SVCE 2018 Rates Don Bray, Manager of Account Services Overview - PowerPoint PPT Presentation

SILICON VALLEY CLEAN ENERGY SVCE 2018 Rates Don Bray, Manager of Account Services

Overview • Due to PG&E’s recently announced 9% increase in generation rates, SVCE rates for 2018 can be maintained at 2017 levels: o $13M+ addition to SVCE operating margin for 2018 o meet original SVCE reserve contribution targets o expand discount for SVCE customers v/v PG&E gen rates to 6+% However, new/emerging regulatory changes will affect SVCE costs, e.g. • Resource Adequacy, Bucket 2 renewables Increases to SVCE rates for 2018 could be considered, to offset impact of • regulatory changes while expanding SVCE generation discount v/v PG&E CD SILICON VALLEY CLEAN ENERGY

Developments to date . . . • SVCE rates originally set to be effective through 2018 unless exceptional market conditions warrant changes sooner • As of August, projected 2018 PG&E gen rates  by 1½%, PCIA  by 16% SVCE 2018 rate reductions of ~6% required to save 1% v/v PG&E o $14 million reduction in SVCE operating margin factored into 2018 budget o • As of December, projected 2018 PG&E gen rates  by 6%, PCIA  by 14% SVCE 2017 rates would average ~3% below PG&E in 2018 o BOD evaluated multiple rate change options – favors ‘Min 3%’ approach o Restores SVCE 2018 margin near original plan, with no gen rate increases o PG&E announces annual rate change postponed until March 2018 o • As of February 2018, actual PG&E gen rates  by 9%, PCIA  by 11-14% PG&E rates effective March 1 st , SVCE updates effective April 1 st o CD SILICON VALLEY CLEAN ENERGY

Figure 2 : Updated 2018 SVCE Rate Scenario - General Case - 9 % increase in PG & E Gen Rate - 14 % increase in PCIA rate - If SVCE 2017 rates remain unchanged , savings v / v PG & E grows to 6 % , but SVCE customer gen costs rise 3 % due to PCIA 6 % gen savings ^ with SVCE v / v 1 % gen PG & E in 2018 T ; - c : savings ; v / v PG & E < in 2017 3 % increase in gen cost < u u CL to SVCE customers due Q - to 2018 PCIA increase 2017 SVCE Gen Rate If no change in 2017 0 ) + > ( Set through M cu SVCE gen rate CD OC QC Dec 2018 ) + - v C C 0 ) < u » < U < 5 CD CD cn QC LU LU c o 3 C 66 < u < D e ? CD Q . CL LU LU u U > > < S ) CO 2017 2017 2018 2018

Rate Scenarios and Options Rate Setting Scenario Description Options Min 1% 1) Minimum of at least Maintain all SVCE generation rates at 2017 levels, except Min 2% [x]% savings v/v PG&E where necessary to maintain a minimum [x]% lower price in 2018 differential versus PG&E, inclusive of PCIA Min 3% Lower all SVCE generation rates as necessary to absorb 2) Absorb increase in increase in PG&E PCIA rates for 2018 – thus keeping SVCE’s Absorb PG&E’s PCIA for 2018 2018 generation rate plus PCIA equivalent to 2017 All 1% ‘Peanut Butter’ approach whereby all 2018 SVCE generation 3) Savings v/v PG&E of rates inclusive of PCIA are set so that the cost the customer for All 2% exactly [x]% for all SVCE service remains [x]% below PG&E for 2018 for all rate rates in 2018 schedules All 3%

Key Rate Schedules % of % SVCE Typical Gen + Rate Description Accounts Accounts Load PCIA Cost/mo (summer) 0 E1 Residential - Tiered 198,400 81% 33% $ 44 E-TOU Residential - Time of Use 7,600 3% 1% $ 35 EV-A Residential EV 5,000 2% 2% $ 97 0 A1 Small Commercial 17,700 7% 10% $ 150 A10 Medium Commercial 2,100 1% 15% $ 1,940 0 E19 Large Commercial 1,200 0.5% 25% $ 17,700 E20 Industrial 30 0.01% 10% $ 49,600 Source: SVCE 2017 data, all figures rounded/approximated for clarity. / ' A ' N SILICON VALLEY CLEAN ENERGY example rates for scenario analysis

