EBCE is committed to protecting our environment and is proud to be a Certified California Green Business
Executive Committee Meeting
Wednesday, May 3, 2023
9:00 am
In Person:
Conference Room 1
East Bay Community Energy
1999 Harrison St, Suite 800
Oakland, CA 94612
Or from the following remote location:
• Dublin Civic Center, Second Floor, 100 Civic Plaza, Dublin, CA 94568 Via Zoom:
https://ebce-org.zoom.us/j/88267670367
Or join by phone:
Dial(for higher quality, dial a number based on your current location):
US: +1 669 900 6833 or +1 253 215 8782 or +1 346 248 7799 or +1 301 715 8592 or +1 312 626 6799 or 877 853 5257 (Toll Free) or 888 475 4499 (Toll Free) Webinar ID: 882 676 70367
Meetings are accessible to people with disabilities. Individuals who need special assistance or a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting materials, should contact the Clerk of the Board at least 2 working days before the meeting at (510) 906-0491 or [email protected].
If you have anything that you wish to be distributed to the Executive Committee, please email it to the clerk by 5:00 pm the day prior to the meeting.
1. Welcome & Roll Call
2. Public Comment
This item is reserved for persons wishing to address the Executive Committee on any EBCE-related matters that are not otherwise on this meeting agenda. Public comments on matters listed on the agenda shall be heard at the time the matter is called. As with all public comment, members of the public who wish to address the Committee are customarily limited to three minutes per speaker and must complete an electronic speaker slip. The Executive Committee Chair may increase or decrease the time allotted to each speaker.
East Bay Community Energy
Board of Directors Page | 2
3. Approval of Minutes from April 5, 2023
4. 2023/24 Budget (Informational Item)
Review of next year’s draft budget
5. Energy Prepay (Informational Item)
Overview of historical energy prepay transactions and future plans
6. Committee Member and Staff Announcements including requests to place items on future Committee Agendas
7. Adjournment to June 7, 2023 at 9:00 am
EBCE is committed to protecting our environment and is proud to be a Certified California Green Business
Draft Minutes
Executive Committee Meeting
Wednesday, April 5, 2023
9:00 am
In Person:
Conference Room 1
East Bay Community Energy
1999 Harrison St, Suite 800
Oakland, CA 94612
Or from the following remote location:
Dublin City Hall - 100 Civic Plaza, Dublin, CA 94568
Via Zoom:
https://ebce-org.zoom.us/j/88267670367
Or join by phone:
Dial(for higher quality, dial a number based on your current location):
US: +1 669 900 6833 or +1 253 215 8782 or +1 346 248 7799 or +1 301 715 8592 or +1 312 626 6799 or 877 853 5257 (Toll Free) or 888 475 4499 (Toll Free) Webinar ID: 882 676 70367
Meetings are accessible to people with disabilities. Individuals who need special assistance or a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting materials, should contact the Clerk of the Board at least 2 working days before the meeting at (510) 906-0491 or [email protected].
If you have anything that you wish to be distributed to the Executive Committee, please email it to the clerk by 5:00 pm the day prior to the meeting.
1. Welcome & Roll Call
Present: Members: Tiedemann, Hu, Kalb and Marquez
Excused: Chair Balch
2. Public Comment
This item is reserved for persons wishing to address the Executive Committee on any EBCE-related matters that are not otherwise on this meeting agenda. Public comments on matters listed on the agenda shall be heard at the time the matter is called. As East Bay Community Energy
Board of Directors Page | 2
with all public comment, members of the public who wish to address the Committee are customarily limited to three minutes per speaker and must complete an electronic speaker slip. The Executive Committee Chair may increase or decrease the time allotted to each speaker.
Tom Kelly urged the Executive Committee and Board of Directors to review contracts with power plants and fossil fuel providers, and to consider the impact of these facilities on local communities and the environment. Tom Kelly suggested that a report be provided on the location and conditions of these plants, as well as the health of surrounding communities. He encouraged the Board to take action to prevent contracting with facilities that harm communities and contribute to climate change.
Jessica Tovar asked EBCE to consider accessing government funding and using its revenues to build microgrids in locations that are trusted by the community.
Additionally, Jessica Tovar stated that community members are asking about Net Energy Metering and suggested that this is a good opportunity for EBCE to offer new NEM incentives that work for the people they serve.
3. Approval of Minutes from December 2, 2022
Member Tiedemann motioned to approve the minutes. The motion was seconded by Member Kalb, which passed 4/0. Excused: Chair Balch.
4. Brand Evolution (Informational Item)
Sharing background on brand efforts
The Committee Discussed:
• Member Marquez asked for clarification about how survey data was collected for cities in San Joaquin County, and for an overview of next steps in the process. Member Marquez also asked if an ad hoc group from Stockton and Tracy was being organized.
