Agenda packet — Clean Power Alliance Finance Committee, October 25, 2023

Finance Committee of the
Clean Power Alliance of Southern California
Regular Meeting
Wednesday, October 25, 2023
11:00 a.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.

Clean Power Alliance
Executive Conference Room
801 S. Grand Ave., Suite 400
Los Angeles, CA 90017
Members of the public may also participate in this meeting at the following locations:

Camarillo City Hall
Mayor’s Office
601 Carmen Drive
Camarillo, CA 93010
Claremont City Hall
Citrus Room
207 Harvard Avenue
Claremont, CA 91711
South Bay Cities Council of Governments
Conference Room
2355 Crenshaw Blvd., Suite 125
Torrance, CA 90501
Rolling Hills Estates City Hall
Conference Room
4045 Palos Verdes Drive North
Rolling Hills Estates, CA 90274
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 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.

Agenda Page 1 of 95
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CALL TO ORDER & ROLL CALL

GENERAL PUBLIC COMMENT

CONSENT AGENDA

1. Approve Minutes from the September 27, 2023, Finance Committee Meeting

2. Receive and File September 2023 Risk Management Team Report

3. Receive and File September 2023 CPA Investment Report

4. Receive and File August 2023 Financial Dashboard

REGULAR AGENDA

5. Report from the Chief Financial Officer

6. Receive Report from the Independent Auditor and Review FY 2022/2023 - Financial Statements and FY 2022/2023 Budget to Actual Report

COMMITTEE MEMBER COMMENTS
ADJOURN – NEXT MEETING ON NOVEMBER 29, 2023*
*Date changed to accommodate for the Thanksgiving holiday.

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 at CPA’s Office at 801 S. Grand Ave., Suite 400, Los Angeles, CA 90017, or online at www.cleanpoweralliance.org/agendas.

Agenda Page 2 of 95
Staff Report – Agenda Item 1
To: Finance Committee
Subject: Approve Minutes from the September 27, 2023 Finance Committee Meeting
Date: October 25, 2023

RECOMMENDATION
Approve.

ATTACHMENT

1. Minutes
Agenda Page 3 of 95
Finance Committee Item 1

MINUTES
Finance Committee of the
Clean Power Alliance of Southern California
Regular Meeting
Wednesday, September 27, 2023, 11:00 a.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:

Camarillo City Hall
Mayor’s Office
601 Carmen Drive
Camarillo, CA 93010
CPA Office
801 S. Grand Ave., Suite 400
Los Angeles, CA 90017
Claremont City Hall
Citrus Room
207 Harvard Avenue
Claremont, CA 91711
Carson City Hall
Executive Conference Room
701 East Carson Street
Carson, CA 90745
Rolling Hills Estates City Hall
Conference Room
4045 Palos Verdes Drive North
Rolling Hills Estates, CA 90274
Thousand Oaks City Hall
City Manager’s Office, Council Office #1
2100 Thousand Oaks Blvd.

Thousand Oaks, CA 91362

CALL TO ORDER & ROLL CALL
Committee Chair 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 Present
Thousand Oaks David Newman 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 May 24, 2023, Finance Committee Meeting

2. Receive and File August 2023 Risk Management Team Report Agenda Page 4 of 95
Finance Committee Item 1

3. Receive and File June, July, and August 2023 CPA Investment Reports

4. Receive and File July 2023 Financial Dashboard
Motion: Committee Member O’Connor, Santa Monica
Second: Committee Member Calaycay, Claremont
Vote: The consent agenda was approved by a roll call vote.

REGULAR AGENDA

5. Report from the Chief Financial Officer
David McNeil, Chief Financial Officer, reported that CPA received an investment-grade (IG) credit rating of “A-” with a stable outlook and reviewed the rating report highlights.

Mr. McNeil reported lower revenues for the month of July due to unseasonably low temperatures; CPA maintains a strong cash flow due in part to lower California Independent System Operator (CAISO) charges. CPA is undergoing an audit as part of the California Arrearage Payment Program (CAPP) and does not anticipate issues.

