REGULAR MEETING of the Finance Committee of the
Clean Power Alliance of Southern California
Wednesday, November 23, 2022
11:00 a.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 Finance Committee will conduct this meeting remotely.
Visit CPA’s YouTube Channel to watch a Live Stream of the Meeting If the YouTube stream is not working, please use the zoom link. *There may be a streaming delay of up to 60 seconds. This is a view-only live stream.
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or
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PUBLIC COMMENT: Members of the public may submit their comments by one of the following options:
• Email Public Comment: Members of the public are encouraged to submit written comments on any agenda item to [email protected] up to four hours before the meeting. Written public comments will be announced at the meeting and become part of the meeting record. Public comments received in writing will not be read aloud at the meeting. • Provide Public Comment During the Meeting: Please notify staff via email at [email protected] at the beginning of the meeting but no later than immediately before the agenda item is called.
o You will be asked for your name and phone number (or other identifying information) and agenda item similar to filling out a speaker card so that you can be called on when it is your turn to speak.
o You will be called upon during the comment section for the agenda item on which you wish to speak on. When it is your turn to speak, a staff member will unmute your phone or computer audio.
o You will be able to speak to the Committee for the allotted amount of time. Please be advised that all public comments must otherwise comply with our Public Comment Policy. o Once you have spoken, or the allotted time has run out, you will be muted during the meeting.
If preferred, you may also submit written comments during the meeting via email to:
[email protected]. The written comments will be shared with the Committee. *While downloading the Zoom application may provide a better meeting experience, Zoom does not need to be installed on your computer to participate. After clicking the webinar link above, click “start from your browser.” Agenda Page 1
Clean Power Alliance Finance Committee
November 23, 2022
Meetings are accessible to persons with disabilities. Individuals who need special assistance or a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting materials, should contact the Clerk of the Board at least two (2) working days before the meeting 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 Board 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. Members of the public who wish to address the Board are requested to contact the Board Clerk, as specified above, at the beginning of the meeting but no later than immediately prior to the time an agenda item is called.
Each speaker is 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 Policy No. 8 – Public Comment for additional information.
CALL TO ORDER & ROLL CALL
GENERAL PUBLIC COMMENT
CONSENT AGENDA
1. Approve Minutes from the October 26, 2022 Finance Committee Meeting
2. Receive and File October 2022 Risk Management Team Report
3. Receive and File October 2022 CPA Investment Report
4. Receive and File Fiscal Year Q1 Financial Report and September 2022 Financial Dashboard
REGULAR AGENDA
5. Report from the Chief Financial Officer
COMMITTEE MEMBER COMMENTS
ADJOURN – NO MEETING IN DECEMBER. NEXT MEETING JANUARY 25, 2023 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 2
FINANCE COMMITTEE ITEM 1
MINUTES
REGULAR MEETING of the Finance Committee of the
Clean Power Alliance of Southern California
Wednesday, October 26, 2022, 11:00 a.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 Finance Committee conducted this meeting remotely.
Meeting videos are available on CPA’s YouTube Channel.
www.youtube.com/@CPApublicmeetings
CALL TO ORDER & ROLL CALL
Committee Chair Susan Santangelo called the meeting to order at 11:00 a.m. and Gabriela Monzon, Board Clerk, conducted roll call.
Roll Call
Camarillo Susan Santangelo Committee Chair Remote
Carson Reata Kulcsar Committee Member Remote
Claremont Corey Calaycay Committee Member Remote
Rolling Hills Estates Steve Zuckerman Committee Member Remote Santa Monica Pam O’Connor Committee Member Remote
All votes are unanimous unless otherwise stated.
GENERAL PUBLIC COMMENT
There was no public comment.
CONSENT AGENDA
1. Approve Minutes from the September 28, 2022 Finance Committee Meeting
2. Receive and File September 2022 Risk Management Team Report
3. Receive and File September 2022 CPA Investment Report
4. Receive and File August 2022 Financial Dashboard
Motion: Committee Member Calaycay, Claremont
Second: Committee Member Zuckerman, Rolling Hills Estates Vote: The consent agenda was approved by a roll call vote.
