herein to be effective at Program initiation. CEA retains authority to modify Program policies from time to time at its discretion. 10.2 PROCUREMENT METHODS CEA will enter into agreements for a variety of services needed to support program development, operation and management. It is anticipated that CEA will generally utilize competitive procurement methods for services but may also utilize direct procurement or sole source procurement, depending on the nature of the services to be procured. Direct procurement is the purchase of goods or services without competition when multiple sources of supply are available. Sole source procurement is generally to be performed only in the case of emergency or when a competitive process would be an idle act. CEA will utilize a competitive solicitation process to enter into agreements with entities providing electrical services for the program. Agreements with entities that provide professional legal or consulting services, and agreements pertaining to unique or time sensitive opportunities, may be entered into on a direct procurement or sole source basis at CEA’s discretion. Authority for terminating agreements will generally mirror the authority for entering into such agreements. 10.3 KEY CONTRACTS 10.3.1 Electric Supply CEA will procure initial energy supply, as well as Scheduling Coordinator Services, through competitive solicitation in the over-the-counter electricity markets. Suppliers will be selected to hedge CEA’s financial risk, meet its capacity obligations and achieve its environmental objectives. CEA will administer Request for Proposal processes for energy supply. Procurement will commence once this implementation plan has been approved and the CEA Board has made the final determination to proceed to going live with the CCA. Procurement will be an ongoing process in order to achieve desired levels of risk mitigation by dollar-cost- averaging supply costs. In addition, particular strategies will be employed to mitigate the risk of changes to the PCIA impacting CEA’s rate competitiveness. Specifically, this entails procuring a certain amount of supply annually during the month of October when the PCIA market price benchmark is set for the coming year. CEA’s wholesale services provider will also serve as the Scheduling Coordinator for scheduling loads, resources and Inter-SC trades into the CAISO market. In addition, the provider will be responsible for ensuring CEA’s compliance with all applicable RA and regulatory requirements imposed by the CPUC or FERC. May 12, 2020 Item #8 Page 82 of 137 Clean Energy Alliance Implementation Plan Contingency Plan for Program Termination 37 December 2019 10.3.2 Data Management Contract A data manager will provide the retail customer services of billing and other customer account services (electronic data interchange or EDI with SDG&E, billing, remittance processing, and account management). The data management contract will be awarded to an experienced data management services provider. The data manager is responsible for the following services: Ø Data exchange with SDG&E; Ø Technical testing; Ø Customer information system; Ø Customer call center; Ø Billing administration/retail settlements; Ø Settlement quality meter data reporting; and Ø Reporting and audits of utility billing. Utilizing a third party for account services eliminates a significant expense associated with implementing a customer information system. Such systems can impose significant information technology costs and take significant time to deploy. Separation of the data management contract from the energy supply contract provides the JPA with greater flexibility to change energy suppliers, if desired, without facing an expensive data migration issue. 11 CONTINGENCY PLAN FOR PROGRAM TERMINATION 11.1 INTRODUCTION This Chapter describes the process to be followed in the case of CEA Program termination. By adopting the original Implementation Plan, the Alliance will have approved the general termination process contained herein to be effective at Program initiation. In the unexpected event that the JPA would terminate the CEA Program and return its customers to SDG&E service, the proposed process is designed to minimize the impacts on its customers and on SDG&E. The proposed termination plan follows the requirements set forth in SDG&E’s tariff Rule 27 governing service to CCAs. The JPA retains authority to modify program policies from time to time at its discretion. 11.2 TERMINATION BY CLEAN ENERGY ALLIANCE CEA will offer services for the long term with no planned Program termination date. In the unanticipated event that the JPA decides to terminate the Program, the Board would vote on Program termination. After any applicable restrictions on such termination have been satisfied, notice would be provided to customers six months in advance that they will be transferred back to SDG&E. A second notice would be provided during the final sixty-days in advance of the transfer. The notice would describe the applicable May 12, 2020 Item #8 Page 83 of 137 Clean Energy Alliance Implementation Plan Contingency Plan for Program Termination 38 December 2019 distribution utility bundled service requirements for returning customers then in effect, such as any transitional or bundled portfolio service rules. At least one-year advance notice would be provided to SDG&E and the CPUC before transferring customers, and CEA would coordinate the customer transfer process to minimize impacts on customers and ensure no disruption in service. Once the customer notice period is complete, customers would be transferred en masse on the date of their regularly scheduled meter read date. CEA will post a bond or maintain funds held in reserve to pay for potential transaction fees charged to the Program for switching customers back to distribution utility service. Reserves would be maintained against the fees imposed for processing customer transfers (CCA Service Requests). The Public Utilities Code requires demonstration of insurance or posting of a bond sufficient to cover reentry fees imposed on customers that are involuntarily returned to distribution utility service under certain circumstances. The cost of reentry fees is the responsibility of the energy services provider or the community choice aggregator, except in the case of a customer returned for default or because its contract has expired. CEA will post financial security in the appropriate amount as part of its registration materials and will maintain the financial security in the required amount, as necessary. May 12, 2020 Item #8 Page 84 of 137 Clean Energy Alliance Implementation Plan Appendix A: Clean Energy Alliance Resolution No. 2019-003 (Adopting Implementation Plan) 39 December 2019 12 APPENDIX A: CLEAN ENERGY ALLIANCE RESOLUTION NO. 2019-003 (ADOPTING IMPLEMENTATION PLAN) May 12, 2020 Item #8 Page 85 of 137 Draft Projected Financial Results 1 Annual DRAFT Pro Forma Projections for a Community Choice Aggregation Program Clean Energy Alliance Fiscal Year Ending:2020 2021 2022 2023 2024 2025 I. Revenue - 9,533,643 69,970,228 71,333,092 72,718,018 74,125,343 II. Operating Expenses Power Supply - 8,103,205 58,057,665 59,435,021 60,960,894 61,960,598 Staff 50,000 235,000 600,000 618,000 636,540 655,636 Administrative Costs*253,000 1,105,691 2,444,552 2,495,095 2,555,592 2,614,773 Subtotal Operating Expenses 303,000 9,443,896 61,102,216 62,548,116 64,153,025 65,231,007 Operating Margin (303,000) 89,748 8,868,011 8,784,977 8,564,992 8,894,335 III. Financing Interest - 101,250 102,309 62,964 22,421 (0) Principal - -1,347,409 1,507,544 1,547,985 130,863 Subtotal Financing - 101,250 1,449,718 1,570,507 1,570,406 130,863 Operating Margin Less Financing (303,000) (11,502) 7,418,293 7,214,469 6,994,586 8,763,473 IV. Cash From Financing 450,000 4,000,000 - - - - V. Other Uses CPUC and CAISO Deposits 147,000 500,000 - - - - Collateral Deposits 2,500,000 - - - - Reserve Additions - 476,682 3,498,511 3,566,655 3,635,901 3,706,267 Subtotal Other Uses 147,000 3,476,682 3,498,511 3,566,655 3,635,901 3,706,267 VI. Net Surplus/(Deficit)- 511,815 3,919,782 3,647,815 3,358,685 5,057,206 VII. Cumulative Reserve - 476,682 3,975,194 7,541,848 11,177,749 14,884,016 VIII. Cumulative Net Surplus - 511,815 4,431,597 8,079,412 11,438,097 16,495,303 * Comprised of Technical and Legal Services, Customer Outreach and Communications, Utility Services Fees, Data Management Services, Uncollectibles Exhibit 5 May 12, 2020 Item #8 Page 87 of 137 Board of Directors Meeting Agenda April 16, 2020, 2 p.m. City of Del Mar | Virtual Meeting Per State of California Executive Order N-29-20, and in the interest of public health and safety to prevent and mitigate the effects of the COVID-19 pandemic, the Clean Energy Alliance Joint Powers Authority Board of Directors (Board) meetings will temporarily be held electronically or by teleconferencing. All public meetings will comply with public noticing requirements in the Brown Act and will be made accessible electronically to all members of the public seeking to observe the Board meeting and provide public comment, the process for which is further described blow. These procedures shall remain in place during the period in which state or local health officials have imposed or recommend social distancing measures. Members of the public can watch the meeting live on the City of Del Mar’s website at: http://delmar.12milesout.com/Video/Live Members of the public can participate in the meeting by e-mailing comments to the Board Secretary at cityclerk@delmar.ca.us by 1 PM the day of the meeting. The subject line of your email should clearly state the item number you are commenting on. If you desire to have your comment read into the record during the meeting, please note that in the email subject line and limit the comment to 500 words or less. There is no character limit for comments not being read into the record. All comments will be transmitted to Board members prior to the start of the meeting. CALL TO ORDER & ROLL CALL FLAG SALUTE PUBLIC COMMENT Each person wishing to comment to the Board on any matter not on the agenda shall submit a written comment to the Board Secretary by 1:00 PM the day of the meeting by emailing cityclerk@delmar.ca.us. Please note “CEA Public Oral” in the subject line of your email. If you desire to have your comment read into the record at the Board meeting, please indicate so in the subject line of your email and limit your e- mail to 500 words or less. State law prohibits the Board from taking action on items not listed on the agenda. Comments requiring follow up will be referred to staff and, if appropriate, considered at a future Board meeting. BOARD COMMENTS & ANNOUNCEMENTS PRESENTATIONS Exhibit 6 May 12, 2020 Item #8 Page 88 of 137 NEW BUSINESS Item 1: Interim Chief Executive Officer Update RECOMMENDATION 1.Receive Community Choice Aggregation Update report from Interim Chief Executive Officer. 2.Receive Community Choice Aggregation Regulatory Affairs report from Special Counsel. Item 2: Clean Energy Alliance Draft Financial Pro-Forma Review; FY 20/21 Budget and Financing Strategy Clean Energy Alliance (CEA) receive updated financial pro-forma from Pacific Energy Advisors; discuss FY 20/21 budget and financing strategy. RECOMMENDATION 1.Receive report on draft financial pro-forma. 2.Provide direction for FY 20/21 staffing and consulting services and community outreach/communication and marketing. 3.Provide direction on FY 20/21 budget financing strategy. Item 3: Authorization to Enter into a Contract for Energy Transactions Attorney Services RECOMMENDATION Authorize the Interim Chief Executive Officer to enter into a contract for energy transactions attorney services with Hall Energy Law for an amount not to exceed $100,000 through June 30, 2021, subject to General Counsel approval. Item 4: Clean Energy Alliance Board Schedule Special Meeting for 5-Year Goals & Vision Workshop RECOMMENDATION Clean Energy Alliance Board schedule special meeting for 5-Year goals & vision workshop to include CCA programs, economic revitilization opportunities, citizen advisory committee, strategic plan and inclusive sustainable workforce policy. BOARD MEMBER REQUESTS FOR FUTURE AGENDA ITEMS ADJOURN NEXT MEETING: Special Meeting TBD May 12, 2020 Item #8 Page 89 of 137 Staff Report DATE: April 16, 2020 TO: Clean Energy Alliance Board of Directors FROM: Barbara Boswell, Interim Chief Executive Officer Ty Tosdal, Special Counsel, Tosdal APC ITEM 1: Operational, Administrative and Regulatory Affairs Update RECOMMENDATION: 1.Receive Community Choice Aggregation Update Report from Interim CEO 2.Receive Community Choice Aggregation Regulatory Affairs Report from Special Counsel. BACKGROUND AND DISCUSSION: This report provides an update to the Clean Energy Alliance (CEA) Board regarding the status of the operational, administrative and regulatory affairs activities. OPERATIONAL UPDATE CEA is meeting its milestones for the implementation of its community choice aggregation (CCA) program and is on track to begin serving customers in May 2021. CCA Implementation Plan & Statement of Intent Certification and CCA Registration A significant step towards implementing CEA was achieved on March 16, 2020, with the certification of CEA’s Implementation Plan and Statement of Intent by the California Public Utilities Commission (CPUC) (Attached). Certification At the February 20, 2020 meeting the Board approved executing the San Diego Gas & Electric (SDG&E) CCA Service Agreement, which has been submitted to SDG&E and we are awaiting the executed copy. The SDG&E Service