 My name is Jeff Byron, and I'd like to thank them for being here today. Some of them had to drive a long way. Some of them have arranged their travel plans around this panel. But I'd also like to thank you for being here. As I promised, we will finish at 11.20. Come and go as you need. Please let folks come in anytime. There's no interrupting us here. And I have a lot of questions that I want to ask, but I want to make sure we try and get some time for some audience Q&A. Let me do this. Let me start with just a little show of hands on a few things that I think will help our panelists gauge our audience so we can target where we need to be. How much do you all know about community choice energy? Let me give you some options here. Do you feel like you know a fair amount about community choice energy? Alright. Looks like a pretty informed audience. How about some in the middle category? Some. You know some about community choice energy. Great. And how about virtually nothing? Newbies. Alright, well we've got a split here and I kind of thought we might. And that's fine. But let me ask you now, why are you interested in community choice energy? Are you just consumers who want to understand it better? Okay, we have a few of those. How many of you see this potential business opportunity? Ah, a lot of those. And who's here that wants to know about CCE? Let me ask it this way. Who wants to know about community choice energy? Particularly as it replies to the Silicon Valley CCE. Alright, so we've got a little bit of mix of everything. I hope that's helpful to you. Oh, let me ask you this. How many of you have an opinion already about community choice energy? No. No opinion. No opinion. Alright. Who has an opinion? And who sees it favorably? Well, there you go. Now you know who you're talking to. We did a panel on this last year and it was pretty well attended. It was interesting because there was so much undecided yet. Well, things have been decided. Things have moved forward. And so we've got a lot more to talk about. I wanted to start with just a little bit of background. How do I go into slide mode here? Slide show. I can tell you, there's the icon of something that looks like a desk at the bottom on the orange. I thought I hit the slide show button on the top. Thank you. So let me just give you the 10 second definition for community choice energy. CCEs are essentially public entities that buy and build electricity supply to meet local community goals using the existing utilities wires and billing process. Some people refer to it as muni light. Now I know that's going to probably raise a lot more questions, but that's what our panelists are here to answer. And I need to give a little bit of background on the history of community choice energy. It really sprung out of the energy crisis 2001 with some legislation. It took a while for the first community choice energy program to get going. Marin is the one that paved the way. They sorted out a lot of things. How to work with each other, creating a JPA, a joint power authority. How to work with the PUC, the Public Utilities Commission, their local utility customers. A lot of issues to deal with. They're doing quite well. In fact, just last month they announced adding seven new cities to their CCE. Then came Sonoma Clean Power, then Lancaster, San Francisco, and in April, two new CCEs have sprung up, the Peninsula Clean Energy Authority, which is all of San Mateo County. In fact, I think we may have some San Mateo County representatives including the new CEO. Jan, would you raise your hand? Jan Pepper is here. And we also have the Silicon Valley Clean Energy Authority. They're the newest. And that's the one we'll primarily be talking about today. So having Mr. Cyphers on the panel is a little bit of a ringer. He kind of can give us a sense of where this is all going to be headed in the next couple of years, having successfully negotiated this process for Sonoma. But these aren't the only ones. There's many more that are either what's the term say, exploring or in process at looking at community choice energy. This slide reflects the latest lists of cities and counties. Borrowed it from Sean Marshall. And as you can see, in fact there's a mistake on here I noticed. Let's fix that mistake. We need to move Santa Clara County over one. And in fact I've seen three different studies that indicate as much as 60% of the state of California could be involved in community choice energy if this continues to go at the pace it's going. But back to the community choice energy the Silicon Valley community choice energy authority and what we're here to talk about. So let me begin with some questions. I'll just leave that up in the background Mr. Sinks, in case you can't see it, it's the cities let me ask you the first question. What drove your community to pursue community choice energy? Well thank you very much, Jim. And really more interesting I think to everyone, what drives you personally to be so engaged in this process? Certainly. First, I'd also, we recognize Jan Pepper congratulations to you Jan. I'd like to also recognize a couple of folks in the audience Tom Habashi, our new CEO, if you'd stand and show everybody your face. So, you know, we're going to be, this is a co-operative, we're going to be working a lot together. But if you have any resumes, give them to Tom first. And I'd also like to give a shout out to one of our key community stakeholders, Bruce Carney of Carbon Free Mountain View. And I know our vice chair raise your hand there, sir. And our vice chair of our board, Rob Rennie from the city of, from the town, excuse me, of Los Gatos. I appreciate the question. Well in that case, I see some other faces we didn't mention there. Chairman of the Peninsula Clean Energy is in the back, right? Supervisor David Pine, San Mateo County. Yeah, absolutely. Your counterpart. Absolutely. Any more? Let's see some more hands. There's Jeff, Jeff or Alphys here too, I believe. Okay, maybe not in this. I don't think we can say enough good things about what Dave Pine did. Go ahead. Please, Council Member. You know, what we recognized in March of 2014, Sean Marshall came to the City's Association of Santa Clara County and told this remarkable story of how they had doubled the greening of their electricity supply at rates comparable to PG&E and we, you know, that was, it was too good, it sounded too good to be true. As we explored it further, we found out it was absolutely the case. And I was sitting as a mayor in 2015, January 2015 in the White House. They said, U.S. Conference of Mayors, we got a program for you. We're gonna help you move the needle 1% on climate change. We're gonna give you some incentives to change out your street lights. Now there were maybe 40 mayors in the