REGULAR MEETING of the Executive Committee of the
Clean Power Alliance of Southern California
Wednesday, May 18, 2022
1:30 p.m.
SPECIAL NOTICE: Pursuant to the Proclamation of the State of Emergency by Governor Newsom on March 4, 2020, AB 361, and enacting Resolutions, and as a response to mitigating the spread of COVID19, the Executive Committee will conduct this meeting remotely.
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Agenda Page 1
Clean Power Alliance Executive Committee Meeting
May 18, 2022
Meetings are accessible to people with disabilities. Individuals who need special assistance or a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting materials, should contact the Clerk of the Board at [email protected] or (323) 640-7664. Notification in advance of the meeting will enable us to make reasonable arrangements to ensure accessibility to this meeting and the materials related to it.
PUBLIC COMMENT POLICY: The General Public Comment item is reserved for persons wishing to address the Committee on any Clean Power Alliance-related matters not on today’s agenda. Public comments on matters on today’s Consent Agenda and Regular Agenda shall be heard at the time the matter is called. Comments on items on the Consent Agenda are consolidated into one public comment period.
Each speaker is customarily limited to two (2) minutes (in whole minute increments) per agenda item with a cumulative total of five (5) minutes to be allocated between the General Public Comment, the entire Consent Agenda, or individual items in the Regular Agenda. Please refer to Clean Power Alliance Policy No. 8 – Public Comments for more information.
CALL TO ORDER AND ROLL CALL
GENERAL PUBLIC COMMENT
CONSENT AGENDA
1. Approve Minutes from April 20, 2022 Executive Committee Meeting
CLOSED SESSION
2. CONFERENCE WITH LEGAL COUNSEL—ANTICIPATED LITIGATION Exposure to litigation pursuant to paragraph (2) of subdivision (d) of Section 54956.9: 1
REGULAR AGENDA
3. Oral Update from the Chief Executive Officer on CPA Operations
4. Review Draft Agenda for June 2, 2022 Board of Directors Meeting
5. Review Draft Fiscal Year 2022/2023 Budget
6. Presentation on the 2022 Integrated Resource Plan (IRP) and Rate Product Discussion
Agenda Page 2
Clean Power Alliance Executive Committee Meeting
May 18, 2022
COMMITTEE MEMBER COMMENTS
ADJOURN – NEXT MEETING JUNE 15, 2022
Public Records: Public records that relate to any item on the open session agenda for a Committee Meeting are available for public inspection. Those records that are distributed less than 72 hours prior to the meeting are available for public inspection at the same time they are distributed to all, or a majority of, the members of the Committee. Public records are available for inspection online at www.cleanpoweralliance.org/agendas.
Agenda Page 3
EXECUTIVE COMMITTEE ITEM 1
MINUTES
REGULAR MEETING of the Executive Committee of the
Clean Power Alliance of Southern California
Wednesday, April 20, 2022, 1:30 p.m.
Pursuant to the Proclamation of the State of Emergency by Governor Newsom on March 4, 2020, AB 361, and enacting Resolutions, and as a response to mitigating the spread of COVID19, the Executive Committee conducted this meeting remotely.
CALL TO ORDER & ROLL CALL
Chair Mahmud called the meeting to order at 1:31 p.m. and Gabriela Monzon, Board Clerk, conducted roll call.
Roll Call
Agoura Hills Deborah Klein Lopez Committee Member Remote Beverly Hills Julian Gold Committee Member Remote
Camarillo Susan Santangelo Committee Member Remote
Los Angeles County Sheila Kuehl Vice Chair Remote
Rolling Hills Estates Steve Zuckerman Committee Member Remote Sierra Madre Robert Parkhurst Committee Member Remote
South Pasadena Diana Mahmud Chair Remote
Ventura County Linda Parks Vice Chair Remote
West Hollywood Absent
Rachel Dimond form West Hollywood was also in attendance, observing for Committee Member Horvath. (Ms. Dimond was subsequently appointed as an Alternate to the CPA Board on May 10, 2022)
All votes are unanimous unless otherwise stated.
GENERAL PUBLIC COMMENT
There was no public comment.
CONSENT AGENDA
1. Approve Minutes from March 16, 2022 Executive Committee Meeting Motion: Director Gold, Beverly Hills
Agenda Page 4
Clean Power Alliance Executive Committee Page 2 of 4
April 20, 2022 Minutes
Second: Vice Chair Kuehl, Los Angeles County
Vote: Item 1 was approved by a roll call vote.
REGULAR AGENDA
2. Oral Update from the Chief Executive Officer on CPA Operations Ted Bardacke, CEO, provided an update on the delayed billing issue, stating that letters and emails were sent to the most impacted customers and adding that out of the 20,000 customers affected, only 7 opt-outs were requested. Mr. Bardacke indicated that Cara Renee, Director of Communications and Marketing, will begin with CPA at the end of May. Vice Chair Parks thanked CPA staff for their appearance at an Earth Day event in the City of Thousand Oaks and requested more printed materials at future events.
3. Review Draft Agenda for May 11, 2022 Board of Directors Meeting Mr. Bardacke reviewed the consent agenda, including the Newgen contract amendment and two contracts for prepay transaction services. Regarding Committee Member Zuckerman’s question concerning cost sharing for services, Matt Langer, Chief Operating Officer, added that CPA has done so previously as it relates to legal services with California Community Choice Association (CalCCA) and Central Coast Community Energy (3CE) and will continue to seek resource sharing strategies on the technical reviews.
Mr. Bardacke reviewed several items on the regular agenda, including the rates and budget priorities and the election of a new Board chair. In response to Committee Member comments regarding ballot return by official email, Nancy Whang, General Counsel, advised that staff will explore ways to simplify the voting process. Members of the Executive Committee thanked Chair Mahmud for her excellent work as Board Chair.
