Liabilities increased by 97% due to increases in accrued cost of electricity and borrowings from JPMorgan Chase Bank. With the service expansion, purchases of electricity through the year also increased, resulting in higher accrued cost of electricity at year end.
CEA incurred costs related to the service expansion into Escondido and San Marcos beginning in January 2023, however, revenue associated with the expansion did not begin until April 2023. This resulted in a need to draw down on the revolving line of credit with JPMorgan Chase. An additional $9,430,000 was borrowed during the fiscal year, bringing the total amount due on the line of credit to $22,950,000 as of June 30, 2023. In September 2023, CEA repaid $15,000,000 on the line of credit and has a remaining balance due of $8,950,000 (taking into account drawdowns during FY 23/24). The line of credit is due to be fully repaid and closed in February 2026.
Results of Operations June 30, 2023
June 30, 2023 June 30, 2022
Total Revenues $87,197,175 $61,083,504
Total Expenses 89,875,464 62,150,085
Net Results $(2,678,289) $(1,066,581)
CEA’s revenues increased 43% compared to the fiscal year ending June 30, 2022. The increase is due to a rate increase effective February 1, 2023, and the expansion to Escondido and San Marcos in April 2023.
Expenses increased 45% compared to 2022, due to higher power supply costs in FY 2022/23 compared to the prior year and costs related to the expansion. CEA’s net result was a net loss of $2,678,289. The adopted fiscal year 2023/24 budget projects a net positive result of operations of $17,553,795, eliminating the deficit net position.
FISCAL IMPACT
There is no fiscal impact associated with these items.
ATTACHMENTS:
Attachment A - Clean Energy Alliance Annual Audited Financial Report for the Fiscal Year ended June 30, 2023
Attachment B - Statement of Auditing Standards No. 115, Communication of Internal Control Related Matters Identified in an Audit
Attachment C – Statement of Auditing Standards No. 114, Report to the Board of Directors ITEM 7 ATTACHMENT A PLACEHOLDER
IS ADDED TO THE AGENDA PACKET AS SEPARATE DOCUMENT LISTED
UNDER ADDITIONAL INFORMATION
@htps://thecleanenergyalliance.org/agendas-minutes/
October 26, 2023, Regular Mee�ng Agenda Packet
SANTA ROSA PETALUMA
RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. 3562 Round Barn Circle, Suite 200
Santa Rosa, CA 95403
(707) 542-3343 Office
(707) 527-5608 Fax
pbllp.com
October 18, 2023
To the Board of Directors
Clean Energy Alliance
Carlsbad, California
In planning and performing our audit of the financial statements of Clean Energy Alliance (CEA) as of and for the year ended June 30, 2023 in accordance with auditing standards generally accepted in the United States of America, we considered CEA’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of CEA’s internal control. Accordingly, we do not express an opinion on the effectiveness of CEA’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis.
A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses. Given these limitations, we did not identify any deficiencies in internal control during our audit that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
This communication is intended solely for the information and use of management, the Board of Directors, and others within the organization, and is not intended to be, and should not be, used by anyone other than these specified parties.
Santa Rosa, California
October 18, 2023
Attachment B - SAS 115
Item 7 Attachment B
RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP.
RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources Clean Energy Alliance
Report to the Board of Directors
For the Year Ended June 30, 2023
Attachment C SAS 114
Item 7 Attachment C
SANTA ROSA PETALUMA
RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. 3562 Round Barn Circle, Suite 200
Santa Rosa, CA 95403
+1 (707) 542-3343 Office
+1 (707) 527-5608 Fax
pbllp.com
To the Board of Directors
Clean Energy Alliance
5857 Owens Ave, 3rd Floor
Carlsbad, CA
We are pleased to present this report related to our audit of the financial statements of Clean Energy Alliance (“CEA”) as of and for the year ended June 30, 2023. This report summarizes certain matters required by professional standards to be communicated to you in your oversight responsibility for CEA’s financial reporting process.
This report is intended solely for the information and use of the Audit Committee, Board of Directors and management of CEA and is not intended to be and should not be used by anyone other than these specified parties. It will be our pleasure to respond to any questions you have regarding this report. We appreciate the opportunity to continue to be of service to Clean Energy Alliance.
Santa Rosa, California
October 18, 2023
cc: Andy Stern, CFO
Attachment C SAS 114
TABLE OF CONTENTS
Required Communications 1
Significant Accounting Estimates 4
Exhibits
Exhibit A—Significant Written Communications Between Management and Our Firm
Representation Letter 5
Exhibit B—Recent Accounting Pronouncements 9
Attachment C SAS 114
1 REQUIRED COMMUNICATIONS
Generally accepted auditing standards (AU-C 260, The Auditor’s Communication With Those Charged With Governance) require the auditor to promote effective two-way communication between the auditor and those charged with governance. Consistent with this requirement, the following summarizes our responsibilities regarding the financial statement audit as well as observations arising from our audit that are significant and relevant to your responsibility to oversee the financial reporting process.
Our Responsibilities With Regard to the Financial Statement Audit Our responsibilities under auditing standards generally accepted in the United States of America have been described to you in our arrangement letter dated July 20, 2023. Our audit of the financial statements does not relieve management or those charged with governance of their responsibilities, which are also described in that letter.
Overview of the Planned Scope and Timing of the Financial Statement Audit We have issued a separate communication dated September 15, 2023 regarding the planned scope and timing of our audit and identified significant risks, if any.
Accounting Policies and Practices
Preferability of Accounting Policies and Practices
Under generally accepted accounting principles, in certain circumstances, management may select among alternative accounting practices. In our view, in such circumstances, management has selected the preferable accounting practice.
Adoption of, or Change in, Accounting Policies
Management has the ultimate responsibility for the appropriateness of the accounting policies used by CEA. CEA did not adopt any significant new accounting policies, nor have there been any changes in existing significant accounting policies during the current period.
Significant or Unusual Transactions
We did not identify any significant or unusual transactions or significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus.
Management’s Judgments and Accounting Estimates
Summary information about the process used by management in formulating particularly sensitive accounting estimates and about our conclusions regarding the reasonableness of those estimates is in the attached Summary of Significant Accounting Estimates.
Attachment C SAS 114
2 Audit Adjustments and Uncorrected Misstatements
There were no audit adjustments made to the original trial balance presented to us to begin our audit.
We are not aware of any uncorrected misstatements other than misstatements that are clearly trivial.
Departure From the Auditor’s Standard Report
Reporting – Expected Other-Matter Paragraph
Accounting principles generally accepted in the United States of America and the Governmental Accounting Standards Board require that the management’s discussion and analysis be presented to supplement the financial statements. We do not express an opinion or provide any assurance on the information. In light of this matter, we will include an other-matter paragraph in the auditor’s report. This matter will not modify the opinion. Below is the paragraph included in the auditor’s report:
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that management's discussion and analysis be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information in Documents Containing Audited Financial Statements Our responsibility for other information in documents containing CEA’s audited financial statements is to read the information and consider whether its content or manner of its presentation is materially inconsistent with the financial information covered by our auditor’s report or whether it contains a material misstatement of fact. We read CEA’s Board of Directors meeting packet materials. We did not identify material inconsistencies with the audited financial statements.
Observations About the Audit Process
Disagreements With Management
We encountered no disagreements with management over the application of significant accounting principles, the basis for management’s judgments on any significant matters, the scope of the audit or significant disclosures to be included in the financial statements Consultations With Other Accountants
We are not aware of any consultations management had with other accountants about accounting or auditing matters.
Attachment C SAS 114
3 Observations About the Audit Process (continued)
Significant Issues Discussed With Management
No significant issues arising from the audit were discussed or the subject of correspondence with management.
Significant Difficulties Encountered in Performing the Audit We did not encounter any significant difficulties in dealing with management during the audit.
Significant Written Communications Between Management and Our Firm Copies of significant written communications between our firm and the management of CEA, are attached as Exhibit A.
Attachment C SAS 114
4 SIGNIFICANT ACCOUNTING ESTIMATES
Accounting estimates are an integral part of the preparation of financial statements and are based upon management’s current judgment. The process used by management encompasses their knowledge and experience about past and current events, and certain assumptions about future events. You may wish to monitor throughout the year the process used to determine and record these accounting estimates.
The following summarizes the significant accounting estimates reflected in CEA’s June 30, 2023 financial statements.
Significant Accounting Estimates
Accrued Revenue
Accounting policy/
Management’s estimation
process
Management’s estimate of accrued revenue includes historical trends and anticipated energy usage.
Basis for our conclusion on
the reasonableness of the
estimate
We tested management’s estimate analytically and determined management’s estimate to be reasonable in relation to the financial statements taken as a whole.
Cost of Electricity
Accounting policy/
Management’s estimation
process
Management’s estimate of accrued cost of electricity includes historical trends and anticipated energy usage.
Basis for our conclusion on
the reasonableness of the
estimate
We tested management’s estimate through subsequent
disbursements and analytical procedures and determined
management’s estimate to be reasonable in relation to the financial statements taken as a whole.
Allowance for Uncollectible Accounts
Accounting policy/
Management’s estimation
process
Management’s estimate of the allowance for uncollectible accounts includes historical collection trends and anticipated future collections.
Basis for our conclusion on
the reasonableness of the
estimate
We evaluated the key factors and assumptions used to develop the estimate in determining that the allowance is reasonable in relation to the financial statements taken as a whole.
Attachment C SAS 114
EXHIBIT A
Significant Written Communications Between Management and Our Firm
Attachment C SAS 114
5857 Owens Ave, 3rd Floor | Carlsbad, CA | 760-209-6177 TheCleanEnergyAlliance.org
October 18, 2023
Pisenti & Brinker LLP
3562 Round Barn Circle, Suite 200
Santa Rosa, CA 95403
This representation letter is provided in connection with your audit of the basic financial statements of Clean Energy Alliance (CEA) as of and for the years ended June 30, 2023 and 2022 for the purpose of expressing an opinion on whether the financial statements are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).
Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information that, in light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement.
We confirm, to the best of our knowledge and belief, that as of October 18, 2023:
Financial Statements
1. We have fulfilled our responsibilities, as set out in the terms of the audit arrangement letter dated July 25, 2023 for the preparation and fair presentation of the financial statements referred to above in accordance with U.S. GAAP.
2. We acknowledge our responsibility for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
3. We acknowledge our responsibility for the design, implementation and maintenance of internal control to prevent and detect fraud.
4. Significant assumptions used by us in making accounting estimates, including those measured at fair value, are reasonable and reflect our judgment based on our knowledge and experience about past and current events, and our assumptions about conditions we expect to exist and courses of action we expect to take.
5. Related-party transactions have been recorded in accordance with the economic substance of the transaction and appropriately accounted for and disclosed in accordance with the requirements of U.S. GAAP.
6. All events subsequent to the date of the financial statements, and for which U.S. GAAP requires adjustment or disclosure, have been adjusted or disclosed.
7. The effects of all known actual or possible litigation and claims have been accounted for and disclosed in accordance with U.S. GAAP.
8. We have no direct or indirect legal or moral obligation for any debt of any organization, public or private, that is not disclosed in the financial statements.
9. We have reviewed, approved, and taken responsibility for the financial statements and related notes.
10. Deposit risk has been properly and fully disclosed.
Attachment C SAS 114
Pisenti & Brinker LLP
October 18, 2023
11. The government has properly separated information in debt disclosures related to direct borrowings and direct placements of debt from other debt and disclosed any unused lines of credit, collateral pledged to secure debt, terms in the debt agreements related to significant default or termination events with finance-related consequences and significant subjective acceleration clauses in accordance with GASB Statement No. 88.
