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Appendix C. Forecast of PG&E's Generation Rates MRW developed a forecast of PG&E's generation rates for comparison with the rates that Alameda CCA will need to charge to cover its costs of service. MRW developed the forecast for the years 2017-2030 using publicly available inputs, including cost and procurement data from PG&E, market price data, and data from California state regulatory agencies and the U.S. Energy Information Administration. The structure of the rate forecast model and the basic assumptions and inputs used are described below. Generation Charges PG&E's generation costs fall into four broad categories: (1) renewable generation costs, (2) fixed costs of non-renewable utility-owned generation, (3) fuel and purchased power costs for non- renewable generation, and(4) capacity costs. Each of these categories is evaluated separately in the rate forecast model, and underlying these forecasts is a forecast of PG&E's generation sales. Sales Forecast PG&E's generation cost forecast is driven in large part by the amount of generation that PG&E will need to obtain to meet customer demand. To forecast PG&E's electricity sales, MRW started with the 2016-2030 sales forecast that PG&E provided in its January 2016 Renewable Energy Procurement Plan ('`RPS Plan") filing with the CPUC.20 This forecast predicts 4% annual sales reductions through 2020 and anemic sales growth of 0.2%per year from 2020-2025,before increasing to close to 1%per year from 2025-2030.21 Renewable Generation The starting point for MRW's analysis is PG&E's "RPS Plan," in which PG&E discusses its plan for meeting California's Renewable Portfolio Standard (RPS) targets and provides the annual amount and cost of renewable generation currently under contract through 2030. PG&E's RPS Plan shows that PG&E's current renewable procurement is in excess of the RPS requirement in each year through 2022. After 2022, PG&E's renewable generation from current contracts falls below the RPS requirements,but PG&E is projected to have enough banked Renewable Energy Credits (RECs) from excess renewable procurement in prior years to meet the RPS requirements until 2025. MRW adopted PG&E's RPS Plan forecast of the amount and cost of renewable generation that is currently under contract. For the period starting in 2026 when PG&E's RPS Plan shows a need 20 Pacific Gas&Electric.Renewables Portfolio Standard 2015 Renewable Energy Procurement Plan(Final Version).January 14,2016.Appendix D. 21 The near-term decline in sales in PG&E's forecast is likely attributable to the growth in CCA,in which a municipality procures electric power on behalf of its constituents instead of having them purchase their power from PG&E.While customers in the jurisdictions of these municipalities have the option to opt-out of CCA and to continue to procure power from PG&E,so far,most CCA-eligible customers have not elected for this option.CCA customers continue to procure electricity delivery services from PG&E;it is only generation services that they obtain through the CCA. C- 1