4. Provide Direction on Fiscal Year 2022/2023 Rates Approach Mr. Langer provided a recap of the 2022 rate environment and its competitive impacts, presented considerations for FY22/23 rates, and reviewed the investment-grade credit rating and its benefits and metrics. The PCIA dropped approximately 85% in 2022; SCE’s generation rate increased by approximately 18% in March 2022. Both factors improved CPA’s competitive position and present a rare opportunity to accelerate its progress toward achieving mid- and long-term strategic financial goals. CPA will have to balance progress toward financial targets; prepare for an adverse competitive position in 2023; acquire a credit rating; default changes; and financial resilience. Staff prepared three rate options for FY2022/23, including a low, middle, and high revenue option. All options assume product differentials are based on CPA’s cost of service and are similar to last year; subset rates reset to reflect current cost of service; the CARE rate freeze ends; establish a target “Days Liquidity on Hand” (DLOH). Mr. Langer discussed 2022/23 rate options, including comparisons to SCE, noting that CPA’s cash needs are seasonal, and the low revenue option make an investment grade less likely in the next year. The low revenue option projects a $178 million contribution to the net position with 109 DLOH; the middle revenue option contributes $236 million to the net position with 131 DLOH; and the high revenue option contributes $265 to the Agenda Page 5
Clean Power Alliance Executive Committee Page 3 of 4
April 20, 2022 Minutes
net position with 142 DLOH. The low revenue option offers a rate cut compared to last year, but the middle and high revenue options offer some continuity in rate levels. Mr. Langer provided background on CARE rate freezes and explained different options to end CARE rate freezes. All options place CPA’s CARE rates at or below SCE CARE rates and close to CPA’s January 2022 rates. Mr. Langer discussed the four scenarios: (a) end freeze 7/1/22; (b) end freeze 10/1/22; (c) step down rate freeze by half 7/1/22; and (d) maintain freeze for FY 22/23. Mr.
Langer noted that CPA has an opportunity to dedicate up to $10 million in additional one-time program spending under the middle and higher revenue scenarios, which could focus on member agency sustainability and resiliency needs. Mr. Langer summarized the three options and invited discussion and a consensus from the Executive Committee on a recommended Rate Approach to the Board.
Responding to Committee Member questions, staff clarified that 30% of CPA’s residential customers are on CARE rates; unincorporated L.A. County CARE customers will switch to 100% Green in 2024; the highest a bill would go is 3% compared to SCE; prepayment transactions would not impact rates; each CARE scenario would reduce the DLOH; about $17 million has been spent in 2020-2022 to benefit 77,000 customers; newly enrolled CARE customers received automatic credits and state funding was applied to unpaid bills from March 15, 2020 to July 15, 2021.
Vice Chair Kuehl observed that the medium and high revenue options appeared to have a minimal bill increase that would be tolerable for customers; Mr. Langer noted that it reflects CPA’s flexibility in rate setting this year. Vice Chair Kuehl opined that ending the CARE rate freeze in October, resulting in less of a financial impact, is favorable; expressed support for option 3A; asked about state and federally funded one-time programs instead. Mr. Bardacke explained that there is an expectation that programs will be funded at the state and federal level, particularly in low carbon infrastructure, electric vehicle charging, and wildfire mitigation; but it remains unknown if funding will address local government priorities. Committee Member Gold expressed preference for building a strong fiscal position now with as many reserves as possible while considering CARE customers’ bill impacts. Committee Member Parkhurst observed that a combination of factors has made energy procurement especially challenging and asked how that was factored into the options presented by staff and commented that additional program spending is needed in the community; therefore is supportive of option 3C. Mr. Langer clarified that the current financial model is based on conservative assumptions and there are no compliance impacts for FY22/23 rates, as most impacts are farther out than this fiscal year. Vice Chair Parks expressed preference for increasing reserves and getting all customers to the 100% Green rate, even if there are some increases to the Lean and Clean rates. Committee Member Lopez expressed a preference for option 3A and added she would prefer that the possibility of additional program spending be considered in October after the impact of summer volatility is clear. Regarding Committee Member Santangelo’s question concerning rate stabilization, Mr. McNeil indicated CPA has a fiscal stabilization fund for generated surpluses to be used in the future to stabilize rates and allow CPA to remain competitive. Mr. Bardacke added that it would allow CPA to maintain a competitive position with SCE and still hit the minimum target of contribution to the net position. Chair Mahmud expressed support for option 3A and suggested that staff make a renewed outreach to eligible Agenda Page 6
Clean Power Alliance Executive Committee Page 4 of 4
April 20, 2022 Minutes
cities regarding awareness of the Power Share Program, as the current enrollment rate is 1/3 of the target. After a round table discussion on the advantages of option 3A, the Executive Committee reached a unanimous consensus for option 3A, noting that additional program spending could be considered later after assessing the fiscal impact of this upcoming summer on CPA.
5. Review Fiscal Year 2022/2023 Budget Priorities
Mr. Bardacke provided the budget timeline, highlighted various operational priorities, and an overview of the operating expenses. Some of the operational priorities include achieving financial targets, talent acquisition and staff retention, and establishment of processes. Mr. Bardacke specified that operating expenses are projected to increase about 30% and highlighted various increase areas, including communications & mailers, customer programs, and staffing. Mr.
Bardacke reviewed three organizational charts detailing filled positions, vacant positions, and proposed new positions.
Committee Member Gold suggested using consultants to evaluate CPA’s scope of work and positions. Mr. Bardacke commented that there is a budget to update salary comparisons and conduct a new compensation study. In response to Vice Chair Kuehl’s question concerning potential vacancies versus new positions, Mr.
Bardacke emphasized the need for CPA to be at a sustainable staffing level while still recruiting new talent, adding that the addition of new positions helps deal with inevitable vacancies. In response to Committee Member Zuckerman’s question, Mr. Bardacke clarified that a portion of the budget item for ‘general and administrative’ is not a staffing budget, but contains items such as professional development, recruiting resources, and performance management, expenses which do go up as staff size increases. Chair Mahmud noted that an additional benefit to member agencies is regulatory support; asked if the projected staffing in the regulatory area will be sufficient to address that. Mr. Langer explained that involvement in the regulatory arena is more about case management and two positions are sufficient for that; CPA plans to evaluate the use of outside consultants as well for SCE general rate cases. Concerning Chair Mahmud’s question about employment contracts, Mr. Bardacke stated that it can be perceived as limiting opportunities for employees; CPA, however, has offered fully remote positions to most staff; enhancements such as free EV charging has been offered to employees as an incentive to return to the office, and all-staff gatherings are to occur two to three times a year.
COMMITTEE MEMBER COMMENTS
Committee Member Parkhurst suggested sharing energy procurement challenges discussed at the Energy Committee with the Board; Mr. Bardacke indicated that will be presented in June. Committee Members Parkhurst and Lopez shared Earth Day events in their respective cities. Chair Mahmud thanked the Committee Members for their support during her tenure as Board Chair.
