Electric Update Workshop Michael Garvey Chairman September 14, 2000

Agenda

Executive Committee for FY Ken Blackman, City of Santa Rosa Kathy Brown, County of Contra Costa Robert Fugle, Gold Gate Bridge District Michael Garvey, City of San Carlos Wayne Green, City of Salinas John Lisenko, City of Foster City Mark Lewis, City of Union City Alan Nadritch, City of Benicia

Annual Board Meeting October 19, :00 a.m. Metro Center

Program Overview Eugene Leong President ABAG POWER September 14, 2000

Program Overview ABAG POWER Objectives –Aggregate power purchases --> savings –Provide economical green power option –Take control of deregulated electric future What a Difference a Year Makes !! –April ‘98-April ‘00 --> Business as usual –June-August ‘00 --> The quarter from hell –Sept. ‘00-Dec. ‘01 --> Hedging the future

The Big Picture municipal associations “The overriding lesson of history is the need to balance market power. History shows that balance cannot be created by regulatory rules alone--it must be in the market structure…a strong consumer presence is essential to help balance the influence of suppliers and make competition work….The coalitions formed…with public power systems, rural cooperatives, municipal associations, consumer advocacy and environmental groups, and labor organizations-- provide a valuable example of combined interests that might help to balance market power in both state and regional structures” -- Scott Ridley, “Profile of Power” (1996)

Executive Summary examples represent a precursor of what lies ahead for California’s economy over the next 30 months “California is experiencing major problems with electricity supply and pricing caused by policies and procedures adopted over the past ten years. This summer, California has seen both electricity price volatility – exemplified by huge increases in wholesale electric prices and increases in retail prices in San Diego – and supply and delivery system instability – culminating in unprecedented black- outs in the Bay Area. These serious, but thus far isolated, examples represent a precursor of what lies ahead for California’s economy over the next 30 months. California’s reliability deficits and retail price volatility may not improve in that time without a mid-course correction.” -- PUC Report to the Governor on Utility Deregulation (Aug. 2, 2000)

What’s Happening in the Electrical Markets Bob Grow, CEC Gary Hunt, Henwood Tom Green, NCPA September 14, 2000

State Renewable Energy Program DAVE FINIGAN September 14, 2000

TOTAL RENEWABLE ENERGY REBATE COLLECTED FOR FY $1,474,636

FEBRUARY, 2000 REBATE TO ELECTRIC PROGRAM MEMBERS $749,087

REMAINING REBATE TO BE DISTRIBUTED TO MEMBERS $725,549

Program Savings

Electric Program Review Jerry Lahr Program Manager September 14, 2000

Electricity Cost Breakdown PX Credit: amount PG&E would have incurred to purchase electricity on your behalf PX Credit and Competitive Transition Charge (CTC) vary month-to-month, but must total to equal the generation charge

Example 1: Price Freeze - PX Rate (Spring)

Example 2: Price Freeze - PX Rate (Early Summer)

Example 3: Price Freeze - PX Rate (Summer)

$0.13

Key Points Cash flow (working capital) increased due to : –skyrocketing energy prices –energy payments in advance ABAG POWER must now recover money owed by PG&E

Example 4: Price Freeze - Fixed Price

Example 5: Price Freeze - Fixed Price

Example 6: Price Freeze - Fixed Price

Example 7: Freeze Removed - PX Rate

Example 8: Freeze Removed - Fixed Rate

Staff Recommendations Continue electric program w/ fixed price contract through 2001 Explore different hedging and risk management strategies Expand Membership Strive for 100% renewable energy

The Future, Calpine Contract Bill Ross Calpine September 14, 2000

Reminder: Annual Board Meeting October 19, 2000

Questions & Answers