Executive Committee of the
Clean Power Alliance of Southern California
Regular Meeting
Wednesday, February 15, 2023
1:30 p.m.
Visit CPA’s YouTube Channel to view a Live Stream of the Meeting www.youtube.com/@CPApublicmeetings
*There may be a streaming delay of up to 90 seconds. This is a view-only live stream.
CPA Office
801 S. Grand Ave., Suite 400
Los Angeles, CA 90017
Members of the public may also participate in this meeting remotely at the following locations:
Agoura Hills City Hall
Planning Conference Room
30001 Ladyface Court
Agoura Hills, CA 91301
Ojai City Hall
Conference Room
401 S Ventura St.
Ojai, CA 93023
Beverly Hills City Hall
Council Office, 4th Floor
455 N. Rexford Drive
Beverly Hills, 90210
Sierra Madre City Hall
Council Chambers
232 W. Sierra Madre Blvd.
Sierra Madre, CA 91024
Camarillo City Hall
Administrative Conference Room
601 Carmen Drive
Camarillo, CA 93010
Residence Inn
Business Center
8400 Market Street
Middleton, WI 53562
Hawthorne City Hall
City Manager’s Conference Room
4455 W. 126th Street
Hawthorne, CA 90250
Ventura County Government Center
Point Mugu Conference Room, 4th Floor
Hall of Administration
800 South Victoria Avenue
Ventura, CA 93009
Los Angeles County Hall of Administration
Sybil Brand Conference Room, Room 372
500 West Temple Street
Los Angeles, CA 90012
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: The General Public Comment item is reserved for persons wishing to address the Committee on any Clean Power Alliance-related matters not on Agenda Page 1
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 Committee at CPA’s Office are requested to complete a comment card and provide it to staff. If you are attending from a remote location, please identify yourself to a CPA representative when your 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.
ACCESSIBILITY: 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 least two (2) working days before the meeting at [email protected] or (213) 713- 5995. 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.
CALL TO ORDER AND ROLL CALL
GENERAL PUBLIC COMMENT
CONSENT AGENDA
1. Approve Minutes from January 18, 2023, Executive Committee Meeting
REGULAR AGENDA
2. Oral Update from the Chief Executive Officer on CPA Operations
3. Review Draft Agenda for the March 2, 2023, Board of Directors Meeting
4. Receive Presentation on Interim FY 2022/2023 Rate Adjustment and Recommend an Option to the Board of Directors
COMMITTEE MEMBER COMMENTS
ADJOURN – NEXT REGULAR MEETING ON MARCH 15, 2023
Public Records: Public records that relate to any item on the open session agenda for a regular Board 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 Board. Those documents are available for inspection at CPA Offices or online at www.cleanpoweralliance.org/agendas Agenda Page 2
Executive Committee Item 1
MINUTES
REGULAR MEETING of the Executive Committee of the
Clean Power Alliance of Southern California
Wednesday, January 18, 2023, 1:30 p.m.
Meeting videos are available on CPA’s YouTube Channel.
www.youtube.com/@CPApublicmeetings
Committee Members participated remotely in this meeting from the following locations:
Agoura Hills City Hall
Planning Conference Room
30001 Ladyface Court
Agoura Hills, CA 91301
CPA Office
801 S. Grand Ave., Suite 400
Los Angeles, CA 90017
Beverly Hills City Hall
4th Floor
455 N. Rexford Drive
Beverly Hills, 90210
Camarillo City Hall
Administrative Conference Room
601 Carmen Drive
Camarillo, CA 93010
Hawthorne City Hall
4455 W. 126th Street
Hawthorne, CA 90250
Ojai City Hall
Conference Room
401 S Ventura St.
Ojai, Ca 93023
Sierra Madre City Hall
Council Chambers
232 W. Sierra Madre Blvd.
Sierra Madre, CA 91024
Ventura County Government Center
Point Mugu Conference Room, 4th Fl.
Hall of Administration
800 South Victoria Avenue
Ventura, CA 93009
CALL TO ORDER & ROLL CALL
Chair Gold called the meeting to order at 1:40 p.m. and Gabriela Monzon, Board Clerk, conducted roll call.
Roll Call
Agoura Hills Deborah Klein Lopez Committee Member Remote Beverly Hills Julian Gold Chair Present
Camarillo Susan Santangelo Committee Member Remote
Hawthorne Alexander Monteiro Committee Member Remote
Los Angeles County Lindsey Horvath Vice Chair Present
Ojai Betsy Stix Committee Member Remote
Sierra Madre Robert Parkhurst Committee Member Remote
Ventura County Vianey Lopez Vice Chair Remote
Agenda Page 3
Clean Power Alliance Executive Committee Page 2 of 4
January 18, 2023 Minutes
All votes are unanimous unless otherwise stated.