room, 20 of which were, 20 of whom were from California including me. One person raised his hand, one of those mayors said, you know, that's so five years ago changing out our street lights. And if you think about the opportunity I raised my hand there after and I said, you know, if you think about the opportunity we have with community choice energy, have you heard about it? We see an opportunity to move the needle on climate change in order of magnitude bigger than your street light initiative. How about thinking about how you could inset more of this around the country? So I think that's primarily what got us into this. And you know, if we think about that last lecture where we were talking about transforming the transportation sector, I think the opportunities are really even bigger. Mr. Tovar, what are the specific goals of the Silicon Valley Clean Energy Authority? Figured you'd be the good person to answer that since you've been working on it for so long. Well I have all of my bosses here today between the chair of the board and our new CEO. So we'll actually be talking about our policy goals at our upcoming board meeting next Wednesday. But in general we're looking to reduce greenhouse gas emissions for our local communities and to do so in a way that doesn't have to cost our customers anymore. As a local agency representative, I started in Sunnyvale in 2012 and was handed a draft climate action plan to implement. And by far the biggest thing in it was the Community Choice Energy Opportunity. It was as big as everything else, the other 100 plus actions in the climate action plan combined. So just as a pragmatist, this seemed like the best and most important place to start because we can create systematic change and do so in a way that's cost efficient to our customers and doesn't have to impact the rest of our city funds. Excellent. Mr. Seifer. So you want to be doing all these plugs for Community Choice Energy. You want to plug your organization before I ask you a question? Well good morning and thank you for inviting me here. I have none of my bosses here I don't think. So I think when you ask why, I think the nut of this for us is that we can use clean electricity to reduce emissions at competitive prices. And when we started we thought that meant loading local renewable energy and energy efficiency programs and it does, but we realized pretty quickly that it was far, far, far bigger. State of California doesn't recognize hydro as carbon free. We realized that when we launched we were able to get to about half the emissions factor of PG&E within the first month at a competitive price, actually at a lower price. And we looked at the last half though. We looked at going from 200 pounds per megawatt hour of emissions down to zero. And that's probably going to take us 20, 25, 30 years to figure out that last half. And it's going to happen very slowly, but we also looked at emissions from cars and realized, and this is kind of the why, that if you just shifted 5% of the population from driving gas to electric on our clean electricity it would do more for the climate and our economy than dealing with the last tiny bit of fossil in our electric mix. So we have since started partnerships and I think the nut then becomes local control, local funds, local partnerships, and therefore real results. How can you do this? How can you beat PG&E? How can you beat the local investor on utility? Get higher renewables, lower GHG at a lower cost. All of you can answer this one. Well, we can always beat PG&E on emissions because we can design a portfolio that does that. We can usually beat them on price, but one of the truth of community choice is we don't set PG&E's rates. There are many regulatory efforts to try and drive up our customer costs. Some fair, some definitely not fair. And as a result we can't promise lower prices every time. But historically we have had, so we've saved customers $50 million since we launched on their bills alone and built a $34 million reserve budget. That's astounding in just two years in a small county. It won't be that good every single time because things change in markets, but we can beat them on emissions every time. That's not difficult. Please. I think if you look at the track record over 100 years in Santa Clara, Silicon Valley Power serving Santa Clara has been in operation since 1896. If you look at the track record of municipal utilities in the last 100 plus years versus the regulated monopoly of the IOUs in the state, there are three of them, combined with the CPUC, you have cases in Santa Clara where I believe they're beating adjacent communities on electricity costs by what you call 30-40%. And if you think about that in aggregate, you have to say that that model has served much better. And therein I think lies an opportunity. I think some of the CC&Es will focus on providing the lowest cost power. I think other CCs will focus on greener. And the beauty of this model is we're elected officials living in our own communities. So we have the opportunity as an agency to be responsive, transparent, we're accountable to our residents and businesses. We have the opportunity to innovate. You know, on the triple bottom line for us of a cleaner environment, local economic benefits and control potential for customer rate savings, I think those things are huge. Can I have one small piece? Please. The investor owned utilities are poorly regulated. And that's one of the reasons. Decoupling meant that they don't earn a profit on the sale of energy. They earn a profit off of investing in infrastructure. And that was designed to promote efficiency and conservation. But the downside of that is they have zero motivation to negotiate the best possible electric generation price. As long as it's deemed reasonable, they get to contract and bill for it to every customer. We're very differently motivated. So we go out and we fiercely negotiate. The last contract we signed, we negotiated for 15 months. We haggled over that for 15 months. And the IOUs don't do that. And they don't have to do that. The regulators don't make them do that. We could get into another topic there, I suppose. But let's get back to Silicon Valley clean energy. So Ms. Tovar, what are some of the other benefits that you can foresee for your local community that may be maybe not next year, but maybe five years from now that you could implement? Well, and Jeff started to touch on these. I mentioned our climate action plan. And it's true for many community climate action plans. It's not just all about renewables, although that is typically the biggest ticket, but also things like addressing your transportation emissions, things like implementing energy conservation programs. As a local agency, we operate quite a few utilities. But