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Community Choice Aggregation Feasibility Analysis Alameda County <br />June, 2016 46 MRW & Associates, LLC <br />Since then, the issue of CCA bond requirements has not been revisited by the CPUC. If it is, the bonding requirement will likely follow that set for Energy Service Providers (ESPs) serving <br />direct access customers. This ESP bond amount covers PG&E’s administrative cost to <br />reintegrate a failed ESP’s customers back into bundled service, plus any positive difference <br />between market-based costs for PG&E to serve the unexpected load and PG&E’s retail generation rates. Since the ESP bonding requirement has been in place, retail rates have always exceeded wholesale market prices, and thus the ESP’s bond requirement has been simply the <br />equal to a modest administrative cost. <br />If the ESP bond protocol is adopted for CCAs, during normal conditions, the CCA Bond amount <br />will not be a concern. However, during a wholesale market price spike, the bond amount could potentially increase to millions of dollars. But the high bond amount would likely be only short term, until more stable market conditions prevailed. Also it is important to note that high power <br />prices (that would cause a high bond requirement) would also depress PG&E’s exit fee and <br />would also raise PG&E rates, which would in turn likely provide the CCA sufficient headroom <br />to handle the higher bonding requirement and keep its customers’ overall costs competitive with what they would have paid had they remained with PG&E. As discussed above, JPA member entities would not be individually liable for any increase in the bond amount. <br />