GENERAL PUBLIC COMMENT
There was no public comment.
CONSENT AGENDA
1. Approve Minutes from November 16, 2022, Executive Committee Meeting Motion: Committee Member Parkhurst, Sierra Madre
Second: Committee Member Santangelo, Camarillo
Vote: The consent agenda was approved by a roll call vote with an abstention by Vice Chairs Horvath and Lopez.
REGULAR AGENDA
2. Oral Update from the Chief Executive Officer on CPA Operations Ted Bardacke, CEO, provided an update on new Board members and noted that Board members Diana Mahmud, South Pasadena, and Steve Zuckerman, Rolling Hills Estates, are likely to continue on the Board as members of the public serving as alternates. Mr. Bardacke indicated that as a condition of the $30 million loan CPA received in July 2021, Los Angeles County will conduct a special study on CPA’s fiscal controls and policies over the next few months. Various Board members, including the Board Chair and Finance Committee members, may be interviewed as part of the study. Mr. Bardacke shared that staff expects grid management challenges in the summer of 2023, adding that the Resource Adequacy (RA) shortage may lead to a fine for CPA of approximately $5 million from the California Public Utilities Commission (CPUC). Mr. Bardacke noted that the price of RA is exceptionally high, so the economic consequences will be minimal, but there is more risk in regulatory and political blowback.
Staff answered several questions from Vice Chair Horvath, Committee Members Parkhurst, Klein Lopez, and Chair Gold regarding procurement challenges. Staff explained that the CPUC denied CalCCA’s petition to modify the RA program. CPA could appeal the fine but lacks firm grounds for an appeal. Additionally, the number of entities that did not meet RA obligations for the summer remains confidential; however, the public relations consequences of the fine may be more impactful than the financial ramifications. IOUs have long-term contracts that can help them meet their requirements, but when the fines are made public, they will include a list of all LSEs that received fines. Staff also noted that the CPUC ordered an additional 2,000 megawatts of emergency reliability procurement to increase system reserves for 2022-2023, contributing to the RA shortage position for most LSEs.
Staff explained that if CPA cannot meet RA procurement requirements, the California Independent System Operator (CAISO) is responsible for procuring the shortfall. The reliability challenges and system shortages appear to be more acute in 2023 than in 2022. Staff added that the impact of recent heavy rain on energy production is difficult to predict. With regard to generation capacity, staff clarified that though it is complicated, some generation assets, including the Colorado River, Pacific Northwest Hydro, Western Sierra, and Eastern Sierra, have relatively good storage capacity. In response to Committee Member Parkhurst’s question Agenda Page 4
Clean Power Alliance Executive Committee Page 3 of 4
January 18, 2023 Minutes
about Board succession planning, Mr. Bardacke indicated that CPA staff is working to cultivate and provide training to all new Board members.
3. Review Draft Agenda for the February 2, 2023, Board of Directors Meeting Mr. Bardacke discussed the Board consent agenda item for the one-year contract for settlement software to help validate and arrange the over $600 million invoiced from CPA suppliers annually; the contract has an option for four more years. Mr.
Bardacke reviewed items on the regular agenda, including the potential modification of CPA’s current legislative and regulatory platform; contract approval to launch a building electrification code assistance and public outreach program; and a quarterly communications report that will educate new Board members and include an update on upcoming communications efforts.
Responding to Committee Member Parkhurst’s question regarding the building electrification contract, Mr. Bardacke advised that a consultant was selected who has expertise in building electrification and sustainability work in CPA territory. The program will offer cities free technical assistance and public outreach services and should begin engaging with cities by the second quarter of the year.
4. Winter Electricity Market Update
Mr. Bardacke provided a presentation on the winter electricity market. A large spike in natural gas prices beginning in December 2022 resulted in significantly higher electricity prices in December and likely through March. This price spike coupled with the September 2022 heat wave led CPA staff to estimate a contribution to the net position in FY 2022/23 of about $50 million compared to the budgeted contribution of about $200 million. To address market volatility, financial results, and prepare for unforeseen events, staff recommends that the Board consider extending CPA’s $80 million credit line with JPMorgan and adjusting rates in March of 2023.
