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ESA Memo to City of Pleasanton:June 13,2016 importance of renewable costs and demonstrates how high renewable costs can all but eliminate any price advantage of the CCA over PG&E.As such,these costs represent a significant risk for the Alameda CCA. Certainly the balance of wholesale renewable power purchases and the development of local renewable energy projects has impacts on the CCA power costs as well as on the economic development of the county. Purchasing renewable power resources from within the State,but outside of Alameda County,can be carried out at a relatively low cost. As mentioned above,local municipal utilities have as recently as May 2016 purchased solar power from large utility scale projects for approximately 4 cents a kWh. However,building local solar and wind generation in the Bay Area is considerably more expensive. For example,the City of Palo Alto's CLEAN (Clean Local Energy Accessible Now)program offers to purchase locally generated solar power at 16.5 cents per kWh for a 20 year term. The Study of the Alameda CCA assumes a 15%premium for renewable energy costs for projects in Alameda County. We are concerned that this premium underestimates the costs of renewable power development. Certainly,areas of eastern Alameda County could serve as sites for solar or wind power but we are unable to verify that a 15%premium is sufficient in estimating the costs of such projects. In a high renewable cost scenario,the development of local renewables within Alameda County will lag,unless the CCA is able to increase its rates to attract developers. Comments on Sensitivity Analysis The sensitivity analysis presented in the Study highlights the key risks faced by the Alameda CCA. These risks are: low power prices offered by PG&E,future high renewable prices and costs,and PCIA charges. Of these three risks,we expect that short-term high renewable prices and PCIA charges will have the most significant risks on the Alameda CCA rate structure and balance sheet. In addition to these key risks,we believe that hydro variability and its impact with energy prices are significant risks that are not fully explored in the Study. These risks are discussed above. As a result,we recommend that additional modeling work be carried out on these three key risks and their impacts on Alameda CCA's balance sheet and reserve requirements. 4. Alignment of the CCA with the City's Energy and Climate Goals The City of Pleasanton has long been interested in energy independence.In the City of Pleasanton 2002 Energy Plan,CCA was identified as a potential means of accomplishing that independence. The City first investigated the feasibility of implementing CCA locally in 2005,when it participated in a research study by the California Energy Commission Public Interest Energy Research(PIER), which found"that if the City was willing to finance renewable energy development, 50%renewable energy generation could be achieved at no increased cost to the ratepayers."Also in 2005,the City added an Energy Element to its General Plan,which points to a CCA as a prospective means of gaining more local control over the City's energy supply portfolio and electricity rates,and includes the goal to move toward"a sustainable future that increases renewable energy use,energy conservation,energy efficiency,energy self-sufficiency,and limits energy-related financial burdens in Pleasanton."The City has incorporated this goal,and consideration of CCA,into its 2010 Energy Efficiency and Conservation Strategy(EECS)and its 2012 Climate Action Plan(CAP). The EECS includes a chapter on Community Choice Aggregation,which specifically recommends monitoring neighboring CCA programs in Mann County and San Francisco and to identify potential models for a successful CCA,and to engage with other East Bay cities to explore the viability of 7