12. Components of net position (net investment in capital assets, restricted, and unrestricted) are properly classified and, if applicable, approved.
13. We have complied with all aspects of laws, regulations and provisions of contracts and agreements that would have a material effect on the financial statements in the event of noncompliance.
14. We have no knowledge of any uncorrected misstatements in the financial statements.
Information Provided
15. We have provided you with:
a. Access to all information of which we are aware that is relevant to the preparation and fair presentation of the basic financial statements such as records, documentation and other matters. b. Additional information that you have requested from us for the purpose of the audit. c. Unrestricted access to persons within CEA from whom you determined it necessary to obtain audit evidence.
d. Minutes of the meetings of the governing board and committees, or summaries of actions of recent meetings for which minutes have not yet been prepared.
16. All transactions have been recorded in the accounting records and are reflected in the basic financial statements.
17. We have disclosed to you the results of our assessment of risk that the basic financial statements may be materially misstated as a result of fraud.
18. It is our responsibility to establish and maintain internal control over financial reporting. One of the components of internal control is risk assessment. We hereby represent that our risk assessment process includes identification and assessment of risks of material misstatement due to fraud.
19. We have no knowledge of allegations of fraud or suspected fraud affecting CEA’s basic financial statements involving:
a. Management.
b. Employees who have significant roles in internal control. c. Others where the fraud could have a material effect on the basic financial statements.
20. We have no knowledge of any allegations of fraud or suspected fraud affecting CEA’s basic financial statements received in communications from employees, former employees, analysts, regulators, short sellers or others.
21. We have no knowledge of noncompliance or suspected noncompliance with laws and regulations.
Attachment C SAS 114
Pisenti & Brinker LLP
October 18, 2023
22. We are not aware of any pending or threatened litigation and claims whose effects should be considered when preparing the financial statements. We have not consulted legal counsel concerning litigation or claims.
23. We have disclosed to you the identity of all of CEA’s related parties and all the related-party relationships and transactions of which we are aware.
24. We are aware of no significant deficiencies, including material weaknesses, in the design or operation of internal controls that could adversely affect CEA’s ability to record, process, summarize and report financial data.
25. There have been no communications from regulatory agencies concerning noncompliance with, or deficiencies in, financial reporting practices.
26. During the course of your audit, you may have accumulated records containing data that should be reflected in our books and records. All such data have been so reflected. Accordingly, copies of such records in your possession are no longer needed by us.
27. We have identified and disclosed to you the laws, regulations, and provisions of contracts and grant agreements that could have a direct and material effect on financial statement amounts.
28. We have complied with all aspects of grant agreements and other contractual agreements that would have a material effect on the financial statements in the event of noncompliance.
29. There are no:
a. Violations or possible violations of laws or regulations, or provisions of contracts or grant agreements whose effects should be considered for disclosure in the financial statements or as a basis for recording a loss contingency, including applicable budget laws and regulations. b. Unasserted claims or assessments that our lawyer has advised are probable of assertion and must be disclosed in accordance with GASB-62.
c. Other liabilities or gain or loss contingencies that are required to be accrued or disclosed by GASB-62.
Required Supplementary Information
30. With respect to the Management’s Discussion and Analysis presented as required by GAAP and the Governmental Accounting Standards Board to supplement the basic financial statements:
a. We acknowledge our responsibility for the presentation of such required supplementary information.
b. We believe such required supplementary information is measured and presented in accordance with guidelines prescribed by U.S. GAAP.
Attachment C SAS 114
Pisenti & Brinker LLP
October 18, 2023
c. The methods of measurement or presentation have not changed from those used in the prior period.
Barbara Boswell, Chief Executive Officer
Clean Energy Alliance
Mike Maher, Accountant
Attachment C SAS 114
EXHIBIT B
Recent Accounting Pronouncements
Attachment C SAS 114
RECENT ACCOUNTING PRONOUNCEMENTS
The following accounting pronouncements have been issued as of October 13, 2023 but are not yet effective and may affect the future financial reporting by CEA.
Pronouncement Summary
GASB Statement No. 101,
Compensated Absences
GASB Statement No. 101, Compensated Absences, is effective for fiscal years beginning July 1, 2023. The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures.
Attachment C SAS 114
Staff Report
DATE: October 26, 2023
TO: Clean Energy Alliance Board of Directors
FROM: Barbara Boswell, Chief Executive Officer
ITEM 8: Consider Approval of the Wholesale Market Access Tariff Terms and Conditions, Wholesale Market Access Agreement and Positive Enrollment Agreement with San Diego County Water Authority and Poseidon Resources (Channelside), LP for Enrollment of the Channelside Account at Carlsbad Desalination Plant
RECOMMENDATION
1) Approve the Wholesale Market Access Tariff Terms and Conditions; 2) Approve Channelside Wholesale Market Access Agreement and Positive Enrollment Agreement with San Diego County Water Authority and Poseidon Resources (Channelside) LP for enrollment of the Channelside account at the Carlsbad Desalination Plant. Authorize the Chief Executive Officer to sign all documents, subject to General Counsel approval.
BACKGROUND AND DISCUSSION
At its July 27, 2023 regular meeting, the Clean Energy Alliance (CEA) Board approved entering into a Memorandum of Understanding with San Diego County Water Authority (SDCWA) and Poseidon Resources, LP (Channelside) for development of a Wholesale Market Access Tariff (WMAT), Wholesale Market Access Agreement and Positive Enrollment Agreement for Board consideration related to the enrollment of the Channelside account serving the Carlsbad Desalination Plant.
Since that time, CEA staff, its legal team and technical consultants have worked to develop the proposed WMAT Terms and Conditions. The team has also worked with SDCWA in developing the proposed Channelside WMAT Agreement and Positive Enrollment Agreement that are before the Board for consideration.
Wholesale Market Access Tariff Terms and Conditions
The purpose of the WMAT is to create a rate tariff that provides the ability for CEA to offer service to customers with an unusually large load, that mitigates the risks regarding the normal opt-out provision and protects CEA’s other customers from cost exposure.
The proposed WMAT Terms and Conditions establishes the WMAT purpose, eligibility, and specific program details.
October 26, 2023
WMAT
If approved, the WMAT would be open to all customers that meet the following proposed eligibility requirements:
• Non-residential Account within CEA’s service territory • Annual load in CEA’s territory greater than 150GWh
• Execution of the Wholesale Market Access Tariff Agreement (Exhibit A) • Concurrent execution of the Positive Enrollment Agreement (Exhibit B) • Not available for accounts enrolled in Net Energy Metering Key to minimizing the risks to CEA and protecting its customers related to servicing a customer that meets WMAT eligibility, is addressing the opt-out risk. Under normal CCA opt-out rules, a CEA customer can opt-out anytime, with certain conditions. If this risk isn’t addressed CEA and the remaining customers may be left with excess contracted energy and costs.
To address the opt-out risk, the WMAT Terms and Condition provide a minimum 3-year or length of longest term of energy contract entered into on behalf of that customer, whichever is longer.
CEA creates a portfolio and establishes a Scheduling Coordinator ID that is specific to the WMAT customer, to ensure their costs can be tracked. The WMAT customer bears the market risk of energy costs since the WMAT rate is based on the costs specific to their load.
The WMAT rate is calculated based on the actual costs of energy procured for the energy needs. The rate also includes an administrative overhead and reserve component. The rate calculation is as follows:
Administrative Cost Component: (CEA budgeted non-power supply expenses + reserves)/CEA forecasted load (excluding WMAT load) = per kWh Administrative Cost Component Energy Rate = Total WMAT Conventional Energy hedge contracts + (current forward price curve * open position) + Resource Adequacy Costs + Short-term energy costs + Long-Term Renewable Energy Costs = Total Energy Costs. Total Energy costs/WMAT forecasted load = per kWh Energy rate Per kWh Administrative Cost Component + Per kWh Energy Rate = Total WMAT Rate This rate calculation methodology is consistent with the methodology used for calculating rates for other CEA customers and ensures that the WMAT customer contributes their proportionate share of administrative costs and reserve contributions.
Revenue and Expenses will be tracked throughout the year, and if at any time there is a 10% or greater variance which is not expected to correct by year-end, the rate is subject to update.
Due to the load profile of the WMAT account, the resulting WMAT rate may be higher or lower than the rates paid by other CEA customers. The potential benefit of a lower rate is offset by the customers higher standard with regards to more stringent opt-out requirements as well as the customer bearing the risk of potential higher costs.
Revenue and costs will be trued-up annually, and the variances identified in the true-up will be included in the following years rate calculation.
A Public Hearing will be held to adopt the rate, as is done with other CEA rates.
Channelside Wholesale Market Access Tariff Agreement and Positive Enrollment Agreement The Carlsbad Desalination Plant (Plant) is owned by Poseidon Resources (Channelside) LP and located within CEA’s service territory in the City of Carlsbad. It is the largest desalination plant in the United October 26, 2023
WMAT
States, delivering nearly 10% of the regions water supply. SDCWA and Channelside have executed a Water Purchase Agreement related to the Plant that, among other things, gives SDCWA decision making authority regarding electric provider for Channelside.
During early 2021, as part of CEA’s customer outreach, CEA staff held several meetings with SDCWA regarding consideration of CEA serving the Channelside account. Channelside is the single largest consumer of electricity in the City of Carlsbad with a load more than 10 times the next largest customer.
At the time CEA was launching in 2021, the Plant load represented 40% of CEA’s load. After careful consideration by both SDCWA and CEA, SDCWA decided to opt-out prior to CEA commencing service in the City of Carlsbad.
CEA and SDCWA have continued to meet to discuss opportunities for CEA to serve the electric needs of Channelside, and through those meetings, the concept of CEA serving Channelside under the WMAT emerged.
Serving the Channelside Account is in alignment with CEA’s goals and priorities because it will result in reducing greenhouse gas emissions in the City of Carlsbad through CEA’s higher renewable energy content. At minimum, the account will be required to enroll in CEA’s Clean Impact, providing 50% renewable energy and increasing to 100% by 2035. CEA is encouraging SDCWA to consider opting up to Clean Impact Plus or Green Impact.
Channelside and SDCWA will execute the WMAT Agreement that includes the following terms:
• The Channelside account will be enrolled with CEA in January 2025. • Based on the enrollment date, the account will be assigned the 2024 Power Charge Indifference Adjustment vintage by San Diego Gas & Electric. • An opt-out effective date is the later of (a) 3 years, or (b) the date upon which all outstanding transactions have been settled and paid for, whether through delivery or through early termination and payment of any termination payments to suppliers and all amounts owed to CEA.
• CEA and SDCWA will work cooperatively to develop a Procurement Plan that details the strategy for procurement of conventional energy hedges, Resource Adequacy, short-term renewable energy, and long-term renewable energy. • The Channelside WMAT Portfolio will be compliant with CEA’s Energy Risk Management Policy and all other CEA compliance requirements. • Channelside will be responsible for all CAISO related costs for the Channelside load. • Channelside will be responsible for all direct and indirect costs related to the management and energy costs for the WMAT account.
• SDCWA will provide credit support for the WMAT portfolio energy supply contracts. • Channelside will post a cash deposit equivalent to the forecasted three highest months of invoices to address cash flow needs.
SDCWA owns and operates a small hydro-electric generation facility, the Rancho Peñasquitos Pressure Control and Hydroelectric Facility, that qualifies as renewable under the state’s renewable portfolio standards program. CEA and SDCWA are negotiating a potential power purchase agreement that will be brought to the CEA Board at a future date.
October 26, 2023
WMAT
FISCAL IMPACT
The Channelside WMAT Rate will be set pursuant to the Rate Setting terms in the Channelside WMAT Agreement. The rate will be considered by the Board at a future Public Hearing.