Responding to Committee Member Parkhurst’s question concerning the reason for the natural gas price spike, Mr. Bardacke stated that multiple factors are involved, including supply issues around the country due to weather, capacity issues, and reduced storage in Southern California. In response to Committee Member Monteiro’s question regarding the possible rate increase percentages, Mr.
Bardacke reviewed a chart depicting residential rate comparisons for Southern California Edison’s (SCE) and CPA. Staff has not developed a proposal for rate adjustments, but CPA will be competitive over the next year and expects any interim rate change adjustment to be an equal percentage to all rate products. In response to Committee Member Parkhurst’s question about SCE’s renewables percentage drop, Mr. Langer commented that SCE has exceeded targets in the past allowing them to be lower, and that they are now required to sell portions of their renewable portfolio to CPA and other CCAs.
Mr. Bardacke reviewed three options for next steps in March, along with benefits and challenges of each, and invited feedback from the Executive Committee on the potential rate and line of credit increases. Committee Members Klein Lopez, Santangelo, Monteiro, and Parkhurst expressed a preference for Option 2, stating reasons such as consistency, least amount of risk, volatility of the market, potential shortages in later summer, and ease of responsiveness to the market. Committee Agenda Page 5
Clean Power Alliance Executive Committee Page 4 of 4
January 18, 2023 Minutes
Member Monteiro inquired about the rate increase amount, and staff suggested that a rate increase would be equitable across all rates, confirming that this will help increase CPA’s reserve by $40-50 million. Vice Chair Horvath echoed support for Option 2, adding that staff can reevaluate in June and determine if another adjustment is advantageous. Chair Gold expressed a need to ensure CPA stays viable as an organization while ensuring that rates stay as low as possible.
Committee Member Monteiro inquired about CPA’s opt-out rate, and Mr. Bardacke indicated that overall CPA has about a 93% participation rate and a 7% opt-out rate. Responding to Committee Member Monteiro’s question concerning the offshore windmill auction, Mr. Bardacke shared that the auction determined which developers had the right to develop projects. As projects are developed, staff will welcome bids for CPA’s RFOs and will evaluate them in comparison to other wind and renewable energy options. Mr. Bardacke added that it would be at least a decade before energy begins to be realized from these projects. Responding to Committee Member Parkhurst’s question, Mr. Bardacke clarified that the auction results do not change CPA’s Integrated Resource Plan (IRP).
COMMITTEE MEMBER COMMENTS
Committee Member Monteiro expressed a preference to have the Executive Committee meeting begin at 2:00 p.m. Committee Member Klein Lopez commented that the City of Agoura Hills adopted its first reading of an all-electrification ordinance for new buildings and unanimously voted to be 100% electric moving forward.
ADJOURN
Chair Gold adjourned the meeting at 2:48 p.m.
Agenda Page 6
Staff Report – Agenda Item 2
To: Executive Committee
From: Ted Bardacke, Chief Executive Officer
Subject: Oral Update from the CEO on CPA Operations
Date: February 15, 2023
The CEO will provide an oral report on CPA operations.
Agenda Page 7
Staff Report – Agenda Item 3
To: Executive Committee
From: Ted Bardacke, Chief Executive Officer
Subject: Review Draft Agenda for March 2, 2023 Board of Directors Meeting Date: February 15, 2023
Staff will provide an overview of the proposed agenda items for the March 2, 2023, 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 action items are recommended for inclusion on the Consent Agenda of the March Board meeting.
Bill Positions Monthly Report
In accordance with the revised bill position protocol approved by the Board at its February meeting, staff will provide a monthly report to inform the Board of any positions taken on legislative bills.
Ticket Distribution Policy
As CPA’s exposure and influence grows, CPA Board members and staff are increasingly offered or in search of opportunities to attend industry conferences and events. CPA often narrows its participation or turns down offers as CPA works through whether and how CPA’s participation comports with CPA objectives and with FPPC compliance. This proposed policy will specify what governmental or public purposes are accomplished by the distribution of the tickets or passes thereby providing additional guidance to CPA. In addition, by virtue of enacting a policy compliant with FPPC regulation Section 18944.1, Agenda Page 8
Executive Committee Item 3
tickets or passes distributed by CPA to its staff and Board members in compliance with this policy will not be reportable as a gift in the recipient’s FPPC Form 700.
Per FPPC regulation 18944.1, the policy must (i) specify the public purpose for which Tickets may be distributed, (ii) specify what governmental or public purposes are accomplished by the distribution of Tickets, (iii) prohibit against transfer of any ticket received except to immediate family or one guest and a prohibition against disproportionate use of Tickets; (iv) include language specifying that CPA determines who uses the Tickets, in CPA’s sole discretion, (v) prohibit earmarking of Tickets by an outside source for use by a specific individual; and (vi) include reporting and public record requirements. Staff intends to present the attached draft policy for Board approval.
