Board adopts rate stabilization reserve policy to smooth PCIA-driven volatility

San Diego Community Power’s board voted March 26 to adopt a formal rate stabilization reserve policy intended to reduce customer bill volatility tied to market shifts and California’s power charge indifference adjustment (PCIA).

Staff presentations by Senior Strategic Finance Manager Jeb Spangler and Senior Rates Analyst Pete Polonsky explained the mechanics: under Governmental Accounting Standards Board guidance (GASB 62), the policy would permit designation of excess revenues into a rate stabilization reserve that remains part of unrestricted cash and investments for reserve calculations. Staff described two annual decision points: a year‑end transfer into the RSR (which the CEO may authorize and report to the board) and a recognition decision during rate setting that requires board approval before funds are recognized to offset rates. Staff said a designation of up to 45 days cash on hand was available for the reserve and cited a staff estimate of roughly $125 million for that upper bound; the agency’s strategic plan also referenced a $70 million target to mitigate fluctuations.

Polonsky framed the reserve’s “primary use case” as protection from PCIA volatility, which staff said produced swings in 2025 (PCIA credited customers about 1.36¢/kWh) versus 2026 (about 3.55¢/kWh) — roughly a 5¢ difference for the representative residential vintage cited. Staff emphasized guardrails: recognition decisions presented with a replenishment plan (2–4 years if feasible) and explicit triggers and criteria in policy. The board moved, seconded and adopted Resolution 2026‑07 by roll call.

The policy is intended as a rate‑smoothing tool for normal volatility and is not designed to address long‑term revenue‑expense imbalances. Staff said they will report transfers and recognition recommendations to the board per the policy’s approval.