Agreement will be summitted to the CPUC along with the CCA bond payment. These last two steps are the final requirements for CCA registration and are expected to be completed within the next week. Meeting with CPUC Energy Division At its February 20, 2020 meeting the Board appointed Board Member Kristi Becker to represent CEA at a meeting with the CPUC Energy Division, who were to be joined by Barbara Boswell and Ty Tosdal, Special Counsel and staff representatives. The purpose of the meeting was to provide an overview of CEA, an update of its implementation plans and goals for the program at launch and to provide an opportunity for the CPUC staff to ask the group question regarding CEA and the transition of Solana Energy Alliance customers to CEA in anticipation of CPUC May 12, 2020 Item #8 Page 90 of 137 certifying the CEA Implementation Plan. The meeting had been scheduled to be in held in person at the CPUC office in San Francisco on March 11, 2020. Due to the early concerns regarding COVID 19 and travel, the meeting was rescheduled as a conference call. Board Member Becker, Interim CEO Barbara Boswell, Special Counsel Ty Tosdal, City of Del Mar Environmental Sustainability and Special Projects Manager Clement Brown and City of Carlsbad Intergovernmental Affairs Director Jason Haber participated in the call with the CPUC Energy Division. CEA representatives addressed questions the Energy Division had regarding regulatory compliance filings required of both CEA and SEA and indicated to Energy Division the commitment of both CCA programs to meet the various regulatory compliance requirements. The CPUC subsequently certified the Implementation Plan. Expansion of Clean Energy Alliance Greg Wade and Jason Haber participated in a South Orange County Community Choice Alliance workshop regarding lessons learned and potential opportunities with neighboring cities on February 20, 2020. The cities of Escondido, San Marcos and Vista have engaged EES Consulting to complete a CCA feasibility study which is targeted to be complete by the end of the calendar year. Staff is also keeping communication lines open with the County of San Diego and Oceanside regarding their efforts in evaluating CCA in their areas. Regulatory Compliance Filings Clean Energy Alliance is in compliance with all required regulatory compliance filings to date, including the most recent filing of the initial Renewable Portfolio Standards (RPS) Procurement Plan. The plan is a compliance filing and is separate and distinct from CEA’s overall procurement strategy and decision-making process, which the Board will ultimately decide. The RPS plan reflects the CEA is aware of, and plans to comply with, California’s renewable energy requirements. The Year-Ahead Resource Adequacy forecast, which informs the California Energy Commission (CEC) and California Public Utility Commission (CPUC) of CEA’s projected energy load for 2021. The CEC and CPUC utilize the forecast to develop the Resource Adequacy requirements that CEA will need to procure. The forecast is in progress and is on track to meet the April 20, 2020 filing deadline. CEA staff and its consultants have been working cooperatively with SDG&E to ensure the forecasts are coordinated regarding SDG&E’s assumptions related to the departing load. Should revisions need to be made to the initial forecast, CEA has until May 15, 2020 to make those revisions. The Integrated Resource Plan (IRP) provides the CPUC with CEA’s 10-year projected electricity load as part of the integrated resource planning process to ensure that California’s electric sector meets its GHG reduction goals while maintaining reliability at the lowest possible costs. May 12, 2020 Item #8 Page 91 of 137 The IRP was originally due in April 2020, was pushed out to July 2020, and has now been further pushed out to September 2020. Coordination with San Diego Gas & Electric CEA staff and consultants continue to meet with and work collaboratively with SDG&E to ensure a smooth CCA implementation. The most recent meeting took place March 27, 2020, topics included a discussion to satisfy SDG&E’s “Meet and Confer” requirement related to the Year-Ahead Resource Adequacy forecast as well as an update of SDG&E’s bill system replacement project, known as Envision. Attendees included various SDG&E staff, Barbara Boswell, Ty Tosdal and Pacific Energy Advisors. SDG&E updated CEA regarding its energy load forecast assumptions related to the CEA customer leaving SDG&E service that SDG&E will be applying to the 2021 load forecast. SDG&E intends to issue a Request for Offers to handle the excess resource adequacy SDG&E may have due to the departed load. CEA will need to engage the services of a transactions attorney to execute the agreements and documents necessary for CEA to take advantage of SDG&E’s request for offers. SDG&E also informed CEA that SDG&E is tracking on its project timeline towards a go live date of January 4, 2021. The on-going testing, including end-to-end testing for CCA and transition of customers will further confirm the operational and application readiness of the systems. REGULATORY UPDATE A regulatory update will be provided to the Board by Ty Tosdal, Tosdal Law APC, highlighting current CPUC proceedings of interest to CEA. FISCAL IMPACT There is no fiscal impact associated with this item. ATTACHMENTS: Clean Energy Alliance Timeline of Implementation Action Items California Public Utilities Commission Letter Certifying Clean Energy Alliance Implementation Plan and Statement of Intent May 12, 2020 Item #8 Page 92 of 137 May 12, 2020 Item #8 Page 93 of 137 Staff Report DATE: April 16, 2020 TO: Clean Energy Alliance Board of Directors FROM: Barbara Boswell, Interim Chief Executive Officer ITEM 2: Clean Energy Alliance Draft Financial Pro-Forma Review; FY 20/21 Budget and Financing Strategy RECOMMENDATION: 1.Receive report on draft financial pro-forma and provide direction for further pro-forma refinement. 2.Provide direction for FY 20/21 staffing and consulting services and community outreach/communication and marketing. 3.Provide direction on FY 20/21 budget financing strategy and direct staff to return with finance plan with the draft budget at the May 21, 2020 Board Meeting. BACKGROUND AND DISCUSSION: At its February 20, 2020 regular meeting, CEA Board selected Pacific Energy Advisors (PEA) to provide technical consulting services in support of its CCA program. One of the first tasks PEA has undertaken is development of the draft CEA financial pro-forma for its community choice aggregation (CCA) program, using 3-years historical usage data from San Diego Gas & Electric (SDG&E), current and projected SDG&E rates, market energy pricing and CEA Joint Powers Authority Agreement program goals. Specific assumptions used in the draft pro-forma include: 10% opt-out rate for Del Mar & Carlsbad (conservative based on averages) 7.5% opt-out rate for Solana Beach (reflects current SEA opt-out rate) 50% default renewable energy No Bucket 3 “Unbundled” Renewable Energy Credits (RECs) No additional financing or advances from member agencies Annual 5% revenue contribution to reserves The chart below summarizes the results of the draft pro-forma over the first 5 full fiscal years of service: May 12, 2020 Item #8 Page 96 of 137 Based on current market conditions, CEA can operate a financially viable CCA program, which generates sufficient revenue to cover its expenditures, contribute funds to an operating reserve and leave a net surplus to fund Board directed discretionary programs. As with any pro-forma, the near terms results are more reliable than those in the outer years due to the uncertainty related to market conditions. The pro-forma reflects policies and goals established in the JPA Agreement. Additional program decisions for the Board to consider include: Rate discount compared to SDG&E comparable generation rates – The draft pro-forma was developed based on rate parity with SDG&E. The JPA Agreement establishes a target discount of 2%. Based on current rate assumptions each 1% discount offered to customers reduces revenue by $1,000,000 annually. Staff seeks Board direction regarding rate discount to be offered by CEA at program launch. Staffing plan for FY 20/21 – The pro-forma identifies $260,000 to be used towards staffing and/or consulting services to fill administrative positions to support implementation and initial operations in FY 20/21. This amount increases to $600,000 beginning in FY 21/22, for the on- going operational activities of CEA. Staffing costs are estimated at a lower amount in fiscal year 20/21 based on the projected activities related to procurement, customer outreach & marketing, program implementation and initial service needs (based on a May 2021 launch). These estimated costs subject to Board direction and can be scaled to meet the requirements of the CCA program as determined by the Board. CEA is currently staffed and supported by a combination of services by Member Agencies and consulting services agreements. May 12, 2020 Item #8 Page 97 of 137 The terms of current agreements are: CONSULTING FIRM/MEMBER AGENCY SERVICE STATUS Bayshore Consulting Group, Inc. Interim Chief Executive Officer Through June 30, 2020; may be extended through mutual agreement Pacific Energy Advisors Technical Consultant Through June 30, 2020; may be extended through mutual agreement Richards, Watson & Gershon General Counsel Through June 30, 2020; may be extended through mutual agreement Tosdal, APC Special Counsel – Regulatory Affairs Through June 30, 2020; may be extended through mutual agreement City of Carlsbad Board Secretary Services/Clerk Services Marketing & Communications Through June 30, 2020; may be extended through mutual agreement City of Del Mar Board Meeting & Clerk Services (for meetings held at Del Mar) Through June 30, 2020; may be extended through mutual agreement City of Solana Beach Interim Finance Agent/Treasurer Board Meeting & Clerk Services (for meetings held at Solana Beach) Through June 30, 2020; may be extended through mutual agreement As CEA looks to fiscal year 20/21, it will be tasked with developing a comprehensive customer outreach, education and marketing program in support of its CCA launch; developing procurement policies and holding solicitations to procure energy to meet its renewable energy, conventional energy and resource adequacy requirements; and establishing operating policies and procedures that provide the foundation for an effective and efficient organization. Options available to the Board to meet its needs are to recruit for full-time staff, continue with its existing consulting arrangements, seek new consulting services, or any combination that the Board deems will best fit its needs in the coming year. Should the Board decide to seek new or additional consulting services, it would be prudent to direct staff to initiate solicitation processes to ensure a smooth transition going into the new fiscal year. May 12, 2020 Item #8 Page 98 of 137 Operating Reserve Policy – A key component of a financially stable CCA program is the adoption of reserve policies that set aside funds to mitigate the negative impacts that are related to the uncertainties of a dynamic rate and energy market environment. In addition to mitigating the market risk, healthy reserves also serve the purpose of supporting agency credit requirements related to energy supply purchases. New CCA programs have set operating reserves targets of 25% - 50% of revenues, with annual contributions building reserves to the targeted amounts. The pro-forma reflects an annual 5% reserve contribution that would result in a 25% operating reserve within 5 years. The Board has discretion to confirm the reserve targets as reflected in the pro-forma or direct adjustment to an amount it determines best fits the needs of CEA. Financing Strategy – The draft pro-forma assumed fiscal year 20/21 start-up costs are funded by loans or lines of credit from 3rd parties and financial institutions, at an average 3% interest rate. No additional advances from Carlsbad, Del Mar or Solana Beach were anticipated. The initial FY 19/20 CEA budget was funded with $150,000 advances from each of the three Member Agencies. The terms of the agreements state that the advances are to be repaid from future CCA revenues, within three years of the commencement of serving customers (or by May 2024). In light of the current economic impacts of COVID-19 that the member cities are having to address, the CEA Board may want to consider amending the terms of the advance agreements to provide an earlier repayment to the cities. The advances could be refunded by including the repayment in the financing options shown below: Lender Amount Interest Rate Loan from Calpine Energy Solutions $500,000 5% Line of Credit/Loan from Financial Institution Est. $4,000,000 Est. 2% - 3% (to be determined through negotiation process) Calpine Energy Solution’s data management proposal included the offer of a $500,000 loan to CEA to fund start-up costs at a 5% interest rate with repayment due within 15 months of CEA starting service to customers. These funds would be available once the agreement between CEA and Calpine has been executed (currently in progress), pursuant to the terms in the agreement. These funds may be available quicker than funds acquired through financing from a financial institution. CEA received proposals for credit solution from River City Bank, JP Morgan Chase and MUFG Union Bank in response to its Request for Proposal for Banking and Credit Solutions process. With direction from the Board, staff will begin negotiation for