Brand Campaign Task Order
CPA will launch a brand campaign to increase awareness of the organization, celebrate the organization’s 5th anniversary of serving its first customers, and highlight its programs, projects, and value to the region. The creative brand campaign will include customer and stakeholder outreach and engagement, external visibility of the brand, media buying and reporting services, and event creation/management. To support the CPA Communications and Marketing team in executing the brand campaign, staff will propose approval of a Task Order, for a not-to-exceed amount of $310,000, with one or more qualified and experienced vendors for the first phase of the brand campaign through the end of this fiscal year.
REGULAR AGENDA
The following items are recommended for inclusion on the Regular Agenda of the March Board meeting.
Amendment to Credit Agreement with JP Morgan Chase
Following discussions with the Finance Committee in January 2023, staff began negotiations with JPMorgan Chase to increase the amount of its line of credit, extend the term of the credit agreement and amend required representations regarding adverse material events as a precondition for borrowing. The purpose of these amendments is to Agenda Page 9
Executive Committee Item 3
provide additional liquidity and to better position CPA to receive an investment-grade credit rating. If negotiations are successful, staff would present (1) proposed terms of an amended Credit Agreement to the Finance Committee at its February 22nd meeting and (2)(a) the amended and restated Credit Agreement and (b) a Resolution approving that Credit Agreement to the Board at the March Board meeting.
Interim FY 2022/2023 Rate Adjustment
This item will be subject to a separate presentation to the Executive Committee.
Nomination Period for At-Large Executive Committee Position In November 2022, Director Deborah Klein Lopez, Agoura Hills, was appointed as the Chair of the Legislative & Regulatory Committee, resulting in a vacancy for one At-Large member of the Executive Committee representing Los Angeles County members. With the appointments to the Board now complete and elections certified, at the March 2 Board meeting, the Chair of the Board will open the nomination period for the At-Large Executive Committee position, with a term ending June 30, 2024. The nomination period for the position will close on Friday, March 10, 2023. The election for the At-Large position will take place at the April 6 Board meeting. A list of eligible directors is included in Attachment
3. ATTACHMENTS
1. Draft March 2, 2023, Board of Directors Agenda
2. Draft Policy Regarding Ticket or Pass Distribution
3. List of Eligible Directors for L.A. County Executive Committee At-Large Position Agenda Page 10
REGULAR MEETING of the Board of Directors of the
Clean Power Alliance of Southern California
Thursday, March 2, 2023
2:00 p.m.
CALL TO ORDER AND ROLL CALL
PLEDGE OF ALLEGIANCE
GENERAL PUBLIC COMMENT
CONSENT AGENDA
1. Approve Minutes from February 2, 2023, Board of Directors Meeting
2. Approve Policy No. 2023-xx – Complimentary Ticket or Pass Distribution
3. Approve Brand Campaign Task Order
4. Receive and File Q4 Risk Management Team Report
5. Receive and File FY Q2 Financial Results
6. Receive and File Bill Positions Monthly Report
7. Receive and File Community Advisory Committee Monthly Report
REGULAR AGENDA
8. Adopt Resolution to Approve Amended and Restated Credit Agreement with JP Morgan Chase
9. Approve Interim FY 2022/2023 Rate Adjustment
OPEN NOMINATION PERIOD FOR ONE LOS ANGELES COUNTY AT-LARGE EXECUTIVE COMMITTEE POSITION FOR A TERM ENDING JUNE 30, 2024
MANAGEMENT REPORT
COMMITTEE CHAIR UPDATES
BOARD MEMBER COMMENTS
REPORT FROM THE CHAIR
ADJOURN – NEXT REGULAR MEETING ON APRIL 6, 2023
Agenda Page 11
Policy Title Complimentary Ticket or Pass Distribution Pursuant to Title 2 California Code of Regulations Section 18944.1
Policy Number 2023-xx Effective Date Original: March x, 2023 I. Purpose of Policy
The purpose of this Policy Regarding Complimentary Ticket or Pass Distribution (“Policy”) is to establish a procedure for the distribution, use, and reporting of tickets or passes in compliance with Title 2, California Code of Regulations Section 18944.1 (“Section 18944.1”). Tickets or passes distributed and accounted for in compliance with this policy will not be considered gifts to a CPA Official, as defined below, who uses such tickets or passes.