energy and electricity are not one of them. And so we don't have a dedicated funding source to promote accelerated energy efficiency. This gives us that opportunity to get into the energy market as a pseudo utility. I think you called us a utility light. So that we can also effect energy usage, so that we can also effect transportation by helping to electrify our transportation system and back it up with green energy. So we're looking at the nexus across all of our greenhouse gas emission programs and how this type of program might help support it. So I was going to move on unless anyone wants to ask. I was going to ask about joint power authorities. I think everybody may or may not be familiar with them. This is essentially how these entities are created. They're not new. There's probably over a hundred or maybe more good sized JPAs in California already around waste management, libraries, school, insurance, transportation, parks. The list goes on. There's even an association of California JPAs. So I want to ask, Council Member Sinks, are there financial benefits for customers? I know it wasn't easy setting up this JPA. You have 12 communities involved. But why to go to all this trouble? Are there some financial benefits in this structure over remaining a bundled utility customer? Well, as I said before, I think for our ratepayers, there's a great advantage. But if you think about what a joint powers authority, it's a structure that each of 11 cities in the unincorporated county has elected to participate on behalf of its residents and businesses. And in doing this, what we're effectively doing is limiting our liability. So the structure does not subject the general funds of each of our cities to threat. So it's designed to protect us and it creates transparency in that, you know, any surpluses we make in one year are going to be applied back to the benefit of our rate base in future years. We don't have to perform and create shareholder value over time. We don't have to pay dividends. Our allegiance is to the communities we serve and that's it. So I think that's what I see in the JPA model that we found compelling. Yeah, we do it for libraries and many other things. And access to money is cheaper? Well, yes. I think access to funding, you know, many of us as cities, many of us are making, as you probably are at the bank, not much interest on current funds for those intermediate funds that we have where we might like to earn a greater rate of return. My expectation is our cities will be offered the chance to provide working capital for the entity. But, you know, that's it. That'll be at the entities a discretion. We could also go to banks and presumably secure a better rate than you might if you were a typical Silicon Valley type, let's say. There's another value related to Prop 26. So if you have an independent entity as a JPA rather than something connected to a general fund, Prop 26 says you can't charge a hidden tax in a utility rate that's designed for some other purpose. And so you can't use the JPA's funds to pave roads and that clarity, the firewall, is really valuable in that respect. Great point. Well, so these are some benefits. What about the risks? You probably each have a different take on this question. What's your greatest concern over the next few years for your community choice energy authority? Let's start with Mr. Cyphers because he's been doing this for a little longer. What's the greatest risk you face and then we'll get to the startup? So I think it's not what you might think. Energy markets are in the markets and they fluctuate pretty wildly. But with good staff and really conservative planning you can attend to that risk. Good reserve funds, good portfolio. So what I'd offer as the biggest risk is the unknown, which is regulatory uncertainty and legislation that could be used to punish the public by private companies. And I think that arena we've already seen some efforts in that arena in terms of trying to shift costs from the utilities customer base and increase profits to IOU shareholders investor owned utilities on to community choice customers. And I think we're going to see more of that. And so that's something we need to guard very carefully against and form clear advocacy groups to fight on the behalf of the public and really make sure we're paying attention. We just found the first consultant who would sign a non-disclosure agreement to analyze confidential contracts that feed into this fee that our customers have to pay. We've been looking for over a year and the reason is that agreement is incredibly onerous. It says they can't essentially do business in the industry with anyone else. I mean, it's really bizarre. So there's a lot of institutional challenges like that that feed into policy and regulatory risk. And so that's where we're spending an awful lot of our time and resources. Council Member Sinks, Ms. Tovar, yours may be more near term concerns. Go ahead, please. Well, we share all of Jeff's concerns. We were very concerned about a bill a couple of years ago called AB 2145 that we all worked to lobby to defeat. But PCIA is the current risk and I know we'll be talking about that more a little later. But I would say in the short term for us, we have a great problem. And that is, do we have enough renewable energy out there? Seriously, Palo Alto being able to source electricity at 3.7 cents, and granted there's some money that is really in charge to bring it up here. But, you know, the time has never been better to move aggressively forward with green energy and some of the hydro initiatives that Jeff has worked on and transformation of the transportation sector helping move that faster. So I would say there may be a scramble for more green energy, but that's exactly why we are so excited to move this forward quickly. Excellent. Ms. Tovar, you've been dealing with the nuts and bolts for the last couple of years. What is your biggest concern about risks? I'll add two things. One, Rod already hinted at when he mentioned resume sending, and that's just that we will be competing for talent as we build this new organization. And so how we create and nurture new professionals in this industry will be one of our challenges here in the coming 12 to 24 months. We've been thrilled to see how that has emerged in North Bay, and we're confident that we've got the right kind of pool down here to take it to the next step. I have been in water regulatory programs for 20 years and I've dealt with the regulators at the state and federal level on the water side. And I say this in support of what Jeff was saying, that as I have started to dance in the energy world and the regulations that are there, it is so much less clear. And there seems to be forces that are far less transparent than what I have been accustomed to in the water world. And so I think another opportunity in creating community choice programs is that is going to it has the opportunity to also push a different level of transparency and clarity to the local level and to local energy users about how policies are created that really do drive what you benefit from at home. So, you know, so far you've been dealing with what I'll call the greenies, okay, folks that are favorably disposed towards community choice energy. Maybe you really haven't seen those that may not or even those that aren't interested. I was taking a quick look. I remember that homeowners, of course, are voters, but businesses drive your local economy. 