REGULAR AGENDA
5. Receive Report from the Independent Auditor and Review FY 2021-2022 Financial Statements and FY 2021-2022 Budget to Actual Report
Bethany Ryers, Baker Tilly, provided a presentation on the 2022 CPA financial audit. Ms.
Ryers reviewed the responsibilities of Baker Tilly; identified the key areas the audit focused on, including key transaction cycles, areas with significant estimates, and the Agenda Page 3
Clean Power Alliance Finance Committee Page 2 of 3
October 26, 2022 Minutes
implementation of new accounting standards, if any. Ms. Ryers explained that the audit was performed in accordance with Generally Accepted Auditing Standards and the audit sought to obtain reasonable assurance that financial statements are free from material misstatement. There were no material weaknesses or significant deficiencies in controls and CPA received an unmodified opinion. Baker Tilly agrees with CPA’s accounting policies and disclosures and there were no material adjustments to the financial statements.
The Finance Committee reviewed the financial audit in further detail with the Baker Tilly auditors without staff present.
Mr. McNeil recognized and thanked Hui Lisano, Controller, and her team for their work achieving a clean audit and thanked Ms. Ryers and the audit team for their professionalism. Mr. McNeil provided a presentation on the FY 2021-22 financial results; reviewed a financial result summary; identified the balance sheet components as of June 2022, including current and noncurrent assets and current and noncurrent liabilities; and specified select financial indicators and provided a comparison of the base budget to the actual analysis.
Committee Member Zuckerman inquired about the fiscal stabilization fund. Mr. McNeil opined that it was not necessary to add to the fund in FY 2021/22, given that CPA budgeted approximately a $200 million increase in the net position in the current fiscal year. Responding to Committee Member Zuckerman’s question relating to the statement of net position and unearned program funds, Mr. McNeil advised that “other receivables” of approximately $7.6 million are amounts owed to CPA that do not arise from the retail sale of electricity and relate, in part, to wholesale sales of electricity or Resource Adequacy (RA); the “unearned program funds” relate to the Power Share Program which CPA has received funding for through the California Public Utilities Commission (CPUC) but has not had expenses related to it yet. In answer to Committee Member Kulcsar’s questions, Mr. McNeil noted that CPA reduced its bad debt expense by about $4-5 million as a result of the CAPP funds expected to be received in early 2023; the total CAPP funding may be around $10-11 million.
6. Report from the Chief Financial Officer
David McNeil, Chief Financial Officer, provided an oral update on CPA’s treasury and financial operations. Mr. McNeil reported that staff intends to repay the balance of the JP Morgan line of credit by the end of November. The financial results show that CPA finished August 2022 below budget but for the fiscal year to date recorded $15 million of net income. The fiscal results of the first quarter will be shared with the Finance Committee in November.
Responding to Committee Kulcsar’s question, Mr. McNeil indicated that CPA has similar interest earning accounts at both River City Bank and the Local Agency Investment Fund (LAIF). Later in 2023, once CPA has more cash, staff will explore other investment opportunities consistent with CPA’s Investment Policy. CPA does not have a segregated reserve account from an operating perspective, and Mr. McNeil opined he does not anticipate funds being formally segregated in the future. Committee Member Zuckerman inquired into the reason CPA’s Investment Report shows only LAIF deposits, and Mr.
McNeil specified that the money in the River City Bank savings accounts is not considered an investment and therefore is not reported under the Investment Policy. Committee Member Zuckerman requested the addition of an informative footnote on the investment Agenda Page 4
Clean Power Alliance Finance Committee Page 3 of 3
October 26, 2022 Minutes
report indicating this ‘does not include depository funds’, and Mr. McNeil agreed to consider the addition.