In response to Committee Member Zuckerman’s questions about the audit and budget predictions, Mr. McNeil noted that S&P was comfortable using unaudited FY 2022/23 results due to CPA’s history of clean audits. CPA’s annual financial audit will be completed by October 19. Committee Member Newman referred to reports of increased oil prices and interest rates and asked about potential effects on CPA’s revenue and expense projections. Staff explained that higher interest rates can impact energy developers and costs for large projects and storage; local factors, such as gas storage availability, can have significant effects on electricity prices.

6. Receive Update on Customer Payment Behavior and Bad Debt Reserve Mr. McNeil presented an update on customer payment behavior and the bad debt reserve.

Committee Member Kulcsar inquired whether future updates on residential customer payment behavior could provide a breakdown of the number of accounts and their respective days past-due and outstanding amounts. Staff agreed to implement the suggestion. Committee Member Zuckerman asked about the method used by Southern California Edison (SCE) to select past due accounts for disconnection. Staff agreed to research this topic.

COMMITTEE MEMBER COMMENTS
None.

ADJOURN
Committee Chair Santangelo adjourned the meeting at 11:39 p.m.

Agenda Page 5 of 95
Staff Report – Agenda Item 2
To: Finance Committee
From: Geoff Ihle, Energy Risk Manager
Approved By: Ted Bardacke, Chief Executive Officer
David McNeil, Chief Financial Officer
Subject: August 2023 Risk Management Team Report
Date: October 25, 2023
September 2023 RMT REPORT
Key Actions
• Reviewed current counterparty credit exposure
• Reviewed June 2023 day-ahead load forecast performance and September load forecast update
• Reviewed August 2023 market performance
• Reviewed energy positions and approved 2023-2027 hedges • Reviewed positions for resource adequacy, RPS and carbon-free energy products
• Reviewed Energy Risk Management Policy (ERMP) compliance • Reviewed September 2023 CRR Allocations and Auction and 2023 YTD Performance
Policy Compliance
Policy Deviation Required Action
None None

ATTACHMENT
None.

Agenda Page 6 of 95
Staff Report – Agenda Item 3
To: Finance Committee
From: David McNeil, Chief Financial Officer
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Receive and File September 2023 Investment Report Date: October 25, 2023

RECOMMENDATION
Receive and file September 2023 Investment Report.

ATTACHMENT

1. September 2023 Investment Report
Agenda Page 7 of 95
Finance Committee Item 3
Agenda Page 8 of 95
Staff Report – Agenda Item 4
To: Finance Committee
From: David McNeil, Chief Financial Officer
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Receive and File August 2023 Financial Dashboard Date: October 25, 2023

RECOMMENDATION
Receive and File August 2023 Financial Dashboard.

ATTACHMENTS

1. August 2023 Financial Dashboard
Agenda Page 9 of 95

CUSTOMERS
Summary of Financial Results
Definitions:

Accounts: Active Accounts represents customer accounts of active customers served by CPA per Calpine Invoice.

Participation Rate %: Participation Rate represents 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 represents the difference between revenues and expenditures before interest income and expense, and capital expenditures
Cash and Cash Equivalents: Includes bank accounts and marketable securities with maturities of less than 90 days.

Year to date (YTD): Represents the fiscal period beginning July 1, 2023 YTD
Aug
2023
Financial Dashboard
Note: Numbers may not sum up due to rounding.

Active Accounts
1,005,437
Participation Rate

93.3%
YTD Sales Volume
2,183 GWh
Aug Volume
1,127 GWh
Agr/Oth
2% Com-Lg
20%
Com-Sm
27%
Res
51%
In August 2023 CPA recorded an operating gain of $7.3 million, $7.1 million less than the budgeted operating gain of $14.4 million provided in the FY 2023/24 budget.