II. Definitions
Unless otherwise expressly provided herein, words and terms used in this Policy shall have the same meaning as that ascribed to such words and terms in FPPC Regulations and the Political Reform Act.
A. “CPA” shall mean Clean Power Alliance of Southern California, and its Board of Directors, and committees, thereof.
B. “CPA Board of Directors” is CPA’s governing body.
C. “CPA Official” shall include every member of CPA’s Board of Directors and any official, officer, agent, or employee of CPA, including the Chief Executive Officer (CEO), who is obligated to file an annual Statement of Economic Interests (FPPC Form 700) under the Political Reform Act or CPA’s Conflict of Interest Code. For purposes of this policy, CPA Official shall also be deemed to include any political appointee, and any department head.
D. “CPA Venue” shall mean and refer to any facility owned, controlled or operated by CPA.
E. “FPPC” shall mean and refer to the California Fair Political Practices Commission.
F. “FPPC Regulations” shall mean the Fair Political Practices Commission regulations contained in Title 2, Division 6 of the California Code of Regulations, Sections 18110 et seq., as the same may be amended from time to time.
G. “Immediate Family” shall mean the spouse and dependent children of a CPA Official.
The term spouse includes registered domestic partners recognized by state law. The term dependent children shall mean a child, including a foster, adoptive, or step- child, who is under 18 years old and who the CPA Official is entitled to claim as a dependent on the CPA Official’s federal tax return.
H. “Pass” shall mean a Ticket that provides repeated access, entry, or admission to a facility or series of events and for which similar passes are sold to the public.
Agenda Page 12
I. “Policy” shall mean and refer to this Policy Regarding the Distribution of Complimentary Tickets or Passes Pursuant to Section 18944.1
J. “Political Reform Act” shall mean California Political Reform Act of 1974 (Government Code Sections 81000, et seq., as the same may be amended from time to time) and the FPPC Regulations.
K. “Ticket” shall mean anything that provides access, entry, or admission to a specific future event or function and for which similar tickets are sold to the public to view, listen to, or otherwise take advantage of the attraction or activity for which the ticket is sold and includes any benefits that the ticket provides.
III. Application
A. This Policy shall be applicable to every CPA Official.
B. This Policy governs the distribution of Tickets or Passes by CPA to a CPA Official, or at the behest of a CPA Official, that are either:
1. Gratuitously provided to CPA by an outside source;
2. Acquired by CPA at fair market value;
3. Acquired by CPA as consideration pursuant to the terms of a contract; or
4. Acquired and distributed by CPA in any other manner.
C. This Policy does not apply to the following:
1. Other items of value. Any other item of value provided to CPA or any CPA Official, regardless of whether received gratuitously or for which consideration is provided.
2. Sources other than CPA. Tickets or Passes provided by sources other than CPA.
3. Reimbursement. A Ticket or Pass distributed by CPA to a CPA Official if such CPA Official pays to CPA the fair value of the ticket within 30 days of receipt.
4. Earmarked Tickets. A Ticket or Pass earmarked by an outside source for use by a specific CPA Official shall be reportable as a gift by any official receiving it who is subject to disclosure requirements under the Political Reform Act, applicable implementing FPPC Regulations, or under the CPA’s Conflict of Interest Code.
IV. Administration and Ticket Administrator
A. The CPA Board of Directors delegates the authority to administer this Policy to the CEO or the CEO’s designee, who shall be designated the Ticket Administrator.
B. The Ticket Administrator shall have the authority, in the Ticket Administrator’s sole discretion, to establish procedures for the distribution of Tickets or Passes in accordance with this Agenda Page 13
Policy. All requests for Tickets or Passes that fall within the scope of this Policy shall be made in accordance with the procedures established by the Ticket Administrator.
C. The Ticket Administrator shall determine the fair value of Tickets or Passes distributed by CPA for purposes of reporting pursuant to Section IX of this Policy.
D. The Ticket Administrator, in the Ticket Administrator’s sole discretion, may revoke or suspend the Ticket privileges of any person who violates any provision of this Policy, or the procedures established by the Ticket Administrator for the distribution of Tickets or Passes.
E. For the purpose of implementing this Policy, and completing and posting the FPPC Form 802, the Ticket Administrator shall be the “Agency Head.” The Board Secretary is delegated responsibility for completing and posting the FPPC Form 802.
V. Conditions for Ticket or Pass Distribution
A. The Ticket Administrator must distribute complimentary Tickets or Passes to CPA Officials only pursuant to this Policy.