ATTACHMENTS
Attachment A – Draft Wholesale Market Access Tariff Terms and Conditions Attachment B – Channelside Wholesale Market Access Tariff Agreement and Positive Enrollment Agreement
Proposed 10/26/2023 1
WHOLESALE MARKET ACCESS TARIFF (WMAT)
TERMS AND CONDITIONS
A. PURPOSE
The purpose of the Clean Energy Alliance (CEA) Wholesale Market Access Tariff (WMAT) Terms & Conditions (T&C) is to provide details of the WMAT including customer eligibility and CEA and customer requirements and commitments.
B. ELIGIBILITY
The WMAT program is available to active non-residential CEA customers that meet the following requirements:
• Annual load in CEA’s territory greater than 150GWh
• Execution of the Wholesale Market Access Tariff Agreement (Exhibit A) • Concurrent execution of the Positive Enrollment Agreement (Exhibit B) • Not available for accounts enrolled in Net Energy Metering C. TERRITORY
Applicable in the CEA service area.
D. PROGRAM
The WMAT program is available to eligible non-residential customers that desire active participation in the procurement of energy products to serve their energy needs. Power supply products included in the customers WMAT Portfolio include conventional energy hedges, CAISO Charges, Resource Adequacy (RA), Carbon Free Energy, Long-Term Renewable Energy and Short-Term Renewable Energy.
Management of the WMAT Portfolio requires active participation by the customer and will be structured to ensure that CEA’s other customers will not be adversely affected by the offering of the WMAT program to eligible customers, including mitigation of impacts of cash flow and energy supply credit and collateral requirements.
The WMAT portfolio will be managed to meet the following priorities:
1. CEA’s regulatory procurement requirements for:
a. Resource Adequacy (RA)
b. Renewable Portfolio Standards (RPS), both Short-Term and Long-Term c. Any other requirements as established by the California Public Utilities Commission or other regulatory agency
Item 8 Attachment A
Proposed 10/26/2023 2
2. Utilize best practices for conventional energy hedging strategy to minimize, to the extent reasonable, market cost exposure to the customer;
3. Meeting CEA’s minimum renewable energy power supply, with consideration for opting up to a higher renewable content power supply.
Enrollment in the WMAT is contingent on the customer executing a WMAT Agreement and Positive Enrollment Agreement. The WMAT Agreement addresses the terms related to procurement of the various power supply products and rate calculation. The Positive Enrollment Agreement establishes the enrollment date, required noticing period of opting out of the WMAT program or CEA service and the Power Charge Indifference Adjustment Vintage with San Diego Gas & Electric. The minimum opt-out notice period shall take into account the resource adequacy process and the longest term of contract entered into to serve the customer account.
WMAT program rates will be based on the actual cost of the WMAT portfolio plus an administrative fee that includes a proportionate share of CEA’s administrative and overhead costs, including reserves, plus any incremental costs unique to or arising from CEA’s service of the accounts enrolled in the WMAT program.
Proposed 10/26/2023 3
EXHIBIT A
CLEAN ENERGY ALLIANCE
WHOLESALE MARKET ACCESS TARIFF AGREEMENT
THIS AGREEMENT, is entered into this Click here to enter DAY. of ENTER MONTH. ENTER YEAR., by and between CLEAN ENERGY ALLIANCE (“CEA”), an independent joint powers authority at 5857 Owens Ave, 3rd Floor, Carlsbad, CA 92008, and NAME OF CUSTOMER at ADDRESS (collectively “Parties”, individually a “Party”).
RECITALS:
A. CEA is an independent public agency duly organized under the provisions of the Joint Exercise of Powers Act of the State of California (Government Code Sections 6500 et seq.) (“Act”) with the power to conduct its business and enter into agreements.
B. CEA is the default energy provider for the City of CITY.
C. CUSTOMER has an active service account with San Diego Gas & Electric and has/has not been enrolled with CEA.
D. CEA, CUSTOMER and CUSTOMER desire to enroll the CUSTOMER Account in CEA pursuant to this WMAT Agreement.
NOW, THEREFORE, the Parties mutually agree as follows:
1. TERM
The term of this WMAT Agreement shall be established in the Positive Enrollment Agreement (Attachment B), which is fully incorporated herein.
2. WHOLESALE MARKET ACCESS TARIFF ENROLLMENT
Upon enrollment with CEA, CEA shall concurrently enroll the following CUSTOMER Account in the Wholesale Market Access Tariff program:
Account Name:
Account Address:
SDG&E Account Service Number:
Proposed 10/26/2023 4
CEA will provide electric generation procurement pursuant to the Wholesale Market Access Tariff Portfolio Management Terms of Service (Attachment A), which are fully incorporated herein.
3. KEY CONTACTS
The WMAT requires close participation among the Parties. Key contacts related to the WMAT Portfolio Management are as follows:
Clean Energy Alliance
Chief Executive Officer
5857 Owens Ave, Suite 2023
Carlsbad, CA 92008
[email protected]
(760) 209-6177
CUSTOMER
NAME
ADDRESS
EMAIL
PHONE #
4. LIMITATION OF LIABILITY
Except to the extent otherwise expressly set forth in this Agreement, no Party shall be liable to any other for any special, indirect, incidental or consequential damages, losses or expenses, including, without limitation, loss of use, business, good will or revenue or loss of profits, or damages from work stoppage or failure to deliver power, incurred by one another or any of their affiliates, subsidiaries or successors, regardless of whether such damages are caused by breach of contract, willful misconduct, negligent act or omission, or other wrongful act of any of them.
5. CUSTOMER LIABILITY
CUSTOMER is jointly and severally responsible for the payment of all costs, expenses, reimbursements, penalties, termination costs and all other payments under this Agreement and as set forth in Attachment A, including, without limitation, direct and indirect conventional energy hedge costs, CAISO charges, including Congestion Revenue Rights charges, direct and indirect Resource Adequacy (RA) costs, including penalties for non-compliance with RA contracting requirements and costs associated with any assignment of RA agreements, direct and indirect short-term renewable energy costs, direct and indirect costs associated with long-term renewable energy requirements, including any assignment of long-term renewable energy agreement, administrative costs, legal costs and technical consulting costs, and direct and indirect costs associated with opting-out or terminating this Agreement.
Proposed 10/26/2023 5
6. DRAFTING AMBIGUITIES
The Parties agree that they are aware that they have the right to be advised by counsel with respect to the negotiations, terms and conditions of this Agreement, and the decision of whether or not to seek advice of counsel with respect to this Agreement is a decision which is the sole responsibility of each Party. This Agreement shall not be construed in favor of or against either Party by reason of the extent to which each Party participated in the drafting of the Agreement.
7. ENTIRE CONTRACT; MODIFICATION
This Agreement, including its Exhibits, contains the entire agreement of the Parties with respect to the subject matter hereof, and supersedes all prior negotiations, understandings or agreements. This Agreement may only be modified by a writing signed by all Parties.
8. COUNTERPARTS/ELECTRONIC SIGNATURE
This Agreement may be executed in counterparts, each of which shall constitute an original. This Agreement may be executed electronically with the same force and effect as an original ink signature.
9. SIGNATORIES
Each signatory and Party hereto hereby warrants and represents to each of the other Parties that he/she/it has legal authority and capacity and direction from its principal to enter into this Agreement, that all resolutions or other actions have been taken so as to enable he/she/it to enter into this Agreement and that he/she/it will indemnify and defend the other Parties should any such representations and warranties prove false.
IN WITNESS WHEREOF, the Parties to this WMAT Agreement through their duly authorized representatives have executed this WMAT Agreement as of the Effective Date.
CUSTOMER CLEAN ENERGY ALLIANCE,
a Joint Powers Authority
By: _________________________ By: _________________________ Name: ______________________ Name: ______________________ Title: _______________________ Title: _______________________ APPROVED AS TO FORM: APPROVED AS TO FORM:
Proposed 10/26/2023 6
By: _________________________ By: _________________________ Name: ______________________ Name: ______________________ Title: _______________________ Title: General Counsel
ATTEST:
By: _________________________
Name: ______________________
Title: _______________________
Proposed 10/26/2023 7
ATTACHMENT A
WHOLESALE MARKET ACCESS TARIFF
PORTFOLIO MANAGEMENT TERMS OF SERVICE
Effective Date of WMAT Portfolio Establishment: DATE
WMAT Portfolio Name: CUSTOMER Account WMAT Portfolio
1. DEFINITION OF TERMS
a. CUSTOMER WMAT Rate: The per kWh rate that will be billed through the San Diego Gas & Electric bill that will be calculated pursuant to Section G of this agreement.
b. Credit Support: May take the form of cash or letters of credit to fulfill collateral or other credit requirements as determined by energy suppliers. c. Direct Costs: Direct Costs are defined as costs incurred that are directly related to the administration and management of the CUSTOMER Wholesale Market Access Tariff Portfolio. Examples of these costs include, but are not limited to, contracted cost of energy, proportional cost of energy, legal costs, technical advisors and scheduling coordinator services.
d. Indirect Costs: Indirect Costs are defined as costs incurred by Clean Energy Alliance, that are not directly related to the administration and management of the CUSTOMER Wholesale Market Access Tariff Portfolio, but which CUSTOMER may receive a benefit from. Examples of these costs include, but are not limited to, administrative overhead.
e. Lockbox: Clean Energy Alliance’s Secured Account Managed by River City Bank that provides credit support for secured creditors.
f. Long-Term Renewable Energy: As defined in Senate Bill 350 (de León 2015) Long-Term Renewable Energy is renewable energy derived from long-term contracts of 10 or more years.
g. Procurement Plan: Plan that details the mutually agreed upon actions to be taken by Clean Energy Alliance (CEA) and CUSTOMER to procure the power supply products including Conventional Energy Hedge, Resource Adequacy, Short-Term and Long-Term Renewable Energy. The initial Procurement Plan will Proposed 10/26/2023 8
be finalized between the Parties by INSERT DATE and will be reviewed and updated at least annually.
h. Short-Term Renewable Energy: Renewable energy derived from contracts of less than 10 years.
A. TERMS RELATED TO CONVENTIONAL ENERGY HEDGE TRANSACTIONS CEA and CUSTOMER will work cooperatively to develop a conventional energy hedge strategy that will be used in developing a Procurement Plan for the CUSTOMER Account WMAT Portfolio. The hedge strategy will be consistent with CEA’s adopted Energy Risk Management Policy (Exhibit 1), and other CEA compliance requirements, and minimize, to the extent commercially reasonable, market cost exposure to CUSTOMER and CUSTOMER.
CEA will procure conventional energy hedges for the CUSTOMER Account WMAT portfolio in accordance with the Procurement Plan. CEA will confer with CUSTOMER regarding planned energy hedge solicitations, offers and recommendations for transactions, and periodically report energy hedge positions relative to projected energy requirements.
If requested by CUSTOMER, CEA will use reasonable efforts to negotiate an assignment provision for Conventional Energy Hedge Agreements whereby such agreement(s) may be assigned to CUSTOMER should there be a desire to opt-out of CEA service prior to the end of said agreement(s). Such assignment provisions are subject to the consent of the energy supplier.
Direct and indirect conventional energy hedge costs will be reimbursed to CEA through the CUSTOMER WMAT Rate, subject to an annual true-up, pursuant to Section G (CUSTOMER WMAT RATE SETTING) below.