August 2023 revenues were $181.4 million or 0.5% lower than budget. The cost of energy was $170 million or 4% more than the FY2023/24 budget. August cost of energy was higher than the budget primarily due to higher than budgeted costs to import Resource Adequacy into California, higher than budgeted grid operation charges levied by the California Independent System Operator (CAISO), and an accounting adjustment to renewable energy costs in August 2023 reflecting an increase in calendar year 2023 renewable energy costs. Operating costs were 22% below budget for the month mainly due to lower than budgeted spending on general and administrative expenses, customer programs and other services, and the non-utilization of contingencies.

As of August 31, 2023, CPA had $201 million in unrestricted cash and cash equivalents and $159.853 million available in its bank line of credit representing 111 Days Liquidity on Hand.

CPA is financially sound and in compliance with its bank and other credit covenants.

Agenda Page 10 of 95
Staff Report – Agenda Item 5
To: Finance Committee
From: David McNeil, Chief Financial Officer
Subject: Report from the Chief Financial Officer
Date: October 25, 2023
The CFO will provide an oral update on August 2023 financial results and treasury operations.

Agenda Page 11 of 95
Staff Report – Agenda Item 6
To: Finance Committee
From: David McNeil, Chief Financial Officer
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Report from the Independent Auditor and Review of Fiscal Year 2022-2023 Audited Financial Statements and Fiscal Year 2022- 2023 Budget to Actual Report
Date: October 25, 2023

RECOMMENDATION
Receive report from the Independent Auditor and review Fiscal Year 2022-2023 Financial Statements and FY 2022-2023 Budget to Actual report.

BACKGROUND
Each year CPA publishes its June 30 fiscal year-end financial statements. CPA’s Bylaws require the Finance Committee to select an independent auditor to perform a financial audit of the accounts of CPA on an annual basis. In April 2023, the Finance Committee selected Baker Tilly to perform an audit of CPA’s Fiscal Year 2022-23 financial statements.

Staff is responsible for the preparation and fair presentation of the financial statements.

The independent auditor performs tests to ensure that the financial statements are free from material misstatement. The FY 2022-23 Financial Statements (Attachment 3) consist of the following:
• Independent Auditors’ Report (Auditors’ Report)
• Management’s Discussion and Analysis
• Financial Statements, including:

Agenda Page 12 of 95
Finance Committee Item 6
o Statements of Net Position
o Revenues and Expenses and Changes in Net Position
o Statements of Cash Flows
o Notes to the Financial Statements

DISCUSSION
Auditors’ Report
The Auditors’ Report includes its opinion that CPA’s FY 2022-23 Financial Statements “present fairly, in all material respects, the financial position of Clean Power Alliance of Southern California as of June 30, 2023 and 2022, and the respective changes in financial position and cash flows thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America”. The Auditors’ Report contains what is generally regarded as an unqualified or “clean” audit opinion.

The auditor’s audit results letter states that they did not identify any deficiencies in internal control that they consider to be a material weakness.

Representatives from Baker Tilly will present their audit results and answer questions during the Finance Committee meeting.

Financial Highlights
• CPA recorded strong financial results in FY 2022-23. The net position increased by $80.3 million, up from a $67 million increase in the prior year. • CPA’s FY 2022-23 financial results benefited from the following:
• Increases in retail electricity rates on July 2022 and April 2023. The impact of rate increases was offset by increased costs arising from a heat wave in September 2022, gas and energy price shocks in December 2022 and January 2023, higher than budgeted renewable energy costs, and a Resource Adequacy compliance penalty.
• Higher interest income which increased due to the increase in market interest rates stemming from rate hikes made by the Federal Reserve.

Agenda Page 13 of 95
Finance Committee Item 6
• The receipt and application of $10.4 million of California Arrearage Payment Program (2022 CAPP) funds which reduced eligible past-due accounts receivable and increased cash in January 2023.
• Operating expenses, excluding the cost of energy, increased year over year from $28.1 million in FY 2021-22 to $34.7 million in FY 2022-23, an increase of 23%. • Cash was positively impacted by the increase in net position, higher accrued electricity costs, and lower energy market settlements. Cash was negatively impacted by higher accounts receivable, accrued revenue, and higher prepaid expenses. Higher accounts receivable and accrued revenue arose primarily from an increase in retail electricity rates. Higher prepaid expenses resulted primarily from resource adequacy contracts. Higher accrued electricity costs resulted from higher electricity costs and delays in supplier invoicing for renewable energy.