B. The Ticket or Pass cannot be earmarked by an outside source for use by specific CPA Official(s). The Ticket Administrator must determine, in its sole discretion, who uses the Ticket or Pass.
C. The Ticket or Pass must be reported pursuant to Section IX of this Policy.
D. The distribution of the Ticket(s) to, or at the behest of, the CPA Official must accomplish or further one or more of the following governmental and/or public purposes:
1. Facilitating the performance of a ceremonial role or function by a CPA Official on behalf of CPA at an event, for which the CPA Official may receive enough Tickets or Passes for the CPA Official and each member of the CPA Official’s Immediate Family.
2. Facilitating the attendance of a CPA Official at an event where the job duties of the CPA Official require the CPA Official’s attendance at the event, for which the CPA Official may receive enough Tickets or Passes for each member of the CPA Official’s Immediate Family.
3. Promotion of intergovernmental relations and/or cooperation and coordination of resources with other governmental agencies, including, but not limited to, attendance at an event with or by elected or appointed public officials from other jurisdictions, their staff members and their guests.
4. Meeting and greeting individuals in CPA’s service area to gain feedback on and make observations of the quality and awareness of CPA services or to gain insight into what CPA services that individuals would like to see CPA make available.
5. Economic or business development purposes on behalf of CPA.
6. Promotion of CPA resources and/or facilities available to CPA customers.
7. Promotion of CPA-run, sponsored or supported community events, activities, or programs.
Agenda Page 14
8. Monitor and evaluate the value of CPA-run, sponsored or supported community events, activities or programs, including, but not limited to, evaluation of the venue, quality of performances and compliance with CPA policies, agreements and other requirements.
9. Promotion and evaluation of events, activities or programs at CPA venues, including but not limited to evaluation of the venue, quality of performances and compliance with CPA policies, agreements and other requirements.
10. Promotion, support and/or demonstration of appreciation for programs or services rendered by charitable and non-profit organizations benefiting CPA customers.
11. Promotion of CPA brand recognition, visibility, and/or profile on a local, state, national or worldwide scale.
12. Encourage CPA customer support for and attendance at local events.
13. Encourage participants in CPA sponsored programs to attend local events.
14. Attract or reward volunteer public service.
15. Encourage or reward significant achievements of CPA customers.
16. Attract and retain highly qualified employees to CPA.
17. Encourage, recognize, or reward meritorious service by a CPA employee.
18. Furthering any other public purpose that CPA is required or authorized by law to pursue, any public purpose similar to those listed herein, any public purpose identified in any CPA contract or as may be determined by resolution of the Board of Directors.
19. As an incident to the above public purposes, allowing for the Immediate Family of the CPA Official to accompany the CPA Official to events to accomplish any of the purposes listed in this Policy.
VI. Tickets or Passes Distributed at the Behest of a CPA Official.
A. Any Tickets or Passes distributed at the behest of a CPA Official must accomplish one or more public purposes set forth in Section V.D. above.
B. If Tickets or Passes are distributed at the behest of a CPA Official, such CPA Official shall not use one of the Tickets or Passes so distributed to attend the event.
VII. Other Benefits. Other benefits, such as food or beverage or other gifts provided to the CPA Official that are not given to the general public as part of the Ticket or Pass admission, may need to be accounted for as gifts.
Agenda Page 15
VIII. General Requirements.
A. No Right to Tickets or Passes: The use of complimentary Tickets or Passes is a privilege extended by CPA and not the right of any person to which the privilege may from time to time be extended.
B. Limitation on Transfer of Tickets or Passes: Tickets or Passes distributed to a CPA Official pursuant to this Policy may not be transferred to any other person except to members of such CPA Official’s Immediate Family or no more than one guest solely for their attendance at the event. If a CPA Official transfers a Ticket or Pass he or she has received from CPA to another person, as opposed to returning the Ticket or Pass to CPA for redistribution, then the value of the Ticket or Pass they transfer shall constitute a gift to them and shall be reportable as provided by the FPPC Regulations.
C. Prohibition Against Sale of or Receiving Reimbursement for Tickets or Passes: No person who receives a Ticket or Pass pursuant to this Policy shall sell or receive reimbursement for the value of such Ticket or Pass.
D. No Disproportionate Use. There shall be no disproportionate use of Tickets or Passes by any CPA Official.
IX. Posting and Disclosure Requirements
A. Within 30 days of adoption or amendment of this Policy, the Policy shall be posted on CPA’s website and a link to the website that displays CPA’s Policy shall be e-mailed to the FPPC in order for the FPPC to post the link on its website.
