MINUTES
Executive Committee of the
Clean Power Alliance of Southern California
Regular Meeting
Wednesday, May 17, 2023
1:30 p.m.
Meeting videos are available on CPA's YouTube Channel.
http://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
Renaissance Esmeralda Resort Indian Wells
Crystal Ballroom, Salon Room A
44400 Indian Wells Lane
Indian Wells, CA 92210
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
Los Angeles County Hall of Administration
Sybil Brand Conference Room, Room 372
500 West Temple Street
Los Angeles, CA 90012
Carson City Hall
Executive Conference Room
701 East Carson Street
Carson, CA 90745
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
Carson Cedric Hicks Committee Member Remote
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Hawthorne Alex Monteiro Committee Member Remote
Los Angeles County Lindsey Horvath Vice Chair Remote
Ojai Betsy Stix Committee Member Remote
Sierra Madre Robert Parkhurst Committee Member Remote
South Pasadena Diana Mahmud Immediate Past Chair Remote 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 April 19, 2023, Executive Committee Meeting Motion: Committee Member Mahmud, South Pasadena
Second: Committee Member Santangelo, Camarillo
Vote: The consent agenda was approved by a roll call vote with abstention by Committee Member Hicks.
REGULAR AGENDA
2. Oral Update from the CEO on CPA Operations
Ted Bardacke, CEO, welcomed Committee Member Hicks to the Executive Committee, congratulated Chair Gold on his election as President of California Contract Cities Association, and reminded the Committee about CPA’s 5th Anniversary event on June 7, 2023.
3. Review Draft Agenda for the June 1, 2023, Board of Directors Meeting Mr. Bardacke discussed the regular agenda items, including the FY 23/24 rates, the FY 23/24 budget, the credit line increase, Power Purchase Agreement (PPA) negotiations, and Net Energy Metering 3.0. Mr. Bardacke discussed Southern California Edison’s (SCEs) announcement of a 3-4% generation rate increase effective June 1, which will improve CPA’s competitiveness.
Chair Gold inquired about customer communication about rates, and Mr. Bardacke indicated that a bill message will inform customers of the upcoming rate adjustment and that the annual mailer comparing rates will go out in late August or early September. Committee Member Mahmud opined that SCE tends to implement rate increases more aggressively; Mr. Bardacke shared that SCE’s June rate increase aims to recover losses incurred in December 2022 and the first few months of this year and that the increase was design to prevent a significant under-collection at the end of this calendar year.
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4. Review Fiscal Year 2023/2024 Draft Budget
Mr. Bardacke provided a presentation outlining the FY 2023/24 draft budget. The budgeted revenues include the FY 2023/24 rate approach, which the Board approved in May, as well as default rate changes in 2022 and 2023 and projected new customer enrollments in March 2024. CPA’s bad debt expense is budgeted at 1.77% of revenue. The 18% increase in energy costs is attributed to higher expenses related to renewable energy and capacity, while the 23% increase in operating expenses reflects investments in staffing and customer programs. Mr.
Bardacke also discussed that the budget included an intern program, an expanded fellowship program that would be announced at CPA’s 5th Anniversary event, and the technical assistance to design a management training program.
Committee Member Mahmud asked several questions regarding CPA’s and SCE’s bad debt expense. Staff clarified that all funding allocated for residential debt related to COVID-19 was utilized, and staff does not anticipate further funding this year. David McNeil, Chief Financial Officer, indicated that CPA’s current bad debt expense reflects payment improvements from commercial customers. Mr. McNeil also shared that SCE resumed disconnection, noticing, and late payment fees for commercial customers in the fall of 2022 and has recently extended these measures to residential customers but that the impact on customer payment behavior could not yet be detected. CPA has not yet initiated third-party collection activities. Chair Gold asked how customers from the new cities may impact bad debt expense, and Mr. McNeil explained that the 1.77% bad debt will be applied to the new revenues generated by the addition of new customers. Responding to Committee Member Parkhurst’s questions regarding operating income and electrification programs, Mr. Bardacke indicated that the increase in operating income is due to differences between costs and revenue and is what will build reserves and enhance liquidity; regarding electrification programs, the overall budget is increasing but there is a reduction in consultant fees and an increase in incentives for cities pursuing the programs.
Mr. Bardacke reviewed the proposed retention incentive program. CPA staff worked with Mercer, a human resources consulting firm, to identify a potential program that aligns with industry-specific standards, market trends, and considers best practices and cost constraints. Mercer recommended a retention structure with a 2- or 3-year vesting schedule. The draft FY 23/34 budget includes a placeholder amount of $1 million for the retention incentive for approximately 19 staff. Staff recommend implementing an executive and management eligibility plan with a 2-year payout schedule. Under this scenario, eligible staff would have 20% of their current salary allocated as a retention incentive, totaling approximately $1.1 million. The proposal calls allows for a reduction in the amount of the retention incentive if the organization does not meet performance metrics in the areas of financial performance, renewable energy procurement, and customer participation rates.