Lower energy market settlement expenditures arose from cool weather conditions in June 2023 and lower charges from the CAISO.
• In June 2023 CPA amended its Credit Agreement with JP Morgan, increasing the facility size to $160 million from $80 million and extending the expiry of the agreement to March 31, 2024.
• As of June 30, 2023, CPA had no loans, bank debt, or letters of credit outstanding, and apart from a $147,000 letter of credit issued to SCE; $159.853 million of CPA’s line of credit was unutilized.
• Total liquidity (unrestricted cash and cash equivalents and unused bank lines of credit) increased year over year from $134.4 million as of June 30, 2022 to $292.6 million as of June 30, 2023.
• The financial results comply with CPA’s credit covenants.

Key financial metrics and additional analysis of FY 2022-23 results are presented in the Presentation of FY 2022-23 Financial Results (see Attachment 5).

FY 2022-23 Budget to Actual Report
The FY 2022-23 Budget to Actual Report (see Attachment 4) compares actual results for Agenda Page 14 of 95
Finance Committee Item 6
the 12 months ending June 30, 2023 with the FY 2022-23 Budget approved by the Board in June 2022 (Base Budget) and as amended by the Board at its April 6, 2023 meeting (Amended Budget). Budget to Actual highlights include:
• Operating revenues less energy cost (gross margin) was $15.5 million below the Amended Budget primarily as a result of unusually cool temperatures in CPA’s service area in the spring of 2023 and lower electricity use and revenue than budgeted.
• Operating expenses were 23% under the Amended Budget primarily due to lower spending on general and administrative expenses, customer programs and other services, and the non-utilization of contingencies.

CPA was within budget limits for all operating expense budget line items with the exception of SCE services ($190 thousand or 9% over the amended budget). SCE service expenses exceeded the budget due to unanticipated charges levied by SCE in the spring of 2023 that related to services performed in prior fiscal years.

Additional analysis of Budget to Actual results, including a comparison of actual FY 2022- 23 results with the FY 2022-23 Amended Budget approved by the Board in April 2023, appears in the Presentation of FY 2022-23 Financial Results (Attachment 5).

Summary
For the year ending June 30, 2023, CPA increased the net position and total liquidity by $80.3 million and $162.8 million respectively. CPA is in sound financial health and is well-positioned to serve its customers and deliver on its mission.

ATTACHMENTS

1. Presentation from the Independent Auditor

2. Audit Result Letter

3. FY 2022-23 Audited Financial Statements

4. FY 2022-23 Budget to Actual Report

5. Presentation of FY 2022-23 Financial Results
Agenda Page 15 of 95
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments. Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2022 Baker Tilly US, LLP Reporting and insights from
2023 audit: Clean Power
Alliance of Southern California
October 25, 2023
Agenda Page 16 of 95
2 Audit Discussion

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
Agenda
Audit Results
Required communication to Governing Body
Impact of future standards
Discussion
Agenda Page 17 of 95
3 Our responsibilities

RESPONSIBILITIES
As your independent auditor, our responsibilities include:
– Planning and performing the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Reasonable assurance is a high level of assurance. – Assessing the risks of material misstatement of the financial statements, whether due to fraud or error. Included in that assessment is a consideration of CPA’s internal control over financial reporting. – Performing appropriate procedures based upon our risk assessment. – Evaluating the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by management.
– Forming and expressing an opinion based on our audit about whether the financial statements prepared by management, with the oversight of those charged with governance:
– Are free from material misstatement
– Present fairly, in all material respects, and in accordance with accounting principles generally accepted in the United States of America – Our audit does not relieve management or the Board of Directors of their responsibilities.