credit terms with the three May 12, 2020 Item #8 Page 99 of 137 financial institutions and bring the results back to the Board for final selection and approval of a credit solution at its May 21, 2020 meeting. FISCAL IMPACT There is no fiscal impact associated with this item, however, the direction provided by Board related to the policy decisions will be used to develop the fiscal year 20/21 budget to be adopted by the Board at its June 18, 2020 meeting. ATTACHMENTS: None. May 12, 2020 Item #8 Page 100 of 137 Staff Report DATE: April 16, 2020 TO: Clean Energy Alliance Board of Directors FROM: Barbara Boswell, Interim Chief Executive Officer ITEM 3: Authorization to Enter into an Agreement for Energy Transactions Attorney Services RECOMMENDATION: Authorize the Interim Chief Executive Officer to enter into an agreement for energy transactions attorney services to Hall Energy Law PC for an amount not to exceed $100,000, through June 30, 2021, subject to General Counsel approval. BACKGROUND AND DISCUSSION: Clean Energy Alliance (CEA), in its role as community choice aggregator providing electricity to its customers is required to procure resource adequacy, renewable energy and conventional energy. The California Public Utilities Commission (CPUC) and California Energy Commission (CEC) each have established requirements and timelines related to these energy products. The initial requirements of CEA are related to the procurement of resource adequacy (RA). RA is not electricity, rather, it is the procurement of generation capacity, to ensure overall grid reliability. It can be thought of as an insurance policy. CCAs (as well as all other load serving entities (LSE) such as the Investor Owned Utilities) are required to procure three types of RA: multi-year local (CEA will need to procure for 2021, 2022 and 2023), annual system and flex. The multi-year local RA requirements for the upcoming year are set based on the LSE’s annual peak demand in September. The timeline related to RA compliance is: April 20, 2020 – Submit initial Year-Ahead Forecast (for 2021) May 15, 2020 – Final date to make revisions to Year-Ahead Forecast July 2020 – CEC reviews forecasts; CPUC issues initial year-ahead requirements August 17, 2020 – Final load forecast for 2021 September 2020 – CEC reviews final forecasts; CPUC issues final year-ahead requirements October 2020 – Submit year-ahead filing reflecting contracts meeting requirements May 12, 2020 Item #8 Page 101 of 137 Local RA is the only RA type that has a multi-year contractual obligation. For CEA that obligation involves meeting the requirements for 2021, 2022 and 2023. Local RA is defined as meeting the needs of the locally constrained area. Historically, San Diego Gas & Electric (SDG&E) has primarily been responsible for meeting the local RA requirements of the San Diego local area. Effective with the implementations of CEA and San Diego Community Power (SDCP), it is anticipated the SDG&E will find itself with excess local RA. In a call with SDG&E on March 27, 2020, it was shared that SDG&E plans to “cast a wide net for RA” in a Request for Offer (RFO) in April 2020. CEA will need to participate in this RFO process in order to have an opportunity to acquire local RA from SDG&E. Without participating in this process, CEA increases its probability of not procuring the local RA as allocated by CPUC. To be enabled to participate in SDG&E’s RFO process, CEA needs to execute an agreement with SDG&E known as the Edison Electric Institute (EEI) agreement with a subsequent agreement known as a confirmation. These agreements require the assistance of an attorney with specialized expertise in handling these types of highly technical agreements. It was originally anticipated that these services would not be required until next fiscal year. however, the upcoming SDG&E RFO process has accelerated the need for this legal expertise. Three law firms were contacted to provide proposals to provide the services needed for the upcoming SDG&E solicitations as well as for the upcoming CEA energy procurements. The chart below summarizes the proposals: FIRM CCA EXPERIENCE NOT TO EXCEED THROUGH 6/30/21 NOTES Cameron – Daniel Limited $82,000 Lead attorney experience with CCA’s has been primarily through another firm whose work with CCA’s is mostly regulatory. Hall Energy Law PC Extensive – 10 similar CCA engagements $100,000 Extensive experience with energy contracts for CCA’s, including working with River City Bank and PEA. Also has negotiated 5 EEI Master Agreements with SDG&E. Wilson Sonsini Limited and recent Not provided – bid at flat rate per transaction except for long-term PPA’s which No experience with start-up CCA; work to be done primarily by May 12, 2020 Item #8 Page 102 of 137 would be billed at hourly rates. associates overseen by lead partner. Proposals were reviewed by Greg Stepanicich, CEA General Counsel and Barbara Boswell, Interim CEO. Both Mr. Stepanicich and Ms. Boswell have had positive experiences working with Steve Hall of Hall Energy Law and recommend this firm as having the most relevant experience providing the specialized energy law services needed by CEA. FISCAL IMPACT The adopted FY 19/20 budget allocated $130,000 for legal services. It is estimated that $75,000 will be spent through fiscal year end for the existing General Counsel and Specialized Legal Counsel services leaving $55,000 available for Energy Transactions Attorney, which is anticipated to be sufficient to cover the costs related to the services needed through June 30, 2020. ATTACHMENTS: None. May 12, 2020 Item #8 Page 103 of 137 Staff Report DATE: April 16, 2020 TO: Clean Energy Alliance Board of Directors FROM: Barbara Boswell, Interim Chief Executive Officer ITEM 4: Schedule Special Meeting for 5-Year Goals & Vision Workshop RECOMMENDATION: Clean Energy Alliance Board schedule special meeting for 5-year goals & vision workshop to include CCA programs, economic revitalization opportunities, citizen advisory committee, strategic plan and inclusive sustainable workforce policy. BACKGROUND AND DISCUSSION: The Clean Energy Alliance (CEA) 5-year goals & vision workshop will provide an opportunity for the CEA Board to identify and prioritize goals, including economic revitalization that address the impacts of COVID 19 on local businesses, citizen advisory committee, strategic plan and inclusive sustainable workforce policy. FISCAL IMPACT There is no fiscal impact from this action. ATTACHMENTS: None. May 12, 2020 Item #8 Page 104 of 137 Board of Directors Special Meeting Agenda May 7, 2020, 2 p.m. City of Carlsbad | Council Chambers | Virtual Meeting Per State of California Executive Order N-29-20, and in interest of public health and safety, we are temporarily taking actions to prevent and mitigate the effects of the COVID-19 pandemic by holding Clean Energy Alliance Joint Powers Authority meetings electronically or by teleconferencing. All public meetings will comply with public noticing requirements in the Brown Act and will be made accessible electronically to all members of the public seeking to observe and address the Clean Energy Alliance Joint Powers Authority Board of Directors. The meetings can be watched via livestream at www.carlsbadca.gov . You can participate in the meeting by e- mailing your comments to the Secretary at clerk@carlsbadca.gov prior to commencement of the agenda item. If you desire to have your comment read into the record at the meeting, please indicate so in the first line of your e-mail and limit your e-mail to 500 words or less. These procedures shall remain in place during the period in which state or local health officials have imposed or recommended social distancing measures. CALL TO ORDER: ROLL CALL: FLAG SALUTE: BOARD COMMENTS & ANNOUNCEMENTS PRESENTATIONS APPROVAL OF MINUTES: Minutes of the Meeting held Jan. 16, 2020 Minutes of the Meeting held Feb. 20, 2020 Minutes of the Meeting held April 16, 2020 ACTION: Exhibit 7 May 12, 2020 Item #8 Page 105 of 137 NEW BUSINESS Item 1: Clean Energy Alliance Financial Pro-Forma Review; 5-year Goals & Vision Discussion Clean Energy Alliance (CEA) discussion of goals/vision for next 5 years to include discussion on CCA programs, citizen advisory committee, strategic plan and inclusive sustainable workforce policy. RECOMMENDATION Provide direction on CEA programs, economic revitilization opportunities, citizen advisory committee, strategic plan and inclusive sustainable workforce policy Item 2: Clean Energy Alliance Board Policy Regarding Handling Unsolicited Proposals RECOMMENDATION Clean Energy Alliance Board provide direction on policy regarding handling of unsolicited proposals. BOARD MEMBER REQUESTS FOR FUTURE AGENDA ITEMS ADJOURN: NEXT MEETING: May 21, 2020, 2 p.m., City of Solana Beach, City Hall (635 S. Highway 101) Reasonable Accommodations Persons with a disability may request an agenda packet in appropriate alternative formats as require by the Americans with Disabilities Act of 1990. Reasonable accommodations and auxiliary aids will be provided to effectively allow participation in the meeting. Please contact the Carlsbad City Clerk’s Office at 760-434-2808 (voice), 711 (free relay service for TTY users), 760-720-9461 (fax) or clerk@carlsbadca.gov by noon on the Monday before the Board meeting to make arrangements. Written Comments To submit written comments to the Board, please contact the Carlsbad City Clerk’s office at clerk@carlsbadca.gov. Written materials related to the agenda that are received by 5:00 p.m. on the day before the meeting will be distributed to the Board in advance of the meeting and posted on the Authority webpage. To review these materials during the meeting, please see the Secretary May 12, 2020 Item #8 Page 106 of 137 Clean Energy Alliance - Board of Directors Meeting Minutes January 16, 2020 - 2 p.m. City of Del Mar Town Hall 1050 Camino del Mar, Del Mar California 92014 CALL TO ORDER Chair Schumacher called the meeting to order at 2:00 p.m. ROLL CALL Present: Chair Cori Schumacher; Vice Chair Ellie Haviland, and Board Member Kristi Becker Absent: None Staff Present: Interim Chief Executive Officer Barbara Boswell; Special Regulatory Counsel, Ty Tosdal; Del Mar City Manager Scott Huth; Solana Beach City Manager Greg Wade; Del Mar Administrative Services Director/City Clerk Ashley Jones; Carlsbad Intergovernmental Affairs Director Jason Huber; Del Mar Environmental Sustainability and Special Projects Manager Clement Brown; and Carlsbad Community Relations Manager Nikki Matosian PLEDGE OF ALLEGIANCE Vice Chair Haviland led the Pledge of Allegiance. PUBLIC COMMENT 1) Lane Shurman, 1260 Santa Luisa, Solana Beach – Representing the San Diego Energy Alliance, expressed concern about the Board’s direction regarding the product being pursued with regard to emission standards. 2) Debra Schade, 529 Mar Vista Road, Solana Beach – Representing the Solana Beach School District, expressed the District’s interest in the CEA’s efforts and how that supports the District’s goals. BOARD COMMENTS & ANNOUNCEMENTS Chair Schumacher reported that she participated today in a conference call with Cal CCA regarding legislative advocacy and partnerships. APPROVAL OF MINUTES: Minutes of the Special Meeting held November 5, 2019 IT WAS MOVED BY VICE CHAIR HAVILAND, SECONDED BY BOARD MEMBER BECKER TO APPROVE THE NOVEMBER 5, 2019 MEETING MINUTES. (VOTE 3-0) Ayes: Vice Chair Haviland, Chair Schumacher and Board Member Becker; Noes: 0; Absent: 0; Abstain: 0. May 12, 2020 Item #8 Page 107 of 137 NEW BUSINESS ITEM 1: ADMINISTRATIVE, OPERATIONAL AND REGULATORY AFFAIRS UPDATE Interim CEO Boswell and Special Regulatory Counsel Tosdal provided a presentation on this item. RECOMMENDATION: Receive and file administrative, operational and regulatory affairs update. Questions from the Board focused on tracking of SDG&E seasonal rate changes. ITEM 2: CLEAN ENERGY ALLIANCE CCA ROADMAP, COMMITTEES AND NEW MEMBER ATTRACTION RECOMMENDATION: Receive report on Community Choice Aggregation actions and provide direction regarding committees and new member attraction. Interim CEO Boswell provided a presentation on this item covering required next steps and related timing for each between January and April 2020; formation of Board committees. Board questions focused on clarification on the color coding of action items included in the presentation timeline; timing for Board goal setting workshop; staff capacity with regard to committee support if formed. Board discussion focused on concern about capacity to work on committee formation at this time, support for deferring exploring formation of committees until after launch time and focusing efforts on getting the CEA off of the ground; support for engaging the public and use of alternate board members to help keep things moving through committees; potential to use committees to help with public education and outreach; suggestion that an Ad-Hoc committee be formed with focus on goal setting, staffing, and energy mix recommendations with two committee appointees for each board member; potential and interest in attracting other participating agencies/members; value in creating a solid base before expanding to include new members and looking for new members that have aligned goals and would be a good fit; could be some benefit in staying smaller for procurement purposes; need to create goals for JPA prior to developing a new member recruitment strategy; approach to outreach with other potential members; how adding new members may help to minimize risk; risk of missing out on potential new members who may be recruited by other CCA JPA’s if the CEA Board