COMMITTEE MEMBER COMMENTS
Committee Member Zuckerman and Chair Santangelo thanked the auditor and CPA staff for their diligent work.
ADJOURN
Chair Santangelo adjourned the meeting at 12:00 p.m.
Agenda Page 5
Staff Report – Agenda Item 2
To: Clean Power Alliance (CPA) Finance Committee
From: Jacky Lo, Energy Market Risk Analyst
Approved by: Ted Bardacke, Chief Executive Officer
David McNeil, Chief Financial Officer
Subject: October 2022 Risk Management Team Report
Date: November 23, 2022
October 2022 RMT REPORT
Key Actions
• Reviewed September 2022 market performance
• Reviewed September 2022 generation performance
• Reviewed energy positions and approved 2022-2025 hedges • Reviewed positions for RPS and carbon free products
• Reviewed Resource Adequacy (RA) positions, including CPA’s 2023 Year-Ahead open position
• Reviewed October 2022 CRR Allocations and Auction
Policy Compliance
Policy Deviation Required Action
Due to an update to the load forecast
(resulting in higher forecast energy usage)
and a delay in commercial online dates of
two projects under long term contract
(resulting in lower forecast supply), Q3
2023 period did not meet the 85% Energy
Risk Hedging Strategy minimum.
Based on planned hedging activities, the
Q3 2023 deviation is expected to be
resolved by the end of December 2022.
ATTACHMENT
None.
Agenda Page 6
Staff Report – Agenda Item 3
To: Clean Power Alliance (CPA) Finance Committee
From: David McNeil, Chief Financial Officer
Approved by: Ted Bardacke, Chief Executive Officer
Subject: CPA Investment Report
Date: November 23, 2022
RECOMMENDATION
Receive and File.
ATTACHMENT
1. October 2022 Investment Report
Agenda Page 7
Agenda Page 8
Staff Report – Agenda Item 4
To: Clean Power Alliance (CPA) Finance Committee
From: David McNeil, Chief Financial Officer
Approved by: Ted Bardacke, Chief Executive Officer
Subject: Receive and File Fiscal Year Q1 Financial Report and September 2022 Financial Dashboard
Date: November 23, 2022
RECOMMENDATION
Receive and file.
ATTACHMENTS
1. September 2022 Financial Dashboard
2. First Quarter Financial Report for the three months ending September 30, 2022 Agenda Page 9
CUSTOMERS
Summary of Financial Results
Definitions:
Accounts: Active Accounts represent customer accounts of active customers served by CPA per Calpine Invoice.
Participation Rate %: Participation Rate r8epresent active accounts divided by eligible CPA accounts YTD Sales Volume: Year to date sales volume represents the amount of energy (in gigawatt hours) sold to retail customers Revenues: Retail energy sales less allowance for doubtful accounts Cost of energy: Cost of energy includes direct costs incurred to serve CPA’s load Operating expenses: Operating expenditures include general, administrative, consulting, payroll and other costs required to fund operations Net operating income, also known as earnings before interest, depreciation and amortization (EBIDA), represents the difference between revenues and expenditures before depreciation expense, interest income and expense, and capital expenditures Cash and Cash Equivalents: Includes cash held as bank deposits.
Year to date (YTD): Represents the fiscal period beginning July 1, 2022 YTD
Sep
2022
Financial Dashboard
Note: Numbers may not sum up due to rounding.
Active Accounts
1,001,716
Participation Rate
96.04%
YTD Sales Volume
3,666 GWh
Sep Sales Volume
1,290 GWh
Agr
1%
Com-Lg
17%
Com-Sm
27%
Res
55%
118
250
378
1114
0 200
400
600
800
1000
1200
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
in 000,000's
Cumulative Revenue
Actual Budget
21 20
5 $243
0 50
100
150
200
250
300
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Net Energy Revenue
Actual Budget
0 20
40 60
80 100
120
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Cash & Cash Equivalents
Unrestricted Resctricted
CPA recorded an operating loss of $18.8 million in September 2022 which was $29.1 million less than the budgeted operating income of $10.3 million. For the year to date, CPA has recorded an operating loss of $3.4 million, $28.1 million less than the budgeted operating income of $24.7 million.
