Staff Report Item 9
Staff Report Item 9
TO: Ava Community Energy Authority Board of Directors
FROM: Nick Chaset, Chief Executive Officer
SUBJECT: Fiscal Year 2024-2025 Budget (Action Item)
DATE: June 12, 2024
__________________________________________________________________ Recommendation
Adopt a resolution approving the 2024-2025 fiscal year budget, including the allocation of surplus revenues proposed below.
Background and Discussion
Ava’s fiscal year is from July 1 through June 30. Staff is presenting a proposed draft budget for fiscal year 2024-2025.
This budget presents revenues based on Ava’s value proposition of a 5% discount relative to PG&E rates for Ava’s Bright Choice product and a 0.25 cent premium for Renewable 100.
This budget also presents a low-to-moderate net position surplus as a base-case scenario, due to anticipated changes in rates and PCIA, as released in PG&E’s Energy Resource Recovery Account (“ERRA”) filing with the CPUC in May of this year. Staff is recommending a method to manage this surplus and any possible increases that may materialize by the end of the fiscal year.
1. No allocation to working capital retention
2. The first $50MM to be allocated to reserves to ensure agency solvency, in the event of possible risk contingencies
3. Any additional surplus above the first $50MM will be first allocated to a $25 CARE/FERA on-bill credit, estimated at about $3.3MM
4. Additional surplus above the previous allocations will be allocated as follows: 60% to a one-time on-bill credit for customers and 40% to Net Billing Tariff (NBT) incentives, up to $25MM in total. This would provide a maximum of $10MM to NBT and $15MM to customers
5. Any additional remaining budget surplus above the previous allocations (estimated at $78.3MM) will be added to reserve funds
Staff Report Item 9
This presented budget is based on feedback from a draft version presented at the Executive Committee on May 1, 2024, the Finance, Administrative, & Procurement Subcommittee on May 8th, 2024, the Board of Directors on May 15, 2024, and the Executive Committee on June 5, 2024 (“previous versions”). The budget outlines staff’s best expected estimates for costs and revenues anticipated for the next fiscal year, based on load, market prices, and PCIA charges.
Due to these updates, the numbers in this draft may differ from those presented in previous versions.
Staff Report Item 9
June Updated FY 2024
BUDGET BUDGET
OPERATING ACTIVITY
REVENUE & OTHER SOURCES
Electricity Sales 881,671,000 957,028,000
Uncollectables (8,817,000) (12,095,000)
Other Operating Revenue 0 (6,642,000)
TOTAL OPERATING REVENUE 872,854,000 938,291,000
EXPENSES & OTHER USES
Cost of Energy 760,248,000 682,367,000
Cost of Energy Services 11,608,000 11,219,000
Total Energy Operating Expenses 771,856,000 693,586,000 Overhead Operating Expenses
Personnel 26,592,000 21,911,000
Marketing & Communications 6,168,000 5,303,000
Legal, Policy, & Regulatory Affairs 4,104,000 3,509,000 Other Professional Services 2,136,000 2,505,000
General & Administrative 5,868,000 5,711,000
Depreciation 399,000 360,000
Total Overhead Operating Expenses 45,267,000 39,299,000
NON-OPERATING ACTIVITY
NON-OPERATING REVENUE
Interest Income 11,400,000 1,680,000
Grants 350,000 0
Other Non-Operating Revenue 49,000 48,000
TOTAL NON-OPERATING REVENUE 11,799,000 1,728,000
NON-OPERATING EXPENSES
Borrowing Interest 2,796,000 1,650,000
Local Development Funding 22,400,000 25,500,000
Capital Expenditures
Investments 0 500,000
Other CapEx 100,000 0
Total Capital Expenditures 100,000 500,000
TOTAL NON-OPERATING EXPENSES 25,296,000 27,650,000
TOTAL REVENUES 884,653,000 940,019,000
TOTAL EXPENSES 842,419,000 760,535,000
TOTAL NET REVENUES 42,234,000 179,484,000
Staff Report Item 9
Fiscal Impact
This establishes the forecast of Ava’s fiscal position for the next 12 months with a positive net position.