Agenda Page 18 of 95
4 Planned scope and timing

AUDIT APPROACH AND RESULTS
Audit focus
Based on our understanding of CPA and the environment in which you operate, we focused our audit on the following key areas:
– Key transaction cycles
– Areas with significant estimates
– Implementation of new accounting standards, if any
Our areas of audit focus were informed by, among other things, our assessment of materiality. Materiality in the context of our audit was determined based on specific qualitative and quantitative factors combined with our expectations about CPA’s current year results.

Agenda Page 19 of 95
5 Key areas of focus and significant findings

AUDIT APPROACH AND RESULTS
Other key areas of emphasis
We also focused on other areas that did not meet the definition of a significant risk but were determined to require specific awareness and a unique audit response.

Other key areas of
emphasis
Cash and investments Revenues and receivables General disbursements Net position calculations Financial reporting and
required disclosures
Agenda Page 20 of 95
6 Audit approach and results
Audit performed in accordance with Generally Accepted Auditing Standards
Audit objective – reasonable assurance that financial statements are free from material misstatement
Financial statements of CPA received an Unmodified Opinion There were no material weaknesses or significant deficiencies in controls Agenda Page 21 of 95
7 Auditor communication to those charged with
governance
No audit findings or concerns
Baker Tilly agrees with CPA’s
accounting policies and
disclosures
Auditor
responsibility &
independence
Board
responsibility
No audit
adjustments
Accounting
policies and
estimates
Agenda Page 22 of 95
8 Future accounting standards update

ACCOUNTING CHANGES RELEVANT TO CPA
Further information on upcoming GASB pronouncements.

GASB
Statement
Number Description
Potentially
Impacts you Effective Date
100 Accounting Changes and Error
Corrections
6/30/24
101 Compensated Absences 6/30/25
Agenda Page 23 of 95
Discussion
Agenda Page 24 of 95
Client service team
Bethany Ryers, CPA
Partner
[email protected]
Ryan Theiler, CPA
Manager
[email protected]
Agenda Page 25 of 95
Reporting and insights
from 2023 audit:

Clean Power Alliance of
Southern California
June 30, 2023
Agenda Page 26 of 95

THIS COMMUNICATION IS INTENDED SOLELY FOR THE INFORMATION AND USE OF THOSE CHARGED WITH GOVERNANCE, AND, IF APPROPRIATE, MANAGEMENT, AND IS NOT INTENDED TO BE AND SHOULD NOT BE USED BY ANYONE OTHER THAN THESE SPECIFIED PARTIES.

BAKER TILLY US, LLP, TRADING AS BAKER TILLY, IS A MEMBER OF THE GLOBAL NETWORK OF BAKER TILLY INTERNATIONAL LTD., THE MEMBERS OF WHICH ARE SEPARATE AND INDEPENDENT LEGAL ENTITIES.

Executive summary
October 17, 2023
To the Board of Directors
Clean Power Alliance of Southern California
Los Angeles
We have completed our audit of the financial statements of the Clean Power Alliance of Southern California (CPA) for the year ended June 30, 2023, and have issued our report thereon dated October 17, 2023. This letter presents communications required by our professional standards.

Your audit should provide you with confidence in your financial statements. The audit was performed based on information obtained from meetings with management, data from your systems, knowledge of CPA’s operating environment and our risk assessment procedures. We strive to provide you clear, concise communication throughout the audit process and of the final results of our audit.

Additionally, we have included information on key risk areas CPA should be aware of in your strategic planning. We are available to discuss these risks as they relate to your organization’s financial stability and future planning.