66% of the load in your service territory, I don't know if we're going to call it that or not, within the Silicon Valley Clean Energy Authority are CNI customers. I see some of them in the audience. How important are these folks to the success of this new authority? Well, they're absolutely key. You know, our CEO has long experience in Palo Alto and Roseville of establishing relationships with those key customers. I know at Silicon Valley Power has that same experience and what I would tell you in the business community is we will work to sit down with you and earn your business. This is not a given. We know that you have alternatives. You know, what we're effectively doing here is we're bringing competition to a regulated monopoly and that's going to make, that's going to give you, frankly, as a company responds to us. That's going to make everybody better. That competition alone. Think about what happened in the telecommunication sector in the 70s and 80s. You got more choices, lower prices, we got the internet, all these marvelous inventions it was one to three bucks to make a phone call when I was growing up. Now what does it cost? Think about that. Think about what competition has brought. We'll bring to this market in terms of innovation and the opportunity for everybody, for both parties to have to work to earn your business. Mr. Farmerman, a question of clarification. What assets, if any, will these entities own? Let me see if Mr. Seifers can answer that question for you quickly. I'm going to get back to audience questions in a second, but what assets do you own? Sure. We actually have very long-term contracts for about 30% of our total load, all renewables in California, and those are between 10 and 25-year contracts. We do not own those assets, but we are the financing mechanism for them to be constructed or to operate. That model is the quickest way to get started because it doesn't require bonding capacity, it doesn't require credit rating, it doesn't require hundreds of millions in cash, and it allows us to get started very quickly. At the moment federal tax law is heavily tilted toward the private sector owning renewable assets and not the public sector because of the tax credit. As a result, there's really no major advantage for the public sector to go out and construct itself today. If that tax credit goes away and it probably will at some point or be reset downward, that equation could change dramatically because our cost of money is so much lower than the private sector. So that equation's going to flip. So we're preparing to own but not needing to at this point, and our customers benefit from that formula today. In fact... Let's do that later. In fact, just to build on the question, I would like to ask Mr. Seifers and Councilmember Sinks you may have heard recently that the President of the Public Utilities Commission Michael Picker referred to CCE as a coup and a forced collectivization. In fact, let me read the quote here to you so that everyone can understand what I'm about to ask. One of the bigger shifts, this is from President Picker in March, one of the bigger shifts that we see at the policy level is people clamoring for these clean community aggregators. If you think that the utilities are a monopoly, that it's a throwback to almost a feudal relationship with customers, these CCAs are really just a coup. It's local government making decision to carve off a piece of the customer sort of in a forced collectivization. What do you make of that? The muni light approach is basically you don't start with a lot of assets. You want to build local assets, but what do you make of this, gentlemen? And Mr. Tovar, you may weigh in too, but I thought these... I think I'll let them do that. What do you make of that? And I know you've met with commissioners, Housemember Sinks. I haven't met with a CPC commissioner to get inside of her head a bit. I mean, honestly, we're bringing competition and choice to a market where none exists today. What's more forced than the relationship between a regulated monopoly and a consumer that needs the product? I don't get it. Seriously. Look, I understand members of the CPC may lament some loss of control over their domain. That's a natural human reaction, but it's actually our domain. If you compare, again, the track record of the CPC and the IOUs, how they've served customers versus municipal utilities, I think it is little doubt which has served customers better. And, you know, we're bringing competition choice and political clout to the table, more political clout, and it'd be really important for the CPC and its commissioners, all of them, to adapt without prejudice to new circumstances. Very good. Mr. Seifers, you want to add to that? I think there's also a misperception that is pretty widespread. And I think a decade ago we had the ability to buy renewable energy credits to offset our emissions or to sort of green up our life. And there was some fair criticism of that model as a durable way of advancing toward really 100% renewable energy future at some point. And that fair criticism is narrow. That alone would not do it because the sun doesn't always run. It only shines in the daytime and wind power needs to be firmed up with other resources and so on. And I think because of that perception that green credits or renewable energy credits were sort of the model, there was this assumption that community choice was the same thing. We were conflated with that world. But community choice, we go out and procure long term contracts. We develop very diverse portfolios. We behave in many ways like a greener version of an investor-owned utility and do all that kind of procurement. We pay for and get all of the resources that firm up our load shape to run at the renewable level that we're saying to customers. And we report to the same agencies and we have the same compliance requirements. And so I think that misperception of those old days is carrying over. And there's some sense that we're just this sort of greenwashing phenomenon. And we have a lot of work