Attachments
A. Resolution adopting the Ava Community Energy Budget FY 2024-2025 B. Ava Community Energy Budget for Fiscal Year 2024-2025 Presentation Attachment Staff Report Item 9A
RESOLUTION NO. R-2024-xx
A RESOLUTION OF THE BOARD OF DIRECTORS
OF AVA COMMUNITY ENERGY AUTHORITY TO APPROVE THE 2024-2025 FISCAL
YEAR BUDGET AND THE WATERFALL ALLOCATIONS OF SURPLUS REVENUES WHEREAS The Ava Community Energy Authority (“Ava”) was formed as a community choice aggregation agency (“CCA”) on December 1, 2016, Under the Joint Exercise of Power Act, California Government Code sections 6500 et seq., among the County of Alameda, and the Cities of Albany, Berkeley, Dublin, Emeryville, Fremont, Hayward, Livermore, Piedmont, Oakland, San Leandro, and Union City to study, promote, develop, conduct, operate, and manage energy-related climate change programs in all of the member jurisdictions. The cities of Newark and Pleasanton, located in Alameda County, along with the City of Tracy, located in San Joaquin County, were added as members of Ava and parties to the JPA in March of 2020. The city of Stockton, located in San Joaquin County was added as a member of Ava and party to the JPA in September of 2022. The city of Lathrop, located in San Joaquin County, was added as a member to Ava and party to the JPA in October of 2023. On October 24, 2023, the Authority legally adopted the name Ava Community Energy Authority, where it had previously used the name East Bay Community Energy Authority since its inception.
WHEREAS Ava operates on a fiscal year budget cycle from July 1st through June 30th; and
WHEREAS draft versions of Ava’s budget for fiscal year 2024-2025 were presented to the Executive Committee on May 1st and June 5th, 2024, the Finance, Administrative, & Procurement subcommittee on May 8th, 2024, and the Board of Directors on May 15th, 2024 (the “Prior Presentations”); and WHEREAS Staff has incorporated feedback from the Prior Presentations and prepared a revised proposed budget set forth in Exhibit A (the “Proposed Budget”).
NOW, THEREFORE, THE BOARD OF DIRECTORS OF AVA COMMUNITY ENERGY AUTHORITY DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. The Board of Directors hereby approves and adopts the Proposed Budget, as set forth in Exhibit A, as Ava’s fiscal year 2024-2025 budget.
Section 2. The Board of Directors hereby approves and assigns that net position surplus money abides by a waterfall of contributions, whereas the first $50 million is to be applied to Ava’s reserve funds, then any additional surplus will first be allocated to a $25 CARE/FERA customer on-bill credit, then the next $25 million will be divided with 60% of that amount being allocated to on-bill credits for all customers and the remaining 40% to Net Billing Tariff incentives program, and any budget surplus beyond these aforementioned allocations will be added to reserve funds.
Attachment Staff Report Item 9A
ADOPTED AND APPROVED this 12th day of June, 2024.
Jack Balch, Chair
ATTEST:
Adrian Bankhead, Clerk of the Board
Fiscal Year 2024-2025
Final Budget
Board of Directors
June 12, 2024
Attachment Staff Report Item 9B
Background & Discussion
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Attachment Staff Report Item 9B
Executive Budget Summary
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Attachment Staff Report Item 9B
Historical Rates & Energy Costs
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0 0.02
0.04 0.06
0.08 0.1
0.12 0.14
0.16 2019 2020 2021 2022 2023 2024 2025
$/kWh
Fiscal Year
Customer Rate Revenue Profile
Ava Average Rates PCIA Fees Cost of Service Margin
Attachment Staff Report Item 9B
Summary of Budget Changes
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0 0.02
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0.08 0.1
0.12 0.14
0.16 0.18
Ava 5% 2024 Ava 7% 2024 Ava 7% 2025 May Ava 5% 2025 June Average Bright Choice Rates: Ava and PG&E for
Calendar Years 2024 and 2025