puts that effort on hold; and factors for attraction could consider geographic location, load size, or both. There was concensus among the Board to grow the board. Next steps is to develop a strategy which identifies criteria to priortize new member recruitment. Cities currently undergoing or have already completed a feasibility study as a first priority and other cities in the geographic zone and SDG&E territory. The Board directed Interim CEO Boswell to return at a future meeting, when appropriate, with a recommendation for formation of an Ad-Hoc citizen’s advisory committee. May 12, 2020 Item #8 Page 108 of 137 ITEM 3: AUTHORIZE REQUEST FOR QUALIFICATIONS FOR CLEAN ENERGY ALLIANCE TECHNICAL CONSULTANT SERVICES RECOMMENDATION: Direct staff to issue a Request for Proposal for Technical Consultant Services. A presentation on this item was provided by Interim CEO Boswell, which discussed the needs for a technical consultant. IT WAS MOVED BY BOARD MEMBER BECKER, SECONDED BY VICE CHAIR HAVILAND TO AUTHORIZE REQUEST TO ISSUE THE RFP (VOTE 3-0) Ayes: Vice Chair Haviland, Chair Schumacher and Board Member Becker; Noes: 0; Absent: 0; Abstain: 0. ITEM 4: AUTHORIZE REQUEST FOR PROPOSAL FOR DATA MANAGER/CALL CENTER SERVICES RECOMMENDATION: Direct staff to issue a Request for Proposal for Data Manager/Call Center Services. Interim CEO Boswell presented this item to the Board, which identified the need for data manager/call center services. IT WAS MOVED BY BOARD MEMBER BECKER, SECONDED BY VICE CHAIR HAVILAND TO AUTHORIZE THE RFP. (VOTE 3-0) Ayes: Vice Chair Haviland, Chair Schumacher and Board Member Becker; Noes: 0; Absent: 0; Abstain: 0. ITEM 5: SERVICE AGREEMENTS WITH MEMBER AGENCIES RECOMMENDATION: Authorize Interim CEO Boswell to execute service agreements with Member Agencies at amounts not to exceed $65,000 for the City of Carlsbad, $2,800 for the City of Del Mar and $16,000 for the City of Solana Beach. Interim CEO Boswell provided a presentation on this item. IT WAS MOVED BY VICE CHAIR HAVILAND, SECONDED BY BOARD MEMBER BECKER TO APPROVE THE SERVICES AGREEMENTS AND AUTHORIZE INTERIM CEO BOSWELL TO EXECUTE THE AGREEMENTS. (VOTE 3-0) Ayes: Vice Chair Haviland, Chair Schumacher and Board Member Becker; Noes: 0; Absent: 0; Abstain: 0. May 12, 2020 Item #8 Page 109 of 137 ITEM 6: RESOLUTION DESIGNATING AUTHORIZED CHECK SIGNERS AND ELECTRONIC PAYMENT APPROVERS RECOMMENDATION: Adopt resolution. Interim CEO Boswell provided a presentation on this item. IT WAS MOVED BY VICE CHAIR HAVILAND, SECONDED BY BOARD MEMBER BECKER, TO APPROVE THE RESOLUTION. (VOTE 3-0) Ayes: Vice Chair Haviland, Chair Schumacher and Board Member Becker; Noes: 0; Absent: 0; Abstain: 0. ITEM 7: CLEAN ENERGY ALLIANCE PUBLIC OUTREACH AND MARKETING RECOMMENDATION: Receive report on public outreach and marketing efforts and provide direction. Carlsbad Community Relations Manager Matosian provided a presentation on this item which focused on communications done to date; potential future activities; and next steps through June 30, 2020. Board comments and questions focused on avoiding use of powerlines in communications; and how CEA website FAQ’s are generated; status of work on logo development; feedback on website; consideration to add information to the website for potential partners to access. The direction given to staff by Interim CEO Boswell is to have a section on the website that provides a form for individuals to fill out with ideas of services that would be beneficial or projects they might want to consider. She noted this information could be a resource for RFPs to be sent out to. ITEM 8: APPLICATION TO JOIN CALIFORNIA COMMUNITY CHOICE ASSOCIATION AS AN AFFILIATE MEMBER RECOMMENDATION: 1. Authorize the Interim CEO to submit an application to California Community Choice Association (CalCCA) for Clean Energy Alliance to join as an affiliate member. 2. Approve annual CalCCA membership dues of $1,500. Interim CEO Boswell provided a presentation on this item. IT WAS MOVED BY BOARD MEMBER BECKER, SECONDED BY VICE CHAIR HAVILAND TO AUTHORIZE THE INTERIM CEO TO SUBMIT AN APPLICATION TO CAL CCA AND APPROVED MEMBERSHIP DUES OF $1,500. (VOTE 3-0) Ayes: Vice Chair Haviland, Chair Schumacher and Board Member Becker; Noes: 0; Absent: 0; Abstain: 0. May 12, 2020 Item #8 Page 110 of 137 BOARD MEMBER REQUESTS FOR FUTURE AGENDA ITEMS Next meeting to be held in Solana Beach on February 20, 2020, at 5 p.m. ADJOURNMENT Chair Schumacher adjourned the meeting at 4:11 p.m. Ashley Jones, Administrative Services Director/City Clerk May 12, 2020 Item #8 Page 111 of 137 Clean Energy Alliance - Board of Directors Meeting Minutes February 20, 2020, 2:00 p.m. City of Solana Beach | City Council Chambers 635 S. Highway 101 | Solana Beach, CA 92014 CALL TO ORDER: 2:00 p.m. ROLL CALL: Schumacher, Haviland, Becker FLAG SALUTE Board Member Becker led the Pledge of Allegiance. PUBLIC COMMENT Time is provided so members of the public can address the Board on items that are not listed on the agenda. Speakers are limited to three (3) minutes each. In conformance with the Brown Act, no Board action can occur on items presented during Public Comment. If you desire to speak during Public Comment, fill out a SPEAKER CARD and submit it to the Board Secretary. When you are called to speak, please come forward to the podium and state your name. Gretchen Newsom, IBEW (International Brotherhood of Electrical Workers) Local 569, requested that a Strategic Plan and an Inclusive and Sustainable Workforce Policy be added to the task matrix of action items. Dinah Wilier, SDG&E, spoke about their meeting with CEA in January to discuss replacement of SDG&E’s customer information system, Envision, and their efforts to meet the launch timelines outlined in the CEA Implementation Plan, potential unforeseen challenges in this project, the critical testing period that would inform the timing, continuing to work with CEA by way of biweekly calls throughout the Envision launch and critical stabilization period, and meeting the outlined timeline would continue to remain a top priority for SDG&E. Emily Rogers Guild and Ebba Selling, Swedish American Chamber of Commerce - San Diego, spoke about their organization focused on CleanTech and Life Science industries and announced their Annual Green Connections event in November featuring partners, speakers, and sponsors in renewable energy, smart building, and energy storage. Lane Sharman, the Center for Community Energy a successor organization to the San Diego Energy District, spoke about their June conference on CCAs (Community Choice Aggregations). BOARD COMMENTS & ANNOUNCEMENTS: None PRESENTATIONS: None APPROVAL OF MINUTES: Minutes of the Special Meeting held November 19, 2019 Minutes of the Regular Meeting held December 19, 2019 May 12, 2020 Item #8 Page 112 of 137 Motion by Vice Chair Haviland, seconded by Board Member Becker to approve the submitted meeting minutes. Motion carried unanimously 3/0. NEW BUSINESS Item 1: Interim CEO Update RECOMMENDATION 1. Receive Community Choice Aggregation Update report from Interim CEO. 2. Select Board Member to represent CEA at meeting with California Public Utilities Commission. Barbara Boswell, Interim CEO (Chief Executive Officer), reviewied the report and presented a PowerPoint (on file) regarding the administrative and operational update. Ty Tosdal, CEA regulatory Special Counsel, continued the PowerPoint (on file) reviewing the regulatory update. Motion by Chair Shumacher, seconded by Vice Chair Haviland to appoint Board Member Becker to represent CEA at the CPUC meeting. Motion carried unanimously 3/0 Motion by Chair Shumacher, seconded by Vice Chair Haviland to add discussion of a Strategic Plan and an Inclusive Sustainable Workforce Policy to the workshop. Motion carried unanimously 3/0 Item 2: Request for Proposal #2020-001 Permanent Banking Services and Credit Solutions Selection RECOMMENDATION 1. Approve selection of River City Bank to provide permanent banking services to Clean Energy Alliance. 2. Authorize the Interim Chief Executive Officer to execute an agreement for banking services, for a three-year term, with the option to extend for two additional years, subject to General Counsel approval. 3. Authorize the Interim Chief Executive Officer and Interim Treasurer to develop a funding strategy for initial Clean Energy Alliance start-up costs and return to April 2020 for Board consideration. Barbara Boswell, Interim CEO, reviewied the report. Motion by Board Member Becker, seconded by Vice Chair Haviland to approve selection of River City Bank for banking services; authorize the Interim CEO to execute an agreement for banking services, for a three- year term, with the option to extend for two additional years, subject to General Counsel approval; and authorize the Interim CEO and Interim Treasurer to develop a funding strategy for initial Clean Energy Alliance start-up costs and return to April 2020 for Board consideration. Motion carried unanimously 3/0 Rose Cucicea, River City Bank, introduced herself. Item 3: Request for Qualifications #2020-002 Clean Energy Alliance Technical Consultant Services Selection May 12, 2020 Item #8 Page 113 of 137 RECOMMENDATION Approve selection of CEA technical consultant and authorize Interim Chief Executive Officer to execute an agreement, for an amount not to exceed $ , subject to General Counsel approval. Barbara Boswell, Interim CEO, reviewied the report. Motion by Board Member Becker, seconded by Vice Chair Haviland to approve the selection of Pacific energy advisors to provide technical consulting services to the Clean Energy Alliance; and authorize the interim chief executive officer to execute an agreement for technical consulting services for an amount not to exceed $75,000 through June 30th, 2020, with the option to extend through fiscal year 2020 2021 for an additional amount of 25,000, subject to General Council approval. Motion carried unanimously 3/0 Kirby Dusel, Pacific Energy Advisors, introduced himself and Donna Stein and their exeperience in the electric utility indsutry and CCAs. Item 4: Request for Proposal #2020-003 Data Manager/Call Center Services Selection RECOMMENDATION Approve selection of Data Manager/Call Center Services provider and authorize Interim Chief Executive Officer and General Counsel to negotiate agreement for an amount not to exceed $__. Barbara Boswell, Interim CEO, reviewied the report. Dennis Ferment, President EDMS, spoke about their submittal and projected savings, not being selected, their abiltiies to onboard new systems quickly, and their work with SDG&E on the EDI front since 2001. Josh Brock, Calpine Energy Solutions, spoke about their current work on various systems testing that would be required to launch CEA, the company being local and passionate about the importance of serving the CCA and earning public trust, and the importance of representing a public entity in speaking with customers. Gretchen Newsom, IBEW Local 569, requested that Calpine agree to neutrality in the event that their employees or subcontractor employees decided to unionize in the future, which had not been successful at SDG&E’s call centers. Calpine representative said that they had completed neutrality agreements with other vendors and they were generally be supportive of that activity. Motion by Chair Shumacher, seconded by Vice Chair Haviland to approve selection of Calpine Energy Solutions and authorize the Interim CEO to execute an agreement for services for an amount not to exceed $720,000 per year for a period of five years, subject to General Counsel approval. Motion carried unanimously 3/0. Item 5: Authorize Execution of San Diego Gas & Electric Community Choice Aggregation Service Agreement; Payment of Community Choice Aggregation Bond and Submittal of Draft Customer Notice to California Public Utilities Commission May 12, 2020 Item #8 Page 114 of 137 RECOMMENDATION 1. Authorize execution of Community Choice Aggregation (CCA) Service Agreement with San Diego Gas & Electric. 2. Approve CCA Bond, in an amount not to exceed $147,000, to the California Public Utilities Commission (CPUC), pursuant to CPUC Resolution E-4907. 