ADJOURN
Chair Mahmud adjourned the meeting at 3:50 p.m.
Agenda Page 7
Staff Report – Agenda Item 3
To: Clean Power Alliance (CPA) Executive Committee
From: Ted Bardacke, Chief Executive Officer
Subject: Oral Update from the CEO on CPA Operations
Date: May 18, 2022
The CEO will provide an oral report on CPA operations.
Agenda Page 8
Staff Report – Agenda Item 4
To: Clean Power Alliance (CPA) Executive Committee
From: Ted Bardacke, Chief Executive Officer
Subject: Review Draft Agenda for June 2, 2022 Board of Directors Meeting Date: May 18, 2022
Staff will provide an overview of the proposed agenda items for the June 2, 2022, Board of Directors meeting for review and feedback from the Executive Committee. The draft Board agenda is attached to this staff report. Information on the main items for Board consideration is provided below.
CONSENT AGENDA
The following items are recommended for inclusion on the Consent Agenda of the June Board meeting.
Community Advisory Committee Appointments
As per the CPA Bylaws (Article 8, Section 5), the term of service for current CAC members expired at the end of April. Staff reached out to all current CAC members, notifying them of the term expirations, and inquired if they would like to be considered for re-appointment to the CAC. All CAC members responded, and thirteen of the fifteen current CAC members requested to be re-appointed. Two representatives (1 South Bay and 1 Gateway Cities) are unable to continue on the CAC and elected to resign. Simultaneously, staff solicited interest from new candidates from all CAC subregions, as well as for the current vacancies in the South Bay and Gateway Cities subregions. Staff received 15 applications, which included thirteen current CAC members and three new applicants.
Staff is recommending the re-appointment of the thirteen current CAC members and the appointment of one new member to fill the open seat in the Gateway Cities Subregion (Downey, Hawaiian Gardens, Paramount, and Whittier). Staff is in the process of Agenda Page 9
EXECUTIVE COMMITTEE ITEM 4
obtaining additional applicants for the South Bay subregion open seat. Once a candidate is identified, staff will bring that recommendation to the Executive Committee. The list of candidates for recommended re-appointments and the new candidate recommended for appointment are included as Attachments 2 and 3 to this staff report.
Bill Positions
Staff will propose bill positions on one or more bills in the 2022 Legislative Session. These may include a bill to establish interim targets to reach the state’s clean energy and greenhouse gas reduction goals more quickly, a bill that would change the process by which local governments can pass building electrification reach codes, a bill related to transmission planning, or a bill related to procurement requirements and the integrated resource plan.
REGULAR AGENDA
The following items are recommended for inclusion on the Regular Agenda of the June Board meeting.
Approve FY 2022/2023 CPA Rates
At the May 11, 2022 Board Meeting the Board adopted the following approach for 2022 rate setting, based on CPA’s cost-of-service product differentials:
(a) Clean Power rates targeted at parity with SCE;
(b) 100% Green Power rates targeted at a 3% premium to Clean Power rates; (c) Lean Power rates targeted at a 1% discount to Clean Power rates; (d) Include a subsidy to maintain CARE1 rates at current levels until September 30, 2022.
This approach will provide a buffer against market volatility and seasonal fluctuations in cash flow and maximize CPA’s chance of receiving an Investment Grade credit rating in the next year while maintaining competitive rate comparisons.
At the June meeting, Staff will present detailed rates and resolutions to the Board for approval based on this approach. Further details on this item will be included in the presentation to the Executive Committee on the Draft FY 2022/23 Budget.
Agenda Page 10
EXECUTIVE COMMITTEE ITEM 4
Introduction of Integrated Resource Plan (IRP) and Product Content This item will be subject to a separate presentation to the Executive Committee.
Draft FY 2022/2023 Budget
This item will be subject to a separate presentation to the Executive Committee.
Election of At-Large Executive Committee Positions
At the May 11th Board of Directors meeting, Board Chair Diana Mahmud opened the nomination period for CPA’s three At-Large Executive Committee positions, two representing L.A. County Members and one representing Ventura County members. The nomination period for the At-Large positions of the Executive Committee will close on Friday, May 20, 2022.
Two-year terms will begin on July 1, 2022, and expire on June 30, 2024. At the May 11th meeting, the following nominations were received:
Los Angeles County:
1. Deborah Klein Lopez, Agoura Hills
2. Alex Monteiro, Hawthorne
Ventura County:
1. Ruth Luevanos, Simi Valley
2. Betsy Stix, Ojai
As of May 13th, no other nominations have been received. The Clerk of the Board will verify that nominees meet all the eligibility criteria. For this election, the Clerk of the Board will email ballots to Regular Directors after the conclusion of the nomination period. The election will take place at the June 2 Board meeting. Both the L.A. County At-Large positions and the Ventura County At-Large position must be elected by Regular Directors representing jurisdictions in their respective counties.
Agenda Page 11
EXECUTIVE COMMITTEE ITEM 4
ATTACHMENTS
1) Draft June 2, 2022 Board of Directors Agenda
2) CAC Appointment Summary
3) CAC New Application Summary – Gateway Cities
Agenda Page 12
EXECUTIVE COMMITTEE ITEM 4 – ATTACHMENT 1
REGULAR MEETING of the Board of Directors of the
Clean Power Alliance of Southern California
Thursday, June 2, 2022
2:00 p.m.