B. TERMS RELATED TO CAISO CHARGES & CONGESTION REVENUE RIGHTS The CUSTOMER Account WMAT Portfolio will include weekly California Independent System Operator (“CAISO”) charges attributable to the CUSTOMER Account load, including weekly Congestion Revenue Rights (“CRR”) activity, which can be either a net charge or credit, and monthly CRR receipts. In order to distinguish and segregate out these transactions from CEA’s other customer activity, a separate Scheduling Coordinator Identification (“SCID”) will be established for the CUSTOMER Account load. CEA will invoice CUSTOMER monthly, by the 10th of each month for the prior month’s CAISO activity. The invoices will be due within 30 days. In the event there is a net credit, the credit will carry forward to offset charges invoiced the following month.
Proposed 10/26/2023 9
C. TERMS RELATED TO RESOURCE ADEQUACY TRANSACTIONS
The CUSTOMER Account WMAT Portfolio will include Resource Adequacy (“RA”) costs attributable to the CUSTOMER Account load. The California Public Utilities Commission (CPUC) adopted the RA policy Framework (Public Utilities Code section 380) in 2004 in order to ensure the reliability of electric service in California. CEA’s annual RA requirements are determined by the CPUC and includes three types: System, Local and Flexible. The local obligation is a three-year forward local obligation and CEA must meet 100% of its local obligation in the immediately following two years and 50% of the third year by October of each year. The obligation is based on a Year-Ahead Resource Adequacy (YARA) filing, submitted in April of each year. Beginning in April 2024, CEA will include the forecasted 2025 load for the CUSTOMER account in its YARA.
CUSTOMER agrees to work with CEA to develop the load forecast upon which the RA obligation will be based. The RA requirements that will be attributed to the CUSTOMER Account will be calculated as follows: (CUSTOMER Account Forecasted Load included in YARA/Total Forecasted CEA Load) X total CEA RA Requirements. CEA will work with CUSTOMER to develop a RA procurement strategy which will inform the development of the Resource Adequacy section of the Procurement Plan. CEA will make its best efforts to acquire the necessary RA to meet the RA requirements pursuant to the Procurement Plan and will confer with CUSTOMER with regards to RA status throughout the procurement processes. To the extent the CUSTOMER Account WMAT Portfolio RA requirements are included in contracts for CEA’s other RA requirements, the CUSTOMER Account WMAT Portfolio’s proportionate share percentage will be determined by dividing the CUSTOMER Account Forecasted Load included in YARA by the Total Forecasted CEA Load in YARA.
To the extent that CEA has used reasonable efforts to meet its RA contracting requirements that includes the CUSTOMER Account RA Requirements and is unable to meet the full obligation, and CEA is assessed a penalty for non-compliance, the CUSTOMER Account WMAT Portfolio will be responsible for its proportionate share of the RA penalty, based on the same proportional share calculation detailed above.
CEA will work with CUSTOMER to develop the RA procurement strategy, however, CUSTOMER acknowledges that CEA is the entity with the RA compliance obligation and, therefore, has final decision-making authority over RA procurement.
If requested by CUSTOMER, CEA will use reasonable efforts to negotiate an assignment provision for Resource Adequacy Agreements whereby such agreement(s) may be assigned to CUSTOMER should there be a desire to opt-out of CEA service prior to the end of said agreement(s). Such assignment provisions are subject to the consent of the energy supplier.
Direct and indirect RA costs will be reimbursed to CEA through the CUSTOMER WMAT Rate, subject to an annual true-up, pursuant to Section G (CUSTOMER WMAT RATE SETTING) below.
Proposed 10/26/2023 10
D. TERMS RELATED TO SHORT-TERM RENEWABLE ENERGY TRANSACTIONS CEA must comply with the California Renewable Portfolio Standard (“RPS”) that is implemented, administered and enforced by the California Public Utilities Commission (”CPUC”). The RPS program requires CEA, as an electric load serving entity, to procure 60% of its electricity portfolio from eligible renewable energy resources by 2030. The CUSTOMER Account WMAT Portfolio will include short-term renewable energy supply products. The short-term renewable energy supply requirements will be determined by subtracting the long-term renewable energy requirements described in Section E from the total renewable energy requirements as determined by the CEA power supply selection on the Positive Enrollment Agreement. CEA and CUSTOMER will develop a Short-Term Renewable Energy procurement strategy that will be used to develop the Short-Term Renewable Energy section of the Procurement Plan. CEA will procure Short-Term Renewable Energy pursuant to the Procurement Plan.
In the event the CUSTOMER Account WMAT short-term renewable energy requirements are included in a contract for CEA’s other short-term renewable energy requirements, the CUSTOMER Account WMAT Portfolio’s proportionate share percentage will be determined by dividing the CUSTOMER short-term renewable energy requirements (less short-term renewable energy contracts dedicated to the CUSTOMER Account WMAT Portfolio) by the total CEA short-term energy requirements, with both the CUSTOMER and CEA requirements being measured in kilowatt-hours (“kWh”). This calculated proportionate share will be included in the rate setting process pursuant to Section G (CUSTOMER WMAT RATE SETTING) below.
CEA will acquire the necessary short-term renewable energy supply through any combination of open solicitation, bilateral negotiations or sources provided through agreements with CUSTOMER.
CEA will work with CUSTOMER to develop the short-term renewable energy procurement strategy, however, CUSTOMER acknowledges that CEA is the entity with the short-term renewable energy compliance obligation and, therefore, has final decision-making authority over short-term renewable energy procurement.
California State Renewable Portfolio Standards Requirements are broken down into Compliance Periods, with determination of compliance determined after the end of the Compliance Period. These Compliance Periods are:
Compliance Period 5 – 2025 – 2027
Compliance Period 6 – 2028 – 2030
Compliance with the California Renewable Portfolio Standards Requirements will not be determined by the California Public Utilities Commission until after the end of the Compliance Period. In the event that CEA is found non-compliant with the Renewable Portfolio Standards Proposed 10/26/2023 11
Requirements for short-term renewable energy in a Compliance Period during which CEA was providing service to the CUSTOMER Account under this WMAT Agreement, CUSTOMER acknowledges that it will be responsible for its proportionate share of any penalty related to non-compliance irrespective of whether the CUSTOMER Account is being served by CEA at the time the penalty is assessed.
If requested by CUSTOMER, CEA will use reasonable efforts to negotiate an assignment provision for Short-Term Renewable Energy Agreements whereby such agreement(s) may be assigned to CUSTOMER should there be a desire to opt-out of CEA service prior to the end of said agreement(s). Such assignment provisions are subject to the consent of the energy supplier.
Direct and indirect short-term renewable energy costs will be reimbursed to CEA through the CUSTOMER WMAT Rate, subject to a true-up, pursuant to Section G (CUSTOMER WMAT RATE SETTING) below.
E. TERMS RELATED TO LONG-TERM RENEWABLE ENERGY TRANSACTIONS CEA must comply with the CPUC’s requirement for long-term renewable energy supply procurement, currently set at 65% of the state-mandated RPS requirement for each compliance period. As defined by the CPUC, long-term renewable energy contracts are for terms of 10- years or more, including ownership interests. The CUSTOMER WMAT Portfolio will incorporate the long-term procurement requirement based on its proportionate share of CEA’s total retail sales during each compliance period, with both the requirement and the retail sales being measured in kWh. CEA will acquire the necessary long-term renewable energy supply, through any combination of open solicitation, bilateral negotiations, participation in San Diego Gas & Electric Voluntary Allocation or Market offer processes or sources provided through agreements with CUSTOMER.
Should the CUSTOMER Account WMAT long-term renewable energy requirements be included in a contract for CEA’s other long-term renewable energy requirements, the CUSTOMER Account WMAT Portfolio’s proportionate share percentage will be determined by dividing the CUSTOMER long-term renewable energy requirements (net of long-term renewable energy contracts dedicated to the CUSTOMER Account WMAT Portfolio) by the total CEA long-term renewable energy requirements for the period. CEA will track progress towards the long-term renewable energy requirements and report the results to CUSTOMER on an agreed upon periodic basis.
CEA will work with CUSTOMER to develop the long-term renewable energy procurement strategy, however, CUSTOMER acknowledges that CEA is the entity with the long-term Proposed 10/26/2023 12
renewable energy compliance obligation and, therefore, has final decision-making authority over long-term renewable energy procurement.
California State Renewable Portfolio Standards Requirements are broken down into Compliance Periods, with determination of compliance determined after the end of the Compliance Period. These Compliance Periods are:
Compliance Period 5 – 2025 – 2027
Compliance Period 6 – 2028 – 2030
Compliance with the California Renewable Portfolio Standards Requirements will not be determined by the California Public Utilities Commission until after the end of the Compliance Period. In the event that CEA is found non-compliant with the Renewable Portfolio Standards Requirements for long-term renewable energy in a Compliance Period during which CEA was providing service to the CUSTOMER Account under this WMAT Agreement, CUSTOMER acknowledges that it will be responsible for its proportionate share of any penalty related to non-compliance irrespective of whether the CUSTOMER Account is being served by CEA at the time the penalty is assessed.
If requested by CUSTOMER, CEA will use reasonable efforts to negotiate an assignment provision for Long-Term Renewable Energy Agreements whereby such agreement(s) may be assigned to CUSTOMER should there be a desire to opt-out of CEA service prior to the end of said agreement(s). Such assignment provisions are subject to the consent of the energy supplier.
Direct and indirect costs related to the long-term renewable energy contracts will be reimbursed to CEA through the CUSTOMER WMAT Rate, subject to a true-up, pursuant to Section G (CUSTOMER WMAT RATE SETTING) below.
F. TERMS RELATED TO ADMINISTRATIVE OVERHEAD FEE AND DIRECT ADMINISTRATIVE COSTS
The CUSTOMER Account will be responsible for its per kWh proportionate share of CEA’s Administrative costs, including reserve contributions, in addition to any direct costs of managing the CUSTOMER Account WMAT portfolio. The proportionate share of CEA’s Administrative costs will be calculated as follows: (CEA total annual adopted budget + reserve contribution – power supply budget)/total load for the covered year = per kWh Administrative Cost Component. The resulting per kWh rate will be included in the CUSTOMER WMAT Rate as part of the rate setting in Section G below.
Proposed 10/26/2023 13
CUSTOMER will also be responsible for any direct costs of managing the CUSTOMER Account WMAT Portfolio, including but not limited to legal costs and technical consulting costs, which will be billed to CUSTOMER as direct costs are incurred on a monthly basis and due within 30 days of invoice receipt.
G. CUSTOMER WMAT RATE SETTING
The CUSTOMER WMAT per kWh rate will be calculated annually in November of each year, to be effective the following January. The annual per kWh rate will be calculated with the following formula:
Total Conventional Energy Hedge contracts + (current price curve * open position) + Resource Adequacy Costs + Short-Term Renewable Energy Costs + Long-Term Renewable Energy Costs = Total Energy Costs.
Total Energy Costs/Projected annual energy usage = per kWh energy component Per kWh Energy Component + per kWh Administrative Cost Component = Total per kWh rate.
CEA will track and report actual revenue and expenses as compared to anticipated revenue and expenses on a monthly basis and provide the report to CUSTOMER by the end of the following month. The per kWh rate will be re-evaluated if the year-to-date variance of actual revenues vs expenditures compared to anticipated revenues vs expenditures exceeds 10%. CEA reserves the right to revise the rate, which will be effective the first day of the next calendar month.
H. OPT-OUT PROVISIONS
CUSTOMER must provide a written opt-out notice to CEA pursuant to the Positive Enrollment Agreement, which establishes a minimum opt-out notice period as the term of the longest energy contract, excluding those to be assigned to CUSTOMER, or three years, whichever is longer. The opt-out effective date is the later of (a) 3 years, or (b) the date upon which all outstanding transactions have been settled and paid for, whether through delivery or through early termination and payment of any termination payments to suppliers and all amounts owed to CEA.