to do to communicate to folks like Michael Picker that this is a different world now. This is completely different. Yes, we were talking about that a little bit earlier and I agree. I think that's really important. So let me ask, please go right ahead. Just thinking about the other regulatory experiences I've had, I did go to another conference and one of the board members at the CPUC spoke and she talked about their objectives of wanting reliable renewable green power available for everyone at affordable rates. And it just struck me that we are not at cross purposes as to what we want to achieve. And so I am encouraged that it is a different model. It is a different balance of authority that they have compared to community choice programs versus the investor-owned utility. But we do share what we're trying to achieve. And so I think it's still an opportunity to achieve it together. And what we bring is still this competition and consumer choice. And I think fundamentally they would support that. The consumers, even when they come to us as customers, can always choose to go back to PG&E if that's what they would like to do. And so we're bringing that new opportunity to the community and consistent with their goals. I think that's excellent. In fact, if I may add, having been a former regulator myself, it takes a lot of effort to put in the renewable portfolio standard laws. 25% now we've got it to 33%. The GHG reduction under AB 32 was years in the making and will be many more years in the making. The energy efficiency programs that the Energy Commission has done. We spent an enormous amount of money and effort on that. And here in one fell swoop, a community choice energy authority can address all three of these things in a much more substantial way. And instead of it being imposed as regulations, it's demanded or it's pulled by the community. So you've won me over already, Mr. Tovar. Just to emphasize Melody's point, each individual residential customer in business can elect to return to the investor owned utility at any time. Very important. Right? This is absolutely a choice. It's not a rigid choice. If we're not competitive, each individual customer can elect to go back to PG&R territory at any time. We do charge $5 for them to do that though. Have you ever charged anybody? I don't believe you've enforced that, have you? We might have to start working on an exit fee too then. I'm kidding. Mr. Tovar, what is the CCE's authority relationship with PG&E? Are there winners and losers when you create a new community choice energy authority? So we think that there are changes to the relationship and we are still looking at it as a partnership. It is a service delivery partnership model. They still provide the billing to the customer. They still collect the money. We hire a data management expert that makes sure all those numbers make sense to us too. And we have a call center. Right now where we are informing is we are before the point where you start to really negotiate with them what service relationships look like. But they have a small team within PG&E that is specifically dedicated to relations with community choice programs. And so so far their work with us has been around things like our data management, I'm sorry, our data PG&E load data request. And they did so in a timely manner. It was really straightforward. I will say that for us, we did it a little differently because we didn't come at it as a whole county. The city of Sunnyvale did it first and then we added on 11 communities onto our request and they were very accommodating with how we did that. And didn't charge us anymore. It didn't take any longer to do that. So so far it's been positive and they have actually their CCA team has proactively reached out to me to ask where we are in our process. And I've heard that they've also started to have meetings with other groups within PG&E, other service groups so that they are assured that their other service partners within PG&E know that they exist and know that they have a resource to go to if they're confused about what this new local emerging entity is. And Jeff, this is really due to Marin. MCE was hammered by Robocalls saying your power would go dark and making all kinds of false accusations. And PG&E was punished for that. Leno passed SB790 and it's the code of conduct. And as a result they've actually really shaped up an awful lot of their outward work. Certainly there are people senior in the organization who still see this as a threat although that's a bit confounding because they can't possibly lose any profit by law and by regulation as a result of this. They earn all their profit off of infrastructure and in fact I think there's a pretty good argument that their profit and sales will go up because one of the things we're motivated to do is get more electric vehicles out there. What does that do? Increases distribution grid requirements. It increases all of that infrastructure that they need. So I think what's going to happen is, and they don't lose employees, in fact they've hired more employees to service this, and I think what's going to happen is there will come a time fairly soon, within one to two years, where there will be a recognition that community choice doesn't in any way take anything away from PG&E shareholders and as a result is no longer the threat. The threat is municipalization. It's not community choice. So they need to focus on the business of delivery and we can focus on the business of generation and they can still participate in that market. But because they don't compete in that arena, we do, they don't, that means they're likely to lose most of their customers to our supply portfolio. So we have 89% participation. I think San Francisco's got, I don't know, 90 something right now. Lancaster is well over 95, I think. The opt-out rates are dropping. They're dropping and they were low to begin with. I think Marin's highest rates were like 21% or something in one round of opt-out. So I think that's where this is going. PG&E is a wires company, not a power company. Councilmember, I send you, I sense you want to add something to this. Well, I would say who ought the winners be in this new world. It ought to be our customers and both the IOUs and the CCAs ought to be motivated to serve our customers better than they have been in the past. And you could really argue that based on the issues that have all been in the press over the last few years, brought up by people like Senator Jerry Hill in Sacramento representing the peninsula, we would be all better served if the IOUs and the CPUC actually focused on the resiliency of core transmission and distribution infrastructure and really did a good job providing efficient service and resilient service of that grid. And I