CALL TO ORDER AND ROLL CALL
PLEDGE OF ALLEGIANCE
GENERAL PUBLIC COMMENT
CONSENT AGENDA
1. Adopt Resolution Finding the Continuing Need to Meet by Teleconference Pursuant to Government Code Section 54953 (e)
2. Approve Minutes from May 11, 2022 Board of Directors Meeting
3. Approve Bill Positions
4. Receive and File Community Advisory Committee Monthly Report
ELECTION OF EXECUTIVE COMMITTEE AT-LARGE POSITIONS
REGULAR AGENDA
5. Approve Fiscal Year 2022/2023 CPA Rates
6. Approve Fiscal Year 2022/2023 Budget
7. Review 2022 Integrated Resource Plan (IRP):
a. Provide Direction on Product Content; and
b. Delegate IRP Approval Authority to the Energy Planning & Resources Committee
MANAGEMENT REPORT
COMMITTEE CHAIR UPDATES
BOARD MEMBER COMMENTS
REPORT FROM THE CHAIR
ADJOURN – NEXT REGULAR MEETING ON JULY 7, 2022
Agenda Page 13
EXECUTIVE COMMITTEE ITEM 4 – ATTACHMENT 2
Community Advisory Committee (CAC)
Members Recommended for Re-Appointment
and New Proposed Appointments for 2022-2024 Term
East Ventura/West LA County – 3 Positions
(Agoura Hills, Camarillo, Calabasas, Moorpark,
Simi Valley, Thousand Oaks, Westlake Village)
Proposed Re-Appointments:
• Angus Simmons
• Jennifer Burke
• Debbie West
San Gabriel Valley – 2 Positions
(Alhambra, Arcadia, Claremont, Sierra Madre,
South Pasadena, Temple City)
Proposed Re-Appointments:
• Richard Tom
• Kim Luu
West/Unincorporated Ventura County – 2
Positions
(Ojai, Oxnard, Ventura, Unincorporated Ventura
County)
Proposed Re-Appointments:
• Lucas Zucker
• Vern Novstrup
South Bay – 2 Positions
(Carson, Hawthorne, Manhattan Beach, Redondo
Beach, Rolling Hills Estates)
Proposed Re-Appointments:
• David Lesser
• Vacant
Gateway Cities – 2 Positions
(Downey, Hawaiian Gardens, Paramount,
Whittier)
Proposed Re-Appointments:
• Genaro Bugarin
Proposed New Appointee:
• Dr. Irella Perez
Westside – 2 Positions
(Beverly Hills, Culver City, Malibu, Santa Monica,
West Hollywood)
Proposed Re-Appointments:
• Cris Gutierrez
• David Haake
Unincorporated LA County – 2 positions
Proposed Re-Appointments:
• Neil Fromer
• Kristie Hernandez
Agenda Page 14
EXECUTIVE COMMITTEE ITEM 4 – ATTACHMENT 3
2022-2024 Community Advisory Committee New Applicant Summary Candidate: Dr. Irella Perez Subregion: Gateway Eligible Candidate: Yes Section 1: Personal Information
A. Home Address: Whittier, CA
B. Occupation: Environmentalist
Section 2: Qualifications
A. Experience serving on advisory committees / public commission / similar bodies:
• I am a former Whittier City School Board of Trustee for nine years. I have also served as a board member for the California Association of Bilingual Educators and the California Association of Latinos Superintendents and Administrators. In my City of Whittier, I have served as a commissioner of the Arts. I have been a board member for the Arts in public places, Whittier Red Cross Ambassador. I currently serve as an advisory board member for UC Irvine in the Customer Experience program.
B. Experience with outreach or community leadership:
• I am a former Principal from El Rancho School District in the City of Pico Rivera and former Superintendent of El Monte Union High School District. I currently work in a foundation doing nonprofit work. My job is to serve underprivileged communities in the worse polluted areas and improve the quality of air. I work with community environmental justice groups to advocate for the rights of students. I am a Rotarian and Raise money for Scholarships in the Hispanic Outreach Board that I serve as a board member.
C. Experience or expertise in energy field:
• Through my previous work with Johnson Controls, I worked with school districts and municipalities transitioning to renewable energy. Through my work with Common Sense, a California Statewide organization, I have organized and mobilized the community to lobby legislators on their rights for their kids and community in all aspects that influence a student's life including sustainability.
D. Other skills / knowledge / experience to bring to Committee:
• I am an educator and former teacher. I am bilingual and bi-literate. I am a mother, and I am in touch with the needs of our youth. My passion is the education of our youth for a better and more sustainable today and tomorrow.
Section 3: Additional Information
A. Why you are interested / what you hope to achieve:
• My work and passion are to work with environmental justice groups to better the lives of our community and advocate for a more sustainable environment. Your mission goes right along with what I stand for and believe in.
B. List other languages / ability to support non-English speaking communities:
Spanish
C. Anything else you would like CPA to know:
• It will be my pleasure and honor to work together to improve the quality of life of our community and help to recreate a more sustainable world.
Section 4: Commitment
A. Ability to make commitment:
I have the time to dedicate. I have the desire to help.
B. Signed to certify electric holder in CPA service territory and meet eligibility requirements? Yes.
Agenda Page 15
Staff Report – Agenda Item 5
To: Clean Power Alliance (CPA) Executive Committee
From: David McNeil, Chief Financial Officer
Antony Sugiarto, Financial Planning and Analysis Manager Approved By: Ted Bardacke, Chief Executive Officer
Subject: Draft FY 2022/2023 Budget
Date: May 18, 2022
BACKGROUND
Each year CPA develops an annual budget to govern the receipt of revenues, the incurrence of expenses, and capital expenditures during the upcoming fiscal year. The Draft Fiscal Year 2022/23 Budget is provided in Attachment 1.
The Draft FY 2022/23 Budget revenues incorporates the option 3A rate setting approach approved by the Board at its May 11, 2022 Board meeting. Staff plan to present a proposed FY 2022/23 to the Finance Committee on May 25, 2022 and the Board on June 2, 2022. The proposed budget will include refinements to revenue, cost of energy, interest income and staffing budget line items compared the draft budget. It will also include metrics regarding staffing requested by Board members at the May 11 Board meeting.
As part of the budget approval, staff plan to seek authorization from the Board to move funds budgeted under General and Administrative expenses to Interest Expense, if necessary, in order to incur expenses associated with the posting of CPA’s Financial Security Requirement (FSR). Whether these expenses remain under GA or Interest depends on the manner in which CPA makes this FSR posting.
DISCUSSION
The Draft Budget reflects the following budget priorities presented to the Board on May 11, 2022:
Agenda Page 16
EXECUTIVE COMMITTEE ITEM 5
1. Invest in customer programs and communications
2. Augment staff resources
3. Build energy/data/risk management staff, software, and systems to improve efficiency and accuracy while reducing energy costs over the long term Draft FY 2022/23 Operating Expenses were reviewed and discussed by the Finance Committee at its April meeting. Budget priorities have also been presented to the Executive Committee, Finance Committee, Community Advisory Committee and Board of Directors in April and May.
