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ESA Memo to City of Pleasanton:June 13,2016 average hydro year. As a result,its adoption could negatively impact the City's GHG reduction goals,particularly as they are expected to evolve in future updates to the 2012 City of Pleasanton Climate Action Plan. Indeed,the Scenario would result in a County-wide increase of GHG emissions of approximately 10.3 million metric tons of CO2. Scenario 1 would thus likely engender strong public opposition and significant customer retention problems for the CCA. The economic viability of this Scenario is therefore questionable. Scenario 2 (Accelerated RPS) presents a significant reduction in GHG emissions,at a lower cost than PG&E (but higher than Scenario 1). This Scenario utilizes purchases of large hydro to provide low-cost supply and increase the GHG-free portion of portfolio. The Scenario presents an approximately 20%generation cost savings,which translates into a 10%savings over PG&E in the year 2030. This price differential is even greater between 2021 and 2026. This is a very ambitious cost saving goal,and is more aggressive than any of the existing CCAs. For comparison,MCE and CleanPowerSF have as a goal parity with PG&E rates,while Sonoma Clean Power and Peninsula Clean Energy are planning for a 5%cost savings over PG&E. While the CCA could achieve the stated costs savings,it would need to rely on out of state hydro purchases at least initially,which might create an unbalanced supply portfolio with delivery risks in the long-term. Based on our work with other CCAs,we believe that Alameda CCA could achieve a price advantage in Scenario 2 over PG&E, but likely at the 5%rate achieved by other similar organizations. Scenario 3 (80% RPS by 2021) provides a GHG emissions reduction of roughly 75%from the PG&E equivalent with a stated cost below that of PG&E. The Scenario relies on 50%of the non-renewable supply being met through large hydro-resources. This reliance on deriving a large fraction of the energy from out of state hydro resources does create an undiversified supply portfolio with inherent transmission risks. We do not recommend a portfolio that contains such a high portion of out of state hydro resources for energy risk management reasons. Adjusting this scenario to 25% from out of state hydro and 25%from out of state renewable supplies would represent a more balanced approach,but it would also incur higher costs. In addition,the projected cost savings for Scenario 3 do not correspond with the experiences of other CCAs in the Bay Area. For example, Peninsula Clean Energy is expecting to achieve a similar scenario for a portion of its expected customers with a 2%price premium over normal PG&E rates. While this premium is small for residential customers,we believe it is a more likely price comparison for Scenario 3. Each of the above scenarios,and our comments on them,are based on PG&E"average hydro year." That is,the availability(and therefore cost) of hydro power sources in State is expected to be equal to the long-term average in the State. Certainly,any specific year between 2017 and 2030 could exhibit average,or even above average,precipitation and hydro volumes in the State. However, hydro power generation in the state has dropped from an average of 14%of overall generation to about 8%in recent years (Energy Information Agency website).Because of the overall reduction in in-state hydro generation,in part due to the impacts of climate change,as well as the year-to-year volatility of hydro production,we believe that that the use of an"average hydro year"could under represent significant price and availability risks. Role of Local renewables Development Local renewable energy development can provide an important long-term source of renewable electricity for the Alameda CCA. The Study uses a 15%price increase over the average costs for renewable energy purchases for a total of 5.6 cents per kWh. As noted above,other Bay Area cities have significantly higher costs for local renewable energy projects. Should actual potential projects carry higher prices,this will serve to limit the ability of the CCA to finance local renewables. The Study anticipates renewable power costs of between 2 cents kwh and 7 cents per kwh across the different scenarios (Figures 14, 17 and 19). The Study's Cost and Benefit Analysis illustrates the 6