Average Rates PCIA PG&E Rates
Attachment Staff Report Item 9B
CARE/FERA
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0.00 100.00
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600.00
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1000.00
5% May 5% June 5% May 5% June
CARE CARE FERA FERA
Average CARE/FERA FY 2024-2025 Generation Cost Comparison Ava Cost PG&E Cost
Attachment Staff Report Item 9B
Recommended Budget Base Case Assumptions
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Attachment Staff Report Item 9B
Budget Comparison Fiscal Year 2024-2025
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June Updated May Draft FY 2024
BUDGET BUDGET BUDGET
OPERATING ACTIVITY
REVENUE & OTHER SOURCES
Electricity Sales 881,671,000 979,017,000 957,028,000
Uncollectables (8,817,000) (9,790,000) (12,095,000)
Other Operating Revenue 0 (6,487,000) (6,642,000)
TOTAL OPERATING REVENUE 872,854,000 962,740,000 938,291,000
EXPENSES & OTHER USES
Cost of Energy 760,248,000 753,523,000 682,367,000
Cost of Energy Services 11,608,000 11,608,000 11,219,000 Total Energy Operating Expenses 771,856,000 765,131,000 693,586,000 Total Overhead Operating Expenses 45,267,000 45,267,000 39,299,000 TOTAL OPERATING EXPENSES 817,123,000 810,398,000 732,885,000
NON-OPERATING ACTIVITY
TOTAL NON-OPERATING REVENUE 11,799,000 11,799,000 1,728,000 TOTAL NON-OPERATING EXPENSES 25,296,000 25,296,000 27,650,000 NET NON-OPERATING POSITION (13,497,000) (13,497,000) (25,922,000) TOTAL REVENUES 884,653,000 974,539,000 940,019,000
TOTAL EXPENSES 842,419,000 835,694,000 760,535,000
TOTAL NET REVENUES 42,234,000 138,845,000 179,484,000
Attachment Staff Report Item 9B
Reserve Amounts & Proposed Surplus Allocations
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Contribution Year Contribution Withdraws Balance OpEx to Cover PctOps 2018-2019 40,513,687 40,513,687 - 410,686,000 9.9%
2019-2020 49,704,640 90,218,327 - 383,045,000 23.6%
2020-2021 - - 90,218,327 471,897,000 19.1%
2021-2022 65,655,073 155,873,400 - 562,667,000 27.7%
2022-2023 75,000,000 230,873,400 - 732,885,000 31.5%
2023-2024 100,000,000 330,873,400 - 810,350,000 40.8%
2024-2025* 42,234,000 - 373,107,400 1,045,192,000 35.7% *Proposed contribution with projected operating expenses to cover as of 5/28/2024 Attachment Staff Report Item 9B
Draft Budget: Operating Revenues
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June Updated May Draft FY 2024
BUDGET BUDGET BUDGET
OPERATING ACTIVITY
REVENUE & OTHER SOURCES
Electricity Sales 881,671,000 979,017,000 957,028,000
Uncollectables (8,817,000) (9,790,000) (12,095,000)
Other Operating Revenue 0 (6,487,000) (6,642,000)
TOTAL OPERATING REVENUE 872,854,000 962,740,000 938,291,000 Attachment Staff Report Item 9B
Draft Budget: Overview of Operating Expenses
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June Updated
BUDGET % Cost
EXPENSES & OTHER USES
Cost of Energy 760,248,000 90.2%
Cost of Energy Services 11,608,000 1.4%
Total Energy Operating Expenses 771,856,000 91.6%
Overhead Operating Expenses
Personnel 26,592,000 3.2%
Marketing & Communications 6,168,000 0.7%
Legal, Policy, & Regulatory Affairs 4,104,000 0.5%
Other Professional Services 2,136,000 0.3%
General & Administrative 5,868,000 0.7%
Depreciation 399,000 0.0%
Total Overhead Operating Expenses 45,267,000 5.4%
TOTAL OPERATING EXPENSES 817,123,000
NON-OPERATING EXPENSES
Borrowing Interest 2,796,000 0.3%
Local Development Funding 22,400,000 2.7%
Total Capital Expenditures 100,000 0.0%
TOTAL NON-OPERATING EXPENSES 25,296,000 3.0%
TOTAL EXPENSES 842,419,000
Attachment Staff Report Item 9B
Draft Budget: Energy Expenses
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PPAs Hedges Open Capacity RECs Carbon Free
FY 2025 Budget to FY 2024 Actuals by Cost Element
FY 2025 FY 2024
June Updated May Draft FY 2024
BUDGET BUDGET BUDGET
EXPENSES & OTHER USES
Cost of Energy 760,248,000 753,523,000 682,367,000