Year-to-date results were impacted by the following factors:
1. Revenue was $377.5 million or 5% higher than budgeted revenue as a result of warmer than normal temperatures and higher electricity use in CPA’s service area.
2. The cost of energy was $372.9 million or 15% higher than budgeted as a result of warmer than normal temperatures, most notably an extreme heat event in the western United States that lasted from in the first two weeks of the month, higher electricity use by CPA customers, higher prices in the California Independent System Operator (CAISO) administered markets and higher charges imposed by the CAISO to operate the grid. .
3. Operating costs were lower than budgeted primarily as a result of lower General and Administration and other services costs than budgeted and the non-utilization of contingencies.
On September 26, 2022, CPA drew $60 million on its $80 million credit facility with JP Morgan. CPA paid $20 million of the loan on September 29, 2022. The remaining loan balance was repaid in October 2022. As of September 30, 2022, CPA had total liquidity of $138 million consisting of $98.8 million in unrestricted cash and cash equivalents, and $39.853 million available on its bank line of credit, up from $133 million and $134 million of liquidity as of September 30, 2021 and June 30, 2022 respectively CPA is in sound financial health and compliance with its bank and other credit covenants.
ITEM 4 - ATTACHMENT 1
Agenda Page 10
2022 2021
Current assets
Cash and cash equivalents $ 98,830,346 $ 53,357,388
Accounts receivable, net of allowance 155,511,536 131,919,867 Accrued revenue 73,173,244 55,978,851
Other receivables 13,961,875 3,453,783
Prepaid expenses 10,512,598 3,580,033
Deposits 44,142,542 17,894,808
Restricted cash 2,400,000 3,614,700
Total current assets 398,532,141 269,799,430
Noncurrent assets
Capital assets, net of depreciation 709,857 608,858
Intangible - right-to-use lease asset 2,488,924 -
Deposits 88,876 88,875
Total noncurrent assets 3,287,657 697,733
Total assets $ 401,819,798 $ 270,497,163
Current liabilities
Accounts payable $ 2,989,330 $ 4,611,547
Accrued cost of electricity 196,468,151 127,308,417
Other accrued liabilities 4,068,916 2,020,200
User taxes and energy surcharges due to other governments 10,139,202 8,353,140 Loans payable to County of Los Angeles - 30,000,000
Security deposits from energy suppliers 259,675 5,769,400 Unearned program funds 3,930,813 2,005,420
Lease liability, current 363,658 -
Total current liabilities 218,219,746 180,068,125
Noncurrent liabilities
Bank Loan 40,000,000 -
Supplier security deposits 3,132,849 6,904,000
Deferred rent - 183,855
Lease liability, noncurrent 2,560,183 -
Total noncurrent liabilities 45,693,032 7,087,855
Total liabilities $ 263,912,778 $ 187,155,980
Investment in capital assets $ 274,939 $ 608,858
Restricted for collateral 2,400,000 3,614,700
Unrestricted 135,232,081 79,117,626
Total net position $ 137,907,020 $ 83,341,183
NET POSITION
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENT OF NET POSITION
AS OF SEPTEMBER 30, 2022
ASSETS
LIABILITIES
ITEM 4 - ATTACHMENT 2
Agenda Page 11
2022 2021
OPERATING REVENUES
Electricity sales, net 377,176,853 $ 297,566,657 $
Other revenue 361,189 225,638
Total operating revenues 377,538,042 297,792,295
OPERATING EXPENSES
Cost of electricity 372,887,614 281,724,860
Contract services 4,697,629 4,340,088
Staff compensation 2,791,386 2,004,434
General and administration 555,035 505,528
Total operating expenses 380,931,665 288,574,910
Operating income (loss) (3,393,623) 9,217,385
NONOPERATING REVENUES (EXPENSES)
Interest income 190,780 8,746