• Member Kalb asked if brand strategy and design firms have been retained to work on this process. Member Kalb also expressed his preference for “clean energy” as a replacement for “community energy” in the brand name.
Tom Kelly stated that EBCE continues to advertise itself as clean and green, but that its emissions compare negatively to PG&E. He urged the Board to either clean up the power supply or be transparent about what the agency is providing to customers.
Jessica Tovar emphasized the importance of keeping "Community Energy" in the name, as it reflects the agency's accountability to its community. Jessica Tovar also recommended avoiding acronyms and corporate-sounding names.
5. Transportation Electrification Loan (Informational Item) $3M loan for Heavy Duty Vehicle Electrification project The Committee Discussed:
East Bay Community Energy
Board of Directors Page | 3
• Member Kalb asked for an estimate of new range trucks at the Port of Oakland as part of this project. Staff clarified that the project is in Livermore, not the Port of Oakland, but that the trucks will be in service of port-related logistics.
Member Kalb also asked if new trucks would displace currently used dirty trucks.
• Member Marquez asked if cities could partner with this project to electrify their fleets. Member Marquez also asked for the timeline and location of the project, and for staff to provide a status update in the fall.
Tom Kelly spoke in approval of the proposal and asked if low carbon fuel standard credits are being utilized in the project.
6. Emissions Overview (Informational Item)
Informational overview on emissions
The Committee Discussed:
• Member Kalb asked if the recent large storms would increase the available large hydro that can be purchased over the next couple of years. Member Kalb also stated that he requested a staff report from the City of Oakland to transition their customers to Renewable 100. Member Kalb stated that he hoped to make recommendations to the Oakland City Council by the end of the year.
• Member Tiedemann asked if, going by its 2030 Plan, EBCE is on track to see a significant decrease in its emissions factor over the next year. Tiedemann suggested that the narrative provided in the CCA comparison chart should be emphasized in future discussions. Additionally, Tiedemann asked about the impact of the agency's size on its emissions factor, and how the decision on the nuclear allocation has affected its emissions. Tiedemann also asked if the Board could reassess its decision on the nuclear allocation. • Member Marquez agreed with Member Tiedemann's suggestion to consolidate the information and frame the discussion more clearly for the public. Member Marquez also raised a question about the agency's acceptance of nuclear, citing confusion over the indication of a small amount of nuclear (1.7%) on the power content label despite the agency's previous decision to refuse nuclear allocation. Member Marquez asked if staff could provide charts that model their projections of a decrease in unspecified energy, and an increase in hydro, solar, and wind energy in upcoming years. Member Marquez also requested a cost analysis of options to move five or ten percent of customers to Renewable 100.
• Member Kalb asked if there might be a decision point in the upcoming year that would provide means for the agency to increase its investment in renewables and thereby obtain a cleaner power mix.
• Member Kalb encouraged Executive Committee members to read an opinion/editorial published in the April 5, 2023 edition of the East Bay Times titled “How community solar could transform clean energy access - New law requires utility regulators to emphasize lower-income households when it assesses new community solar proposals”. This article can be found at East Bay Community Energy
Board of Directors Page | 4
https://www.eastbaytimes.com/2023/04/05/opinion-how-community-solar-could-transform-clean-energy-access/ Tom Kelly stated that the staff presentation was missing important details. He referred to the JPA agreement, which stated that EBCE would beat PG&E on greenhouse gas emissions. He stated that every city that still has Bright Choice as its default product has seen its greenhouse gas emissions spike five times greater than PG&E’s. Tom Kelly stated that he would provide a fuller analysis on this issue but felt that the JPA agreement was no longer being adhered to.
Jim Lutz commended the presentation but noted that it was missing some important information. He requested details on the mix of Bright Choice and Renewable 100 over the years, including how many dollars and megawatt hours are under each, and what fraction of EBCE's product is Bright Choice and how this fraction has changed over time.
Jim Lutz also asked how these percentages would change with Stockton being added to EBCE.
Becky Dennis requested information about how well the current programs are meeting emissions limits. Becky Davis suggested that more people could help by signing up for Renewable 100, but recognized the need for incentives to encourage participation. She asked if the board had considered providing incentives for individuals who sign up for Renewable 100, such as rebates tied to the price of carbon credits in the market. Becky Davis stated that although the benefits might not be immediate, participants could potentially participate in the emerging carbon market, which could provide an additional incentive to sign up.
Jessica Tovar emphasized the need for EBCE to provide incentives that mirror those provided by Net Energy Metering 2.0. Jessica Tovar stated that with the proper incentives, residents in EBCE’s service territory could power their own communities with microgrids and on-site solar.