3. Approve submittal of draft customer notice to California Public Utilities Commission pursuant to CPUC Resolution E-4907. Barbara Boswell, Interim CEO, reviewied the report. Motion by Chair Shumacher, seconded by Vice Chair Haviland to approved execution of Community Choice Aggregation (CCA) Service Agreement with San Diego Gas & Electric; approve a CCA Bond, in an amount not to exceed $147,000, to the California Public Utilities Commission (CPUC), pursuant to CPUC Resolution E-4907; and approve submittal of a draft customer notice to California Public Utilities Commission pursuant to CPUC Resolution E-4907. Motion carried unanimously 3/0 Item 6: Adopt Resolution Approving Clean Energy Alliance Policies RECOMMENDATION Adopt Resolution #2020-### approving Clean Energy Alliance policies relaed to travel and reimbursement, customer confidentiality and privacy and collections: 1. CEA -001 Travel and Reimbursement Policy 2. CEA-002 Protection of Confidential Information 3. CEA-003 Privacy and Customer Confidentiality Policy 4. CEA-004 Advanced Metering Infrastructure (AMI) Data Security and Privacy Policy 5. CEA-005 – CEA Collections Policy Barbara Boswell, Interim CEO, reviewied the report and recommend that the title of Resolution CEA-001 be amended to say “A resolution of the board of directors of the clean energy Alliance approving travel and reimbursement, customer confidentiality and privacy policy.” Motion by Vice Chair Haviland, seconded by Board Member Becker to approve Resolution CEA-001 Travel and Reimbursement Policy modifying the amount of a meal expense from ‘should be moderete’ to ‘should not exceed $30 per meal and associated gratuities should not exceed 20%,’ Resolution CEA-002 Protection of Confidential Information adding a reference to Board Members, Employees, Agents, etc. to be specifically referenced, Resolution CEA-003 Privacy and Customer Confidentiality Policy, and Resolution CEA-004 Advanced Metering Infrastructure (AMI) Data Security and Privacy Policy. Motion carried unanimously 3/0 CLOSING COMMENTS: Board Members discussed Board Members receiving copies of all RFQs (Request for Quotes) when an RFQ is issued and clarification on setting the agenda through the Staff and the CEO or Board Members submitting requests at the public meeting. ADJOURN Chair Schumacher adjourned the meeting at 3:34 p.m. _______________________________ Angela Ivey, City Clerk of Solana Beach Interim Acting Board Secretary May 12, 2020 Item #8 Page 115 of 137 Clean Energy Alliance - Board of Directors Meeting Minutes April 16, 2020 - 2 p.m. Del Mar Civic Center – Town Hall Remote Participation Only 1050 Camino del Mar, Del Mar CA 92014 CALL TO ORDER: 2 p.m. ROLL CALL: Schumacher, Haviland, Becker FLAG SALUTE Vice Chair Haviland led the Pledge of Allegiance. PUBLIC COMMENT Each person wishing to comment to the Board on any matter not on the agenda shall submit a written comment to the Board Secretary by 1:00 PM the day of the meeting by emailing cityclerk@delmar.ca.us. Please note “CEA Public Oral” in the subject line of your email. If you desire to have your comment read into the record at the Board meeting, please indicate so in the subject line of your email and limit your email to 500 words or less. State law prohibits the Board from taking action on items not listed on the agenda. Comments requiring follow up will be referred to staff and, if appropriate, considered at a future Board meeting. No public comment was received. BOARD COMMENTS & ANNOUNCEMENTS None. PRESENTATIONS None. NEW BUSINESS Item 1: Interim Chief Executive Officer Update RECOMMENDATION: 1. Receive Community Choice Aggregation Update report from Interim Chief Executive Officer. 2. Receive Community Choice Aggregation Regulatory Affairs report from Special Counsel. Interim Chief Executive Officer Barbara Boswell presented the Community Choice Aggregation Update report and reviewed a PowerPoint presentation (on file in the office of the Board Secretary). May 12, 2020 Item #8 Page 116 of 137 Special Counsel Ty Tosdal presented the Community Choice Aggregation Regulatory Affairs report and reviewed a PowerPoint presentation (on file in the office of the Board Secretary). No public comment on the item was received. Board discussion focused on public outreach and designating Board and staff members to coordinate outreach efforts to increase CEA membership. On a motion by Board Member Becker, seconded by Vice Chair Haviland, to direct Interim CEO Boswell to return to the board at the next board meeting with an outreach plan for expansion of the Clean Energy Alliance. Motion carried unanimously, 3/0. Item 2: Clean Energy Alliance Draft Financial Pro-Forma Review; FY 20/21 Budget and Financing Strategy Clean Energy Alliance (CEA) receive updated financial pro-forma from Pacific Energy Advisors; discuss FY 20/21 budget and financing strategy. RECOMMENDATION: 1. Receive report on draft financial pro-forma. 2. Provide direction for FY 20/21 staffing and consulting services and community outreach/communication and marketing. 3. Provide direction on FY 20/21 budget financing strategy. Interim Chief Executive Officer Barbara Boswell introduced Kirby Dusel and John Dalessi of Pacific Energy Advisors who presented on the draft financial pro-forma and reviewed a PowerPoint presentation (on file in the office of the Board Secretary). No public comment on the item was received. On a motion by Vice Chair Haviland, seconded by Chair Schumacher, to direct staff to include in the next pro-forma scenarios of 50%, 75% and 100% renewable base product options and to look at the ability for each city to offer different base product options for their city. Motion carried unanimously, 3/0. On a motion by Chair Schumacher, seconded by Board Member Becker, to direct staff to include in the next pro-forma two additional scenarios: 1) 100% REC 1 renewables at start-up and 2) phasing in of 100% REC 1 renewables by 2023. Motion carried unanimously, 3/0. May 12, 2020 Item #8 Page 117 of 137 On a motion by Vice Chair Haviland, seconded by Chair Schumacher, to direct staff to include in the next pro-forma scenarios that include a 1% discount rate and a 2% rate discount. Motion carried unanimously, 3/0. On a motion by Chair Schumacher, seconded by Board Member Becker, to direct staff to return during the FY21 budget discussion with a reserves policy that includes a 5% annual reserves contribution with a minimum 25% reserves contribution achieved in the first five years and a future reserves range with 25% as the minimum and a goal of greater reserves. Motion carried unanimously, 3/0. On a motion by Board Member Becker, seconded by Vice Chair Haviland provided direction for FY 20/21 staffing and consulting services to continue with all existing agreements. Motion carried unanimously, 3/0. On a motion by Chair Schumacher, seconded by Vice Chair Haviland, to give Interim Chief Executive Officer Boswell the authority to negotiate financing with third parties including Calpine Energy Solutions with the understanding that the Board’s desire is to get the best interest rate possible in order for the Clean Energy Alliance to be able to repay its member agencies $150,000 advances should they need it in a more expedient manner. Motion carried unanimously, 3/0. Item 3: Authorization to Enter into a Contract for Energy Transactions Attorney Services RECOMMENDATION: Authorize the Interim Chief Executive Officer to enter into a contract for energy transactions attorney services with Hall Energy Law for an amount not to exceed $100,000 through June 30, 2021, subject to General Counsel approval. Interim Chief Executive Officer Boswell presented staff’s recommendation to enter into an agreement for energy transaction attorney services with Hall Energy Law due to the need for the Clean Energy Alliance to enter into energy supply contracts which requires specalized legal expertise. Interim Chief Executive Officer Boswell reviewed a PowerPoint presentation (on file in the office of the Board Secretary). No public comment on the item was received. On a motion by Vice Chair Haviland, seconded by Chair Schumacher, to authorize the Interim Chief Executive Officer to enter into contract for energy transaction attorney services for an amount not to exceed $100,000 with a staff recommendation to coordinate with San Diego Community Power on the upcoming San Diego Gas & Electric (SDG&E) Resource Adequacy (RA) solicitations as well as other energy procurements, 3/0. May 12, 2020 Item #8 Page 118 of 137 Item 4: Clean Energy Alliance Board Schedule Special Meeting for 5-Year Goals & Vision Workshop RECOMMENDATION: Clean Energy Alliance Board schedule special meeting for 5-Year goals & vision workshop to include CCA programs, economic revitilization opportunities, citizen advisory committee, strategic plan and inclusive sustainable workforce policy. On a motion by Chair Schumacher, seconded by Vice Chair Haviland, the board scheduled the special meeting for May 7, 2020 at 2 p.m. in Carlsbad (or via teleconference if required). Motion carried unanimously, 3/0. BOARD MEMBER REQUESTS FOR FUTURE AGENDA ITEMS None. ADJOURNMENT: Chair Schumacher adjourned the duly noticed Meeting at 4:50 p.m. ___________________________ Sarah Krietor, Management Analyst City of Del Mar May 12, 2020 Item #8 Page 119 of 137 Staff Report DATE: May 7, 2020 TO: Clean Energy Alliance Board of Directors FROM: Barbara Boswell, Interim Chief Executive Officer ITEM 1: Clean Energy Alliance Financial Pro-Forma Review; 5-Year Goals and Vision Discussion RECOMMENDATION: 1.Review initial draft of Clean Energy Alliance (CEA) Financial Pro-Forma. 2.Discuss CEA 5-Year Goals and Vision and provide direction regarding CCA program prioritization that support JPA goals, climate action plan goals, economic development, local development and support low income. 3.Provide direction to staff regarding a Citizen Advisory Committee Policy. 4.Provide direction to staff regarding a CEA strategic plan. 5.Provide direction to staff regarding an Inclusive Sustainable Workforce Policy. BACKGROUND AND DISCUSSION: The Clean Energy Alliance Joint Power Authority was formed by the cities of Carlsbad, Del Mar and Solana Beach in November 2019 for the purpose of establishing a community choice aggregation (CCA or CCE) program in their communities. Recital 3 of the JPA Agreement states: “The purposes for the Founding Members…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.” Recital 6 of the JPA Agreement identifies the following goals of the JPA: •Provide electricity in a responsible, reliable, innovative and efficient manner; •Generation rates competitive with San Diego Gas & Electric (SDG&E) with a target 2% discount below SDG&E’s base electric generation product; •Offer a mix of energy products that is cleaner that SDG&E’s similar service and other options including voluntary 90% & 100% products, with the objective of achieving- and sustaining- the Climate Action Plan goals of the members, at competitive rates; May 12, 2020 Item #8 Page 120 of 137 • An aggregate electric supply portfolio with overall lower greenhouse gas (GHG) emissions than SDG&E, and that supports achievement of members’ greenhouse gas reduction goals and renewable electricity goals; • An energy portfolio that incorporates energy efficiency and demand response programs and pursues ambitious energy consumption reduction goals; • 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 of programs implemented by the Authority; • Provide a range of energy product and program options, available to all members and customers, that best serve their needs, their local communities, and support regional sustainability efforts; • Support low-income households having access to special utility rates including California Alternative Rates for Energy (CARE) and Family Electric Rate Assistance (FERA) programs; • 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 • Create an administering Authority that seeks to maximize economic benefits and is financially sustainable, well-managed and responsive to regional and local priorities. The JPA Agreement identifies specific goals regarding its renewable portfolio standards and power supply. Section 6.4 establishes the goal of a renewable energy portfolio from 100% renewable sources, at competitive rates, by no later than 2035. Section 6.5 sets forth a base energy product with a 50% renewable energy content, but in no event lower than SDG&E’s base product, with voluntary opt-up product offerings such as 75% or 100% renewable content. The Climate Action Plans of Carlsbad0F 1, Del Mar 1F 2and Solana Beach 2F 3set the following goals for their respective cities: Carlsbad Del Mar Solana Beach GHG Reduction Target 49% 50% 50% Target date 2035 2035 2035 GHG Reduction Measures Rooftop Solar; Energy Efficiency Retrofits; Solar water heater/heat pump installation; Rooftop solar; Energy Efficiency; CCA Program; Reduce single passenger vehicle trips; Rooftop Solar; Energy efficiency retrofits; Solar water heating; 1 City of Carlsbad Climate Action Plan September 2015 2 City of Del Mar Climate Action Plan June 2016 3 City of Solana Beach Climate Action Plan July 2017 May 12, 2020 Item #8 Page 121 of 137 Carlsbad Del Mar Solana Beach Building cogeneration; Commercial commissioning; CALGreen building code; Increased zero- emissions vehicle travel Transportation Demand Management Citywide renewable projects Water delivery and conservation Bicycle and pedestrian- friendly streets & sidewalks; Improved public transit service; Reduce water consumption; Water-efficient landscaping; Pool covers to conserve water; Capture methane from landfills; Promote expanded recycling programs Reduce natural gas water heating; CCA Program The Climate Action Plans are in alignment with regards to GHG reduction targets and timing. There are also several areas of commonality with the GHG reduction measures including: supporting rooftop solar (residential and commercial), energy efficiency programs, solar and electric water heating and increased use of heat pumps, as well as establishing a CCA program. Clean Energy Alliance Initial Draft Pro Forma At its April 16, 2020 regular CEA board meeting, the Board reviewed the initial draft of the CEA CCA financial pro forma. Assumptions that served the basis for the initial draft included a minimum 50% renewable energy default product increasing to 100% by 2035, no category 3 renewable energy credits, rate parity with SDG&E and a 5% of revenue annual reserve contribution. With these assumptions, and current energy market conditions, the financial outlook over the next 5-years is reflected in the following chart: May 12, 2020 Item #8 Page 122 of 137 At the April 16 Board meeting, several alternative program options and assumptions were requested to be evaluated with an updated pro forma to come back to the Board. The updated pro forma with the requested scenarios will be brought before the Board at its May 21, 2020 meeting. The original initial draft pro forma is presented to provide the Board with a basis for discussion regarding the 5-year goals and vision