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ESA Memo to City of Pleasanton:June 13,2016 Scenario 2 is likely to have a lower opt out rate,given the environmental and cost advantages over PG&E. Regarding Scenario 3,significant portions of the residential customer base could have a strong interest in high GHG-free electricity and opt-up to 100%renewable. However,we believe that the costs associated with Scenario 3 are overly optimistic,and based on the experiences of other CCAs in the Bay Area,price parity or a slight increase in costs for Scenario 3 over standard PG&E rates are likely. Peninsula Clean Energy will be charging its 100%renewable product customers approximately 2%more than the standard PG&E rate. We also expect that under Scenario 3 conditions,a significant fraction of large commercial and industrial uses,as well as those who are direct access customers,would choose not to participate in the CCA.As a comparison,the Peninsula Clean Energy CCA Feasibility Study(2016)estimated a 25%opt out rate for a similar scenario for customers in the residential and small commercial sectors,and upwards of 50%opt out for large industrial and commercial customers. This level of opting out would significantly change the revenue and risk projections presented in the Study. Direct access customers may have little incentive to opt into the CCA. However,the City's relatively small number of Direct Access customers (according to 2010 PG&E data),if accurate,means this could have a relatively small effect in Pleasanton. In San Mateo County,approximately 10%of the total load is consumed by direct access customers(Peninsula Clean Energy CCA Technical Study, 2016). 13