7. Committee Member and Staff Announcements including requests to place items on future Committee Agendas
• Member Marquez requested that the following topics be brought back in May or June:
o Solar grids and microgrids;
o Emissions content level;
o Incentivizing customers to move to Renewable 100.
• Member Marquez stated that, in order to maintain order during meetings, members of the public should be prepared to raise their hands when the public comment period is called.
8. Adjournment to May 3, 2023 at 9:00 am
Draft Budget Review for
Fiscal Year 2022-2023
MAY 3, 2023
PRESENTED BY:
NICK CHASET, CEO
2 Executive Summary
• In the face of rising energy costs, EBCE is able to continue to serve our local community and customers with cost competitive & cleaner energy while providing local jobs and equitable programs.
• Rates are up and PCIA is down, driven by a historic increase in market energy prices starting in 2021 and forecasted to persist in 2023-2024.
• With EBCE rates indexed to PG&E rates, we are forecasting significant headroom to operate and a strong financial surplus.
• Draft budget includes the following:
o Significant contributions to working capital and reserves o Improvements to the Value Proposition (increased discount and bill credits) o Increased carbon free energy procurement targets
o Meaningful contribution to local development budget
o Expand on staff expertise, build more depth, and scale operations further 3 Summary Draft Budget for Fiscal Year 2021-2022
Notes:
YTD* reflects actuals
through Feb 28, 2023
EST are most current
projections as of April
26, 2023
Net Position through FY
Feb 28, 2023: $57.7MM
FY 2023-24 FY 2022-23 FY 2022-23
DRAFT BUDGET BUDGET YTD* + EST
OPERATING ACTIVITY
REVENUE & OTHER SOURCES
GASB 62 Unrecognized Revenue Balance 15,814,000 15,814,000 15,814,000 Total Operating Revenue 934,627,000 769,940,000 865,646,000
EXPENSES & OTHER USES
Total Energy Operating Expenses 696,681,000 535,241,000 666,257,000 Total Overhead Operating Expenses 38,887,000 27,426,000 22,016,000
NON-OPERATING ACTIVITY
Total Non-Operating Revenue 1,728,000 276,000 2,821,000 Total Non-Operating Expenses 23,150,000 30,990,000 23,854,000 NET NON-OPERATING ACTIVITY (21,422,000) (30,714,000) (21,033,000) TOTAL REVENUES 936,355,000 770,216,000 868,467,000
TOTAL EXPENSES 758,718,000 593,657,000 712,127,000
NET INCREASE(DECREASE) IN POSITION 177,637,000 176,559,000 156,340,000
RESERVE BALANCE
Beginning Reserve Balance* 230,873,000 155,873,000 155,873,000 # Operating Target (50%) 367,784,000 281,334,000 281,334,000 *Expected value after FY 2022-23 contribution
4 Draft Budget: Base Case Assumptions
Revenues
• Increase to customer value proposition by
o Bright Choice from 3% to 5% discount to PG&E
o R100 from $0.0075 to $0.0025 above PG&E
o Estimated revenue reduction of $29.2MM
• $50 bill credit applied to all CARE & FERA customers in Q1/Q2, totaling an estimated $6.6MM in one time bill
savings
• Assumes current rates and PCIA are unchanged
through 2023
• Rates and PCIA for 2024 are non-stressed, or as
forecasted, energy rates
• 1.5% uncollectable rate for 2023, then 1.0% for 2024
• No recognition of GASB 62 revenue ($15,814,000)
• Non-operating revenue assumes 2.5% interest earned
on treasury backed cash balance accounts
Energy Costs
• Costs are derived from a blend of contracted and
open positions for all energy, attributes, and RA
o Open prices are non-stressed, or as forecasted
• Carbon free energy is above recent board approved
targets by 5% for calendar 2023 and 10% for 2024
Bright Choice targets
o 2023: CF 71% --> 76%
o 2024: CF 75% --> 85%
o Adds $5.6MM to costs (Each 1% is ~$373,000)
Other Costs
• Additional staffing requirements of 17 FTE
• $2.6MM increase in Marketing for re-branding
campaign
• $2MM increase in G&A to account for increased staff
requirements
• Significant Program funding maintained at $21MM
5 Draft Budget: Proposed Surplus Allocations
Net Position Estimated at $177.3MM
Proposed Budget Surplus Waterfall Allocation:
1) Working Capital Needs: $50MM*
2) Reserve Account Funding: $100MM*
3) 50/50% split of any excess to:**
o Incremental Long-Term Renewable Energy/Clean Energy Storage Investments: ~$13.6MM o One-time On-Bill Credits to Customers: ~$13.6MM
*Allocations to be made after the end of the fiscal period ending June 30, 2024 **Assuming a budget surplus that is materially consistent with this forecast, staff would plan for an even allocation. Formal action would be brought forth to the board to formally adopt prior to, or in conjunction with, the presentation of the audit in October of 2024. This timing would allow for staff to have exact knowledge of available surplus.
