AgdaPkt 2016-02-08 Closed and Joint SA PFA

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of the debts, liabilities or obligations of the Authority” (Section 2.2). In addition, the JPA agreement states that the JPA will indemnify the City and its agents for any claims related to the JPA. These protections notwithstanding, the City could be exposed to risk if the JPA fails to carry sufficient insurance to meet its indemnification responsibilities under the JPA agreement. In addition, there is minimal risk that a court will deem the JPA an “alter ego” of the City and thus find the City responsible for the debts, liabilities, or obligations of the JPA. Furthermore, there could be exit fees should the City leave the JPA voluntarily or involuntarily. Legislative and regulatory risks come primarily from CPUC rate and policy making. The utilities may design and set rates in ways that affect PCE competitiveness, increasing their charges for transmission or solar interconnection, for example. PCE customers will have to pay an exit fee, which is set by CPUC, to the incumbent utility (PG&E in our case) to cover its costs of advance energy procurement. This cuts into the incentive for customers to stay with PCE. PG&E has requested and the CPUC has recently approved a 95% increase in exit fees. This increase in exit fees may remove the cost competitive advantage of PCE. If, on the other hand, PG&E loses many customers to PCE, their overhead on the distribution system will be higher, which will then motivate them to petition the CPUC to allow them to charge higher transmission and distribution rates or exit fees. The State could also change the requirements for providing evidence of resource adequacy, placing an additional burden on CCAs to contract for more energy in advance to meet forecast demand. These risks are being addressed and to some extent mitigated by the existing CCAs’ active efforts at CPUC proceedings on behalf of CCA members’ and future members’ interests. In summary, while these risks can be mitigated to a certain degree, they cannot all be eliminated and in some cases such as rate risk and regulatory risks, the risk level cannot be easily measured with any degree of certainty. Should the program fail, however, customers, including the member agencies, would return to PG&E on a transitional bundled commodity cost rate schedule, which is market-based and could be either more or less expensive than the prevailing rate schedule. Next Steps The deadline for cities to join the JPA as a founding member and adopt the PCE ordinance is at the end of February 2016. Once the founding member agencies join PCE, they will form the JPA Board and determine the policies of PCE. When PCE formation is complete, PCE will conduct required noticing to customers regarding the opt-out period and then begin providing service, anticipated in October 2016. ALTERNATIVES Council may elect not to participate in Peninsula Clean Energy by not adopting the resolution, not appointing a Director and Alternate, and not introducing the Ordinance. FISCAL IMPACT The City is not required to fund any portion of the CCA program establishment. San Mateo County provided seed money and is proposing to fund the initial start-up costs for 9.B. - Page 5