B. Within 45 days of distribution of a Ticket or Pass, CPA must report the distribution on FPPC Form 802 containing the information required to be reported under Section 18944.1(d), and post the Form 802 on CPA’s website, and a link to the website that displays CPA’s Form 802 shall be e-mailed to the FPPC in order for the FPPC to post the link on its website.
C. This Policy and CPA’s Form 802 is public record and is subject to inspection and copying under Government Code Section 81008.
Agenda Page 16
List of Eligible Regular Directors
Los Angeles County
Member Agency Regular Director
Alhambra Jeff Maloney
Carson Cedric Hicks
Claremont Corey Calaycay
Paramount Vilma Cuellar Stallings
Santa Monica Gleam Davis
Temple City Fernando Vizcarra
Westlake Village Ned Davis
Agenda Page 17
Staff Report – Agenda Item 4
To: Executive Committee
From: Karen Schmidt, Director, Rates & Strategy
Matt Langer, Chief Operating Officer
Approved by: Ted Bardacke, Chief Executive Officer
Subject: Interim FY 2022/2023 Rate Adjustment
Date: February 15, 2023
RECOMMENDATION
Receive a presentation on interim FY 2022/2023 rate adjustment and recommend an option to the Board of Directors.
ATTACHMENT
1. Presentation on Interim FY 2022/2023 Rate Adjustment Agenda Page 18
Item 4 – Interim FY 2022-23 Market
Adjustment Rate Change
February 15, 2023
Agenda Page 19
Summary
As discussed at the January Committee and February Board meetings, FY 2022/23 financial results will be significantly below budget as a result of extraordinary energy market events in September, December and January, as well as increasing short-term renewable energy prices CPA still expects a positive contribution to the net position for the FY. However, gains would be concentrated in the last months of the fiscal year and energy markets remain volatile, heightening risk To address lower than budgeted financial results and prepare for unforeseen events, at its February meeting, the Board indicated consensus to support the following actions:
o Increasing CPA’s $80 million credit line with JPMorgan o Considering a rate adjustment at the March 2023 Board meeting through an interim “market adjustment” that would come into effect in April 2023 before the traditional annual rate setting cycle begins this spring
SCE implemented significant rate increases and a negative PCIA on January 1, 2023, improving CPA’s rate competitiveness and lowering CPA customer bills. Even with a proposed interim rate change in April, CPA would maintain competitive rates
Today, staff will present three options for the interim rate adjustment and is seeking an Executive Committee recommendation to the Board for one of the options Agenda Page 20
Credit Rating Metrics
An important milestone in CPA’s progress is achieving an investment-grade (IG) credit rating This was a key driver when the Board last set rates in June 2022 Building liquidity (cash and unused lines of credit) is critical for achieving an investment grade credit rating
o The key metric for liquidity is Days Liquidity on Hand (DLOH) o DLOH is defined as available cash and unused lines of credit divided by net operating expenses x 365
CPA is currently at the low end of the “adequate” range – 49 DLOH as of December 2022 Staff believes that CPA would need to be at least in the middle of the “strong” range to receive an IG rating in the next year
Risk Factor Metric Extremely
Strong Very Strong Strong Adequate Vulnerable Highly
Vulnerable
Liquidity Days Liquidity
on Hand (days) >=270 150-270 90-150 45-90 15-45 <=15
Indicative Credit Rating High IG Medium IG Low IG Sub-IG Agenda Page 21
Current Residential Rate Comparisons
Energy Product
July 2022 January 2023
Average
Monthly Bill
Comparison
to SCE
Average
Monthly Bill
Comparison
to SCE
SCE base rate $174 $192
Lean Power $172 -1.0% $162 -16%
Clean Power $174 0.0% $164 -15%
100% Green $179 3.0% $169 -12%
FY 22/23 Contribution to Net
Position, $M $190 $40-60
Days Liquidity on Hand,
6/30/23 136 ~96
Reserves %, 6/30/23* 33% ~18%
*Board-approved minimum reserve target is 30%.