for CEA. CCA Programs The annual net surplus generated by the CCA provide funds and opportunity for implementation of Board directed CCA programs that address the priorities and goals of CEA as established by the Board and in the JPA Agreement. Examples of CCA programs, that have been implemented, or are being implemented by CCAs throughout the State of California are shown in the below. $0 $10 $20 $30 $40 $50 $60 $70 $80 FY 20/21 FY 21/22 FY 22/23 FY 23/24 FY 24/25MillionsCEA Initial Draft Pro Forma Revenue Expenditures Cumulative Res Cum. Net Surplus May 12, 2020 Item #8 Page 123 of 137 Staff is requesting the Board to prioritize potential CCA programs that CEA will work to implement over the next 5-years, that support climate action plan measures, economic development, clean energy, local development and support of low-income goals. With the current impact of COVID-19 on member agency city economies, CEA has an opportunity to identify and implement programs that can assist in the economic revitalization efforts. Citizen Advisory Committee May 12, 2020 Item #8 Page 124 of 137 Section 5.9 of the JPA Agreement establishes the authority for the Board to establish an advisory committee to assist the Board in implementing and operating its CCA program. Pursuant to the JPA Agreement, the committees should have equal representation from the member agencies. The Board may establish criteria to qualify for appointment to the committee, establish rules, regulations, policies or procedures to govern the committee. Citizen Advisory Committees (CAC) have been established by CCAs to provide input to CCA boards and assist in the decision-making process. Examples of areas that a CEA CAC may address include: • Community Outreach • Development of public information • Finance and Risk Management • CEA Expansion Staff is seeking direction from the Board regarding establishing a CAC policy that addresses membership criteria, application process, committee purpose and scope. Strategic Plan A strategic plan will provide a process of documenting and establishing the direction of CEA, assessing where CEA is and where CEA is going. It provides a place to record the mission, vision and values, long-term goals and actions plans that will be used to reach those goals. Staff is seeking direction from the Board regarding development of a strategic plan for CEA. Inclusive Sustainable Workforce Policy Inclusive sustainable workforce policies establish procedures and practices regarding hiring staff, procurement of goods and services, procurement of energy, and local development. Attachment A is the Inclusive and Sustainable Workforce Policy from Peninsula Clean Energy, a CCA program in northern California. Staff is seeking direction from the Board regarding development of an Inclusive Sustainable Workforce Policy for CEA. FISCAL IMPACT There is no fiscal impact associated with this item. ATTACHMENTS: Attachment A – Peninsula Clean Energy Inclusive and Sustainable Workforce Policy May 12, 2020 Item #8 Page 125 of 137 Policy Number: 10 Original Adoption Date: December 15, 2016 Revised: October 25, 2018 Subject: Inclusive and Sustainable Workforce Policy Policy: One of PCE’s strategic goals is to “foster a work environment that espouses sustainable business practices and cultivates a culture of innovation, diversity, transparency, integrity, and commitment to the organization’s mission and the communities it serves.” PCE recognizes that an inclusive and sustainable workforce helps PCE meet its core mission and goals more effectively, serve its customers in a more culturally sensitive manner, and reflect the businesses we partner with and the community we serve more comprehensively. PCE strives to have a workforce that is as inclusive as the community it serves. Inclusive Workforce PCE Staff PCE relies on its employees to provide clean, cost-effective, alternative energy to its customers. These customers live in diverse communities, and an inclusive workforce comprised of staff who reflect and are invested in these communities allows PCE to serve them more effectively. An inclusive staff also provides good jobs for people from diverse communities. To help maintain and strengthen PCE’s inclusive staff, PCE will: (1)Engage in broad outreach efforts in diverse communities, includingdisadvantaged and low-income communities, to ensure a diverse pool ofcandidates for open positions; (2)Provide fair compensation that aligns with regional market indicators forcompensation levels for each position; (3)Be transparent about these practices and lessons learned; and (4)Provide contact information for staff who can answer questions about thispolicy. Supply Chain PCE’s commitment to inclusion also extends to its supply chain. Where and from whom PCE purchases goods and services have important consequences for businesses, customers, and their communities. An inclusive supply chain is an important driver for successful delivery of PCE’s services to its customers, and of fair and equitable economic development generally. To help ensure an inclusive supply chain, PCE will: (1)Strive to use local businesses and provide fair compensation in the purchase Attachment A May 12, 2020 Item #8 Page 126 of 137 of services and supplies; (2) Proactively seek services from local businesses and from businesses that have been Green Business certified and/or are taking steps to protect the environment; (3) Engage in efforts to reach diverse communities to ensure an inclusive pool of potential suppliers; (4) Collect information from suppliers and contractors on the inclusivity of their workforce; (5) Include questions about supplier inclusivity in requests for proposals (RFPs) for services; (6) Require reporting from developers and large vendors on inclusivity in business ownership and staff; (7) Be transparent about these practices and lessons learned; and (8) Provide contact information for staff who can answer questions about this policy. Inclusive Business Practices To fulfill its core mission to provide energy choices to the diverse residents and communities of San Mateo County, PCE must ensure that its services and information are accessible to all communities. Accordingly, PCE will: (1) Strive to provide information on PCE’s services in the multiple languages commonly spoken in PCE’s service area (including mailers, tabling materials, customer service, call center, workshops and outreach events, advertisements, and other means of customer engagement); (2) Conduct marketing and outreach in diverse communities (including advertising in minority-owned media, establishing partnerships with community organizations, and using various media, such as radio and television) to increase awareness of PCE’s services and programs; (3) Strive to attend important multi-cultural community events with multi-lingual materials and speakers; (4) Share information about activities and initiatives that promote inclusion, access, and diverse engagement in the community. Non-Discrimination Pledge PCE will not discriminate, and will require that its suppliers do not discriminate, on the basis of race, color, national origin, ancestry, age, disability (physical or mental), sex, sexual orientation, gender identity, marital or domestic partner status, religion, political beliefs or affiliation, familial or parental status (including pregnancy), medical condition (cancer-related), military service, or genetic information. May 12, 2020 Item #8 Page 127 of 137 Sustainable Workforce Support of local businesses, union labor and apprenticeship and pre-apprenticeship programs that create employment opportunities are important components of building and sustaining healthy and sustainable communities. It is in the interest of Peninsula Clean Energy in San Mateo County (PCE) to provide fair compensation and sustainable workforce opportunities within a framework of competitive service and the promotion of renewable energy, energy efficiency and greenhouse gas reduction. PCE Recognizes the importance of locally-generated renewable energy in assuring that California is provided with (1) adequate supplies of renewable energy for economic growth, (2) sustained local job opportunities and job creation, and (3) effective means to reduce the impacts of greenhouse gas emissions. PCE also recognizes the opportunities that energy efficiency programs provide for local workforce training and employment. PCE supports fair compensation in direct hiring, renewable development projects, energy efficiency programs and in procurement of PCE services and supplies. PCE also supports quality State of California approved apprenticeship and pre-apprenticeship training programs in construction craft occupations to foster long-term, fairly compensated employment opportunities for program graduates and believes that local apprenticeship and pre-apprenticeship programs are an efficient vehicle for delivering quality training in construction industry craft occupations. PCE therefore desires to facilitate and accomplish the following objectives: (1) Support for and direct use of local businesses; (2) Support for and direct use of union members from multiple trades; (3) Support for and use of training and State of California approved apprenticeship programs, and pre-apprenticeship programs from within PCE’s service territory; and (4) Support for and direct use of green and sustainable businesses. “Local” is defined as 1.) San Mateo County; 2.) Nine Bay Area Counties (Alameda, Contra Costa, Marin, Napa, San Mateo, San Francisco, Santa Clara, Solano, Sonoma); 3.) Northern California; 4.) California. Preference will be give first to San Mateo County; second, to the Nine Bay Area Counties; third, to Northern California; fourth, to California. May 12, 2020 Item #8 Page 128 of 137 PCE will support the objectives stated above in the following ways: PCE Power Purchase Agreements with Third Parties PCE shall collect information from respondents to any bidding and/or RFP/RFQ process regarding past, current and/or planned efforts by project developers and their contractors to: • Employ workers and use businesses from the PCE service territory. • Employ properly licensed (A, B, C10, C7, C46) contractors and California Certified electricians. • Utilize multi-trade project labor agreements on the proposed project or any prior project developments. • Utilize local apprentices, particularly graduates of local pre-apprenticeship programs. • Pay workers the correct prevailing wage rates for each craft, classification and type of work performed. • Display a poster at jobsites informing workers of prevailing wage requirements. • Provide workers compensation coverage to on-site workers. • Support and use State of California approved apprenticeship programs. Relevant information submitted by proposers will be used to evaluate potential workforce impacts of proposed projects with the goal of promoting fair compensation, fair worker treatment, multi-trade collaboration, and support of the existing wage base in local communities where contracted projects will be located. PCE Owned Generation Projects Any PCE-owned renewable development project shall use local businesses, union labor, and apprenticeship programs through multi-trade agreements and/or through multiple agreements for work. Each construction contractor or subcontractor performing work on any PCE-owned project shall use a combination of local labor, union labor and apprenticeship programs, and shall follow fair compensation practices including proper assignment of work to crafts that traditionally perform the work. For each renewable energy project, PCE or its construction contractor shall require of its regular workforce that at least 50% of all “journey level” employees shall be graduates of a State of California approved apprenticeship program and at least 20% shall be enrolled and participating in a local State of California approved apprenticeship program. Apprenticeship programs must be approved by the State Department of Apprenticeship Standards. May 12, 2020 Item #8 Page 129 of 137 PCE Feed-In Tariff Price Projects PCE shall use best efforts to ensure each construction contractor or subcontractor performing work on any PCE Feed-in Tariff project utilize local businesses, union labor, multi-trade agreement, apprenticeship programs, and fair compensation practices including proper assignment of work to crafts that traditionally perform the work. PCE Energy Efficiency Projects PCE shall use best efforts to support local businesses, union labor, and local apprenticeship programs in the implementation of its energy efficiency programs. PCE shall use best efforts to ensure each construction contractor or subcontractor performing work on any PCE energy efficiency program utilize local businesses, union labor, local apprenticeship, and fair compensation practices in program implementation including proper assignment of work to crafts that traditionally perform the work. May 12, 2020 Item #8 Page 130 of 137 Staff Report DATE: May 7, 2020 TO: Clean Energy Alliance Board of Directors FROM: Barbara Boswell, Interim Chief Executive Officer ITEM 1: Clean Energy Alliance Board Policy Regarding Handling of Unsolicited Proposals RECOMMENDATION: Provide direction regarding development of an Unsolicited Proposal Policy. BACKGROUND AND DISCUSSION: The Clean Energy Alliance (CEA) Joint Powers Authority Agreement identifies the goal of providing innovative energy programs, projects and services to its customers. Typically, these programs, projects and services would be sourced through solicitation processes such as Request for Proposal or Request for Qualifications. However, there may be instances where public or private sector entities or individuals have an innovative project or idea that they desire to propose to the Board outside of the normal solicitation processes. An Unsolicited Proposal Policy establishes procedures and practices regarding how unsolicited proposals would be submitted and how they would be handled once submitted. Attachment A is a sample Unsolicited Proposal Policy from SANDAG. Staff is seeking direction regarding development of an Unsolicited Proposal Policy. FISCAL IMPACT There is no fiscal impact associated with this item. ATTACHMENTS: Attachment A – SANDAG Unsolicited Proposal Policy May 12, 2020 Item #8 Page 131 of 137 Board Policy No.: 040 Unsolicited Proposals and Partnership Requests SANDAG normally develops its own requirements, solicits proposals or bids, and contracts with entities whose proposals or bids are deemed most advantageous to SANDAG, however, the Board of Directors recognizes the valuable, innovative ideas or sources of revenue that educational and nonprofit institutions, private sector entities, and individuals may bring to propose relevant projects or partnerships that they believe are within the purview of SANDAG and will help meet SANDAG goals. This policy outlines how SANDAG staff will process unsolicited proposals to contract with SANDAG as a consultant or contractor, and partnership requests seeking to work with SANDAG in a public private partnership (P3) or other similar arrangement. Scope of Policy 1.1 This policy is intended to provide high-level policy considerations and procedures to guide SANDAG management decisions when responding to unsolicited proposals and partnership requests (unsolicited offers). The Board of Directors hereby delegates authority to the Executive Director to create written procedures and to contract with parties submitting unsolicited proposals or partnership requests consistent with the requirements of this policy and Board Policy No. 017: Delegation of Authority. 