The Proposed Budget sets forth changes to the following budget line items:
Revenue – electricity net (+$230,452,000; 25.7% increase): Budgeted electricity revenues are based on estimates of customer electricity usage and retail electricity rates.
Budgeted revenues include the rate approach approved by the Board on May 11, 2022.
Budgeted revenues include an allowance for doubtful accounts equal to 1.2% of revenues or $12 million. Revenues are higher than FY 21/22 budgeted revenues due to an increase in rates and six communities changing their default levels to 100% Green. The additional revenue due to 100% default changes offset additional renewable energy purchasing costs.
Other revenue (+$874,000; 47% increase): Other revenue includes operating revenue from sources other than retail electricity sales. Other revenue includes funding from the California Public Utilities Commission (CPUC) to support the Power Share program and workforce development funding provided through a renewable energy power purchase agreement. Other revenues offset expenses budgeted in the Customer Programs, Staffing, Technical Services, Legal, and Communications budget line items.
Cost of energy (+$36,252,000; 4% increase): Cost of energy includes expenses associated with the purchase of system energy, renewable energy, resource adequacy, and charges by the California Independent System Operator (CAISO) for load, and services performed by the CAISO. CAISO charges for load are based on customer energy Agenda Page 17
EXECUTIVE COMMITTEE ITEM 5
use and prices at the Default Load Aggregation Point (DLAP). Credits for energy generation scheduled into the CAISO market and revenues arising from Congestion Revenue Rights (CRRs) are netted from the cost of energy. CAISO credits for energy generation are based on wholesale energy deliveries and Locational Margin Prices (LMPs). CRRs are financial instruments created by the CAISO which enable load serving entities, such as CPA, to manage price differences between wholesale energy delivery locations and retail use points.
Staffing (+$4,025,000; 41% increase): Staffing costs include salaries and benefits payable in accordance with CPA’s Board-approved Employee Handbook and salary grades and ranges approved by the Board on March 4, 2021. Almost half of the increase is driven by the full-year impact of positions added mid-year, promotions, and higher than expected mid-year COLA (pegged to the official inflation rate) in the current fiscal year.
The staffing budget does not include a contingency. However, the budget assumes all positions are filled for the full year; vacancies and delayed hiring are likely to reduce actual spending. $500k of staffing expenses are reimbursable via CPUC customer program funding (Power Share).
FY 2022/23 budgeted staffing costs is composed of the following:
Technical services (+$223,000; 18% increase): Technical services comprise professional services for scheduling coordination, short and long-term energy contracting, risk and portfolio management related, and planning/support for customer programs where engineering or other technical expertise is required. Scheduling coordinators provide a variety of services including scheduling generating and storage assets and customer energy use into the CAISO markets, managing CRR purchases and sales, Agenda Page 18
EXECUTIVE COMMITTEE ITEM 5
validating CAISO invoices, and providing risk management and energy contract management software. The increase in technical services arises primarily from a contracted increase in scheduling coordinator fees for the FY 2022/23 and investment in consulting fees to develop a Low Carbon Fuel Standard (LCFS) program.
FY 2022/23 budgeted technical services are composed of the following:
Legal services (+$162,000; 15% increase): Legal services support CPA’s contracting, including energy contracting for short-term and long-term energy, resource adequacy, and non-energy contracting, including banking, finance, and local programs. Legal services also include support for specific regulatory proceedings (e.g., SCE’s ERRA Applications, SCE General Rate Case, and other compliance obligations), employment matters, governance, and general liability management. The majority of the budget in this section is shown in the following table:
Legal Service Major Providers
Energy Contracting Hall Energy Law
Clean Energy Counsel
Keyes & Fox
Davis, Wright, & Tremaine
Regulatory Compliance and CPUC Advocacy Braun Blaising Smith Wynne Keyes & Fox
Banking/Finance Chapman
Employment Law and Compliance Polsinelli
General Liability and Governance Burke Williams & Sorensen Jarvis Fay & Gibson
Agenda Page 19
EXECUTIVE COMMITTEE ITEM 5
The proposed budget increase is due primarily to carrying over work and projects included in the FY 2021/22 budget that were delayed or replaced due to other priorities or logistical issues.
Other services (+$446,000; 31% increase): Other services represent professional services not budgeted under Technical or Legal services and include costs associated with energy compliance auditing, financial audits and audit support, rate setting, lobbying services, non-technical assistance for local programs, and staff support services including recruitment, payroll, and benefits administration, IT support, and labor compliance.
The proposed budget increase is due primarily to budgeting for third party collection agent services that would begin performed in accordance with CPA’s Board approved Collections Policy, increased services in the regulatory and lobbying areas and increased IT services.
FY 2022/23 budgeted other services expenses are composed of the following:
Communications and marketing services (+$513,000; 34% increase):
Communications and related services include costs associated with customer outreach, marketing, branding, website management, translation, advertising, special events, and sponsorships. The increase in marketing expenses reflects investments in CPA’s website, enhanced digital communications, customer outreach associated with the CPUC funded Agenda Page 20
EXECUTIVE COMMITTEE ITEM 5
Power Share program, and outreach to increase brand awareness and reputation enhancement.
FY 2022/23 budgeted communications expenses and offsetting revenue (the latter recorded in the other revenue budget line item) are composed of the following:
Staff expect lower than budgeted spending in Communication Consultants depending on the timing of new hires on the communications and marketing team.
Customer notices and mailing services (+$549,000; 69% increase): Notices and mailing services support required communication with CPA customers and include printing and postage costs. Costs are increasing primarily due additional mailing and communications expenses required to notify approximately 300,000 customers of a default rate change to the 100% Green Power product in October 2022.
FY 2022/22 budgeted customer notices and mailing services are composed of the following:
Agenda Page 21
EXECUTIVE COMMITTEE ITEM 5
Billing data management services (+$57,000; 1% increase): Billing data manager costs are based on the number of customer meters served by CPA and per-meter rates charged by CPA’s billing data manager, Calpine. Increased costs reflect a 2.5% inflation escalator on per-meter charges included in an amendment with Calpine approved by the Board on April 1, 2021.
Service fees – SCE (+$100,000; 5% increase): Service fees are charged by SCE for a variety of customer billing and administrative services. The increase in service fees results from adding in contingencies to cover unforeseen costs from SCE.