In the event that there are outstanding energy supply agreements with terms beyond the minimum 3-year opt-out notice period, and CUSTOMER desires to opt-out within the 3-year minimum period, CEA will work with CUSTOMER to terminate, liquidate or assign the energy supply contracts. CUSTOMER will be responsible to cover any losses incurred in such termination, liquidation or assignment, including termination payments to suppliers and Proposed 10/26/2023 14
reasonable costs and expenses incurred by CEA, including consulting and legal fees, arising from the termination, liquidation or assignment of such contracts.
CUSTOMER will be responsible for all CAISO charges that are assessed to the CUSTOMER Account WMAT Portfolio SCID after opt-out, which may continue for several years in accordance with the CAISO tariff.
I. CUSTOMER CREDIT SUPPORT OBLIGATIONS
1. CUSTOMER will be required to post and maintain with CEA a cash deposit equal to the amount of the three highest months’ invoices for the CUSTOMER Account based on a cash flow projection for the coming year.
2. Energy, RA and related contractual obligations require credit support. Credit support is determined by the seller and can take the form of cash collateral or letter of credit. Alternatively, it may also take the form of a guarantee from CUSTOMER for payment. CEA will use reasonable efforts to minimize collateral requirements for the CUSTOMER Account WMAT Portfolio through the use of CEA’s Lockbox.
However, to the extent that credit support is required for the CUSTOMER Account WMAT Portfolio beyond the Lockbox, CUSTOMER shall be responsible for providing any required credit support for such transactions and ensuring that CEA’s other customers are not adversely affected by any additional credit requirements arising from transactions involving the CUSTOMER Account WMAT Portfolio.
Proposed 10/26/2023 15
ATTACHMENT B
CLEAN ENERGY ALLIANCE
POSITIVE ENROLLMENT AGREEMENT
DATE: ________________________________
SDG&E SERVICE ACCOUNT NAME: ____________________________________________ SDG&E SERVICE ACCOUNT NUMBER: __________________________________________ ENROLLMENT MONTH/YEAR: ______________________________________________________ CEA POWER SUPPLY: ____ Clean Impact ______ Clean Impact Plus ______ Green Impact MINIMUM OPT-OUT NOTICE PERIOD: _________________________________________ The Minimum Opt-Out Notice Period will take into account the longest-term energy contract, but no less than three years to ensure accommodation with the Year-Ahead Resource Adequacy process.
SDG&E POWER CHARGE INDIFFERENCE ADJUSTMENT (PCIA) VINTAGE: ___________________ PCIA Vintage is based on the enrollment date per SDG&E Rate Schedule CCA-CRS.
The undersigned is an authorized representative of the account listed above and agrees to enroll the account with Clean Energy Alliance effective on the account meter read date in the month of the Enrollment Date above.
_____________________________________________
NAME
TITLE
DATE SIGNED
Acceptance by Clean Energy Alliance
_____________________________________________
NAME
Chief Executive Officer
DATE SIGNED
Proposed 10/26/2023 1
CLEAN ENERGY ALLIANCE
WHOLESALE MARKET ACCESS TARIFF AGREEMENT
THIS AGREEMENT, is entered into this Click here to enter DAY. of ENTER MONTH. ENTER YEAR., by and between CLEAN ENERGY ALLIANCE (“CEA”), an independent joint powers authority at 5857 Owens Ave, 3rd Floor, Carlsbad, CA 92008, POSEIDON RESOURCES (“Channelside”) LP, a Delaware limited partnership, at 5780 Fleet Street, Suite 140, Carlsbad, CA 92008 and SAN DIEGO COUNTY WATER AUTHORITY (“SDCWA”), a County Water Authority at 4677 Overland Ave, San Diego, CA 92123 (collectively “Parties”, individually a “Party”).
RECITALS:
A. CEA is an independent public agency duly organized under the provisions of the Joint Exercise of Powers Act of the State of California (Government Code Sections 6500 et seq.) (“Act”) with the power to conduct its business and enter into agreements.
B. CEA is the default energy provider for the City of Carlsbad.
C. Channelside has an active service account with San Diego Gas & Electric and has never been enrolled with CEA.
D. Pursuant to that certain Water Purchase Agreement dated December 20, 2012 (“WPA”) between Channelside and SDCWA, SDCWA has the sole authority and discretion to make decisions with respect to the Carlsbad Desalination Plant’s electricity supplier (“Channelside Account”) until the expiration of that WPA on December 20, 2045, at which time the Channelside Desalination Plant transfers to SDCWA.
E. The Parties agree that should this Wholesale Market Access Tariff Agreement (“WMAT Agreement”) create any obligations for Channelside that conflict with, or contravene contractual obligations set forth in the WPA between Channelside and SDCWA, the WPA will prevail and Channelside’s obligations will be limited thereto.
C. CEA, Channelside and SDCWA desire to enroll the Channelside Account in CEA pursuant to this WMAT Agreement.
NOW, THEREFORE, the Parties mutually agree as follows:
Item 8 Attachment B
Proposed 10/26/2023 2
1. TERM
The term of this WMAT Agreement shall be established in the Positive Enrollment Agreement (Attachment B), which is fully incorporated herein.
2. WHOLESALE MARKET ACCESS TARIFF ENROLLMENT
Upon enrollment with CEA, CEA shall concurrently enroll the following Channelside Account in the Wholesale Market Access Tariff program:
Account Name:
Account Address:
SDG&E Account Service Number:
CEA will provide electric generation procurement pursuant to the Wholesale Market Access Tariff Portfolio Management Terms of Service (Attachment A), which are fully incorporated herein.
3. KEY CONTACTS
The WMAT requires close participation among the Parties. Key contacts related to the WMAT Portfolio Management are as follows:
Clean Energy Alliance
Chief Executive Officer
5857 Owens Ave, Suite 2023
Carlsbad, CA 92008
[email protected]
(760) 209-6177
Poseidon Resources (Channelside)
NAME
ADDRESS
EMAIL
PHONE #
San Diego County Water Authority
NAME
ADDRESS
EMAIL
PHONE #
4. LIMITATION OF LIABILITY
Except to the extent otherwise expressly set forth in this Agreement, no Party shall be liable to any other for any special, indirect, incidental or consequential damages, losses or expenses, including, without limitation, loss of use, business, good will or revenue or loss of Proposed 10/26/2023 3
profits, or damages from work stoppage or failure to deliver power, incurred by one another or any of their affiliates, subsidiaries or successors, regardless of whethersuch damages are caused by breach of contract, willful misconduct, negligent act or omission, or other wrongful act of any of them.
5. CHANNELSIDE AND SDCWA LIABILITY
Channelside and SDCWA are jointly and severally responsible for the payment of all costs, expenses, reimbursements, penalties, termination costs and all other payments under this Agreement and as set forth in Attachment A, including, without limitation, direct and indirect conventional energy hedge costs, CAISO charges, including Congestion Revenue Rights charges, direct and indirect Resource Adequacy (RA) costs, including penalties for non-compliance with RA contracting requirements and costs associated with any assignment of RA agreements, direct and indirect short-term renewable energy costs, direct and indirect costs associated with long-term renewable energy requirements, including any assignment of long-term renewable energy agreement, administrative costs, legal costs and technical consulting costs, and direct and indirect costs associated with opting-out or terminating this Agreement.
6. DRAFTING AMBIGUITIES
The Parties agree that they are aware that they have the right to be advised by counsel with respect to the negotiations, terms and conditions of this Agreement, and the decision of whether or not to seek advice of counsel with respect to this Agreement is a decision which is the sole responsibility of each Party. This Agreement shall not be construed in favor of or against either Party by reason of the extent to which each Party participated in the drafting of the Agreement.
7. ENTIRE CONTRACT; MODIFICATION
This Agreement, including its Exhibits, contains the entire agreement of the Parties with respect to the subject matter hereof, and supersedes all prior negotiations, understandings, or agreements. This Agreement may only be modified by a writing signed by all Parties.
8. COUNTERPARTS/ELECTRONIC SIGNATURE
This Agreement may be executed in counterparts, each of which shall constitute an original. This Agreement may be executed electronically with the same force and effect as an original ink signature.
9. SIGNATORIES
Each signatory and Party hereto hereby warrants and represents to each of the other Parties that he/she/it has legal authority and capacity and direction from its principal to enter into this Agreement, that all resolutions or other actions have been taken so as to enable he/she/it to enter into this Agreement and that he/she/it will indemnify and defend the other Parties should any such representations and warranties prove false.
Proposed 10/26/2023 4
IN WITNESS WHEREOF, the Parties to this WMAT Agreement through their duly authorized representatives have executed this WMAT Agreement as of the Effective Date.
SAN DIEGO COUNTY WATER AUTHORITY CLEAN ENERGY ALLIANCE, a Joint Powers Authority
By: _________________________ By: _________________________ Name: ______________________ Name: Barbara Boswell
Title: _______________________ Title: Chief Executive Officer APPROVED AS TO FORM: APPROVED AS TO FORM:
By: _________________________ By: _________________________ Name: Michael McDonnell Name: Johanna N. Canlas
Title: Assistant General Counsel Title: General Counsel Channelside/Poseidon Resources ATTEST:
By: _________________________
Name: ______________________ By: _________________________ Title: _______________________ Name: Susan Caputo, MMC
Title: Interim Board Secretary
Proposed 10/26/2023 5
ATTACHMENT A
WHOLESALE MARKET ACCESS TARIFF
PORTFOLIO MANAGEMENT TERMS OF SERVICE
Effective Date of WMAT Portfolio Establishment: January 1, 2024 WMAT Portfolio Name: Channelside Account WMAT Portfolio
1. DEFINITION OF TERMS
a. Channelside WMAT Rate: The per kWh rate that will be billed through the San Diego Gas & Electric bill that will be calculated pursuant to Section G of this agreement.
b. Credit Support: May take the form of cash or letters of credit to fulfill collateral or other credit requirements as determined by energy suppliers. c. Direct Costs: Direct Costs are defined as costs incurred that are directly related to the administration and management of the Channelside Wholesale Market Access Tariff Portfolio. Examples of these costs include, but are not limited to, contracted cost of energy, proportional cost of energy, legal costs, technical advisors, and scheduling coordinator services.
d. Indirect Costs: Indirect Costs are defined as costs incurred by Clean Energy Alliance (“CEA”), that are not directly related to the administration and management of the Channelside Wholesale Market Access Tariff Portfolio, but which Channelside and San Diego County Water Authority (“SDCWA”) may receive a benefit from. Examples of these costs include, but are not limited to, administrative overhead.
e. Lockbox: CEA’s Secured Account Managed by River City Bank that provides credit support for secured creditors.
f. Long-Term Renewable Energy: Long-Term Renewable Energy is renewable energy procured through contracts of 10 years or more in duration or through ownership interests or ownership agreements for eligible renewable energy resources.
g. Procurement Plan: Plan that details the mutually agreed upon actions to be taken by CEA and SDCWA to procure the power supply products including Proposed 10/26/2023 6
Conventional Energy Hedge, Resource Adequacy, Short-Term and Long-Term Renewable Energy. The initial Procurement Plan will be finalized between the Parties by January 31, 2024, and will be reviewed and updated at least annually. h. Short-Term Renewable Energy: Renewable energy procured through contracts of less than 10 years.
A. TERMS RELATED TO CONVENTIONAL ENERGY HEDGE TRANSACTIONS CEA and SDCWA will work cooperatively to develop a conventional energy hedge strategy that will be used in developing a Procurement Plan for the Channelside Account WMAT Portfolio.