6 Draft Budget: Operating Revenues
• Increase to value proposition
o Bright Choice from 3% to 5% discount to PG&E
o Renewable 100 from $0.0075 to $0.0025 above PG&E
o $50 bill credit to all CARE & FERA customers in July-Sept 2022, shown as Other Operations Revenue reduction
• Assumes current rates and PCIA are unchanged through 2023 • Rates and PCIA for 2024 are non-stressed, or as expected, energy rates • 1.5% uncollectable rate for rest of 2023 and 1.0% for 2024 • No recognition of GASB 62 revenue ($15,814,000)
• Current Year Other Operations Revenue is damages received from counterparties FY 2023-24 FY 2022-23 FY 2022-23
DRAFT BUDGET BUDGET YTD* + EST
REVENUE & OTHER SOURCES
GASB 62 Unrecognized Revenue Balance 15,814,000 15,814,000 15,814,000 Operating Revenue
Electricity Sales 953,323,000 792,009,000 873,457,000
Uncollectables (12,054,000) (15,840,000) (17,469,000)
Other Operations Revenue (6,642,000) (6,229,000) 9,658,000 Total Operating Revenue 934,627,000 769,940,000 865,646,000 7 Draft Budget: Energy Expenses
Energy Costs
• Costs are derived from a blend of contracted and
open positions for all energy, attributes, and RA
o Open prices are non-stressed, or as forecasted
o FY 23/24 overall price projections are about on
parr with FY 22/23 actuals on average
o Most materially significant increase for FY
23/24 is with RECs and capacity charges
• Carbon free energy is above recent board approved
targets by 5% for calendar 2023 and 10% for 2024
Bright Choice targets
o 2023: CF 71% --> 76%
o 2024: CF 75% --> 85%
o Adds $5.6MM to costs (Each 1% is ~$373,000)
• Note: We are still in a period of historically high
energy pricing and significant uncertainty/volatility
o Forecasted market energy costs in 2023 and
2024 are approximately double the historical
10-year average and has persisted since 2021
FY 2023-24 FY 2022-23 FY 2022-23
DRAFT BUDGET BUDGET YTD* + EST
Energy Operating Expenses
Cost of Energy 685,451,000 523,996,000 654,987,000
Data Management/Customer Service 7,777,000 7,834,000 7,859,000 PG&E Service Fees (Billing/Metering) 2,722,000 2,715,000 2,711,000 CAISO Scheduling Coordinator 731,000 696,000 700,000
Total Energy Operating Expenses 696,681,000 535,241,000 666,257,000 8 Draft Budget: Overhead Expenses
Material Overhead Items for FY 23-24:
• Personnel costs will be discussed more in-depth on the next slide
• $2.5MM increase in Marketing costs is specifically driven by re-branding campaign
o Also includes approx. $1MM of Programs related
marketing costs
• $1.0MM increase in Legal, Policy, & Regulatory affairs is due to a couple of factors
o Membership expansion (Stockton)
o Additional volume of consulting/vendor agreements
and power contracts
• Larger staffing demand, from Personnel costs, increases in Professional Services with HR/recruiting and additional project support
• Increase to G&A is also directly related to increase in staffing with software subscriptions, membership dues, equipment, office space, insurance, and the like
• Depreciation increases due to new building
FY 2023-24 FY 2022-23 FY 2022-23
DRAFT BUDGET BUDGET YTD* + EST
Overhead Operating Expenses
Personnel 21,262,000 15,711,000 13,317,000
Marketing & Communications 5,303,000 2,824,000 2,073,000 Legal, Policy, & Regulatory Affairs 3,459,000 2,411,000 1,603,000 Other Professional Services 2,520,000 2,293,000 1,302,000 General & Administrative 5,983,000 4,007,000 3,563,000
Depreciation 360,000 180,000 158,000
Total Overhead Operating Expenses 38,887,000 27,426,000 22,016,000 9 Draft Budget: Overhead Expenses—Personnel
• FY 2021-22 Budget was initially approved at 43 FTE and expanded mid-year to 49 o 2.5% COLA and up to 5% merit-based/promotional compensation allotted o Currently at 45 FTE and interviewing for an additional 4 roles • FY 2022-23 Budget was increased to 68 FTE to accommodate additional work requirements in all areas.
Additional headcount will expand on internal expertise/skills, build more depth, and scale operations:
o 3.5% COLA and up to 10% merit-based/promotional compensation pool o 5 Marketing, 4 Local Programs, 3 Operations, 3 Technology, 2 Power Resources, 2 Legal • FY 2023-24 Budget seeks to add 17 FTE to accommodate additional work requirements in all areas.