Customer Programs (+$2,791,000; 149% increase): Customer programs represent direct costs associated with providing energy programs to CPA customers and other related services. Direct costs include both incentives for participation and payments to third parties for program implementation. The FY 2022/23 customer programs budget supports the CPA Power Share program (100% reimbursable from CPUC), Power Response demand response program, CPA’s EV charger rebate program which provides matching funds for electric vehicle charger incentives administered by the Center for Sustainable Energy/CALeVIP program, $350,000 for workforce development funded through a long term, renewable energy power purchase agreement, and incentives for member agencies to adopt enhanced building codes.
FY 2022/23 budgeted customer programs expenses are composed of the following:
Agenda Page 22
EXECUTIVE COMMITTEE ITEM 5
General and administration (+$4,293,000; 271% increase): General and administration costs include office supplies, phone, internet, travel, dues and subscriptions, professional development, and other related expenses. The majority of the proposed budget increase in G&A is to support the issuance of a financial instrument to meet CPA’s Financial Security Requirement (FSR) obligations under California Public Utility Code 394.25(e), increased software costs, and depreciation and amortization expenses formerly budgeted as a separate “Depreciation” budget line item.
Occupancy (-$548,000; 100% decrease): Costs formerly budgeted under Occupancy have been moved to the General and administrative and interest expense budget line items.
Agenda Page 23
EXECUTIVE COMMITTEE ITEM 5
Finance and interest expense (-$8,000; 1% decrease): Finance and interest expenses represent fees, borrowing and letter of credit costs associated with CPA’s loan facility.
Costs include fees associated with a new credit agreement approved by the Board on September 2, 2021 and a contingency for interest and borrowing costs.
Interest income (-$27,000; 19% decrease): Interest income represents income earned on funds in savings accounts held by River City Bank and other investment accounts.
Decrease in interest income arises from a decrease in interest rates from those assumed in the FY 2021/22 Budget. This number is subject to refinement.
Capital outlay (-$111,500; 33% decrease): Expenditures associated with capital outlay will support and accommodate unforeseen equipment purchases and office improvements as more staff begin to use the office on a regular basis.
ATTACHMENT
1) Draft FY 2022/23 Budget
Agenda Page 24
FY 2021/22
Amended Budget
FY 2022/23
Budget
Budget Difference
($)
Budget
Difference (%)
Revenue ‐ Electricity net 895,247,000 1,125,699,000 230,452,000 25.7% Other revenue 1,868,000 2,742,000 874,000 46.8% TOTAL REVENUE 897,115,000 1,128,441,000 231,326,000 26% TOTAL ENERGY COSTS 834,282,000 870,533,000 36,251,000 4% NET ENERGY REVENUE 62,833,000 257,908,000 195,075,000 310%
OPERATING EXPENSES
Staffing 9,893,000 13,918,000 4,025,000 41% Technical services 1,213,000 1,436,000 223,000 18% Legal services 1,081,000 1,243,000 162,000 15% Other services 1,456,000 1,902,000 446,000 31% Communications and marketing services 1,505,000 2,018,000 513,000 34% Customer notices and mailing services 797,000 1,346,000 549,000 69% Billing data management services 10,417,000 10,474,000 57,000 1% Service fees ‐ SCE 2,016,000 2,116,000 100,000 5% Customer programs 1,872,000 4,663,000 2,791,000 149% General and administration 1,584,000 5,877,000 4,293,000 271% Occupancy 548,000 ‐ (548,000) ‐100%
TOTAL OPERATING EXPENSES 32,382,000 44,993,000 12,611,000 39% OPERATING INCOME 30,451,000 212,915,000 182,464,000 599% Finance and interest expense 570,000 562,000 (8,000) ‐1% Depreciation & Amortization 156,000 ‐ (156,000) ‐100%
TOTAL NON OPERATING EXPENSES 726,000 562,000 (164,000) ‐23% Interest Income 144,000 117,000 (27,000) ‐19%
TOTAL NON OPERATING REVENUE 144,000 117,000 (27,000) ‐19% NON OPERATING REVENUE (EXPENSE) (582,000) (445,000) 137,000 ‐24% CHANGE IN NET POSITION 29,869,000 212,470,000 182,601,000 611% NET POSITION BEGINNING OF PERIOD 74,229,000 104,098,000 29,869,000 40% NET POSITION END OF PERIOD 104,098,000 194,535,000 90,437,000 87% FISCAL STABILIZATION FUND ‐ ‐ 0%
RESERVES END OF PERIOD (Net Position + FSF) 104,098,000 194,535,000 90,437,000 87% Other Uses
Capital Outlay 336,000 225,000 (111,000) ‐33%
Depreciation (156,000) (622,000) (466,000) 299% CHANGE IN FUND BALANCE 29,689,000 212,867,000 183,178,000 617% Note: Funds may not sum precisely due to rounding
Draft
Fiscal Year 2022/2023 Budget
CLEAN POWER ALLIANCE of SOUTHERN CALIFORNIA
EXECUTIVE COMMITTEE ITEM 5 – ATTACHMENT 1
Agenda Page 25
Staff Report – Agenda Item 6
To: Clean Power Alliance (CPA) Executive Committee
From: Natasha Keefer, Vice President, Power Supply
Approved by: Ted Bardacke, Chief Executive Officer
Subject: 2022 Integrated Resource Plan (IRP) and Discussion on CPA’s Rate Product Content
Date: May 18, 2022
Staff will provide a presentation and invite feedback from the Executive Committee.
