MINUTES
Executive Committee of the
Clean Power Alliance of Southern California
Regular Meeting
Wednesday, April 19, 2023
1:30 p.m.
Meeting videos are available on CPA’s YouTube Channel.
www.youtube.com/@CPApublicmeetings
Committee Members participated 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
Council Office, 4th Floor
455 N. Rexford Drive
Beverly Hills, 90210
Camarillo City Hall
Administrative Conference Room
601 Carmen Drive
Camarillo, CA 93010
South Bay Cities Council of Governments
Conference Room
2355 Crenshaw Blvd., Suite 125
Torrance, CA 90501
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 Floor
Hall of Administration
800 South Victoria Avenue
Ventura, CA 93009
UCLA Faculty Club
Executive Board Room
480 Charles E. Young Drive East
Lost Angeles, CA 90095
CALL TO ORDER & ROLL CALL
Chair Gold called the meeting to order at 1:30 p.m. and Gabriela Monzon, Clerk of the Board, conducted roll call.
Roll Call
Agoura Hills Deborah Klein Lopez Committee Member Remote Beverly Hills Julian Gold Chair Remote
Camarillo Susan Santangelo Committee Member Remote
Hawthorne Alex Monteiro Committee Member Remote
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April 19, 2023 Minutes
Los Angeles County Lindsey Horvath Vice Chair Remote
Ojai Betsy Stix Committee Member Absent
Sierra Madre Robert Parkhurst Committee Member Remote
South Pasadena Diana Mahmud Committee Member Present
Ventura County Vianey Lopez Vice Chair Remote
All votes are unanimous unless otherwise stated.
GENERAL PUBLIC COMMENT
There was no public comment.
CONSENT AGENDA
1. Approve Minutes from March 15, 2023, Executive Committee Meeting Motion: Committee Member Parkhurst, Sierra Madre
Second: Vice Chair Horvath, Los Angeles County
Vote: The consent agenda was approved by a roll call vote.
REGULAR AGENDA
2. Oral Update from the CEO on CPA Operations
None.
CLOSED SESSION
3. CONFERENCE WITH LEGAL COUNSEL - ANTICIPATED LITIGATION Exposure to litigation pursuant to paragraph (2) or (3) of subdivision (d) of Section 54956.9: 1
Nancy Whang, General Counsel, reported that no reportable action was taken.
REGULAR AGENDA (continued)
4. Review Draft Agenda for the May 4, 2023, Board of Directors Meeting Ted Bardacke, CEO, discussed the Board regular agenda items, including the rate setting approach, budget priorities, potential long-term Power Purchase Agreements (PPAs), an informational update on summer reliability and customer communications and programs, and the election of the at-large Executive Committee position.
5. Provide Recommendation for Fiscal Year 2023/2024 Rates Approach Matthew Langer, Chief Operating Officer, provided a presentation on the rate setting options for Fiscal Year 2023/2024. In May, the Board will be asked to adopt a rate setting approach for the coming fiscal year that will inform the FY 2023/2024 rates to be adopted by the Board in June. Mr. Langer reviewed product pricing differentials, bill comparison levels, updated subset rates, and the rate approach for new communities enrolling in 2024. Staff recommends setting the FY 23/24 Clean Power Alliance Executive Committee Page 3 of 5
April 19, 2023 Minutes
price differential between 100% Green and Clean at 4% and the differential between 100% Green and Lean at 5% to follow the Cost of Service (COS) analysis more closely. Staff are presenting four rate comparison target options based on the contribution to the net position, Days Liquidity on Hand (DLOH), and reserve targets. The minimum reserve option would contribute $160 million to the net position, reach a 30% reserve target, and yield 111 DLOH. The low reserve option would contribute $193 million to the net position, reach a 33% reserve target, and yield 120 DLOH. The moderate reserve option would contribute $225 million to the net position, reach a 35% reserve target, and yield 129 DLOH. And the midpoint reserve option would contribute $290 million to the net position, reach a 40% reserve target, and yield 148 DLOH.
Responding to Committee Member Klein Lopez’s inquiry about customer composition, staff indicated that roughly 70% of CPA customers are enrolled in 100% Green, 20% of customers in Clean, and 10% of customers in Lean. In response to Committee Member Parkhurst’s question about CPA’s reserves prior to the April 2023 interim rate change, Mr. Bardacke specified that without the interim rate adjustment, the reserves would have been less than 20%; staff is projecting a little over 20% reserve target with the interim rate adjustment.
Committee Member Parkhurst asked questions about a possible rate scenario with a DLOH over 150 and the impact on CPA’s investment grade credit rating. Mr.
Langer stated that staff is working on an $80 million increase to CPA’s line of credit, which would put CPA over 150 DLOH without affecting the reserve percentage.
David McNeil, Chief Financial Officer, added that the rating agency will consider a wide variety of metrics for an investment grade rating, and DLOH and reserves are only two of those metrics. Responding to Committee Member Mahmud’s question about customer reactions to the interim rate adjustment, Mr. Bardacke noted that although customers will not see the full impact of the bill adjustment until May, the impact on opt-outs or call center activity has been minimal. Chair Gold commented that the difference between the moderate and midpoint reserve options is relatively small for the ratepayer but large for CPA. Chair Gold expressed a preference for the midpoint reserve option. Vice Chair Horvath agreed, adding that CPA has an opportunity to invest and prepare for future volatility. The Committee reached a consensus to recommend the midpoint reserve option to the Board of Directors.