1.2 An "unsolicited proposal" is defined as a written proposal to perform a proposed task or effort, initiated and submitted to SANDAG by a prospective consultant or contractor without a solicitation from SANDAG, with the objective of obtaining a contract award from SANDAG. The unsolicited proposal is the formal means by which business proposals are brought to the attention of SANDAG, submitted in the hope that the SANDAG will contract with the offeror for goods or services. 1.3 An “unsolicited partnership request” is a written request that SANDAG participate in a P3 or other partnership arrangement. Unlike a consultant or contractor arrangement, a partnership request calls for the requesting partner(s) to assume responsibility and financial liability for performing all or a significant number of functions in connection with a project. In transferring responsibility and risk for multiple project elements to the partner, SANDAG would reduce its controls and risks regarding the project. Additionally, the partner would receive the opportunity to earn a financial return or other benefits commensurate with the risks it would assume. 1.4 An “offeror” is the term used in this policy to refer to entities or persons submitting an unsolicited offer, which may be in the form of an unsolicited proposal or partnership request. 1.5 The following types of correspondence will not be considered under this policy: (1) written inquiries regarding SANDAG interest in research and/or development areas, (2) proposal explorations, (3) technical inquiries, (4) research descriptions, (5) offers to sell commercial off-the- shelf equipment or software, (6) a proposal that overlaps with the scope of work in a pending competitive procurement, and (7) proposals or requests that would require SANDAG to act outside SANDAG authority, inconsistently with applicable laws, or outside the purview of the agency. Attachment A May 12, 2020 Item #8 Page 132 of 137 2 Role of SANDAG Staff 2.1 Offerors may engage in preliminary discussions with SANDAG staff to gauge SANDAG interest in a potential unsolicited proposal or partnership request. Both SANDAG and offeror staff, however, must exercise caution to ensure that these preliminary communications do not lead to inadvertent collaboration on the development of a work statement that would subsequently be incorporated in an unsolicited offer. This would potentially invalidate the unsolicited nature of the offer or disqualify it from being considered due to concerns about unfair competition. Discussions between a potential offeror and SANDAG staff other than SANDAG Contracts and Procurement Division (CPD) staff should be limited to preliminary discussions of general concepts only. Discussions with non-CPD staff should be used solely to gauge SANDAG potential interest and determine whether the unsolicited offer would be of interest to SANDAG. If a potential offeror wishes to pursue the proposal or request after preliminary discussions, SANDAG staff should refer the offeror to this Board Policy and the CPD. 2.2 In cooperation with the Office of General Counsel, the CPD is responsible for: (1) establishing contracting policies and procedures consistent with Board Policies and applicable laws that are needed to address matters unique to unsolicited proposals and partnerships; (2) processing solicitations and proposals; and (3) processing unsolicited offers. The CPD will endeavor to ensure prompt and impartial evaluation in all of its function areas. 3 Preparation and Submission of Proposals 3.1 All unsolicited offers submitted for SANDAG consideration should be addressed to: Contracts and Procurement Division Attention: Unsolicited Offers SANDAG 401 B Street, Suite 800 San Diego, CA 92101 unsolicitedoffers@SANDAG.org An unsolicited offer submitted directly to anyone other than CPD personnel cannot be acted upon officially until it is submitted to the CPD. If an offer is not sent by email, five copies of each offer must be delivered to SANDAG, one of which must be a manually signed original. Unsolicited offers should be prepared in conformance with this policy and any written procedures developed under the authority of the Executive Director. Offerors may submit their proposals or requests in their own format as long as the required data are provided. Email submissions may be made to the email address above, provided a single, manually signed hard copy is mailed concurrently. All electronic submissions must be in PDF and OCR format. 3.2 An unsolicited offer must meet all of the following requirements in order to be eligible for formal evaluation: (1) it must be in writing; (2) contain a novel, innovative, or otherwise meritorious concept, application, approach, or method; (3) be independently originated and developed by the offeror; (4) be prepared without SANDAG staff supervision or direct SANDAG staff assistance: and (5) present the proposed work or project in sufficient detail to allow a determination to be made that SANDAG support could be worthwhile and the proposed work could enhance, benefit, and provide valuable input to SANDAG mission or responsibilities. 3.3 The following information must be included in unsolicited offers: 3.3.1 Name(s) and address(es) of entity(ies) or persons submitting the offer. 3.3.2 Type(s) of organization(s) (for profit, nonprofit, educational, small business, other) submitting the offer. May 12, 2020 Item #8 Page 133 of 137 3.3.3 In the case of participation of other key entities or persons not participating as an offeror, provide identifying information for such entities or persons. 3.3.4 Names and telephone numbers of the offeror's technical and business personnel whom SANDAG may contact for evaluation and negotiation purposes. 3.3.5 Identification of whether the offer is intended to be an unsolicited proposal or unsolicited partnership request. 3.3.6 Identification of any proprietary data that the offeror intends to be used by the agency only for evaluation purposes. (See Section 3.4 for instructions). 3.3.7 Names of any other Federal, State, local agencies, or other parties receiving the offer. 3.3.8 Date of submission of the offer. 3.3.9 A signature of a responsible official authorized to contractually obligate the offeror. 3.3.10 Technical information, including a concise title and an abstract (approximately 200 words) of the proposed effort or partnership. 3.3.11 A reasonably complete discussion stating the objectives of the project or partnership, method of approach, the nature and extent of the anticipated results, and the manner in which the project or partnership will help support the SANDAG mission. 3.3.12 The names and brief background information of the offeror's key personnel who would be involved. 3.3.13 The type of support, if any, the offeror requests of SANDAG; e.g., financial, facilities, real property rights, equipment, materials, profit sharing, or personnel resources. 3.3.14 A cost estimate for the proposed contract award, or estimated amount of investment from offeror and amount, if any, sought from SANDAG. The estimate must be sufficiently detailed, by element of cost, for meaningful evaluation by SANDAG and include subcontractors, partners, or any potential private equity contribution the offeror would provide. Offeror also must provide its estimate of the projected total net value or cost of the proposal or partnership to SANDAG and offeror over the life of the program, project, or service. 3.3.15 Period of time for which the offer is valid (minimum of three months). 3.3.16 Proposed schedule. 3.3.17 A statement, if applicable, regarding proposed cost or revenue sharing. 3.3.18 Identification of any organizational conflicts or financial conflicts of interest with SANDAG, its member agencies, or the members of the Board of Directors. 3.3.19 A brief description of the offeror's organization and previous relevant work or experience. 3.3.20 A statement demonstrating the financial ability of the offeror to perform the project or venture. 3.4 Proprietary Data Whenever possible, an offeror should submit a proposal without restrictions on the use of technical data provided. All offers shall be public records. The offeror must state whether or not the proposal contains proprietary information that constitutes a trade secret pursuant to California Civil Code section 3426.1. If an unsolicited offer includes trade secret data that the offeror does not want disclosed for any purpose other than evaluation of the offer, the title page shall be marked with the following legend: May 12, 2020 Item #8 Page 134 of 137 USE AND DISCLOSURE OF DATA The trade secret information in this offer shall not be duplicated, used, or disclosed in whole or in part for any purpose other than to evaluate the offer; provided, that if a contract or partnership agreement is executed with offeror as a result of or in connection with submission of this data, SANDAG shall have the right to duplicate, use, or disclose the data to the extent provided in the contract. This restriction does not limit SANDAG’s right to use information contained in the data if it is obtainable from another source without restriction. The data subjected to this restriction are contained in Page(s) [insert page numbers] of the offer. The offeror also shall mark each restricted page with the following legend: Use or disclosure of data in sections or paragraphs [insert section or paragraph numbers] on this page is trade secret and is therefore subject to the restriction on the title page of this offer. An unsolicited offer will be returned to the offeror if it is marked with a different legend than that provided in paragraph (a) above. The offeror will be informed that the offer cannot be considered because it is impracticable for SANDAG to comply with the offeror’s requirements. The offeror shall also be informed, however, that the offer will be considered if it is resubmitted with the legend provided above. 4 Evaluation of Proposals 4.1 Preliminary Review. Prior to making a Comprehensive Evaluation of a document submitted as an unsolicited offer, the CPD will determine that the document contains sufficient information to enable meaningful evaluation. The CPD will notify the potentially interested SANDAG Department Director(s) and coordinate a preliminary review of the offer. If the Department Director(s) in his/her/their sole discretion, deems the offer in SANDAG’s best interest to further evaluate, the CPD will notify the offeror. If the document lacks information required by this policy or other procedures promulgated by SANDAG the offeror will be notified and given the opportunity to submit the needed information. The Comprehensive Evaluation cannot begin until the needed information is received and one or more Department Directors has authorized the expenditure of the funds within SANDAG’s approved budget to conduct a Comprehensive Evaluation. If it is determined that the submission does not meet the criteria for Comprehensive Evaluation as an unsolicited offer, a reply will be sent to the offeror, indicating the reason(s) for not considering it. SANDAG will endeavor to notify an offeror whether or not its offer will progress to a Comprehensive Evaluation within 60 days of receipt of the offer. Offerors shall have neither vested rights in this decision, nor ability to protest a decision by SANDAG not to conduct a Comprehensive Evaluation. 