ATTACHMENT
1. 2022 IRP & Rate Product Presentation
Agenda Page 26
2022 Integrated
Resource Plan (IRP)
Introduction
May 18, 2022
Agenda Page 27
Executive Summary
CPA is required to file its 2022 Integrated Resources Plan with the CPUC by November 1st and is currently planning its IRP analysis o Staff will be presenting information on the IRP and other long-term planning materials between now and November to Energy Committee and the Board Staff will be seeking input and actions on the IRP from the Board during its June Board meeting on two items:
1. Administrative: Delegate IRP approval authority to the Energy Committee – This is consistent with the Board approval process implemented for the 2018 and 2020 IRPs given the short time frame the CPUC provides LSEs to complete the IRP submission
2. Substantive: Long-term planning assumptions for CPA’s three rate products Agenda Page 28
Agenda
Background
Schedule & Delegation of
Authority
Product Content Assumptions
Discussion
Agenda Page 29
Background
4 Agenda Page 30
Recap of 2020 IRP
CPUC requires all LSEs to submit their IRPs every two years, reflecting their individual procurement preferences and submission requirements as directed by the CPUC o The IRP proceeding is an important forum for statewide planning and may result in procurement orders for CPA
In September 2020, CPA submitted its Board-approved Conforming Portfolio Plans as part of the 2020 IRP proceeding
o CPA was required to submit two statewide greenhouse gas reduction (GHG) scenarios – the 46 and 38 million metric ton (MMT) Conforming Portfolios; the 38 MMT scenario was CPA’s Preferred Portfolio o CPA’s Conforming Portfolio Plans were optimized to achieve the three goals of reliability, GHG reduction, and least-cost procurement
On February 15, 2022, the CPUC adopted the 38 MMT GHG target by 2030 as the preferred system plan o The aggregated plans of the LSEs, plus the additional resources ordered in the CPUC’s Mid-Term Reliability Decision, came in under the targeted GHG emissions amounts and met reliability targets Agenda Page 31
Upcoming 2022 IRP
2022 IRPs will be due on November 1st
What’s new:
o Upcoming cycle planning efforts will be focused around 2035 GHG and reliability results o LSEs required to adopt conforming portfolios consistent with the 38 MMT buildout and potentially a 30 MMT sensitivity
o LSEs have option to determine resources to be added to their portfolios following their individual procurement preferences
o Recommend planning for new resources that requires longer lead times for development, including out-of-state renewables and offshore wind
CPA’s portfolio will be developed and optimized around CPA’s goals o Renewable and carbon free procurement for its current and future product offerings (customer demand), which far exceed the California RPS target of 60% by 2030
o GHG targets that meet both statewide requirements and JPA objectives CPA’s Conforming Portfolios will also achieve the CPUC GHG Benchmarks, which will be finalized by the CPUC in June
Agenda Page 32
Schedule &
Delegation of
Authority
7 Agenda Page 33
CPA’s 2022 IRP Schedule
Date Action
June
•Seek Board input on long-term product
content assumptions and delegation of
authority
•CPUC issues decision on LSE planning
targets/direction
•Develop forecasting and scenario inputs for
the 38 & 30 MMT cases
July •Develop draft resource portfolios
August
•Seek Energy Committee and CAC input on
draft resource portfolios and present key
findings/consideration
September
•Update Board
•Revise quantitative analysis as needed
•Prepare CPUC submission, including
narrative and Data Request
October
•Finalize IRP submission and present to
Energy Committee for approval
consideration
November •IRP submissions due
The CPUC is required to issue
instructions on the 2022 IRP no later
than June 15, 2022
IRP submissions require approval by
CPA’s “Governing Body”
Due to the highly compressed schedule
to complete the IRP submissions, CPA is
seeking to delegate final IRP approval to
the Energy Committee, consistent with
previous IRP submissions
Energy Committee, Community Advisory
Committee, and the Board will be
updated on IRP progress throughout the
summer as Staff completes its analysis
Subject to Change
Agenda Page 34
Rate Product
Content
Assumptions and
Scenarios
9 Agenda Page 35
Current Default Levels in CPA Territory
Current and planned member agency defaults:
o Lean Power (5) – Arcadia, Paramount, Simi Valley, Temple City, Westlake Village o Clean Power (6) – Alhambra, Carson, Downey, Hawaiian Gardens, Moorpark, Whittier o 100% Green Power (21) – Agoura Hills, Beverly Hills, Calabasas, Camarillo, Claremont, Culver City, Hawthorne, Los Angeles County, Malibu, Manhattan Beach, Ojai, Oxnard, Redondo Beach, Rolling Hills Estates, Santa Monica, Sierra Madre, South Pasadena, Thousand Oaks, Ventura County, Ventura, West Hollywood For the IRP base case, CPA will assume no further changes to current member agency default elections or CPA expansion. Any further default changes or CPA expansion would be included in 2024 IRP
10 Percentage of Load by Year Lean Clean 100% Green
2023 14% 30% 56%
2024 14% 19% 67%
2025 14% 15% 71%
2026 14% 15% 71%
2027 14% 15% 71%
Agenda Page 36
Rate Product Content Considerations
11 Lean Power provides a product
geared to affordability
Consistent with minimum
compliance standards and with a
view towards for potential/future
state mandates
Meet needs for incumbent member
cities and cost-sensitive customers
Crucial in marketing to new cities
Continue to provide customers with
gold-standard renewable energy
product (status quo)
Various paths towards 100%
renewable and GHG targets are
considered in the proposed
scenarios
In all pathways Clean beats SCE’s
estimated emissions intensity
Pathways can be particularly
beneficial for customers with
specific carbon reduction strategies
(e.g., C&I)
Agenda Page 37
Current Environmental Targets
12 Under SB 100, California utilities are required
to achieve 60% renewable energy by 2030
and 100% emissions free (either renewable
or zero-carbon) energy by 2045
o Beyond 2030, CPA assumes the Renewable
Portfolio Standard (RPS) will grow at a consistent
rate (i.e., 70% renewables achieved by 2035)
Proposed SB 1020 legislation attempts to
accelerate this decarbonization by requiring
that California also meet interim targets of
90% emissions free by 2035 and 95%
emissions free by 2040
o For the purposes of this presentation, CPA
