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Community Choice Aggregation Feasibility Analysis Alameda County June, 2016 12 MRW & Associates, LLC deliveries in other hours. When high renewable energy deliveries coincide with low loads, the CCA will need to sell the excess, likely at a loss, or curtail deliveries, and potentially have to make up those renewable energy purchases during higher load hours to comply with the RPS. The result is that the procurement costs will be somewhat higher than simply contracting with sufficient capacity to meet the annual RPS. PG&E Rate and Exit Fee Forecasts MRW developed a forecast of PG&E’s bundled generation rates and CCA exit fees in order to compare the projected rates that customers would pay as Alameda CCA customers to the projected rates and fees they would pay as bundled PG&E customers. PG&E Bundled Generation Rates To ensure a consistent and reliable financial analysis, MRW developed a 30-year forecast of PG&E’s bundled generation rates using market prices for renewable energy purchases, market power purchases, greenhouse gas allowances, and capacity that are consistent with those used in the forecast of Alameda CCA’s supply costs. MRW additionally forecast the cost of PG&E’s existing resource portfolio, adding in market purchases only when necessary to meet projected demand. MRW assumed that near-term changes to PG&E’s generation portfolio would be driven primarily by increases to the Renewable Portfolio Standard requirement in the years leading up to 2030 and by the retirement of the Diablo Canyon nuclear units at the end of their current license periods in 2024 and 2025. More information about this forecast is provided in Appendix B. MRW forecasts that, on average, PG&E’s generation rates will increase just slightly faster than inflation through 2030, with 2030 rates 3% higher than today’s rates when considered on a constant dollar basis (i.e., assuming zero inflation). Underlying this result are three distinct rate periods: 1. An initial period of faster rate growth through 2023 (1.3% above inflation); 2. A period of rate decline from 2023-2026 (2.5% below inflation) primarily due to the retirement of Diablo Canyon24; and 3. A period of dampened rate growth through 2030 (0.2% above inflation) primarily due to the replacement of high-cost renewable power contracts currently in PG&E’s portfolio with new lower-priced contracts (reflecting the significant fall in renewable power prices in recent years). PG&E’s bundled generation rates in each year of MRW’s forecast are shown in Figure 12, on both a nominal and constant-dollar basis. 24 More information can be found in the Appendix C