4.2 Comprehensive Evaluation. Upon acceptance of an unsolicited offer for Comprehensive Evaluation, CPD will convene a panel of CPD staff and experts to perform an independent evaluation. The decision as to whether favorable action will be taken on the offer will be based upon an assessment by the panel of the potential contribution of the proposed project or partnership arrangement to the objectives of SANDAG and whether the risk and cost to SANDAG can be justified under the circumstances. SANDAG staff or consultants will conduct cost, economic or market analyses to evaluate the current and future market conditions and determine whether the project or partnership arrangement is viable and in the best interest of SANDAG. The offeror will need to be available to the evaluation team to answer questions and provide additional information without charge to SANDAG. An offeror must establish it and/or its team or partners have sufficient technical experience and readiness to proceed. 4.3 Privacy Impacts. SANDAG may determine that an offer involving exchange of data raises public privacy concerns that require further assessment. SANDAG may require a privacy impact assessment to occur prior to fully evaluating an offer. May 12, 2020 Item #8 Page 135 of 137 4.4 If it is determined to be in the best interest of SANDAG, other local, state, or Federal agencies may be approached to share in the evaluation and consideration of the offer. 4.5 When the Comprehensive Evaluation has been completed, CPD will inform the offeror of the results of the evaluation. If SANDAG determines the offer is viable and worthy of pursuit in its sole discretion, it will evaluate whether to utilize Section 5 or 6 of this policy as the next step in the process. 4.6 Normally, unsolicited offers are not returned after completion of the evaluation. They are retained in a secure location for a period of time and then destroyed after two years. If the offeror wishes the offer to be returned, a statement to that effect should be clearly made in the submission. 5 Determinations Regarding Competitive Process 5.1 SANDAG will determine in its sole discretion whether competition exists from other potential offerors. 5.2 If SANDAG determines competition may exist, the CPD shall publicly notice the unsolicited offer on its website and in any other locations directed by SANDAG management, and allow for other offerors to submit an abbreviated competing proposal within 30 days for consideration by SANDAG. The public notice shall include the evaluation criteria that SANDAG will use to evaluate competing offers. 6 Determinations Regarding Whether a Sole Source Contract is Appropriate 6.1 SANDAG will utilize written procedures to evaluate whether a contract award or partnership agreement can be justified without a competitive process. Such procedures shall be consistent with SANDAG sole source justification procedures and will be dependent upon the sources of funding SANDAG would use and the circumstances of each offer. 6.2 The offeror may claim, or it may appear from an offer, that no other entity or person could offer the same product, service, or partnership arrangement. In the case of software, technology or other intellectual property, it may appear that only the offeror can perform. These circumstances alone, however, will not justify a sole source contract. The concept will be evaluated on its own merit, including analysis of revenue producing potential and opportunities for cost recovery for the applicable project or program. In many cases, the offeror will have competitors that could offer SANDAG similar solutions, but with different options, functionality, costs or risks. A competitive process should be used to select the consultant, contractor or partner, unless SANDAG staff determines that the proposed concept itself is proprietary, or the proposal concerns a specific piece of real property with unique attributes essential to SANDAG’s interests to which the offeror has exclusive ownership and/or negotiating authority. 6.3 The essential consideration in whether or not to accept an unsolicited offer without competition (i.e., to engage in contract negotiations on a sole source basis) is whether or not the offer is presenting a proprietary/trade secret concept or real property interest that is itself essential to contract performance. If an offeror is merely presenting a rationale for doing certain work that could be done by others if given the chance to compete, then there is no permissible basis to authorize a sole source. In the case of a proprietary software product that is being offered to achieve a certain goal, SANDAG could not, for example, release proprietary programming codes in a competitive solicitation. Staff should, however, if it deems the proposal one it recommends pursuing, compete the contract award in terms of describing what the mission or goal is in order to see what other firms might offer in terms of software solutions. In other words, staff cannot assume that the product being offered in the unsolicited proposal is the only, or best, product available to meet the objectives of the agency. May 12, 2020 Item #8 Page 136 of 137 7 Partnership Requests that Include Joint Development Proposals Offers including proposed joint use and development on SANDAG-developed and/or owned property will be evaluated using the following additional criteria: 7.1 Whether the project will negatively impact present or future public transportation facilities. 7.2 Whether the project is consistent with regional and local community policies and plans. 7.3 Whether the project demonstrates a fiscal benefit to SANDAG or a public transportation operator. 7.4 Whether the project provides economic development potential to SANDAG and/or the community. 7.5 Whether the project increases accessibility to public transportation. 7.6 Whether the project addresses community needs for housing, employment, services, or recreational facilities. 8 Board of Directors Participation 8.1 As set forth in Board Policy No. 017: Delegation of Authority, the Executive Director and his/her delegates may enter into agreements not currently incorporated in the budget and make other modifications to the budget in an amount up to $300,000 per transaction so long as the overall budget remains in balance. If, in order to act upon an offer, a modification of more than $300,000 would be necessary, such action shall be brought to the Executive Committee if under $500,000 or to the Board of Directors for amounts in excess of $500,000 as prescribed by Board Policy No. 001 Allocation of Responsibilities. 8.2 For all offers that progress to the Comprehensive Evaluation Stage, the Executive Director will report actions taken to the Board in summary written form at the next regular meeting of the Board. 9 SANDAG Liability 9.1 This policy and the procedures it describes do not commit SANDAG to evaluate an offer within a certain period of time, execute a contract, or to expend any public funds. SANDAG has no obligation to reimburse an offeror for any costs it incurs in preparing or submitting an offer or in providing information to SANDAG as it evaluates an offer. 9.2 All unsolicited offers submitted to SANDAG become the property of SANDAG and public records and, as such, may be subject to public review and use by SANDAG. Documents protected by law from public disclosure will not be disclosed by SANDAG if clearly marked as described in Section 3.4 of this policy. Trade secrets may be marked as confidential only to the extent they meet the requirements of California Civil Code section 3426.1(d). Only information claimed to be a trade secret at the time of submittal to SANDAG and marked as required in this policy will be treated as a trade secret. To the extent that an entire offer is marked as confidential or a trade secret, such designations will not be effective, and the offer will be rejected. To the extent that an offeror marks any information as either confidential or a trade secret, the offeror thereby agrees to defend and indemnify SANDAG in the event that SANDAG’s non-disclosure is challenged in any legal action. Please see SANDAG Board Policy No. 015: Records Management Policy for information regarding the treatment of documents designated as confidential by SANDAG. 9.3 Offerors who wish to release information regarding evaluation, selection, or contract awards information in a press release or its promotional materials prior to the time a public announcement is made by SANDAG must receive prior written approval from SANDAG. Adopted: June 28, 2019 May 12, 2020 Item #8 Page 137 of 137 Clean Energy Alliance Update Jason Haber, Intergovernmental Affairs Director May 12, 2020 Clean Energy Alliance Update •Agenda item request per CMC 1.20.060 –Mayor Hall –CEA update, discussion & direction •Background •Implementation status •Financial projections •Discussion with CEA Board representatives 2 Background •October 2019 –Adopted Resolution No. 2019-197 •Approved CEA Joint Powers Agreement –Appointed Schumacher (primary) & Hall (alternate) to CEA Board of Directors •November 2019 –Adopted Resolution No. 2019-22 •Accepted peer review of feasibility study •Authorized $150,000 to fund CEA FY 19-20 Budget 3 Implementation Status •On track to begin service in May 2021 •Implementation Plan certified by CPUC •Year -Ahead Resource Adequacy Forecast filed –JPA withdrawal provisions: •1 year notice & potential financial obligations beyond initial advance •All member agencies remain committed 4 Implementation Status •Board Chair & Vice Chair •Interim Board Secretary •Interim Board Treasurer/CFO •Interim CEO •General Counsel •Regulatory Special Counsel •Energy Transactions Attorney •Secured banking services 5 Implementation Status •Agreements for payment/reimbursement of initial costs •Established website: www.thecleanenergyalliance.com •Member agency service agreements •SDG&E service agreement •CPUC bond payment •County BOS approved Conflict of Interest Code 6 Implementation Status •Adopted Initial Budget •Travel and Reimbursement Policy •Protection of Confidential Information Policy •Privacy and Customer Confidentiality Policy •Advanced Metering Infrastructure (AMI) Data Security and Privacy Policy •Collections Policy 7 Implementation Status Ongoing: •5-year Goals & Vision –Strategic Plan •Financial Pro-Forma Review •FY 2020-21 Budget •Citizens Advisory Committee •Unsolicited Proposals Policy •Inclusive & Sustainable Workforce Policy –Consistent with JPA Agreement & State Law 8 Financial Projections •Base Assumptions –50% renewable energy default at launch increases to 100% renewable by 2035 –Renewable energy portfolio assumes use of 82% PCC1 and 18% PCC2, which reflects RPS compliance limitations for PCC2 products –Annual reserve contribution equal to 5% of total projected revenues –Financing & repayment of initial budget contributions 9 10 Fiscal Year Ending:2020 2021 2022 2023 2024 2025 I. Revenue - 9,533,643 69,970,228 71,333,092 72,718,018 74,125,343 II. Operating Expenses Power Supply - 8,103,205 58,057,665 59,435,021 60,960,894 61,960,598 Staff 50,000 235,000 600,000 618,000 636,540 655,636 Administrative Costs*253,000 1,105,691 2,444,552 2,495,095 2,555,592 2,614,773 Subtotal Operating Expenses 303,000 9,443,896 61,102,216 62,548,116 64,153,025 65,231,007 Operating Margin (303,000) 89,748 8,868,011 8,784,977 8,564,992 8,894,335 III. Financing Interest - 97,750 105,686 64,994 23,129 0 Principal - 450,000 1,346,130 1,507,440 1,549,207 131,023 Subtotal Financing - 547,750 1,451,816 1,572,434 1,572,335 131,023 Operating Margin Less Financing (303,000) (458,002) 7,416,196 7,212,543 6,992,657 8,763,312 IV. Cash From Financing 450,000 4,450,000 - - - - V. Other Uses CPUC and CAISO Deposits 147,000 500,000 - - - - Collateral Deposits 0 2,500,000 - - - - Reserve Additions - 476,682 3,498,511 3,566,655 3,635,901 3,706,267 Subtotal Other Uses 147,000 3,476,682 3,498,511 3,566,655 3,635,901 3,706,267 VI. Net Surplus/(Deficit)- 515,315 3,917,684 3,645,888 3,356,756 5,057,045 VII. Cumulative Reserve - 476,682 3,975,194 7,541,848 11,177,749 14,884,016 VIII. Cumulative Net Surplus - 515,315 4,433,000 8,078,888 11,435,644 16,492,689 * Comprised of Technical and Legal Services, Customer Outreach and Communications, Utility Services Fees, Data Management Services, Uncollectibles * includes financing of initial advances @ 2% interest Draft Financial Pro Forma Financial Projections •Additional Scenarios & Portfolio Options –100% PCC1 renewable at launch –100% PCC1 by 2023 –2% rate discount & 1% rate discount –50% renewable/75% carbon free option –75% renewable energy option* –100% renewable energy option 11 Draft Projected Net Surplus & Sensitivities 12 Projected Net Surplus and 1% Discount Scenarios $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $- 2021 2022 -Base Case Net Surplus -1% Discount with No PCC2 2023 2024 2025 -1% Discount -1% Discount with PCC2 Phase Out Projected Net Surplus and 2% Discount Scenarios $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $- 2021 2022 -Base Case Net Surplus -2% Discount with No PCC2 2023 2024 2025 -2%Discount -2% Discount with PCC2 Phase Out Other Portfolio Options 13 Options 50% Renewable/75% GHG Free (Carbon Free) Default Voluntary 100% Renewable Option Affect on Rate Discount/Rate Premium 1% decrease in rate discount $.0075/kWh ~ $2.80 per month for average residential usage Notes Reduction in rate discount covers incremental cost of GHG-free product Rate is set to cover incremental cost of increase to 100% renewable Advising CEA Board representatives •City Council may advise and provide feedback –Cannot direct CEA Board representatives •Key City Council decisions per CEA Agreement: –Liability firewall –Selection of default power supply product –Directing discretionary revenues –Membership withdrawal 14 Questions & Discussion 15