Operations Board of Directors
May 10, 2023
CONSENT AGENDA
Approve Minutes from the April 12, 2023 Meeting of the Operations Board of Directors.
Approve the CEO to Submit an Interim Load Management Standards Compliance Plan that Extends Deadlines for Loading Rate Information Into the California Energy Commission’s Market Informed Demand Automation Server As Permitted Under CCR Title 20, Section 1623.1(a)(2).
Authorize the CEO to Execute Amendment No. 2 to the Standard Services Agreement with AIQUEOUS, LLC to Add $39,000 For a Total Not to Exceed Amount of $503,250 and No Additional Time.
Energy Programs Update
Treasurer Report
REGULAR AGENDA
Item 1
Community Advisory Council Report
Item 2
CEO Report
Staffing Update
Front of the Meter Energy Storage Update
CAISO Interconnection Enhancements Initiative
Real-time Pricing Pilots
CARB Rule for Truck Fleets Approved
9th Circuit Rules City of Berkeley Gas Ban Preempted by Energy Policy Conservation Act
ITEM 3
Receive an Update on a Prepay Financing Transaction and Recommend the Policy Board's Approval and Authorization of the CEO to Execute a Clean Energy Purchase Contract with California Community Choice Financing Authority and Ancillary Documents and Agreements to Affect the Prepay Financing Transaction
8 3CE has been working toward an energy prepay transaction to reduce a portion of its power costs by an anticipated 10% Among CCAs, Clean Power Alliance, Marin Clean Energy, Silicon Valley Clean Energy, Pioneer, and East Bay Community Energy have executed nearly $3 billion in prepay transactions, resulting in savings of 7-12% Concept is based on well-established tax law that allows tax-exempt entities to facilitate prepayment of long-term contracts, gaining benefits from taxable/tax-exempt spread Attractive to bond investors as a source for tax-exempt bonds and attractive to treasuries/banks as a diversified source of stable funding at low rates Prepay demand is driven by yields and tax-exempt investor interest Energy prepay
9 Energy prepay
PPA partially assigned to J. Aron
CCCFA issues non-recourse tax-exempt bonds
CCCFA pays bond proceeds to J. Aron as prepayment for power J. Aron loans bond proceeds to Funding Recipient
Funding Recipient services loan
J. Aron makes PPA payments to PPA Seller
PPA Seller delivers power to J. Aron
J. Aron delivers power to CCCFA
CCCFA delivers power to 3CE
3CE makes payments to CCCFA net of discount
CCCFA services bond debt with payments from 3CE
Summary of Energy Prepayment Structure Mechanics
1 Non-Recourse Tax-exempt Bondholders
Bond Debt
Service
Bond
Proceeds
3CE
J. Aron
MWhs
Bond Proceeds
PPA Price
less Discount
MWhs
CCCFA
2 3
8 9
10 11
PPA Seller
PPA Payments
MWhs
6 7
Funding Recipient
Loan Service
5 Bond Proceeds
4 10
Parties
Financial Advisor: PFM
Investment Banker: Goldman Sachs / J. Aron
Bond Issuer: California Community Choice Financing Authority Bond/Tax/Disclosure/Issuer Counsel: Nixon Peabody
Special Counsel: Hall Energy Law
Special Counsel: Stradling Yocca Carlson & Rauth
PPA Sellers: Four currently producing PPAs
Funding Recipient: TBD
Energy prepay
11 Volumetric risk - PPA under delivers
Mitigants
Transaction uses conservative volumes (80% of contracted power) Isolated shortfalls can by covered by other PPAs or self-certification that MWh were procured elsewhere Facility failure could be replaced by a new PPA
Under delivery would be an issue regardless of prepay structure Market risk – Savings discount does not materialize
Mitigants
Muni bond supply/demand and interest rates being tracked weekly Independent validations from PFM financial advisor based on investment bank quotes Staff is targeting a 10% discount before transaction execution; if less, 3CE will not move forward and losses are limited to staff time, special counsel expense, and lost discount Energy prepay
12 Counterparty risk – Banker or funding recipient distress Mitigants
RFI process selected seasoned investment bank with committed commodity business, prepay experience, and substantial balance sheet In the event of funding recipient distress, bondholders would be most impacted, as debt is non-recourse to 3CE or member agencies If there is an issue, 3CE may exit the transaction and return to original PPA terms Energy prepay
Item 4
Receive an Update of the Fiscal Year 2022-23 Mid-Year Budget Re-forecast and Support Seeking Policy Board Approval to Increase Appropriations
Operations Board of Directors
Closed Session