Committee Member Mahmud added that if SCE’s request to increase energy rates filed with the California Public Utilities Commission (CPUC) goes through, CPA’s rates will be even more competitive.
Mr. Langer reviewed subset rate comparisons for the minimum, moderate, and midpoint reserve scenarios and discussed the rate approach for new member communities. Customers in Hermosa Beach, Monrovia, and Santa Paula will be placed on SCE’s 2023 vintage Power Charge Indifference Adjustment (PCIA) rates when CPA begins service in March 2024. Staff recommends setting bill comparisons for new member communities at the same level as existing communities for at least the first year of service and delegating to staff the ability to adjust the rates if needed to meet these comparisons as SCE rates change within FY 23/24. Staff expect that CPA will recover the cost to serve the new Clean Power Alliance Executive Committee Page 4 of 5
April 19, 2023 Minutes
member communities if their rates are set to match the bill comparisons for existing communities.
Committee Member Monteiro inquired about the preferred energy choice for each of the three new cities, and Mr. Bardacke indicated that Hermosa Beach is enrolled at 100% Green, while Monrovia and Santa Paula will decide once CPA adopts its new rate approach.
Two written public comments were received.
6. Review Fiscal Year 2023/2024 Budget Priorities
Mr. Bardacke provided a presentation on FY 23/24 budget priorities and operating expense highlights. Operating expenses represent 4.3% of CPA’s total costs, and rising spending on customer programs and staffing are projected to increase operating expenses by approximately 26%. Staff projects that the initial budget for staffing costs will increase 43% to a still industry-leading 1.3% of revenue in the upcoming year.
Chair Gold and Committee Member Mahmud expressed support for the budget priorities.
7. Provide Feedback on Expanding Energy Procurement Options Mr. Langer provided a presentation on expanding procurement options. Assuming resources contracted for existing Power Purchase Agreements (PPAs) come online as expected, CPA will meet its existing Mid-Term Reliability (MTR) and long-term renewable energy compliance requirements for much of the rest of this decade; CPA’s short-term procurement and compliance needs are more challenging. Mr. Langer reviewed the renewable energy and Resource Adequacy (RA) pricing and availability. Competition is increasing for new resources, and staff are seeking ways to attract a competitive pool of offers so CPA can add a significant number of long-term resources to its portfolio and reduce dependence on the volatile short-term markets. Staff are exploring ideas for attracting more offers in upcoming RFOs, including requests for natural gas energy bundled with RA as a means to access RA from existing facilities that might otherwise not bid into CPA. Staff are also considering changing contract term requirements to allow 10- and 20-year contracts in addition to 15-year contracts. Natural gas energy purchases would displace Unspecified Power on the Power Content Label (PCL), but the emissions impact is unit specific; unspecified Power is generic system power that CPA purchases to meet the balance of customers’ needs that is not met by specified sources.
Committee Member Parkhurst expressed support for the idea to request offers for natural gas energy bundled with RA, noting that CPA is already buying significant amounts of unspecified energy that includes natural gas. Responding to Committee Member Parkhurst’s question about the risk of summer rolling blackouts, Mr. Langer shared that staff are very concerned about the risk and have been communicating their concerns to the state legislature, the CPUC, and the California Energy Commission (CEC). In response to Vice Chair Horvath’s Clean Power Alliance Executive Committee Page 5 of 5
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questions about the benefits of natural gas options, Mr. Langer indicated that natural gas plants utilize different technologies and have different emissions profiles; cleaner plants tend to run more often because they are more efficient that dirtier higher emission plants; staff would evaluate any offers received to determine the balance of clean energy and efficiency. Vice Chair Horvath emphasized the importance of protecting jobs during the clean energy transition, noting a desire to learn more on the subject given the current market conditions. Committee Member Klein Lopez inquired about the impact on the PCL and Mr. Langer explained that staff would know the emissions profile of the facility contracted before any contract would be presented to the Board. Committee Member Mahmud referenced the CPUC-issued fines to another CCA for its failure to meet RA obligations and noted CPA has the options to either pay high prices for RA or risk compliance shortfalls for RA requirements, potentially facing political and economic ramifications.
Committee Member Mahmud expressed support for staff’s recommended approach and commented that adding storage at existing natural gas facilities ensures energy can be dispatched and delivered as needed without interconnection challenges. Chair Gold commented that gas-powered plants have the potential for conversion to green hydrogen and possible opportunities for long-term provisions for green energy. In response to Committee Member Monteiro’s inquiry about summer hydro energy, Mr. Langer indicated that the amount of hydro energy available will be dependent on several factors, including the amount needed to fill reservoirs and the speed of the snowpack melting.
COMMITTEE MEMBER COMMENTS
There were no committee member comments.
ADJOURN
Chair Gold adjourned the meeting at 3:09 p.m.