Interest and related expenses (125,492) (114,247)
Interest expense - lease (17,873) -
Total nonoperating revenues (expenses) 47,414 (105,501) CHANGE IN NET POSITION 9,111,884 (3,346,208)
Net position at beginning of period 141,253,228 74,207,784 Net position at end of period 137,907,020 $ 83,319,668 $
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
FOR YEARS ENDED SEPTEMBER 30, 2022
Agenda Page 12
2022 2021
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Net operating income (loss) $ (3,393,623) $ 9,217,385
Adjustments to reconcile operating income to net
cash provided (used) by operating activities
Depreciation expense 54,525 27,470
Amortization expense 95,727 -
Revenue adjusted for allowance for uncollectible accounts 5,495,854 4,696,311 (Increase) decrease in:
Accounts receivable (64,436,618) (48,392,277)
Other receivables (6,302,411) (1,040,730)
Accrued revenue (17,676,453) (79,787)
Prepaid expenses (4,374,194) 608,171
Deposits (18,027,012) (4,567,966)
Increase (decrease) in:
Accounts payable (1,536,984) (172,600)
Energy market settlements payable (8,623,026) (6,719,550) Accrued cost of electricity 121,461,970 45,869,635
Other accrued liabilities 1,631,290 295,746
User taxes due to other governments 4,112,844 3,024,040 Supplier security deposits (4,524,976) (37,789,000)
Unearned program funds 426,780 407,433
Net cash provided (used) by operating activities 4,383,694 (34,615,719)
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Loan proceeds 60,000,000 30,000,000
Principal payments on loan (20,000,000) -
Interest and related expense payments (91,446) (81,492) Net cash provided (used) by non-capital
financing activities 39,908,554 29,918,508
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments to acquire capital assets (90,125) (146,415)
Payments on lease (for both principal and interest) (100,228) - Net cash provided (used) by capital and related financing activities (190,353) (146,415)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest income received 190,780 8,746
Net cash provided (used) by investing activities 190,780 8,746 Net change in cash and cash equivalents 44,292,675 (4,834,880) Cash and cash equivalents at beginning of period 56,937,672 61,806,968 Cash and cash equivalents at end of period $ 101,230,346 $ 56,972,088 Reconciliation to the Statement of Net Position
Cash and cash equivalents (unrestricted) $ 98,830,346 $ 53,357,388 Restricted cash 2,400,000 3,614,700
Cash and cash equivalents $ 101,230,346 $ 56,972,088
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENT OF CASH FLOWS
FOR YEARS ENDED SEPTEMBER 30, 2022
Agenda Page 13
2022/23 YTD
Budget
2022/23 YTD
Actual
2022/23 YTD
Budget Variance
(Under) Over
2022/23 YTD
Actual /
Budget % 2022/23 Budget
2022/23
Remaining
Budget
2022/23
Remaining
Budget %
Operating revenues
Revenue - electricity, net $ 359,469,732 $ 377,176,853 $ 17,707,121 105% $ 1,110,780,980 $ 733,604,127 66% Other revenues 713,510 361,189 (352,321) 51% 2,742,000 2,380,811 87% Total operating revenues 360,183,242 377,538,042 17,354,800 105% 1,113,522,980 735,984,938 66% Energy costs
Energy procurement 324,031,365 372,887,614 48,856,250 115% 870,533,000 497,645,386 57% Total energy costs 324,031,365 372,887,614 48,856,250 115% 870,533,000 497,645,386 57% Operating revenues less energy costs 36,151,877 4,650,428 (31,501,450) 13% 242,989,980 238,339,553 98% Operating Expenditures