Additional headcount will expand on internal expertise/skills, build more depth, and scale operations:
o 3.5% COLA and up to 10% merit-based/promotional compensation pool o 3 Marketing, 3 Local Programs, 3 Operations, 2 Technology, 3 Power Resources, 3 Legal FY 2023-24 FY 2022-23 FY 2022-23
DRAFT BUDGET BUDGET YTD* + EST
PERSONNEL
Salaries & Wages 16,021,000 11,598,000 9,747,000
Retirement 2,012,000 1,544,000 1,340,000
Health Care/Benefits 2,868,000 2,292,000 864,000
Payroll Expenses 361,000 277,000 169,000
Total 21,262,000 15,711,000 12,120,000
10 Draft Budget: Organization Chart
11 Draft Budget: Open Position Count
Team
# of New
Roles
Data & Tech 2
MAS 3
Operations, Admin &
Finance 2 +1
Power Resources 3
Programs 3 +1
Public Policy 2
Total New Roles: 15 + 2 (17)
● # of New Roles to budget for next FY: 15
○ Add 2 carry-over roles from FY 22-23, so 17 Total
12 Draft Budget: New Positions
Team Position Title (Draft) Position Level Desired Start Comp Band $ Low (Base) $ High (Base) $ Mid (Base) Data & Tech IT HelpDesk Associate Associate Q2 (Oct - Dec 2023) 4 $117,597 $133,400 $125,498 Data & Tech Junior Data Engineer Analyst Q3 (Jan - Mar 2024) 3 $89,597 $117,596 $103,596 MAS Graphic Designer & Content Developer Associate Q1 (Jul - Sep 2023) 4 $117,597 $133,400 $125,498 MAS Copywriter Associate Q1 (Jul - Sep 2023) 4 $117,597 $133,400 $125,498 MAS Manager, Customer Experience Manager/Principal Q3 (Jan - Mar 2024) 6 $151,319 $167,170 $159,245 Operations, Admin &
Finance Sr. Mgr / Mgr, Structured Finance (TBD) Sr Manager/Sr Principal Q2 (Oct - Dec 2023) 7 $167,171 $190,393 $178,782 Operations, Admin &
Finance Finance Associate Associate Q2 (Oct - Dec 2023) 4 $117,597 $133,400 $125,498 Operations, Admin &
Finance
Coordinator, Ops & Admin
(Carry-over from last yr) Coordinator Q1 (Jul - Sep 2023) 2 $69,174 $89,596 $79,385 Power Resources Contract Manager Manager/Principal Q1 (Jul - Sep 2023) 7 $167,171 $190,393 $178,782 Power Resources "CAISO Day Ahead Manager" Level Manager/Principal Q1 (Jul - Sep 2023) 7 $167,171 $190,393 $178,782 Power Resources Settlements Manager Manager/Principal Q3 (Jan - Mar 2024) 7 $167,171 $190,393 $178,782 Programs Programs Director Role Director Q1 (Jul - Sep 2023) 8 $190,394 $219,052 $204,723 Programs Program Lead / Associate Associate Q3 (Jan - Mar 2024) 4 $117,597 $133,400 $125,498 Programs Solar & Storage Programs / Associate Associate Q3 (Jan - Mar 2024) 4 $117,597 $133,400 $125,498 Programs Project Manager (Carry-over from last yr) Sr Associate Q2 (Oct - Dec 2023) 5 $133,401 $151,318 $142,360 Public Policy Contract Management Manager/Principal Q1 (Jul - Sep 2023) 6 $151,319 $167,170 $159,245 Public Policy Regulatory Analyst Analyst Q2 (Oct - Dec 2023) 3 $89,597 $117,596 $103,596 13 Draft Budget: Overhead Expenses—Marketing &
Account Services
Next Year Material Items:
• Majority of increase is driven by $2.6MM allocation for our first major foray into customer facing program campaigns where we are trying to acquire customers to participate and/or use our equipment (e.g. e-Bike, DCFC stations, induction cooking and EV adoption). Additionally, EBCE’s rebranding campaign will carry incremental costs beyond past year marketing spends that will pull from this allocation Included in cost items is approximately $1.0MM dedicated to Programs related marketing costs
• Required Mailings: Joint Rate Mailer w/ PG&E, Power Content Label, New Account Noticing
• Advertising: Active community presence activities, sponsorships, local events, increase due to Stockton and rebranding campaigns • Promotional Items: Give away items
• Communications: Public relations, media, newsletters, consultants, minor software needs--Website development from rebranding is biggest cost item at $1MM
Current Year Material Items:
Marketing has lower cost with advertising and
communications consultant due to shifting in
Programs related needs with Resilient Home and
BlocPower campaigns
FY 2023-24 FY 2022-23 FY 2022-23
DRAFT BUDGET BUDGET YTD* + EST
Required Mailings 282,000 520,000 529,000
Advertising 2,044,000 986,000 629,000
Promotional Items 123,000 50,000 41,000
Communications 2,854,000 1,268,000 874,000
Total 5,303,000 2,824,000 2,073,000
14 Draft Budget: Overhead Expenses—Legal, Policy, &
Regulatory Affairs
Current year spending was less than budgeted this year due to a delay in expected litigation expenses and unused contingency set aside
Next Year:
• Legal Consultants: Outside general counsel for procurement, analysis, and general operations.