The hedge strategy will be consistent with CEA’s adopted Energy Risk Management Policy (Exhibit 1), and other CEA compliance requirements, and minimize, to the extent commercially reasonable, market cost exposure to SDCWA and Channelside.
CEA will procure conventional energy hedges for the Channelside Account WMAT portfolio in accordance with the Procurement Plan. CEA will confer with SDCWA regarding planned energy hedge solicitations, offers and recommendations for transactions, and periodically report energy hedge positions relative to projected energy requirements.
If requested by SDCWA, CEA will use reasonable efforts to negotiate an assignment provision for Conventional Energy Hedge Agreements whereby such agreement(s) may be assigned to SDCWA should there be a desire to opt-out of CEA service prior to the end of said agreement(s).
Such assignment provisions are subject to the consent of the energy supplier.
Direct and indirect conventional energy hedge costs will be reimbursed to CEA through the Channelside WMAT Rate, subject to an annual true-up, pursuant to Section G (CHANNELSIDE WMAT RATE SETTING) below.
B. TERMS RELATED TO CAISO CHARGES & CONGESTION REVENUE RIGHTS The Channelside Account WMAT Portfolio will include weekly California Independent System Operator (“CAISO”) charges attributable to the Channelside Account load, including weekly Congestion Revenue Rights (“CRR”) activity, which can be either a net charge or credit, and monthly CRR receipts. In order to distinguish and segregate out these transactions from CEA’s other customer activity, a separate Scheduling Coordinator Identification (“SCID”) will be established for the Channelside Account load. CEA will invoice Channelside monthly, by the 10th of each month for the prior month’s CAISO activity. The invoices will be due within 30 days. In the event there is a net credit, the credit will carry forward to offset charges invoiced the following month.
Proposed 10/26/2023 7
C. TERMS RELATED TO RESOURCE ADEQUACY TRANSACTIONS
The Channelside Account WMAT Portfolio will include Resource Adequacy (“RA”) costs attributable to the Channelside Account load. The California Public Utilities Commission (“CPUC”) adopted the RA policy Framework (Public Utilities Code section 380) in 2004 in order to ensure the reliability of electric service in California. CEA’s annual RA requirements are determined by the CPUC and includes three types: System, Local and Flexible. The local obligation is a three-year forward local obligation and CEA must meet 100% of its local obligation in the immediately following two years and 50% of the third year by October of each year. The obligation is based on a Year-Ahead Resource Adequacy (“YARA”) filing, submitted in April of each year. Beginning in April 2024, CEA will include the forecasted 2025 load for the Channelside account in its YARA. SDCWA agrees to work with CEA to develop the load forecast upon which the RA obligation will be based. The RA requirements attributed to the Channelside Account will be calculated as follows: ((Channelside Account Forecasted Load included in YARA/Total Forecasted CEA Load) X total CEA RA Requirements) minus RA contracts dedicated to the Channelside Account WMAT Portfolio. CEA will work with SDCWA to develop a RA procurement strategy which will inform the development of the Resource Adequacy section of the Procurement Plan. CEA will make its best efforts to acquire the necessary RA to meet the RA requirements pursuant to the Procurement Plan and will confer with SDCWA with regards to RA status throughout the procurement processes. To the extent the Channelside Account WMAT Portfolio RA requirements are included in contracts for CEA’s other RA requirements, the Channelside Account WMAT Portfolio’s proportionate share percentage will be determined by dividing the Channelside Account Forecasted Load included in YARA by the Total Forecasted CEA Load in YARA.
To the extent that CEA has used reasonable efforts to meet its RA contracting requirements that includes the Channelside Account RA Requirements and is unable to meet the full obligation, and CEA is assessed a penalty for non-compliance, the Channelside Account WMAT Portfolio will be responsible for its proportionate share of the RA penalty, based on the same proportional share calculation detailed above.
CEA will work with SDCWA to develop the RA procurement strategy, however, SDCWA acknowledges that CEA is the entity with the RA compliance obligation and, therefore, has final decision-making authority over RA procurement.
If requested by SDCWA, CEA will use reasonable efforts to negotiate an assignment provision for Resource Adequacy Agreements whereby such agreement(s) may be assigned to SDCWA should there be a desire to opt-out of CEA service prior to the end of said agreement(s). Such assignment provisions are subject to the consent of the energy supplier.
Direct and indirect RA costs will be reimbursed to CEA through the Channelside WMAT Rate, subject to an annual true-up, pursuant to Section G (CHANNELSIDE WMAT RATE SETTING) below.
Proposed 10/26/2023 8
D. TERMS RELATED TO SHORT-TERM RENEWABLE ENERGY TRANSACTIONS CEA must comply with the California Renewable Portfolio Standard (“RPS”) that is implemented, administered, and enforced by the CPUC. The RPS program requires CEA, as an electric load serving entity, to procure 60% of its electricity portfolio from eligible renewable energy resources by 2030. The Channelside Account WMAT Portfolio will include short-term renewable energy supply products. The short-term renewable energy supply requirements will be determined by subtracting the long-term renewable energy requirements described in Section E from the total renewable energy requirements as determined by the CEA power supply selection on the Positive Enrollment Agreement. CEA and SDCWA will develop a Short-Term Renewable Energy procurement strategy that will be used to develop the Short-Term Renewable Energy section of the Procurement Plan. CEA will procure Short-Term Renewable Energy pursuant to the Procurement Plan.
In the event the Channelside Account WMAT short-term renewable energy requirements are included in a contract for CEA’s other short-term renewable energy requirements, the Channelside Account WMAT Portfolio’s proportionate share percentage will be determined by dividing the Channelside short-term renewable energy requirements (less short-term renewable energy contracts dedicated to the Channelside Account WMAT Portfolio) by the total CEA short-term energy requirements, with both the Channelside and CEA requirements being measured in kilowatt-hours (“kWh”). This calculated proportionate share will be included in the rate setting process pursuant to Section G (CHANNELSIDE WMAT RATE SETTING) below.
CEA will acquire the necessary short-term renewable energy supply through any combination of open solicitation, bilateral negotiations or sources provided through agreements with SDCWA.
CEA will work with SDCWA to develop the short-term renewable energy procurement strategy, however, SDCWA acknowledges that CEA is the entity with the short-term renewable energy compliance obligation and, therefore, has final decision-making authority over short-term renewable energy procurement.
The RPS requirements are broken down into Compliance Periods, with CEA’s compliance being determined after the end of each Compliance Period. These Compliance Periods are:
Compliance Period 5 – 2025 – 2027
Compliance Period 6 – 2028 – 2030
Compliance with the RPS requirements will not be determined by the CPUC until after the end of each Compliance Period. In the event that CEA is found non-compliant with the RPS requirements for short-term renewable energy in a Compliance Period during which CEA was providing service to the Channelside Account under this WMAT Agreement, SDCWA acknowledges that it will be responsible for its proportionate share of any penalty related to Proposed 10/26/2023 9
non-compliance irrespective of whether the Channelside Account is being served by CEA at the time the penalty is assessed.
If requested by SDCWA, CEA will use reasonable efforts to negotiate an assignment provision for Short-Term Renewable Energy Agreements whereby such agreement(s) may be assigned to SDCWA should there be a desire to opt-out of CEA service prior to the end of said agreement(s).
Such assignment provisions are subject to the consent of the energy supplier.
Direct and indirect short-term renewable energy costs will be reimbursed to CEA through the Channelside WMAT Rate, subject to a true-up, pursuant to Section G (CHANNELSIDE WMAT RATE SETTING) below.
E. TERMS RELATED TO LONG-TERM RENEWABLE ENERGY TRANSACTIONS CEA must comply with the CPUC’s requirement for long-term renewable energy supply procurement, currently set at 65% of the state-mandated RPS requirement for each compliance period. As defined by the CPUC, long-term renewable energy contracts are for terms of 10- years or more, including ownership interests. The Channelside WMAT Portfolio will incorporate the long-term procurement requirement based on its proportionate share of CEA’s total retail sales during each compliance period, with both the requirement and the retail sales being measured in kWh. CEA will acquire the necessary long-term renewable energy supply, through any combination of open solicitation, bilateral negotiations, participation in San Diego Gas & Electric Voluntary Allocation or Market offer processes or sources provided through agreements with SDCWA.
Should the Channelside Account WMAT long-term renewable energy requirements be included in a contract for CEA’s other long-term renewable energy requirements, the Channelside Account WMAT Portfolio’s proportionate share percentage will be determined by dividing the Channelside long-term renewable energy requirements (less long-term renewable energy contracts dedicated to the Channelside Account WMAT Portfolio) by the total CEA long-term renewable energy requirements for the period. CEA will track progress towards the long-term renewable energy requirements and report the results to SDCWA on an agreed upon periodic basis.
CEA will work with SDCWA to develop the long-term renewable energy procurement strategy, however, SDCWA acknowledges that CEA is the entity with the long-term renewable energy compliance obligation and, therefore, has final decision-making authority over long-term renewable energy procurement.
Compliance with the RPS requirements will not be determined by the CPUC until after the end of each Compliance Period, as described above in Section D. In the event that CEA is found non- Proposed 10/26/2023 10
compliant with the RPS requirements for long-term renewable energy in a Compliance Period during which CEA was providing service to the Channelside Account under this WMAT Agreement, SDCWA acknowledges that it will be responsible for its proportionate share of any penalty related to non-compliance irrespective of whether the Channelside Account is being served by CEA at the time the penalty is assessed.
If requested by SDCWA, CEA will use reasonable efforts to negotiate an assignment provision for Long-Term Renewable Energy Agreements whereby such agreement(s) may be assigned to SDCWA should there be a desire to opt-out of CEA service prior to the end of said agreement(s).
Such assignment provisions are subject to the consent of the energy supplier.
Direct and indirect costs related to the long-term renewable energy contracts will be reimbursed to CEA through the Channelside WMAT Rate, subject to a true-up, pursuant to Section G (CHANNELSIDE WMAT RATE SETTING) below.
F. TERMS RELATED TO ADMINISTRATIVE OVERHEAD FEE AND DIRECT ADMINISTRATIVE COSTS
The Channelside Account will be responsible for its per kWh proportionate share of CEA’s Administrative costs, including reserve contributions, in addition to any direct costs of managing the Channelside Account WMAT portfolio. The proportionate share of CEA’s Administrative costs will be calculated as follows: (CEA total annual adopted budget + reserve contribution – power supply budget)/total load for the covered year = per kWh Administrative Cost Component. The resulting per kWh rate will be included in the Channelside WMAT Rate as part of the rate setting in Section G below.
Channelside will also be responsible for any direct costs of managing the Channelside Account WMAT Portfolio, including but not limited to legal costs and technical consulting costs, which will be billed to Channelside as direct costs are incurred on a monthly basis and due within 30 days of invoice receipt.
G. CHANNELSIDE WMAT RATE SETTING
The Channelside WMAT per kWh rate will be calculated annually in November of each year, to be effective the following January. The annual per kWh rate will be calculated with the following formula:
Total Conventional Energy Hedge contracts + (current price curve * open position) + Resource Adequacy Costs + Short-Term Renewable Energy Costs + Long-Term Renewable Energy Costs = Total Energy Costs.
Proposed 10/26/2023 11
Total Energy Costs/Projected annual energy usage = per kWh energy component Per kWh Energy Component + per kWh Administrative Cost Component = Total per kWh rate.
CEA will track and report actual revenue and expenses as compared to anticipated revenue and expenses on a monthly basis and provide the report to SDCWA by the end of the following month. The per kWh rate will be re-evaluated if the year-to-date variance of actual revenues vs expenditures compared to anticipated revenues vs expenditures exceeds 10%. CEA reserves the right to revise the rate, which will be effective the first day of the next calendar month.
