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ESA Memo to City of Pleasanton:June 13,2016 satisfaction. Stable and competitive rates are among the significant benefits that can/will be provided by Alameda CCA. 3. Assess Value and Risks of Hydropower Scenarios 2 and 3 each rely on a significant portion of the Alameda CCA supply portfolio as being comprised of hydro generation. However,the risks and volatility impacts of hydro resources and the reliance of the CCA in their procurement are not,in our opinion,fully discussed. We recognize that large hydro is not considered renewable in the State of California's rules around Renewable Portfolio Standards (RPS). Hydro is a critical resource to help the CCA reduce its GHG-free content at a relatively low cost,which in turn helps the region,and the City in particular,meet its GHG reduction targets. As can be seen in Table 2 above (Summary of Community Choice Aggregation Programs in the Bay Area)both Sonoma Clean Power and MCE use large hydro for a significant portion of their supplies. The consideration of purchasing hydro has financial,economic,regulatory and political risks and ramifications. Each of the scenarios in the Study are based on the PG&E"average hydro year"and do not take into account significant volumetric risk of purchasing hydro or the cost impacts. In recent years hydro generation in the state has dropped from an average of 14%of overall generation to about 8%in recent years (Energy Information Agency website). For portfolio diversification purposes,hydropower can be purchased at very low rates from the Northwest(primarily Oregon and Washington)and imported along transmission lines.Many existing CCAs use hydropower to increase their GHG-free power content. Such power purchases do face transmission risks,since delivery from the Northwest can be interrupted by transmission outages. Availability risk can also occur during droughts in the Northwest. Additionally potential regulation (such as AB 1110 and SB1305)may make such purchases more expensive or limit their availability. The inclusion of hydropower has been an important component of many CCA launch portfolios,as the resource is GHG free and low-cost and serves as an important diversification of the initial supply portfolio. The purchase of hydropower also allows the CCA to have competitive rates and very-low GHG emissions during its initial start-up period,which is attractive to many customer elements and is a strong competitive advantage when customers decide to opt into the new CCA. 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. We recommend that the Study undertake additional sensitivity analyses,which take into account hydro supply variability within California and the Northwest,and the impacts of such variability on overall energy prices. 4. Assess Customer Opt-in and Retention The Study does not assess in detail issues around customer opt-in retention. Rather the Study assumes that 15%of all customers,across all classes,would opt to remain with PG&E. Under Scenario 1 of the Study,the overall 15%opt out of customers is questionable given the negative GHG impacts of this Scenario.Many cities within the CCA territory,especially those looking for higher(e.g., 100%) renewable options,may choose not to participate in a CCA that chooses to implement Scenario 1.Because of this high opt-out rate,the viability of a CCA could be significantly at risk. 12