Increase is driven by:
o Multiple pending and on-going litigations expenses
o 2023 Large Clean Energy RFO
o Implementation of numerous local development initiatives o Additional volume of consulting/vendor agreements and power contracts • Legislative Consultants: Retainer for legislative advocacy. For this coming fiscal year, EBCE has added additional resources focused on federal affairs to support both funding and policy initiatives. • Other Consultants: Policy related advising and economic consulting FY 2023-24 FY 2022-23 FY 2022-23
DRAFT BUDGET BUDGET YTD* + EST
LEGAL AND POLICY
Legal Consultants 3,117,000 2,135,000 1,384,000
Legislative Consultants 237,000 177,000 180,000
Other Consultants 105,000 99,000 39,000
Total 3,459,000 2,411,000 1,603,000
15 Draft Budget: Overhead Expenses—Other Professional
Services
Next Year Material Items:
• Operations: Accounting and auditing for financial
compliance, general finance, and addition of new
project with treasury management consulting
• Human Resources Consulting: Support for additional
HR demand for increased staffing recruitment,
professional development, and training
• Tech Consulting: Technical network assistance
• Power Resources: Technical consulting for Power
Resources, operational compliance support and other
various tasks
Current Year Material Items:
• HR consulting was approximated as first year need
for consulting. Hiring of HR lead has led to reduced
costs with active management
• Technology Consulting is lower than expected with
reevaluation of timeline for cost-of-service
implementation
• Power Resources consulting lower than expected
with IRP below budget
FY 2023-24 FY 2022-23 FY 2022-23
DRAFT BUDGET BUDGET YTD* + EST
OPERATIONS CONSULTANTS
Operations 931,000 363,000 435,000
Human Resources Consulting 634,000 1,000,000 338,000
Tech Consulting 325,000 325,000 209,000
Power Resources 630,000 605,000 320,000
Total 2,520,000 2,293,000 1,302,000
16 Draft Budget: Overhead Expenses—General & Administrative Next Year Material Items:
• Operational Expenses: Increased staff costs related to insurance, service fees, supplies, membership dues,
operational services, building maintenance, and other
relevant G&A
• Software, Subscriptions, SaaS: Increase covers
additional software needs for Finance, Power
Resource, and Technology operations, as well as
essential subscriptions for ongoing operations with
expanded staff
• Rent & Utilities: Increases with office space needs
due to expanded staff
• Conferences & Professional Development: Trainings,
conferences, and related expenses
• Board & Director Fees: Monthly stipends and
transportation reimbursements for board members
Current Year Material Items:
• Operational Expenses were higher than expected primarily due to inflationary increases in insurance costs and industry memberships dues
• Software costs were lower with delay in implementing
customer portal development and battery optimization as well as data storage was under budget
FY 2023-24 FY 2022-23 FY 2022-23
DRAFT BUDGET BUDGET YTD* + EST
GENERAL OPERATIONS
Operational Expenses 1,523,000 1,039,000 1,133,000
Software, Subscriptions, SaaS 2,948,000 2,233,000 1,576,000 Small Equipment 510,000 210,000 113,000
Rent & Utilties 764,000 345,000 565,000
Conferences & Prof. Development 160,000 130,000 124,000 Board & Director Fees 78,000 50,000 52,000
Total 5,983,000 4,007,000 3,563,000
17 Draft Budget: Non-Operating Activity
• Non-Operational Revenue: Interest earned on Treasury backed cash account balances (estimated at 2.5%) and BlocPower loan (5.5% on $500k)
• Grants: Generally only recognized against qualifying expenses as incurred, thus not projected
• Other Non-Operational Revenue: Rent from AT&T tower on new building
• Borrowing Interest Expenses: Expected costs associated with expanded credit facility
• Local Development Funding: Capital transfer to Local
Development Fund
• Capital Expenditures: Moving and new equipment/furniture related to new office space
FY 2023-24 FY 2022-23 FY 2022-23
DRAFT BUDGET BUDGET YTD* + EST
NON-OPERATING REVENUE
Interest Income 1,680,000 261,000 1,561,000
Grants 0 0 1,100,000
Other Non-Operating Revenue 48,000 15,000 160,000
Total Non-Operating Revenue 1,728,000 276,000 2,821,000
NON-OPERATING EXPENSES
Borrowing Interest 1,650,000 1,440,000 587,000