H. OPT-OUT PROVISIONS
SDCWA and Channelside must provide a written opt-out notice to CEA pursuant to the Positive Enrollment Agreement, which establishes a minimum opt-out notice period as the term of the longest energy contract, excluding those to be assigned to SDCWA, or three years, whichever is longer. The opt-out effective date is the later of (a) 3 years, or (b) the date upon which all outstanding transactions have been settled and paid for, whether through delivery or through early termination and payment of any termination payments to suppliers and all amounts owed to CEA.
In the event that there are outstanding energy supply agreements with terms beyond the minimum 3-year opt-out notice period, and SDCWA and Channelside desire to opt-out within the 3-year minimum period, CEA will work with SDCWA to terminate, liquidate, or assign the energy supply contracts. SDCWA will be responsible to cover any losses incurred in such termination, liquidation, or assignment, including termination payments to suppliers and reasonable costs and expenses incurred by CEA, including consulting and legal fees, arising from the termination, liquidation, or assignment of such contracts.
SDCWA will be responsible for all CAISO charges that are assessed to the Channelside Account WMAT Portfolio SCID after opt-out, which may continue for several years in accordance with the CAISO tariff.
I. CUSTOMER CREDIT SUPPORT OBLIGATIONS
1. Channelside will be required to post and maintain with CEA a cash deposit equal to the amount of the three highest months’ invoices for the Channelside Account based on a cash flow projection for the coming year.
2. Energy, RA, and related contractual obligations require credit support. Credit support is determined by the seller and can take the form of cash collateral or letter Proposed 10/26/2023 12
of credit. Alternatively, it may also take the form of a guarantee from Channelside for payment. CEA will use reasonable efforts to minimize collateral requirements for the Channelside Account WMAT Portfolio through the use of CEA’s Lockbox.
However, to the extent that credit support is required for the Channelside Account WMAT Portfolio beyond the Lockbox, Channelside shall be responsible for providing any required credit support for such transactions and ensuring that CEA’s other customers are not adversely affected by any additional credit requirements arising from transactions involving the Channelside Account WMAT Portfolio.
Proposed 10/26/2023 13
ATTACHMENT B
CLEAN ENERGY ALLIANCE
POSITIVE ENROLLMENT AGREEMENT
DATE: ________________________________
SDG&E SERVICE ACCOUNT NAME: ____________________________________________ SDG&E SERVICE ACCOUNT NUMBER: __________________________________________ ENROLLMENT MONTH/YEAR: ______________________________________________________ CEA POWER SUPPLY: ____ Clean Impact ______ Clean Impact Plus ______ Green Impact MINIMUM OPT-OUT NOTICE PERIOD: _________________________________________ The Minimum Opt-Out Notice Period will take into account the longest-term energy contract, but no less than three years to ensure accommodation with the Year-Ahead Resource Adequacy process.
SDG&E POWER CHARGE INDIFFERENCE ADJUSTMENT (PCIA) VINTAGE: ___________________ PCIA Vintage is based on the enrollment date per SDG&E Rate Schedule CCA-CRS.
The undersigned is an authorized representative of the account listed above and agrees to enroll the account with Clean Energy Alliance effective on the account meter read date in the month of the Enrollment Date above.
_____________________________________________
NAME
TITLE
DATE SIGNED
Acceptance by Clean Energy Alliance
_____________________________________________
NAME
Chief Executive Officer
DATE SIGNED
Staff Report
DATE: October 26, 2023
TO: Clean Energy Alliance Board of Directors
FROM: Barbara Boswell, Chief Executive Officer
ITEM 9: Consider Approval of Clean Energy Alliance Solar Billing Plan (NEM 3.0)
RECOMMENDATION
CEA Board direct staff to:
• Implement Solar Billing Plan to mirror San Diego Gas & Electric’s Solar Billing Plan and maintain CEA’s current Net Surplus Compensation methodology effective December 15, 2023; or • Implement a modified Solar Billing Plan to mirror San Diego Gas & Electric’s Solar Billing Plan which provides a $.01 per kWh premium to the Avoided Cost Component and maintain CEA’s current Net Surplus Compensation methodology effective December 15, 2023, for 5 years; or • Do not implement Solar Billing Plan.
BACKGROUND AND DISCUSSION
In December 2020, the Clean Energy Alliance (CEA) Board approved CEA’s Net Energy Metering Personal Impact Program (Attachment A) for customers who generate their own solar or wind power and want to offset their energy costs by selling excess energy produced to CEA. The goal for CEA’s Personal Impact Program was to provide a process for how Net Energy Metering customers are enrolled with Clean Energy Alliance (CEA) and how the program is administered. Customers enrolled in San Diego Gas & Electric’s (SDG&E) Net Energy Metering Program (SDG&E NEM) are automatically enrolled in CEA’s Personal Impact Program. The Program is applicable for all NEM customers who have Renewable Generation Facilities such as rooftop solar. The facility must be eligible under SDG&E’s Schedule NEM – Net Energy Metering or similar tariff option(s) focused on NEM, which may be amended or replaced by SDG&E from time to time. Personal Impact customers whose system has generated more electricity than the customer used, on a kilowatt-hour basis, during the 12-month relevant period are eligible to receive Net Surplus Compensation, currently set at $.06 per kilowatt-hour for Net Excess Generation.
CEA’s Personal Impact program nets system generated energy against customer used energy based on kWh during each time-of-use period to determine whether the customer is a net generator or consumer during the period. If the customer is a net generator, a credit is calculated by multiplying the net kWh generation times the applicable retail rate in effect for the period. If the customer is a net consumer, a charge is calculated by multiplying the net kWh used times the applicable retail rate in effect for the period. This methodology is similar to SDG&E’s NEM 1.0 and 2.0.
October 26, 2023
SBP
In December 2022, the California Public Utility Commission (CPUC) issued Decision 22- 12-056 adopting a successor to NEM 1.0 and 2.0, commonly referred to as NEM 3.0, which has been renamed Solar Billing Plan (SBP). The decision requires investor-owned utilities (IOUs) such as SDG&E to implement an updated “net billing” tariff structure designed to optimize grid use by the affected customers and incentivize adoption of combined solar and storage systems in order to help meet California’s climate goals, increase grid reliability, and promote affordability across all income levels. It directs IOUs to compensate customers with new behind-the-meter renewable generation (e.g., rooftop solar panels, with or without paired battery storage) for their exported energy – energy generated in excess of on-site consumption – based on hourly Avoided Cost Calculator (ACC) values rather than at retail rates as is done under existing NEM tariffs, including CEA’s. The ACC values are intended to incentivize adoption of solar paired with battery storage by providing price signals to customers to export energy to the grid when it is most valuable and needed to relieve grid stress and not exporting when export rates are low.
Per the CPUC decision, SBP affects customers that submit Interconnection Applications after April 15, 2023, and the new rate is to be in place effective December 15, 2023. New SBP customers were placed on NEM 2.0 on a temporary basis between April 15, 2023 – December 15, 2023, at which time the customer account will be true-up and then placed on the new SBP rate.
The CPUC estimates that SBP lengthens the expected payback period for rooftop solar to 9 years as compared to an estimated 5 years under NEM 2.0. Most of the reduction in customer value – and the commensurate longer payback time – happens as a result of the new ACC values on the delivery side of customer bills, which is not controlled by CEA.
CEA customers that applied with SDG&E for NEM after April 15, 2023, will be placed on SBP by SDG&E for the Transmission & Delivery (T&D) side of the bill regardless of whether CEA adopts SBP for generation. CEA customers who are currently on NEM 1.0 or NEM 2.0 tariffs are not affected by the decision until the end of their legacy period, at which time SDG&E will place them on SBP by SDG&E for T&D side of the bill.
In addition to changing the methodology for calculating credits and charges, SBP also places customers on the TOUEV5 rate instead of the TOUDR1, which is the current default rate for NEM customers.
SBP changes the methodology for assessing customer bills from being netted on a kWh basis to be netted on a rate basis, with the credit based on the ACC instead of the retail rate.
The charts below demonstrate the difference in how the charges and credits will be calculated. These figures do not represent total customer expected results, they are only to demonstrate how the bill calculations will change.
NEM 2.0 Calculation Methodology:
Summer Winter
System Generation -512 kWh -227kWh
Customer usage 109 kWh 143kWh
Net Generation (credit) -403kWh -84kWh
TOUDR1 Off Peak Rate $.20463 $.06081
October 26, 2023
SBP
Net Credit Earned -$82.47 -$5.11
SBP Calculation methodology:
Summer Winter
System Generation -512 kWh -227kWh
Export Credit Rate (using
average ACC during off-peak)
$0.02671 $.04742
Export Credit Earned -$13.68 -$10.76
Customer usage 109kWh 143kWh
EVTOU5 Summer Off Peak Rate $.14523 $.11273
Customer usage charge $15.83 $16.12
Net Charge $2.15 $5.36
NOTE: SBP will perform the usage charge and export credit on an hourly basis. For ease in presentation, this calculation was performed on the off-peak time of use period and not at the granular hourly level.
Using the SBP methodology, the customer incurs a net charge of $2.15 in the summer month off-peak period and $5.36 in the winter off-peak period. The net charge would be billed and due under the new monthly true-up requirement.
SBP incentivizes partnering battery storage with solar in that customers can fill their battery during the off peak periods when the value of putting the energy on the grid is low, and then using the energy from the battery during high on-peak periods. Customers avoid both T&D and generation costs when using the energy from the battery.
Other changes being implemented as part of SBP is monthly account true-up with no option of an annual true-up and how SDG&E will calculate Net Surplus Compensation. Customers whose solar system generates more energy on a kWh basis than they use in a 12-month relevant period are eligible for Net Surplus Compensation (NSC). Under NEM 1.0 and 2.0, NSC is calculated by SDG&E by multiplying the excess generation by the wholesale value of the energy, which is updated monthly. For CEA customers, the NSC is calculated by multiplying the excess generation by $.06 per kWh.
Under SBP, SDG&E will calculate NSC under the current methodology then deduct the export value the customer has already received for the energy. The reasoning is that the customer was being “double compensated” for the energy, during the monthly calculation and then at the end of the year with NSC.
CEA Current NEM Customers
CEA has approximately 22,500 NEM customers, broken down as follows:
Residential – 22,200
Commercial – 300
October 26, 2023
SBP
NEM 1.0 – 6,500
NEM 2.0 – 16,000
An analysis of CEA’s current NEM customer base, over a one year period, showed that the average monthly generation cost (CEA’s service) for a customer on NEM 2.0 is $25. Under SBP the average generation cost for would be $67, an increase of $42 per month. Actual results will vary depending on a customers usage habits (use during peak vs off-peak times). This $40 would be new revenue to CEA if SBP is implemented.
NEM 1.0 and 2.0 customers will remain on the current NEM program until the end of their legacy period, at which time they will transition to SBP. Since April 15, 2023, approximately 100 customers have installed new solar or solar/battery systems and will be placed on SBP after December 15, 2023, by SDG&E.
It is projected, based on historical new NEM enrollments, and CEA’s current customer base, that CEA could have 100 – 200 new NEM enrollments and transitions from legacy NEM 1.0 & 2.0 annually. Over time the legacy transitions will increase as the legacy periods end.
NEM Policy Options
CEA is not required to adopt SBP for the generation side of customer bills. However, there is a financial impact to CEA, with not realizing the new revenue, for not implementing SBP and should consider its options.