Agenda Page 22
Rate Adjustment Options
Option 1: Adjust rates to July 2022 total bill levels
o Resets customer bills to roughly where they were when CPA last changed rates in July 2022, still far below current SCE rates
Option 2: Adjust rates to December 2022 total bill levels o Resets customer bills to roughly where they were at the end of 2022, maintaining significant discount to SCE for most rates/products
Option 3: Increase rates three-fourths of the way between CPA and SCE current levels o Substantially reduces competitive gap with SCE, with a larger customer impact in the short-term Address Market
Volatility
Customer Bill
Impact
FY 22/23
Results & FY
23/24 Stability
Competitive
Position
Considerations
o Offsetting the impact of YTD market volatility on CPA’s financial position and continuing to pursue the goal of an IG credit rating o Finishing the current fiscal year with higher reserves provides additional flexibility to be more competitive in the next fiscal year o Fiscally prudent rates for FY2023/24 will likely be closer to SCE’s rates to address market volatility and achieve CPA’s financial goals Factors to Balance for Interim Rate Change
Agenda Page 23
Option 1 - July 2022 total bill levels
Resets customer bills to roughly where they were when CPA last set rates for the year, still far below current SCE rates
Smallest impact to revenue and lowest cushion against future volatility Energy Product
April 2023
Average Monthly
Residential Bill Comparison to SCE
SCE base rate $192
Lean Power $172 -11%
Clean Power $174 -9%
100% Green $180 -6%
Increase to FY 22/23 Net Position +$42M
FY 22/23 Net Position $82-102M
Days Liquidity on Hand, 6/30/23 ~102
Reserves %, 6/30/23 ~22%
Agenda Page 24
Option 2 – Dec 2022 Total Bill Levels
Resets customer bills to roughly where they were at the end of 2022, maintaining significant discount to SCE for most rates/product
Allows CPA to make substantial progress toward its financial goals this fiscal year Energy Product
April 2023
Average Monthly
Residential Bill Comparison to SCE
SCE base rate $192
Lean Power $176 -8%
Clean Power $178 -7%
100% Green $185 -4%
Increase to FY 22/23 Net Position, $M +$60M
FY 22/23 Net Position $100-120M
Days Liquidity on Hand, 6/30/23 ~105
Reserves %, 6/30/23 ~24%
Agenda Page 25
Option 3 - ¾ between CPA and SCE levels
Substantially reduces competitive gap with SCE; larger customer impact in the short -term Largest incremental impact to revenue and additional flexibility for FY 2023/24 rates Energy Product
April 2023
Average Monthly
Residential Bill Comparison to SCE
SCE base rate $192
Lean Power $183 -5%
Clean Power $185 -4%
100% Green $192 0%
Increase to FY 22/23 Net Position, $M +$90M
FY 22/23 Net Position $130-150M
Days Liquidity on Hand, 6/30/23 ~109
Reserves %, 6/30/23 ~27%
Agenda Page 26
These three options will be presented for Board action at the March 2 Board meeting Staff is seeking an Executive Committee recommendation for the Board The FY2023/24 budget and rate setting process will proceed as follows:
Next Steps
Month 2023/24 Rate Setting 2023/24 Budget
February Interim rate discussion
March Adopt interim rates
April Implement interim rates; Rate
comparison update and next FY
outlook
May Adopt rate setting approach Discuss budget priorities June Adopt final rates Adopt final budget
July Implementation of final rates Start of new Fiscal Year Agenda Page 27
Summary of Rate Adjustment Options
Option 1: Adjust rates to roughly July 2022 total bill levels Option 2: Adjust rates to roughly December 2022 total bill levels Option 3: Increase rates three-fourths of the way between CPA and SCE current levels Energy Product
Option 1 Option 2 Option 3
Average Monthly
Residential Bill
Comparison to
SCE
Average Monthly
Residential Bill
Comparison to
SCE
Average Monthly
Residential Bill
Comparison to
SCE
SCE base rate $192 $192 $192
Lean Power $172 -11% $176 -8% $183 -5%
Clean Power $174 -9% $178 -7% $185 -4%
100% Green $180 -6% $185 -4% $192 0%
Increase to FY 22/23 Net Position +$42M +$60M +$90M
FY 22/23 Net Position $82-102M $100-120M $130-150M
Days Liquidity on Hand, 6/30/23 ~102 ~105 ~109
Reserves %, 6/30/23 ~22% ~24% ~27%
Agenda Page 28
Questions and Comments
Agenda Page 29
Credit Rating Overview
What is an investment-grade credit rating?
• A credit rating is an opinion published by an independent rating agency (e.g. S&P, Moody’s, and Fitch) that assesses the likelihood an entity will repay its debts
• Entities with an investment-grade rating are considered the best credit risks and can attract financing at the lowest cost and from the greatest number of lenders and investors
How does CPA obtain a credit rating?
• CPA engages with a credit rating agency which will evaluate CPA and assign a credit rating
Agenda Page 30