Committee Members Klein Lopez, Santangelo, and Vice Chair Horvath, expressed support for the retention incentive program and asked questions regarding benefits Clean Power Alliance Executive Committee Page 4 of 5
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of a 2-year compared to a 3-year plan; allocation of performance bonuses; and post-payout requirements. Heidi O’Brien, Mercer representative, suggested that the 2-year plan offers more immediate tangible value. Regarding allocations, Mr.
Bardacke clarified that the proposed performance metrics are interdependent and not attributed to any one employee or department. Additionally, the staggered nature of the payouts, occurring every 12 months after the initial 2-year period, serves as the retention incentive and there are no other post-payout requirements.
Chair Gold asked if employees could defer payouts; Ms. O’Brien stated that an employee would receive the payout at the time it is provided for due to taxation regulations. Committee Member Mahmud expressed reservations about including Mr. Bardacke and Ms. Nancy Whang, General Counsel, in the retention incentive program, since they have direct contracts with the Board. Committee Member Mahmud noted that their inclusion in the retention program may distort the considerations of the Board when compensation was established in the previous contract renewal period. Chair Gold noted that Mr. Bardacke and Ms. Whang’s contracts specify that they are eligible to receive benefits or programs offered to other staff. Committee Members Parkhurst and Mahmud asked several questions about other similar CCA programs, the effect of retention incentives on annual reviews, the basis for a 20% incentive, and eligibility during leaves of absence. Joe Ziomek, Mercer representative, advised that this type of mature retention incentive program is more prevalent in the general labor market that CPA competes in but not as common among CCAs. Mr. Bardacke explained that executive-level management payouts are included in the budget and contingent upon organizational performance goals and are in addition to annual merit increases.
Additionally, Mr. Bardacke clarified that employees tend to leave CPA for a 20% increase in compensation, which includes higher salaries and signing bonuses.
Regarding CCA comparisons, Mr. Bardacke noted that the program would position CPA in the middle range of individual employee salaries; CPA is still significantly lower than other major CCAs regarding overall staffing costs as a percentage of revenue. With regard to eligibility and performance, Ms. O’Brien noted that Mercer’s clients generally do not penalize employees in incentive programs for leaves of absence. Mr. Bardacke added that all employees are at-will and those that there are other processes in place and potential consequences for individual employees who do not meet performance standards.
Vice Chair Lopez asked for assurance that CPA staff members not eligible for this program have other opportunities for compensation growth; Mr. Bardacke stated that other staff are eligible for annual merit increases. Committee Member Hicks inquired about linking the program with employee evaluations, and Mercer representatives shared that the retention program is separate from other mechanisms in place to manage performance. Committee Member Klein Lopez asked about the timing of the payouts, and Mercer representatives and staff noted that the payouts would occur year after year; Dr. Monique Edwards-Greer, Chief Administrative Officer, explained that staff turnover tends to occur within the first two years of employment, hence the 2-year recommendation. Responding to Chair Clean Power Alliance Executive Committee Page 5 of 5
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Gold’s question about budgeting yearly payouts, Mr. McNeil clarified that the payouts represent accrued expenses and do not impact future budgets.
The Committee reached consensus to recommend the 2-year retention incentive program to the Board of Directors.
5. Receive Presentation on Net Energy Metering 3.0
Karen Schmidt, Director, Rates and Strategy, provided a presentation on the Net Energy Metering (NEM) 3.0 policy options. The California Public Utilities Commission’s (CPUCs) NEM 3.0 decision has increased the economic benefits of battery storage and provided additional compensation for low-income customers.
While these changes align with CPA’s policy objectives, they may not fully address the barriers to storage accessibility for low-income customers. Ms. Schmidt reviewed CPA’s NEM policy options and compared the customer value of NEM 2.0 and NEM 3.0. Based on preliminary analysis, staff recommend that CPA adopt the NEM 3.0 approach for export compensation, supplemented by a broad-based storage rebate program that includes additional incentives for low-income customers. Staff suggests that the most effective way to reach CPA’s policy goals of promoting storage adoption, enhancing grid reliability, and supporting low-income customers is by providing upfront financial rewards to customers who install storage systems.
Two written public comments were received.
COMMITTEE MEMBER COMMENTS
Committee Member Mahmud commented that the Huntington Beach City Council’s decision to leave the Orange County Power Authority may be attributed to the perceived lack of competent staff and expressed appreciation for CPA’s exceptional leadership.
ADJOURN
Chair Gold adjourned the meeting at 3:12 p.m.