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Community Choice Aggregation Feasibility Analysis Alameda County <br />June, 2016 9 MRW & Associates, LLC <br />Power Supply Cost Assumptions <br />As discussed above, the CCA would procure a portfolio of resources to meet its customers’ <br />needs, which would consist of a mix of renewable and non-renewable (i.e., wholesale market) <br />resources. As shown in Figure 10, the products to be purchased by the CCA consist generally of <br />energy, capacity and renewable attributes (which for counting purposes take the form of renewable energy credits, or RECs).21 <br />Figure 10. Power Supply Cost Elements <br /> <br /> <br />The CCA will be procuring supplies from the same competitive market for resources as PG&E. <br />As a result, we assume that the costs for renewable and non-renewable energy and for resource adequacy capacity are the same for the CCA as for new purchases made by PG&E (as used in our forecast of PG&E rates discussed below). Wholesale market prices for electricity in <br />California are largely driven by the cost of operating natural gas fueled power plants, since these <br />plants typically have the highest operating costs and are the marginal units. As a result, market <br />prices are a function of the efficiency of the marginal generators, the price of natural gas and the cost of GHG allowances. MRW developed forecasts of these elements to derive a power price forecast for use in determining costs for the CCA and PG&E. Capacity prices are based on prices <br />for resource adequacy contracts reported by the CPUC. <br />MRW developed a forecast of renewable generation prices starting from an assessment of the <br />current market price for renewable power. For the current market price, MRW relied on wind and solar contract prices reported by California municipal utilities and CCAs in 2015 and early 2016, finding an average price of $49/MWh for the solar contracts, $55/MWh for windpower <br /> <br />21 RECs are typically bundled with energy deliveries from renewable energy projects, with each REC representing 1 MWh of renewable energy. A limited number of unbundled RECs may be used to meet RPS requirements. For the <br />purpose of this study we have not considered unbundled RECs and have rather estimated costs based on renewable energy contracts where the RECs are bundled.