As CEA’s rate-setting body, the CEA Board has the following options:
1. Maintain its existing NEM program (Personal Impact Program adopted December 2020) for new solar and NEM 1.0 and 2.0 legacy customers.
a. Keeping new solar customers on NEM 2.0 will not offset NEM 3.0’s reduced compensation which occurs primarily on the delivery side of the bill; b. NEM customers would see this as a benefit compared to SDG&E bundled service; c. CEA would not realize the new revenue generated by SBP; d. The SDG&E T & D side of bill would be calculated on a different methodology then the CEA Generation side, which could cause customer confusion; e. It would be difficult to calculate rate comparisons between SDG&E and CEA.
2. Default to SDG&E’s new SBP using SDG&E’s ACC to determine the energy generation export credit.
a. Affected customers would be on parity with SDG&E;
b. Potential for new revenue for CEA;
c. T & D and Generation services would be calculated on same basis on customer bill, reducing possibility of confusion;
d. Simplifies rate comparison between SDG&E and CEA.
October 26, 2023
SBP
3. Adopt SDG&E’s new SBP with an additional premium added to the export credit (modified SBP). a. Provides a higher export rate to affected customers, resulting in a lower cost compared to SDG&E;
b. Potential for new revenue for CEA, decreased by the premium adder; c. T & D and Generation services would be calculated on same basis on customer bill, reducing possibility of confusion;
d. Simplifies rate comparison between SDG&E and CEA.
Under option 2 & 3 the Board has the option to keep the NSC calculation as it is today or adopt the new NSC calculation being implemented by SDG&E. Keeping NSC as it is today would be seen as a benefit to affected customers.
CEA’s Community Advisory Committee heard a presentation on SBP at its October 5, 2023, meeting and had a discussion regarding the impacts and options. The consensus was to support implementation of a modified SBP that provided a premium adder to the export credit rate.
Staff recommends implementing SBP with a premium adder of $.01 per kWh to be in place for 5 years and maintaining the current NSC calculation methodology. After 5 years the Board should evaluate its NEM program and rates. Implementing the recommendation would support the CPUC’s goal of incentivizing battery storage for grid reliability, provide benefits to CEA’s customers compared to SDG&E and generate additional revenue to CEA.
It is estimated the additional adder would result in an average monthly SBP generation cost of $63 vs $67, a $4 per month reduction. This would not be a new cost for CEA, rather it would decrease the new revenue that is generated by implementing SBP. Using an assumption of 200 new solar customers per year, the estimated annual new revenue to CEA under SBP is $160,800 and under modified SBP is $151,200. After 5 years the annual new revenue to CEA is estimated at $756,000.
Should the CEA Board desire to implement SBP or modified SBP, it should direct staff to develop updated terms and conditions for the new program and return to the Board for approval.
FISCAL IMPACT
It is estimated that the annual new revenue to CEA generated by 200 solar customers on the recommended modified SBP to be $151,200 and after 5 years of the same growth estimated new revenue is projected to be $756,000.
ATTACHMENTS
Clean Energy Alliance Personal Impact Terms and Conditions
NET ENERGY METERING
TERMS AND CONDITIONS OF SERVICE
A. PURPOSE
The Purpose of the Net Energy Metering (NEM) Program terms & conditions (T&C) is to provide a process for how Net Energy Metering (commonly referred to as rooftop solar) customers are enrolled with Clean Energy Alliance (CEA) and how the program is administered.
B. APPLICABILITY
Customers enrolled in San Diego Gas & Electric’s (SDG&E) Net Energy Metering Program (SDG&E NEM) are automatically enrolled in CEA’s NEM Program. The Program is applicable for all NEM customers who have Renewable Generation Facilities such as rooftop solar. The facility must be eligible under SDG&E’s Schedule NEM – Net Energy Metering or similar tariff option(s) focused on NEM, which may be amended or replaced by SDG&E from time to time. Each customer’s eligible Renewable Generating Facility must fall within the capacity limits described in SDG&E’s Schedule NEM and must be located on the customer’s owned, leased, or rented premises, must be interconnected and operated in parallel with SDG&E’s transmission and distribution systems, and must be intended primarily to offset part or all of the customer’s own electrical requirements.
This rate schedule will be available to customers that provide SDG&E with a completed SDG&E NEM Application and comply with all SDG&E NEM requirements as described in SDG&E’s Schedule NEM. This includes, but not limited to, customers served by NEM-V (Virtual Net Energy Metering), VNM-A (Virtual Net Energy Metering for Multifamily Affordable Housing), VNEM-SOMAH (Virtual Net Energy Metering - Solar on Multifamily Affordable Housing) and Multiple Tariff facilities as described by SDG&E’s Schedule NEM.
C. TERRITORY
Applicable in the CEA service area.
D. RATES
All rates charged under this schedule will be in accordance with the customer’s otherwise applicable CEA rate schedule (OAS). A customer served under this schedule is responsible for all charges from its OAS including monthly minimum charges, customer charges, meter charges, facilities charges, demand charges and surcharges, and all other charges owed to CEA or SDG&E. Charges for energy (kWh) supplied by CEA will be based on the net metered usage in accordance with this tariff.
E. BILLING
1. For a customer with Non-Time of Use (TOU) Rates. If the customer is a “Net Consumer,” having overall positive usage during a specific billing cycle, the customer will be billed in accordance with the customer’s OAS. If the customer is a “Net Generator,” having Item 9 Attachment A
CEA NEM Terms & Conditions
Adopted December 2020
2 overall negative usage during a specific billing cycle, any net energy production shall be valued in consideration of the customer’s OAS. The calculated value of any net energy production shall be credited to the customer according to the OAS.
2. For a customer with TOU Rates. If the customer is a Net Consumer during any discrete TOU period reflected within a specific billing cycle, the net kWh consumed during such TOU period shall be billed in accordance with applicable TOU period-specific rates / charges, as described in the customer’s OAS. If the customer is a Net Generator during any discrete TOU period reflected within a specific billing cycle, any net energy production shall be valued in consideration of the customer’s OAS. The calculated value of such net energy production shall be credited to the customer according to the OAS.
3. CEA True-Up & Cash-Out Processes.
a. True-Up. At the end of each NEM customer’s 12-month relevant period, CEA will determine whether or not each customer has produced net surplus energy, as measured in kWh, over the most recent 12 billing cycles, or the period of time extending from the customer’s commencement of participation in CEA’s NEM program through the end of their relevant period, whichever is shorter (the “True-Up Period”). If the customer has not produced net surplus NEM energy, as measured in kWh, during the True-Up Period, all NEM credits, if any, generated through participation in CEA’s NEM program in excess of currently applicable CEA charges shall be set to zero and any remaining balance will be due and payable.
However, if a customer has produced net surplus NEM energy, as measured in kWh, resulting in a credit balance in excess of currently applicable CEA charges, then CEA shall credit such customer a Net Surplus Compensation (NSC) amount equal to the CEA NSC Rate per kWh, as defined in the CEA Rate Schedule, multiplied by the quantity of net surplus NEM energy produced by the customer during the True-Up Period, consistent with CEA’s Cash-Out practice. All NEM accounts will be reset to zero kWh upon True-up.
b. Cash-Out. At the end of each customer’s relevant period, any current customer with a NSC Payment equal to or greater than $100, as determined during the applicable True-Up process, will be sent a direct payment by check. NSC payments less than $100 will be rolled over into the next relevant period and used to offset future charges.
c. Aggregated NEM. Pursuant to California Public Utilities Commission Section 2827(h)(4)(B), aggregated NEM customers are “permanently ineligible to receive net surplus electricity compensation.” Therefore, any excess accrued credits over the course of a year under an aggregated NEM account are ineligible for CEA’s Cash-Out as described in Section 5. All other NEM rules apply to aggregated NEM accounts.
CEA NEM Terms & Conditions
Adopted December 2020
3 F. ACCOUNT CLOSURES
Customers who close their electric account through SDG&E or move outside of the CEA service area prior to the end of their relevant period and have produced net surplus NEM energy, as measured in kWh, resulting in a credit balance in excess of currently applicable CEA charges, shall receive a direct payment equal to the rate per kWh, as defined in the CEA Rate Schedule, multiplied by the net surplus NEM energy.
CEA reserves the right to work with customers on a case-by-case basis to transfer NEM credits.
G. SDG&E NEM SERVICES
Customers are subject to the conditions and billing procedures of SDG&E for their non-generation services, as described in SDG&E’s applicable NEM tariffs and options addressing NEM service. Customers should be advised that while CEA may settle out balances for generation on a monthly basis, SDG&E will continue to assess charges for delivery, transmission and other services. Customers are encouraged to review SDG&E’s most up-to-date NEM tariffs, which are available at www.sdge.com.
H. RETURN TO SDG&E BUNDLED SERVICE
Customers with NEM service may opt-out and return to SDG&E bundled service at any time, pursuant to SDG&E’s Rule 27. CEA will perform a true-up of their account (as described above), at the time of return to SDG&E bundled service, and customers will be subject to SDG&E’s then current rates, terms and conditions of service. For details, please visit www.sdge.com.
Staff Report
DATE: October 26, 2023
TO: Clean Energy Alliance Board of Directors
FROM: Barbara Boswell, Chief Executive Officer
ITEM 10: Consider Approval of Establishment of a Feed-In Tariff (Community Solar) Program and Direct Staff to Return with Marketing Campaign, Program Guidelines and Related Documents
RECOMMENDATION
Approve establishment of a Feed-In Tariff (Community Solar) Program with the criteria recommended by staff and direct staff to return to the Board with a marketing campaign, program guideline, application, and power purchase agreement.
BACKGROUND AND DISCUSSION
The Board has previously identified development of a Feed-in-Tariff (FIT), also known as Community Solar, as a high priority. A FIT is a standard offer power purchase program, which is typically implemented to incentivize locally situated, small-scale renewable energy projects that is priced to recognize the value of the locally generated renewable energy. As a “standard offer” program, key requirements are non-negotiable, including the energy price offered, delivery term (which is typically ten years or longer), project size limitations, and the power purchase agreement itself. Any supply arranged through a FIT program will complement other wholesale renewable energy purchases in Clean Energy Alliance’s energy portfolio.
Staff has reviewed similar programs offered by Community Choice Aggregators throughout the state, and conferred with its portfolio manager to develop the following recommended terms for CEA’s initial Feed-in-Tariff offering:
• Projects must be within CEA’s service territory
• Projects must be 500kW – 1MW in size
• Base FIT offer price of $85/MWh
• Bonus offer price for co-located battery storage of $15/MWh • A non-refundable deposit of $500 must be paid with the submission of an application • Purchase agreements will be for a 20-year term
• Projects must be new-build
• Renewable energy certificated produced by the projects must be transferred to and owned by CEA
October 26, 2023
FIT Program
CEA’s FIT program guidelines will be developed to reflect CEA’s Inclusive and Sustainable Workforce Policy, which states:
CEA will encourage construction contractors or subcontractors performing work on any CEA Feed-In-Tariff project utilize local businesses and local apprenticeship programs and fair compensation practices including proper assignment of work to crafts that traditionally perform that work.
CEA encourages contractors and subcontractors performing work on any CEA Feed-In-Tariff project to pay at least prevailing rate of wages, as defined in Article 2 (commending with Section 1770) of Chapter 1 of Part of Division 2 of the California Labor code and encouraged to use a skilled and trained workforce, as defined in Chapter 2.9 (commencing with Section 2600) of Part 1 of Division 2 of the California Public Contract Code.
CEA’s Community Advisory Committee (CAC) received an overview of the draft Feed-in-Tariff and supports the Board consideration of implementing a FIT.
FISCAL IMPACT
Costs of the FIT program are within the Fiscal Year 2022/23 adopted power supply budget.
ATTACHMENTS
None