December Rate Scenario Analysis O O O E - l Tiered 2018 SVCE Operating 2018 Customer SVCE 2018 Gen SVCE 2018 Gen A - l Small E - 19 Large Savings v / v PG & E Residential Rate Margin Impact Rate Increases Rate Decreases Commercial Rate Commercial Rate ( $ M ) ( Average % ) ( No ) ( No ) Impacts Impacts Impacts Scenario / Option Min 1 % Savings SVCE 2018 v / v PG & E = > - 1.70 % - 2.77 % - 4.01 % % + 13.2 M 3.03 % 0 31 % Cust Gen 2018 Cost Change = > 4.95 % 3.14 % 3.21 % Min 2 % % Savings SVCE 2018 v / v PG & E = > + 12.8 M 3.15 % 0 55 - 2.00 % - 2.77 % - 4.01 % % Cust Gen 2018 Cost Change = > 4.63 % 3.13 % 3.21 % % Savings SVCE 2018 v / v PG & E = > - 3 % Min 3 % + 11.2 M 3.59 % 0 84 - 3.06 % - 4.15 % % Cust Gen 2018 Cost Change = > 3.56 % 2.83 % 3.02 % % Savings SVCE 2018 v / v PG & E = > Absorb PCIA + 1.6 M 6.27 % 0 179 - 6.34 % - 5.72 % - 6.36 % % Cust Gen 2018 Cost Change = > 0.00 % 0.00 % 0.00 % % Savings SVCE 2018 v / v PG & E = > All 1 % + 20.0 M 1 % 148 31 - 1.00 % - 1.00 % - 1.00 % % Cust Gen 2018 Cost Change = > 5.70 % 5.01 % 5.73 % % Savings SVCE 2018 v / v PG & E = > All 2 % + 16.5 M 2 % 124 55 - 2.00 % - 2.00 % - 2.00 % % Cust Gen 2018 Cost Change = > 4.63 % 4.63 % 4.63 % % Savings SVCE 2018 v / v PG & E = > All 3 % + 13.3 M 3 % 95 84 - 3.00 % - 3.00 % - 3.00 % % Cust Gen 2018 Cost Change = > 3.56 % 2.89 % 3.59 % / ' A ' S SILICON VALLEY CLEAN ENERGY Board Consensus – Min 3% approach

Updated Analysis for April 2018 • New rate scenarios required for PG&E increase of 9%, vs. 6% in December • N ew analysis projects ‘Min 5/6/7%’ and ‘All 5/6/7%’ as a range of options • Min 6% more attractive than favored Min 3% option in December • more operating margin for SVCE, more customer savings v/v PG&E • ‘All 6%’ option generates more operating margin than Min 6%, but requires a significant number of rate increases CD SILICON VALLEY CLEAN ENERGY

Updated Rate Scenarios and Options Rate Setting Scenario Description Options Min 5% 1) Minimum of at least Maintain all SVCE generation rates at 2017 levels, except Min 6% [x]% savings v/v PG&E where necessary to maintain a minimum [x]% lower price in 2018 differential versus PG&E, inclusive of PCIA Min 7% Lower all SVCE generation rates as necessary to absorb 2) Absorb increase in increase in PG&E PCIA rates for 2018 – thus keeping SVCE’s Absorb PG&E’s PCIA for 2018 2018 generation rate plus PCIA equivalent to 2017 All 5% ‘Peanut Butter’ approach whereby all 2018 SVCE generation 3) Savings v/v PG&E of rates inclusive of PCIA are set so that the cost the customer for All 6% exactly [x]% for all SVCE service remains [x]% below PG&E for 2018 for all rate rates in 2018 schedules All 7%

SVCE 2018 Rate Scenario Analysis O E - l Tiered A - l Small E - 19 Large Annualized SVCE 2018 Customer SVCE 2018 Gen SVCE 2018 Gen Savings v / v PG & E Residential Rate Commercial Rate Commercial Rate Operating Margin Rate Increases Rate Decreases Impact ( $ M ) ( Average % ) ( No ) ( No ) Impacts Impacts Impacts Scenario / Option Min 5 % 7.40 % % Savings SVCE 2018 v / v PG & E = > - 5.71 % - 7.36 % - 8.38 % + 13.9 M 0 3 % Cust Gen 2018 Cost Change = > 4.35 % 2.06 % 1.52 % % Savings SVCE 2018 v / v PG & E = > Min 6 % + 13.4 M 7.50 % 0 26 - 6.00 % - 7.37 % - 8.38 % % Cust Gen 2018 Cost Change = > 4.04 % 2.04 % 1.52 % % Savings SVCE 2018 v / v PG & E = > - 7 % - 7.58 % - 8.38 % Min 7 % + 12.0 M 7.90 % 0 55 % Cust Gen 2018 Cost Change = > 2.93 % 1.81 % 1.52 % Absorb PCIA + 6.6 M 9.70 % % Savings SVCE 2018 v / v PG & E = > - 9.65 % - 9.22 % - 9.75 % 0 147 % Cust Gen 2018 Cost Change = > 0.00 % 0.00 % 0.00 % % Savings SVCE 2018 v / v PG & E = > All 5 % + 24.2 M 5 % 176 3 - 5.00 % - 5.00 % - 5.00 % % Cust Gen 2018 Cost Change = > 5.14 % 4.45 % 4.95 % All 6 % 6 % % Savings SVCE 2018 v / v PG & E = > - 6.00 % - 6.00 % - 6.00 % + 20.5 M 153 26 % Cust Gen 2018 Cost Change = > 4.04 % 3.43 % 3.94 % % Savings SVCE 2018 v / v PG & E = > All 7 % + 16.8 M 7 % 124 55 - 7.00 % - 7.00 % - 7.00 % % Cust Gen 2018 Cost Change = > 2.93 % 2.39 % % 2.91 / WN SILICON VALLEY . . . Similar to ‘Min 3’ in December, but improved CLEAN ENERGY

Changing Financial Context - Supply • Increasing costs for Resource Adequacy • Some/all Bucket 2 renewables may need to be replaced with more expensive Bucket 1 – ramping to $10M annually in 2020 • PCIA proceeding underway; annual PCIA increase typical in recent years • Expand current reserve contribution through rate increases, to offset/cover anticipated increases? CD SILICON VALLEY CLEAN ENERGY