Staffing 3,217,190 2,791,386 (425,804) 87% 13,976,000 11,184,614 80% Technical services 363,750 288,281 (75,469) 79% 1,436,000 1,147,719 80% Legal services 356,060 168,409 (187,651) 47% 1,243,000 1,074,591 86% Other professional services 566,754 164,261 (402,494) 29% 1,902,000 1,737,739 91% Communications and outreach 506,995 210,779 (296,216) 42% 2,018,000 1,807,221 90% Mailers 727,045 440,314 (286,731) 61% 1,346,000 905,686 67% Billing data manager 2,602,735 2,601,884 (851) 100% 10,474,000 7,872,116 75% SCE services 528,990 480,000 (48,990) 91% 2,116,000 1,636,000 77% Customer programs 1,148,005 343,701 (804,304) 30% 4,663,000 4,319,299 93% General and administrations 1,450,980 555,035 (895,945) 38% 5,877,000 5,321,965 91% Total operating expenditures 11,468,504 8,044,050 (3,424,454) 70% 45,051,000 37,006,949 82% Operating income 24,683,373 (3,393,623) (28,076,996) -14% 197,938,981 201,332,603 102% Non-operating revenues (expenditures)Interest income 121,500 190,780 69,280 157% 486,000 295,220 61% Finance and interest expense (236,505) (143,365) 93,140 61% (562,000) (418,635) 74% Total non-operating revenues (expenditures) (115,005) 47,414 162,419 -41% (76,000) (123,414) Change in net position 24,568,368 (3,346,208) (27,914,577) 197,862,981 201,209,189 102% Other uses Capital outlay 56,125 90,125 34,000 161% 224,500 134,375 60% Depreciation and Amortization (157,020) (150,252) 6,768 96% (622,000) (471,748) 76% Total other uses (100,895) (60,127) 40,768 60% (397,500) (337,373) 85% Change in fund balance $ 24,669,263 $ (3,286,081) $ (27,955,344) -13% $ 198,260,481 $ 201,546,562
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
BUDGETARY COMPARISON SCHEDULE
FOR YEAR ENDED SEPTEMBER 30, 2022
Agenda Page 14
Note Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
1 Working Capital 89,731,305 107,892,204 111,423,404 147,468,653 180,312,395 2 Current Ratio 1.5 1.8 1.9 2.5 1.8
3 Days Sales Outstanding 40 39 39 41 38
4 Equity 83,341,183 101,176,027 105,176,451 141,253,228 137,907,020 5 Equity to Assets % 31% 42% 44% 56% 34%
6 Available Cash 53,357,388 67,450,194 85,085,627 54,537,672 98,830,346 7 Available Line of Credit 80,000,000 79,853,000 79,853,000 79,853,000 39,853,000 8 Total Liquidity 133,357,388 147,303,194 164,938,627 134,390,672 138,683,346 9 Days Liquidity on Hand (TTM) 60 67 75 61 57
10 Gross Margin 5% 8% 8% 11% 1%
11 Net Margin 3% 6% 5% 8% -1%
Percentage Change from Prior Quarter
Working Capital 12% 20% 3% 32% 22%
Current Ratio -4% 20% 6% 29% -26%
Days Sales Outstanding 0% -4% 1% 3% -8%
Equity 12% 21% 4% 34% -2%
Equity to Assets % -6% 35% 6% 27% -39%
Available Cash -8% 26% 26% -36% 81%
Available Line of Credit 117% 0% 0% 0% -50%
Total Liquidity 40% 10% 12% -19% 3%
Days Liquidity on Hand (TTM) 37% 12% 11% -18% -7%
Note Description Note Description
1 Current Assets less Current Liabilities 7 Total Line of Credit less Borrowing and Letters of Credit 2 Current Assets divided by Current Liabilities 8 Sum of Available Cash and Line of Credit 3 Accounts receivable divided by Sales divided by 365 9 Total Liquidity divided by trailing 12 month expenses divided by 365 4 Net Position plus Fiscal Stabilization Fund 10 Operating revenue less energy cost divided by operating revenue 5 Equity (Net Position + FSF) divided by Total Assets 11 Change in net position divided by operating revenue 6 Unrestricted cash and cash equivalents
Select Financial Indicators
-
25 50
75 100
125
150
175
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
($)
Millions
Fiscal Quarter
Financial Indicators
Working Capital Equity Total Liquidity
Agenda Page 15
Staff Report – Agenda Item 5
To: Clean Power Alliance (CPA) Finance Committee
From: David McNeil, Chief Financial Officer
Subject: Report from the Chief Financial Officer
Date: November 23, 2022
The Chief Financial Officer will present the FY 2022/23 first quarter financial results (see attachment 1).