Cost of Energy Services 11,608,000 11,608,000 11,219,000 Total Energy Operating Expenses 771,856,000 765,131,000 693,586,000 Attachment Staff Report Item 9B
Carbon Free Procurement Schedule
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Year Path Target Increase Updated Target Increase Updated Target Increase Updated Target 2022 63% 5% 68% -- -- -- --
2023 66% 5% 71% 5% 76% -- --
2024 71% 0% 71% 10% 81% 0% 81%
2025 76% 0% 76% 0% 76% 5% 81%
2026 81% 0% 81% 0% 81% 0% 81%
2022 2023 2024
Attachment Staff Report Item 9B
Draft Budget: Overhead Expenses
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June Updated FY 2024
BUDGET BUDGET
EXPENSES & OTHER USES
Overhead Operating Expenses
Personnel 26,592,000 21,911,000
Marketing & Communications 6,168,000 5,303,000
Legal, Policy, & Regulatory Affairs 4,104,000 3,509,000 Other Professional Services 2,136,000 2,505,000
General & Administrative 5,868,000 5,711,000
Depreciation 399,000 360,000
Total Overhead Operating Expenses 45,267,000 39,299,000 Attachment Staff Report Item 9B
Draft Budget: Personnel
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June Updated FY 2024
BUDGET BUDGET
PERSONNEL
Salaries & Wages 19,765,000 16,587,000
Retirement 2,450,000 2,058,000
Health Care/Benefits 3,961,000 2,913,000
Payroll Expenses 416,000 353,000
Total 26,592,000 21,911,000
Attachment Staff Report Item 9B
Draft Budget: New Personnel Assignments
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Title Functional Area
1 Controller Finance
2 Structured Finance Manager Finance
3 HR Operations Manager Human Resources
4 Contracts Manager Local Development
5 DCFC Product Manager Local Development
6 Project Manager Local Development
7 Strategic Accounts and Product Designer Local Development 8 Marketing Associate Marketing
9 Outreach Coordinator Marketing
10 Contract Manager Power Resources
11 Contracts Analyst Power Resources
12 RA Portfolio Analyst Power Resources
13 Settlements Analyst Power Resources
14 Assistant Board Clerk Public Policy & Legal
15 Regulatory Analyst Public Policy & Legal
Attachment Staff Report Item 9B
Draft Budget: Non-Operating Activity
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June Updated FY 2024
BUDGET BUDGET
NON-OPERATING ACTIVITY
NON-OPERATING REVENUE
Interest Income 11,400,000 1,680,000
Grants 350,000 0
Other Non-Operating Revenue 49,000 48,000
TOTAL NON-OPERATING REVENUE 11,799,000 1,728,000
NON-OPERATING EXPENSES
Borrowing Interest 2,796,000 1,650,000
Local Development Funding 22,400,000 25,500,000
Total Capital Expenditures 100,000 500,000
TOTAL NON-OPERATING EXPENSES 25,296,000 27,650,000
NET NON-OPERATING POSITION (13,497,000) (25,922,000)
Attachment Staff Report Item 9B
Draft Budget: Local Development
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June Updated FY 2024
BUDGET BUDGET
Critical Municipal Facilities 7,000,000 -
Health-e-Communities 5,000,000 5,000,000
DCFC Network 3,000,000 3,600,000
Ava e-Bike 2,000,000 2,000,000
Building Electrification 2,000,000 3,500,000
Community Grants 1,200,000 1,400,000
Vehicle Electrification 1,000,000 6,000,000
Legal Expense 500,000 -
Solar + Storage 2,000,000 500,000
Subscription 200,000 -
Demand Response - 2,000,000
Total 22,400,000 25,500,000
Potential to S+S* - 22,683,000
Estimated with Surplus 22,400,000 48,183,000
*Estimated amounts from surplus net revenues waterfall allocations Attachment Staff Report Item 9B
Appendix
Attachment Staff Report Item 9B
How Ava Works—Energy Delivery
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Attachment Staff Report Item 9B
How Ava Works—Billing Cycle
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Attachment Staff Report Item 9B
How Ava Works—Product Rates
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2022 2023 2024 2025
BC%
Retail MWh
Bright Choice as Percent of Retail Load by Year
BC-Res BC-C&I R100-Res R100-C&I BC%
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Attachment Staff Report Item 9B
Thank you!
Attachment Staff Report Item 9B