If you have questions at any point, please connect with us:
 Bethany Ryers, Partner: [email protected] or +1 (608) 240 2382  Ryan Theiler, Manager: [email protected] or +1 (608) 240 2571 Sincerely,
Baker Tilly US, LLP
Bethany Ryers, CPA, Partner
Ryan Theiler, CPA, Manager

Agenda Page 27 of 95
© 2023 Baker Tilly US, LLP Page | 3
Responsibilities
Our responsibilities
As your independent auditor, our responsibilities include:
 Planning and performing the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Reasonable assurance is a high level of assurance.  Assessing the risks of material misstatement of the financial statements, whether due to fraud or error. Included in that assessment is a consideration of CPA’s internal control over financial reporting.  Performing appropriate procedures based upon our risk assessment.  Evaluating the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by management.
 Forming and expressing an opinion based on our audit about whether the financial statements prepared by management, with the oversight of the Board of Directors:
 Are free from material misstatement
 Present fairly, in all material respects and in accordance with accounting principles generally accepted in the United States of America
 Our audit does not relieve management the Board of Directors of their responsibilities.

We are also required to communicate significant matters related to our audit that are relevant to the responsibilities of The Board of Directors, including:
 Internal control matters
 Qualitative aspects of CPA’s accounting practice including policies, accounting estimates and financial statement disclosures
 Significant unusual transactions
 Significant difficulties encountered
 Disagreements with management
 Circumstances that affect the form and content of the auditors’ report  Audit consultations outside the engagement team
 Corrected and uncorrected misstatements
 Other audit findings or issues
Agenda Page 28 of 95
© 2023 Baker Tilly US, LLP Page | 4
Audit status
Significant changes to the audit plan
There were no significant changes made to either our planned audit strategy or to the significant risks and other areas of emphasis identified during the performance of our risk assessment procedures.

Agenda Page 29 of 95
© 2023 Baker Tilly US, LLP Page | 5
Audit approach and results
Planned scope and timing
Audit focus
Based on our understanding of CPA and environment in which you operate, we focused our audit on the following key areas:
 Key transaction cycles
 Areas with significant estimates
 Implementation of new accounting standards
Our areas of audit focus were informed by, among other things, our assessment of materiality. Materiality in the context of our audit was determined based on specific qualitative and quantitative factors combined with our expectations about CPA’s current year results.

Key areas of focus and significant findings
Significant risks of material misstatement
A significant risk is an identified and assessed risk of material misstatement that, in the auditor’s professional judgment, requires special audit consideration. Within our audit, we focused on the following areas below.

Significant risk areas Testing approach Conclusion
Management override of
controls
Incorporate unpredictability into
audit procedures, emphasize
professional skepticism and
utilize audit team with industry
expertise
Procedures identified provided
sufficient evidence for our audit
opinion
Improper revenue recognition
due to fraud
Confirmation or validation of
certain revenues supplemented
with detailed predictive analytics
based on non-financial data and
substantive testing of related
receivables
Procedures identified provided
sufficient evidence for our audit
opinion
Potential for inaccurate billing
data from SCE
Review Calpine SOC report and
perform walkthrough to assess
the procedures established to
validate the data
Procedures identified provided
sufficient evidence for our audit
opinion
Agenda Page 30 of 95
© 2023 Baker Tilly US, LLP Page | 6
Other areas of emphasis
We also focused on other areas that did not meet the definition of a significant risk, but were determined to require specific awareness and a unique audit response.

Other areas of emphasis
Cash and investments Revenues and receivables General disbursements Net position calculations Financial reporting and
required disclosures
Internal control matters
We considered CPA’s internal control over financial reporting as a basis for designing our audit procedures for the purpose of expressing an opinion on the financial statements. We are not expressing an opinion on the effectiveness of CPA’s internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that were not identified.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis.

A material weakness is a deficiency or combination of deficiencies in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. We did not identify any deficiencies in internal control that we consider to be material weaknesses.

Required communications
Qualitative aspect of accounting practices
 Accounting policies: Management is responsible for the selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we have advised management about the appropriateness of accounting policies and their application. The significant accounting policies used by CPA are described in Note 2 to the financial statements. We noted no transactions entered into by CPA during the year for which accounting policies are controversial or for which there is a lack of authoritative guidance or consensus or diversity in practice.