assumes that any “compliance product” achieves
the SB 1020 proposed targets
Statewide Targets (Emissions Free %)
Source: CalCCA
Agenda Page 38
In December 2021, the Board discussed long-term rate product direction. Since then, conditions and understanding of customer needs have changed:
o 6 member agencies changed defaults to 100% Green
o CPA has engaged in a number of discussions with new prospective cities in LA and Ventura Counties o Several large corporate customers have made GHG-free commitments by certain dates (e.g. 2030 or 2035) CPA has developed four scenarios for future rate product targets, in order of most to least aggressive emissions reductions targets:
Scenario Overview
13 Lean Power Clean Power 100% Green Power
Scenario 1
CPA achieves 100% renewable for all customers by 2035 100% renewable by 2035 100% renewable by 2030 100% renewable today Scenario 2
CPA achieves 100% renewable for Clean by 2030 RPS/GHG Free Compliant 100% renewable by 2030 100% renewable today Scenario 3
CPA achieves 100% renewable for Clean by 2035 RPS/GHG Free Compliant 100% renewable by 2035 100% renewable today Scenario 4
SB 1020 by 2035 – have Lean and Clean merge
RPS/GHG Free Compliant
and exceeds SCE’s estimated emissions intensity 100% renewable today Agenda Page 39
Scenario 1
CPA Achieves 100% Renewable by 2035 for All Customers
14 Offer Clean customers 100% renewable by 2030
Offer Lean customers 100% renewable by 2035
Demonstrates strong environmental leadership
across all rate products
Risk is that Lean becomes less competitive with
SCE and the only option for the most price-sensitive customers is to opt-out RPS% /Total Carbon Free %
Year Lean Clean
100%
Green Total Portfolio
2023 43/43 50/59 100/100 77/80
2024 45/45 50/61 100/100 83/85
2025 50/50 58/66 100/100 87/88
2026 55/55 67/68 100/100 89/89
2027 60/60 75/76 100/100 91/91
2028 65/65 83/84 100/100 93/93
2029 70/70 92/95 100/100 95/95
2030 75/75 100/100 100/100 97/97
2031 80/80 100/100 97/97
2032 85/85 100/100 98/98
2033 90/90 100/100 99/99
2034 95/95 100/100 99/99
2035 100/100 100/100 100/100
Agenda Page 40
Scenario 2
Clean Achieves 100% Renewable by 2030
15 Clean Rate is 100% renewable by 2030
In 2030, CPA moves to just two rate options
Offer Lean customers 90% GHG Free by 2035
o Consistent with proposed SB 1020
o Renewable content is based on RPS compliance
If current Clean Rate customers or cities want to
lower costs, they can opt-down to Lean
RPS% /Total Carbon Free %
Year Lean Clean
100%
Green Total Portfolio
2023 43/43 50/59 100/100 76/79
2024 45/45 50/61 100/100 82/84
2025 50/50 58/66 100/100 86/87
2026 52/54 67/68 100/100 88/88
2027 54/58 75/76 100/100 89/90
2028 56/62 83/84 100/100 91/92
2029 58/66 92/95 100/100 92/94
2030 60/70 100/100 100/100 94/95
2031 62/74 100/100 94/96
2032 64/78 100/100 94/96
2033 66/82 100/100 95/97
2034 68/86 100/100 95/98
2035 70/90 100/100 95/98
Agenda Page 41
Scenario 3
Clean Achieves 100% Renewable by 2035
16 Same as Scenario 2 except offer to Clean
customers is 100% renewable by 2035 instead
of 2030
Offer Lean customers 90% GHG Free by 2035
o Consistent with proposed SB 1020
o Renewable content is based on RPS
compliance
If current Clean Rate customers/cities want to
lower costs, they can opt-down to Lean
RPS% /Total Carbon Free %
Year Lean Clean 100% Green Total Portfolio
2023 43/43 50/59 100/100 76/79
2024 45/45 50/61 100/100 82/84
2025 50/50 54/66 100/100 86/87
2026 52/54 59/68 100/100 87/88
2027 54/58 63/70 100/100 88/88
2028 56/62 68/72 100/100 88/89
2029 58/66 72/74 100/100 89/90
2030 60/70 77/78 100/100 90/91
2031 62/74 81/82 100/100 91/92
2032 64/78 86/86 100/100 92/92
2033 66/82 90/90 100/100 93/93
2034 68/86 95/95 100/100 94/94
2035 70/90 100/100 100/100 95/95
Agenda Page 42
Scenario 4
Lean/Clean Merge to Compliant Product
17 Starting in 2026, Lean and Clean merge into a
single product given the trajectory for statewide
emissions reduction goals
o Consistent with proposed SB 1020
o Renewable content is based on RPS compliance
o Maintains Clean’s goal of achieving an emissions intensity target less than SCE
Simplifies CPA’s rate offerings with via a low-cost option and premium option Removes the gradual pathway to 100% Green
RPS% /Total Carbon Free %
Year Lean Clean 100% Green Total Portfolio
2023 43/43 50/59 100/100 76/79
2024 45/45 50/61 100/100 82/84
2025 50/50 50/66 100/100 85/87
2026 52/68 100/100 85/90
2027 54/70 100/100 86/91
2028 56/72 100/100 87/91
2029 58/74 100/100 87/92
2030 60/78 100/100 88/93
2031 62/82 100/100 88/94
2032 64/86 100/100 89/96
2033 66/92 100/100 90/97
2034 68/92 100/100 90/97
2035 70/92 100/100 91/97
Agenda Page 43
Scenario Comparison
18 Because of member agency default opt-ups to 100% Green Power since 2020, any of the proposed scenarios will result in generally higher renewable content and a lower emissions intensity for CPA’s portfolio compared to the 2020 IRP submission 60%
65%
70%
75%
80%
85%
90%
95%
100%
1 2 3 4 5 6 7 8 9 10 11 12 13
CPA Total Portfolio RPS by Scenario
RPS - Scenario 1 RPS - Scenario 2 RPS - Scenario 3
RPS - Scenario 4 RPS - 2020 IRP
60%
65%
70%
75%
80%
85%
90%
95%
100%
2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 CPA Total Portfolio GHG Free by Scenario
GHG-Scenario 1 GHG-Scenario 2 GHG-Scenario 3
GHG-Scenario 4 GHG-2020 IRP
Agenda Page 44
Board Considerations
The primary objective of the June Board meeting discussion is to provide direction to staff on IRP modeling assumptions and get formal delegation to approve the IRP to the Energy Committee
o The results of the IRP analysis may provide insight into future Board decision-making related to long-term rate product content – expected later in 2022 or early 2023 The largest consideration around IRP assumptions is related to the long-term objective of the Clean communities – path to 100% Green vs. meeting California compliance mandates o One way to address both goals is to establish a new 100% by 2030 product (“Pathway 2030” rate) that would replace Clean after it merges with Lean
In any given year, the Board will have flexibility in designing products for customers to address cost and competitive considerations; however, CPA should stay on track to meeting its long-term environmental targets
19 Agenda Page 45
Discussion
20 Agenda Page 46
Discussion
Staff is seeking Executive Committee feedback on two aspects of the IRP:
1. Delegate IRP approval authority to the Energy Committee
2. Long-term planning assumptions for CPA’s three rate products 21 Agenda Page 47