Local Development Funding 21,000,000 22,550,000 22,550,000 Grant 0 0 0
Capital Expenditures 500,000 7,000,000 717,000
Total Non-Operating Expenses 23,150,000 30,990,000 23,854,000 NET NON-OPERATING ACTIVITY (21,422,000) (30,714,000) (21,033,000) 18 Draft Budget: Local Development Fund
• 2023-2024 Local Development Fund
allocation is set at $21MM
• Allocating budget for capital
intensive infrastructure development
projects
• Allocating EBCE capital to reduce cost of
ownership for building and vehicle
electrification
• Initiating programs to accelerate heavy and
light duty vehicle adoption as well as
eMobility
• $1MM in Program marketing in the MAS
budget
• Unspent Local Development
budget carries forward year to year
Local Development Areas of Emphasis Budget Allocation
Transportation Electrification $11.75M
Building Electrification $7M
Energy Efficiency No Direct EBCE Cost
Community Resilience/Local RE $2M
Community Grants $0 ($4.2M allocated in FY'23)
Sponsorships/Memberships $250k
LOCAL DEVELOPMENT FUND
FY 2023-24 FY 2022-23 FY 2021-22 FY 2020-21 FY 2019-20
BEGINNING BALANCE 36,194,914 16,626,143 10,398,245 5,201,410 0
REVENUE & OTHER SOURCES
Transfer from Operating Fund 21,000,000 22,550,000 8,475,000 6,340,000 6,340,000 Grants/Interest - 1,025,980 335,460 395,000 219,673
Total Revenues & Other Sources 21,000,000 23,575,980 8,810,460 6,735,000 6,559,673
EXPENSES & OTHER USES
Actual Program Expenses 2,671,209 2,582,563 1,538,165 1,358,263 Expected Remaing Expenses 57,194,914 1,336,000 - - -
Total Expenses & Other Uses 57,194,914 4,007,209 2,582,563 1,538,165 1,358,263 ENDING BALANCE - 36,194,914 16,626,143 10,398,245 5,201,410 Thank You!
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Energy Prepay
Transaction
Overview
MAY 3, 2023
Energy Prepay Overview
● EBCE executed two energy prepay transactions in 2021 and 2022, issuing through CA Community Choice Financing Authority (CCCFA), the JPA in which EBCE is a member ● The annual savings from these first two energy prepay transactions totals nearly $7 Million at the outset
● Energy Prepay transactions are off balance sheet structures that allow EBCE to utilize its tax-exempt status to lower its energy procurement costs ● The discount that is applied to energy costs is based on the differential between taxable and tax-exempt dept spreads ● These spreads are historically volatile and therefore optimal prepay timing is difficult to predict ● EBCE is preparing a third energy prepay transaction and anticipates going to market in the next 2- 4 months if conditions are suitable and will seek approval from the board as early as May or June 2023
2 Existing Energy Prepay Transaction Summary
EBCE First Transaction – Jointly executed with SVCE
● First Energy prepay closed by a CCA
● Closed: Sept. 23, 2021
● Total Bond Proceeds: $1.48 Billion ("Green Bond” Certified) ● Initial Power Supply: 59 MW Around-the-Clock Carbon-Free Energy starting Jan 1, 2022 ● Initial Bond Tenor Savings: 10 years
EBCE Second Transaction - Standalone prepay
● Third Energy prepay closed by a CCA
● Closed: July 12, 2022
● Total Bond Proceeds: $939 Million ("Green Bond” Certified) ● Initial Power Supply: 75 MW Around-the-Clock Carbon-Free Energy starting April 1, 2023 ● Initial Bond Tenor: 6 years
3 Historical Prepay Parties
4 Prepay Supplier/Bond Underwriter: Morgan Stanley
– Selected through solicitation issued November 2019
Municipal Financial Advisor: PFM
– Selected through solicitation issued September 2020
Counsel: Orrick, Herrington & Sutcliffe (Bond & Tax Counsel) | Chapman & Cutler LLP (POS, Disclosure & Issuer’s Counsel)
– Both firms selected through solicitation issued June 2020 Bond Issuer: California Community Choice Financing Authority – EBCE membership approved by Board in April 2021, JPA formed June 2021; Founding Members are EBCE, MCE, SVCE, 3CE
Custodian: BONY
– PFM issued solicitation early July 2021
Commodity Swap Counterparty: Natixis and RBC
– RBC was the swap counterparty in 2021 and Natixis was the swap counterparty in 2022 Appendix
• An energy prepayment is a long-term non-recourse financial transaction between a tax-exempt Load Serving Entity (LSE) and a taxable financial counterparty (bank, called “Prepay Supplier") utilizing the municipal bond market.