think as regards our expected energy utilization going up because of transforming the sector, I think Jeff's points are spot on. So Mr. Seifers mentioned this by law, this notion that there's no transference of cost as community choice energy customers leave the bundled utility. This is referred to as the power charge indifference adjustment. PCIA, I love all these acronyms. There was a near doubling of this exit fee this last year to protect those remaining bundled customers. And I know there's concerns about the size of the PCIA and how many years customers are going to be paying for it, how it's calculated, the transparency, that calculation. I know Ms. Tovar and Mr. Seifers were at a workshop, the PC held on this in March. It's a concern I'm sure you all have. Tell me and you may all want to answer this, tell me where the concern lies, how extensive is it? Maybe Mr. Seifers first on this one, just because he's been through the ringer a little bit already, and I know Marin has as well. Where's this going? What effect will it have? So this is a fee that our customers pay directly. We don't actually as an agency pay this fee, but it's pretty hefty. It can be anywhere between 6 and 12% of a total bill. Some of that doubling was forecast because natural gas power prices drop. The presumed loss of selling a contract that PG&E held and now doesn't need gets bigger. And so they have to recover that. About half of it was predicted. The other half was a surprise. And the problem is we don't hear about that surprise until six weeks before the fee goes into effect. And the final number doesn't come out until about eight hours before it goes into effect. This past year it was three days. We had three days of warning. If you really want to be able to levelize and provide consistent power prices to customers, which is certainly our goal, we would like to see power prices as flat as we can and if they have to grow smoothly rather than like this, we need a forecast. We need forward information about this. And we need them to open up about half of the data that feed into this are confidential and redacted. And can't be viewed by any market participant. So there's a lack of transparency. There's a number of policies, I'll just mention one, but there's 18 that we've identified that are problematic already and we're still looking. One of them is a community choice program load is pretty consistent from year to year, even though the customers in it are leaving and coming back. So that load is consistent. So the departed load, the load that PG&E needs to address and deal with is about the same from year to year to year to year. But because customers are coming and going, what that means is the vintage of that fee keeps getting reset forever. So it is a fresh, recent vintage meaning the fee never goes away. It's a permanent fee. So it's anti competitive because if their longest contract might be 30 years the fee could last forever. So there's some policy problems and I know that was kind of in the weeds but the fee is bigger than it needs to be and is not getting better. The forward look on that fee that just came out yesterday in a filing actually shows that some of the older vintages are going to pay higher, the people who started in programs several years ago are going to pay higher rates on that fee than people started recently. There's no logic to that. And so the whole thing I think needs a fresh look and we're advocating at the CPUC that there needs to be a consolidated proceeding to look at all of these issues rather than dealing with it in a fragmented way. I'll just add it's been, it's the worst thing you can try and communicate to a customer. In addition to paying for the energy that we will provide you, you have to also pay for the energy PG&E will not be providing you because we are providing energy. So it is really difficult for a consumer to understand why this would exist, let alone exist in perpetuity. So I appreciate the efforts of Marin and Sonoma and they brought the emerging and newer CCE programs into the room as well to help educate us so that we can work together with the CPUC on what steps are necessary to take. But it does need to be reshaped and more transparent. Jeff started to make a point earlier about whether the investor on utilities are properly motivated on contracting costs. Part of our issue with transparency in the current process is that it isn't clear to us that they're really leveraging everything they could to reduce the cost of those contracts before they pass on the additional cost back to our customers. And so that's one of the reasons we want to see more closely what they are deciding because it's not clear they're deciding in the consumer's favor. I know you may have something you want to add. Well, yeah, I mean if the attitude is we're the force of collectivization, I would say PCIA is a forced fee imposed by a body that you, it's very interesting coincidence that this fee has gone up so dramatically and is threatened to go up again as CCEs have come online. What's with that? And the fact that this thing is calculated non-transparently, I mean honestly this is a regulated monopoly and there's no transparency in this. I really just don't understand how the rate agency can be doing this behind closed doors in this instance. So I'm very concerned about fair and transparent treatment on behalf of our customers and we will be vigorously working with other CCEs to pursue this both in San Francisco as well as in Sacramento. Good. So let me switch subjects a little bit. I just have one or two questions then I'm going to turn it over to audience and I don't know how we're set up here if we have microphone or not that travels. We do have a microphone so we're going to bring that to you when you raise your hand and I call upon you. Let me switch subjects a little bit. I think that might be helpful for those in the audience that maybe are down the path of thinking or exploring community choice energy. What's the biggest thing you've learned that might help prevent others from a major headache? Something that you didn't foresee and we've touched on some things I realize but go ahead. And Mr. Seifers maybe you first on this one again. What is the biggest thing that you learned that could save people a lot of trouble? I think that my background in solar energy and energy efficiency wasn't as helpful as I thought it would be. So I've worked with utilities on programs and customer facing things for many years and what I realized is the wholesale power market is nothing like the retail power market. In fact I don't think there's any crossover whatsoever. The knowledge base between wholesale and retail is just a completely it would be better to hire a stock trader than somebody out of the retail power