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Community Choice Aggregation Feasibility Analysis Alameda County June, 2016 3 MRW & Associates, LLC Chapter 2: Economic Study Methodology and Key Inputs The section summarizes the key inputs and methodologies used to evaluate the cost-effectiveness and cost-competitiveness of the CCA under different scenarios. It considers the requirements that an Alameda County CCA would need to meet, the resources that the County has available or could obtain to meet these requirements, and the PG&E rates that the CCA would be competing against. It also describes the pro forma analysis methodology that is used to evaluate the financial feasibility of the CCA. Understanding the interrelationships of all the tasks and using consistent and coherent assumptions throughout are critical to delivering a quality work product. Figure 1 shows the analysis elements (blue boxes) and major assumptions (red ovals) and how they relate to each other. As the figure illustrates, there are numerous integrations between the tasks. For example, the load forecast is a function of not only the load analysis, but also of projections of economic activity in the county and outcome of the energy efficiency analysis. Two important points are highlighted in this figure. First, it is critical that wholesale power market and prices assumptions are consistent between the CCA and PG&E. While there are reasons that one might have lower or higher costs than the other for a particular product (e.g., CCAs can use tax-free debt to finance generation projects while PG&E cannot), both will participate in the wider Western US gas and power markets and therefore will be subject to the same underlying market forces. To apply power cost assumptions to the CCA than to PG&E, such as simply escalating PG&E rates while deriving the CCA rates using a bottom-up approach, will result in erroneous results. Second, virtually all elements of the analysis feed into the economic and jobs assessment. As is described in detail in Chapter 5, the Study here uses a state-of-the art macroeconomic model that can account for numerous activities in the economy, which allows for a much more comprehensive—and accurate—assessment than a simple input-output model.