o Typically 30-year term, LSE committing ~$350MM-$850MM of energy supply contracts (combined contract notional values)
o LSE utilizes in order to lower customer energy costs
• Prepay Supplier is assigned an existing energy supply contract, pays the contract price to PPA Seller and immediately transfers all electricity and attributes to LSE. LSE pays the Prepay Supplier. • Municipal utilities (and tax-exempt entities such as CCAs) in the US can prepay for a supply of electricity or natural gas from a taxable entity and fund that prepayment with tax-exempt municipal bonds. The LSE must sell the commodity to their retail end-users residing within their traditional service area. o This structure is well known and regularly used for gas and is now being applied towards renewables PPAs o Codified in US Tax Law. Since first prepayments of natural gas were done in the early 1990’s, the IRS issued rules allowing tax-exempt prepayments and Congress enacted legislation specifically allowing the transactions (National Energy Policy Act of 2005; Section 1327) 6 Prepay Overview
7 Prepay Structure
Prepay Supplier Municipal
Conduit LSE/CCA
Existing PPA to
be Assigned
Non-Recourse
Tax-Exempt
Bonds
Existing PPA
Counterparty
Contract Price
Prepayment $$
Contract Price
Less Discount
MWhs + RECs MWhs + RECs
+ Debt Service
MWhs + RECs
Debt
Service
Bond
Proceeds
Market Statistics
8 • Nationwide: 90+ municipal transactions
– $50+ Billion combined notional contract value
• California: 11 municipal transactions
– $5.7 Billion combined notional contract value
• Active Suppliers: Morgan Stanley, Goldman Sachs, JP Morgan, Royal Bank of Canada, Citi, TD Securities – All investment grade rated financial institutions
• Resource Types:
– Majority of transactions to date have been exclusively for natural gas, remainder including an electricity ‘switch’ at a certain year.
– The same tax law and similar transaction structure enables the program for electricity from renewables contracts, as well. The market is seeing activity and preparation for these transactions, particularly from CCAs.
Power Contract Assignment:
• Existing renewable PPAs are assigned to the taxable Prepay Supplier. The LSE continues to take and pay for energy and attributes delivered through the contract.
• All other terms of the PPA are unchanged
• If the prepay program terminates early, prepaid supplier fails to perform, or LSE fails to perform, the LSE forgoes the future savings and the assigned PPA contract is put back to the original LSE • Active Suppliers: Goldman Sachs, Morgan Stanley, JP Morgan Royal Bank of Canada, Citi, Bank of America are all investment grade rated financial institutions
Debt:
• Non-Recourse: Prepays utilize non-recourse municipal bonds and are not secured or guaranteed by the referenced entity (i.e. the CCA). Rather the debt is recourse to the Prepay Supplier (i.e. the bank receiving the prepayment). This significantly protects the CCA and mitigates risk related to the payment of power contracts novated through the prepay.
• Off Balance sheet for LSE: Bonds are issued by a municipal bond conduit and arranged by the Prepay Supplier 9 Key Elements of a Prepay Transaction
Prepay Sizing and Discount
10 • The total bond proceeds may be as high as $1.25bn and will be dependent on the CA bond market appetite. – EBCE will seek the maximum bond raise while maintaining optimal bond rates – The amount represents the present value of the PPA cashflows over the 30-year life of the transaction • This transaction will likely translate to an estimated $2-3MM of annual savings for EBCE for the initial bond term. – The transaction assumes an increase in the cashflows running through the prepay over the 30-year life. – As the transaction moves forward, the arbitrage value goes down since the present value benefits reduce with a shorter remaining tenor.
The future discount rates will be reset every 5-10 years based on bond tenors and be dependent on future bond market conditions, but this puts downward pressure on the future discounts.
– There is a negotiated minimum discount that, if not met by the Prepay Supplier, allows the LSE not to move forward in the repricing. • Ultimately the discount is established by the spread between taxable and tax-exempt rates and deducts all transaction related costs, which include fees associated with bond underwriting, counsel (bond, disclosure, underwriter’s, prepay), financial adviser, swap counterparty, credit rating, custodian, etc.
• 5-10 years is typically the optimal bond spread tenor. Maintaining this spread over a 30-year transaction life maximizes the available discount. This requires a repricing and re-issuance of bonds every 5-10 years and a reset of the discount rate. In general, a high interest rate environment will lead to a higher discount.
• The initial power flows for the transaction are anticipated to begin in 2024