market to support you. So find people and that was a flip remark. Don't actually hire a stock trader. Oh I don't do that. We have an expert who does wholesale trading. It is remarkably complex. We report I think we report to nine compliance agencies. We have a filing at least every week. This is an unbelievably heavily regulated industry. And the penalties of non-compliance are incredibly stiff. So understanding the regulatory framework, the wholesale transactional arena means you've got to hire people who already know this. You can't learn those things on the job. And that to me was a huge lesson. I'll just share that one. Good. Please. We did it a little differently. Unlike the county of San Mateo that drove Peninsula Clean Energy, we started as a group of three cities and then the county came in a little after. And getting us all coordinated and working together was a big challenge. I've been at a couple of Silicon Valley startups in the private sector and what I'd say worked differently there that I'd recommend going forward to those agencies interested in pursuing this is startups work best where you have dedicated staff, you get a couple people together, you lock them in a room and you have clear and specific objectives driven by political leadership. So were we to do it over again I think I would have insisted on identifying, putting melody on full time, lock in or in a room with a colleague from Cupertino and maybe Mountain View and saying, okay, here are your deliverables and manage it just like we would under any other Silicon Valley startup scenario. You know, Miss Tovar is very good. I met her a couple of years ago and that's why she's on this panel is I know how good she is. Miss Tovar, what would you do differently that you think would save people a big headache that are thinking about CCD? Being locked in a room sounds punitive. But you're welcome. Come out when you're ready. Exactly. When it's done. But I would agree that as local communities look to evaluate this and potentially do it, that you just can't, it's impossible to overestimate the local staff time that it will take. You're creating a new small business operation and so you end up having to borrow from expertise throughout your existing organization in order to get that work done and certainly having a few dedicated staff I think would be a more efficient way to approach it. The other lesson that I learned really builds on what Jeff was mentioning about the expertise of this and the complexity of this. There were some pivotal aspects that weren't clear to me until it was sort of too late to react to them. And so there's a seasonality to rates that affects what your revenue will look like and what your cash flow will look like that can affect how much money you'll need to start this kind of thing. There's the assurance of knowing when PG&E's rates are available so that you know what you're comparing to when you talk to your customers and how that influences when you might want to launch that communication with your customers. Once it became more crystal, it became much more obvious. I was like oh I should start three more of these things and tell them exactly how to do it. So I will say in that spirit borrow heavily from the folks that have done it. We did so. We had a workshop in the fall of 2014 and brought the operating experts down to our policy makers and had them talk together about the nuts and bolts as well as the policy level issues around starting a new program and we look forward to contributing to the next round of emerging programs as we evolve as well. One quick add on. So the JPA helps provide a lot of risk protection but what that means is you have no credit when you start. And so building cash reserves, anybody in finance knows that's going to be super valuable. We didn't know how valuable that was but having all our debt off and 10, 15 million in the bank at the end of the first year meant our power contracts were about a percent lower because we were getting power way cheaper. Well that means we're making a million and a half in reduced cost every single year from then on out. Siri didn't get that. So building reserves is actually going to produce more available funds for customer programs and other things than spending the money. So that's contradictory to what most average people are thinking but don't spend any of the money you make in your first five years on programs. Build reserves and if you have to spend money leverage what you've done financially out of the reserves. So make sure that you're really doing that because you're going to have way more for programs as a result. Well maybe you should start lending some of that excess cash to new community voice energy program. We've looked into it. It turns out that's never been done. Our attorney has figured out not just in CCAs but from JPA to JPA so anyway. We have some challenges. Listen I've got a lot more questions and I want to make sure my panelists get a chance to make their concluding statements but are there any questions from the audience? Please raise your hands. I need to have a microphone brought forward please. Okay. Because we are recording this and we want to capture your question but you know what, I'll start over here on the left. Please identify yourself and questions only. Quick question. Go right ahead. I'll repeat it. Go ahead. Okay. I'm from Rodson hometown of Cupertino and you guys mentioned that you don't own anything. You don't have any intrinsic towers or lines or anything. What happens in a disaster? Who do you get the electricity back running? Is it a reliable system when you operate? Yeah. So in this territory PG&E still makes all of their profit off of maintaining infrastructure and building it. And so they behave exactly the same as before the community choice program. So they still respond to all the emergencies and the evidence has shown that they do. This is an area where PG&E actually does a great job. They do. They have responded to emergencies exactly the same way they did before. They've maintained the infrastructure in the same way and so I got to give them high marks on that one. Alright. Go right ahead. Next question. Please identify yourself. Sure. I'm Mike Wara from Stanford Law School. My question is about distributed energy resources. Is this on? No. A little closer Mike. A little closer. Okay. My question is about distributed energy resources. There's been a lot of discussion on the panel about Marin clean energy, Sonoma clean energy as sort of competitors with utilities. I think if you ask PG&E they'd say or any other regulated IOU in the WEC they'd say wow the real challenge is distributed energy resources. How do you view solar? How do you view the discussions around changing rate structures that are really