ATTACHMENT
1. Presentation on Q1 FY 2022/23 Financial Results
Agenda Page 16
Item 5
Presentation on
Q1 FY 2022/23 Financial Results
November 23, 2022
ITEM 5 - ATTACHMENT 1
Agenda Page 17
Summary of Financial Results
Year-to-date results were impacted by an extreme heat event in the western United States that lasted from approximately September 2nd to September 8th, 2022, in an energy market in which the supply of electricity capacity is limited. These conditions resulted in higher electricity use by CPA customers, higher prices in the California Independent System Operator (CAISO) administered wholesale electricity markets and higher charges imposed by the CAISO to operate the grid.
CPA recorded an operating loss of $3.4 million in the first quarter of FY 2022/23 which includes an $18 million loss in September 2022. As of September 30, 2022, CPA had total liquidity of $138 million consisting of $98.8 million in unrestricted cash and cash equivalents and $39.853 million available on its bank line of credit, up from $133 million and $134 million of liquidity as of September 30, 2021, and June 30, 2022, respectively
CPA’s limited financial losses and strong liquidity position demonstrates robust procurement, hedging, risk and capital management, and the importance of CPA’s strategy of continuing to build financial reserves and liquidity to support CPA’s long-term objectives 2 Agenda Page 18
Summary of Financial Results
3 July August September Total
Electricity Sales, Net 117,582,802 132,298,168 127,295,883 377,176,853 Cost of Energy 96,376,409 132,840,180 143,624,393 372,840,982 Gross Margin 21,206,393 (542,012) (16,328,510) 4,335,871 Cooling Degree Days (1) 109% 122% 185%
(1) Actual / Average, CDDs are an indicator of temperature impacts on energy consumption Q1' FY 2022/23 Financial Summary
Gains in July resulting from normal weather conditions were largely offset by losses in September
Elevated temperatures, electricity use and wholesale prices in September resulted in energy costs exceeding revenues by $16.3 million
Staff will conduct an in-depth analysis of summer 2022 financial results once restated CAISO settlement data becomes available
Agenda Page 19
September Heat Event - Temperatures
High, and in many cases, record
temperatures across the west,
including regions in CPA’s
service area stressed energy
markets
4 Agenda Page 20
September Heat Event - Temperatures
In California, higher temperatures during the day (table below left) and overnight (table below right) supercharged energy consumption during the September heat wave
5 Agenda Page 21
September Heat Event – Peak Electricity Use
CAISO peaked at an all time high of 52,000 GW on September 6, well above the California Energy Commission’s peak forecast for September 6 Agenda Page 22
September Heat Event – Wholes Prices & Costs
High temperatures and consumption across the west combined with tight supply caused wholesale prices to increase 8-10x during the heat wave High wholesale prices and energy
consumption in CPA’s service
area contributed to energy costs of
$42 million or 40% over budget
for the month of September
7 Agenda Page 23
September Heat Event - Revenue
Higher temperatures, electricity use and revenue in CPA’s service area during the September heat event was
partially offset by cooler
than normal temperatures and
electricity consumption
in mid-September
• Revenues were $11.8 million
or 10% higher than budget
for the month of September
8 Agenda Page 24
Thank You! Questions?
Agenda Page 25