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Community Choice Aggregation Feasibility Analysis Alameda County Bonding Risk Pursuant to CPUC Decision 05-12-041, a new CCA must include in its registration packet evidence of insurance or bond that will cover such costs as potential re-entry fees, specifically, the cost to PG&E if the CCA were to suddenly fail and be forced to return all its customers back to PG&E bundled service. Currently, a bond amount for CCAs is set at $100,000. This $100,000 is an interim amount. In 2009, a Settlement was reached in CPUC Docket 03-10- 003 between the three major California electric utilities (including PG&E), two potential CCAs (San Joaquin Valley Power Authority and the City of Victorville) and The Utility Reform Network(TURN) concerning how a bonding amount would be calculated. The settlement was vigorously opposed by MCE and San Francisco and never adopted. Since then, the issue of CCA bond requirements has not been revisited by the CPUC. If it is, the bonding requirement will likely follow that set for Energy Service Providers (ESPs) serving direct access customers. This ESP bond amount covers PG&E's administrative cost to reintegrate a failed ESP's customers back into bundled service,plus any positive difference between market-based costs for PG&E to serve the unexpected load and PG&E's retail generation rates. Since the ESP bonding requirement has been in place, retail rates have always exceeded wholesale market prices, and thus the ESP's bond requirement has been simply the equal to a modest administrative cost. If the ESP bond protocol is adopted for CCAs, during normal conditions, the CCA Bond amount will not be a concern. However, during a wholesale market price spike, the bond amount could potentially increase to millions of dollars. But the high bond amount would likely be only short term, until more stable market conditions prevailed. Also it is important to note that high power prices (that would cause a high bond requirement) would also depress PG&E's exit fee and would also raise PG&E rates, which would in turn likely provide the CCA sufficient headroom to handle the higher bonding requirement and keep its customers' overall costs competitive with what they would have paid had they remained with PG&E. As discussed above, JPA member entities would not be individually liable for any increase in the bond amount. July,2016 47 MRW&Associates,LLC