at the center of what's going on in that area right now? Is there something different that's happening for the community choice organizations? Anybody? Well I think you're asking an enormous question so I'll try and just take a small slice of it but the changing rate structures that move the value of energy from a solar owner to later in the day and that value becomes highest in the evening solar generators in individual homeowners and businesses are going to lose some of the value of their solar array as a result. That's a problem for us. We have a major local solar industry and we are working with them on solving that problem but what we're doing instead of saying just fight the rate structure because the reality is costs are moving into the evening too because the peak is driven by homes now not businesses. And so fighting a market that's a real thing isn't going to win but what we're doing is working with the solar providers to say how do we add a load in the daytime to compliment your business. So we're looking at daytime EV charging, schools, workplaces, parking rides train stations, downtown parking garages as ultra low cost, 100% local, 100% renewable sourced electric vehicle charging to support our local solar industry and we're going to add daytime load because we need to. So that's the kind of solution we get to do because we have a local entity that we wouldn't otherwise but you're right that the problem is there and I think one of the things we've traded on and gotten a lot of traction on is being ruthlessly honest about the reality and the reality is we do have a problem in California starting in about 2020 with quote too much solar but that shouldn't tell us not building more solar. It should tell us we need somewhere to put it that's effective and valuable. So that's the part of the conversation that I think gets a lot of traction. Very good. So I'd like the microphone to travel. There's a woman in the short sleeve black shirt that's been patient and thank you for asking that question. It'd be wonderful if we could go another half hour and get into the potential and your plans for community choice energy going forward but we don't have the time. Please state your name. Yeah, I'm Lena Perkins. I have a PhD from Stanford in mechanical engineering. I work for the city of Palo Alto Utilities now and so you know sort of the original CCA if you will. Muni Heavy. Yeah, Muni Heavy. Well and it does mean that we maintain our own wires as well which is an additional cost and my question because I've heard Commissioner or President Pickering say that line and my question is you know for a dense urban situation like Santa Clara or Marin or San Francisco, you know the cost for PG&E to maintain that infrastructure is much lower than running a single line out to serve one resident somewhere northeast of Reading. So I think that there some could argue that you know you're sort of carving out the wealthier, denser, industrial, commercial folks who have intrinsically lower costs and PG&E has to serve all of them and so they have higher costs and if you are carving out the best customers how will their costs not go up? So I have a pretty short answer to that. PG&E still charges for transmission and distribution and all of those costs stay the same. They remain identical so there's no, actually that issue doesn't exist in this because the costs are still socialized across all of PG&E's territory. That's assuming that all the rate structures recoup 100% of those costs which... They have to by rule so if they don't then somebody's breaking the law. I'm quite certain that the IOUs know how to recover their costs at the CPEC. I mean honestly I talked to Palo Alto for 100% green electricity at what I understand are lower rates than my residents currently pay and the other thing I would add is competition, again if you think about competition we're going to make the world better even for those communities that don't elect to form a community choice energy agency because the benefits that we create do ignore to everybody. So thank you. I apologize my commitment is to have you out of here by 1120 I'd like to give each of my panelists an opportunity to make a final comment and that really is, is there something we haven't covered or that you feel you want to emphasize? Let's start with Mr. Cyvers at the end in just a minute or so please. Well first cheers to Silicon Valley Clean Energy. I'm really glad you guys are moving on this and really and to Penance Clean Energy as well who's also here. I think that evolution in the industry is what's so exciting. We're going to see challenges ahead as we talked about today but the reality is as more of us try this out and become educated and attract top talent to California to work in these programs it's going to get better and better. So this is exciting. I am always reminded of earlier experiences in my environmental career and a story a colleague told me about how local action creates a state and worldwide change. So when we were recycling in the early days there was the bottle bill and that really came about because individual cities started to make decisions about local bottle deposit requirements and it got so different and chaotic and emergent that it prompted state action to make a bigger change and so here we have a model of local communities getting engaged in an entirely new way in how energy is used and how energy is sourced and that has an enormous potential to then change how energy is used and sourced worldwide as well as statewide and how it's managed even on the grid distribution system that we don't even have to operate in order to influence change now that we'll be more involved. Well I'd say in the next several years I take Jeff's advice seriously about building our reserves but beyond that if you think about short circuiting the loop to helping innovation drive improvements we're all looking forward to look at how much solar energy the price of solar has come down. Could we bring innovations like that in storage technology in transportation with a much shorter loop and less bureaucracy than we have today I think so. We are if we're listening well to our customers we're keeping abreast of technology and we stay agile just like any other Silicon Valley startup I think we'll be winners and I would add we're so very grateful to the model of that marine clean energy and Sonoma Clean Power set where it's just inspiring to see what you all have done. Excellent. In fact Mr. Seifers congratulations on building an excellent organization in these past three years but watch out. This is Silicon Valley where we build upon good ideas and good work of others and I have no doubt the Silicon Valley Clean Energy Authority is going to be CCE on steroids. Bring it on. Okay.