Agenda Page 31 of 95
© 2023 Baker Tilly US, LLP Page | 7
 Accounting estimates: Accounting estimates, including fair value estimates, are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements, the degree of subjectivity involved in their development and because of the possibility that future events affecting them may differ significantly from those expected. The following estimates are of most significance to the financial statements:

Estimate Management’s process to
determine
Baker Tilly’s conclusions
regarding reasonableness
Unbilled Revenues Evaluation of actual data usage
that is submitted to CAISO
Reasonable in relation to the
financial statements as a whole
Allowance for doubtful
accounts
Evaluation of historical
revenues and loss levels with
the analysis on collectability of
individual amounts
Reasonable in relation to the
financial statements as a whole
Lease asset & lease
liability
Evaluation of lease contracts
by management and
incremental borrowing rate
used for present value
calculation
Reasonable in relation to the
financial statements as a whole
There have been no significant changes made by management to either the processes used to develop the particularly sensitive accounting estimates, or to the significant assumptions used to develop the estimates, noted above.
 Financial statement disclosures: The disclosures in the financial statements are neutral, consistent and clear.

Significant unusual transactions
There have been no significant transactions that are outside the normal course of business for CPA or that otherwise appear to be unusual due to their timing, size or nature.

Significant difficulties encountered during the audit
We encountered no significant difficulties in dealing with management and completing our audit.

Disagreements with management
Professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be significant to the financial statements or the auditors' report. We are pleased to report that no such disagreements arose during the course of our audit.

Audit consultations outside the engagement team
We encountered no difficult or contentious matters for which we consulted outside of the engagement team.

Agenda Page 32 of 95
© 2023 Baker Tilly US, LLP Page | 8
Uncorrected misstatements and corrected misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management.

There were no misstatements identified.

Other audit findings or issues
We encountered no other audit findings or issues that require communication at this time.

We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as CPA’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

Management’s consultations with other accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing or accounting matters.

Written communications between management and Baker Tilly The attachments include copies of other material written communications, including a copy of the management representation letter.

Compliance with laws and regulations
We did not identify any non-compliance with laws and regulations during our audit.

Fraud
We did not identify any known or suspected fraud during our audit.

Going concern
Pursuant to professional standards, we are required to communicate to you, when applicable, certain matters relating to our evaluation of CPA’s ability to continue as a going concern for a reasonable period of time but no less than 12 months from the date of the financial statements, including the effects on the financial statements and the adequacy of the related disclosures, and the effects on the auditor's report.

No such matters or conditions have come to our attention during our engagement.

Independence
We are not aware of any relationships between Baker Tilly and CPA that, in our professional judgment, may reasonably be thought to bear on our independence.

Related parties
We did not have any significant findings or issues arise during the audit in connection with the CPA’s related parties.

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Other matters
We applied certain limited procedures to the required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.

Agenda Page 34 of 95
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Audit committee resources
Visit our resource page for regulatory updates, trending challenges and opportunities in your industry and other timely updates.

Visit the resource page at https://www.bakertilly.com/page/audit-committee-resource-center.

Agenda Page 35 of 95
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Management representation letter
Agenda Page 36 of 95
801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
October 17, 2023
Baker Tilly US, LLP
4807 Innovate Lane
Madison, WI 53718
Dear Baker Tilly US, LLP:

We are providing this letter in connection with your audit of the financial statements of the Clean Power Alliance of Southern California as of June 30, 2023 and 2022 and for the years then ended for the purpose of expressing an opinion as to whether the financial statements present fairly, in all material respects, the financial position of the Clean Power Alliance of Southern California and the respective changes in financial position and cash flows, where applicable, in conformity with accounting principles generally accepted in the United States of America (GAAP). We confirm that we are responsible for the fair presentation of the previously mentioned financial statements in conformity with accounting principles generally accepted in the United States of America. We are also responsible for adopting sound accounting policies, establishing and maintaining internal control over financial reporting, and preventing and detecting fraud.

Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement. An omission or misstatement that is monetarily small in amount could be considered material as a result of qualitative factors.

We confirm, to the best of our knowledge and belief, the following representations made to you during your audit.

Financial Statements
1) We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated June 21, 2022.

Agenda Page 37 of 95
801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
2) The financial statements referred to above are fairly presented in conformity with accounting principles generally accepted in the United States of America. The financial statements include all properly classified funds of the utility required by accounting principles generally accepted in the United States of America to be included in the financial reporting entity. 3) We acknowledge our responsibility for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

4) We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud.
5) Significant assumptions we used in making accounting estimates, including those measured at fair value, if any, are reasonable.
6) Related party relationships and transactions, including revenues, expenditures/expenses, loans, transfers, leasing arrangements, and guarantees, and amounts receivable from or payable to related parties have been appropriately accounted for and disclosed in accordance with the requirements of accounting principles generally accepted in the United States of America.
7) All events subsequent to the date of the financial statements and for which accounting principles generally accepted in the United States of America require adjustment or disclosure have been adjusted or disclosed. No other events, including instances of noncompliance, have occurred subsequent to the financial statement date and through the date of this letter that would require adjustment to or disclosure in the aforementioned financial statements. 8) All material transactions have been recorded in the accounting records and are reflected in the financial statements.
9) We are not aware of any known actual, possible, pending, or threatened litigation, claims, or assessments or unasserted claims or assessments that are required to be accrued or disclosed in the financial statements in accordance with accounting principles generally accepted in the United States of America.

Agenda Page 38 of 95
801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
Information Provided
10) We have provided you with:
a) Access to all information, of which we are aware, that is relevant to the preparation and fair presentation of the financial statements, such as financial records and related data, documentation, and other matters.
b) Additional information that you have requested from us for the purpose of the audit. c) Unrestricted access to persons within the entity from whom you determined it necessary to obtain audit evidence.
d) Minutes of the meetings of Board of Directors or summaries of actions of recent meetings for which minutes have not yet been prepared.
11) We have disclosed to you the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud.
12) We have no knowledge of any fraud or suspected fraud that affects the entity and involves:
a) Management,
b) Employees who have significant roles in internal control, or c) Others where the fraud could have a material effect on the financial statements.

13) We have no knowledge of any allegations of fraud or suspected fraud affecting the entity received in communications from employees, former employees, regulators, or others. 14) We have no knowledge of known instances of noncompliance or suspected noncompliance with provisions of laws, regulations, contracts, or grant agreements, or abuse, whose effects should be considered when preparing financial statements. 15) We have disclosed to you the names of our related parties and all the related party relationships and transactions, including side agreements, of which we are aware.

Other
16) There have been no communications from regulatory agencies concerning noncompliance with, or deficiencies in, financial reporting practices.

Agenda Page 39 of 95
801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
17) We have a process to track the status of audit findings and recommendations. 18) We have identified to you any previous financial audits, attestation engagements, and other studies related to the audit objectives and whether related recommendations have been implemented.
19) We have identified to you any investigations or legal proceedings that have been initiated with respect to the period under audit.
20) We are responsible for compliance with federal, state, and local laws, regulations, and provisions of contracts and grant agreements applicable to us, including tax or debt limits, debt contracts, and IRS arbitrage regulations; and we have identified and disclosed to you all federal, state, and local laws, regulations and provisions of contracts and grant agreements that we believe have a direct and material effect on the determination of financial statement amounts or other financial data significant to the audit objectives, including legal and contractual provisions for reporting specific activities in separate funds. 21) There are no:
a) Violations or possible violations of budget ordinances, federal, state, and local laws or regulations (including those pertaining to adopting, approving and amending budgets), provisions of contracts and grant agreements, tax or debt limits, and any related debt covenants whose effects should be considered for disclosure in the financial statements or as a basis for recording a loss contingency, or for reporting on noncompliance, except those already disclosed in the financial statement, if any. b) Other liabilities or gain or loss contingencies that are required to be accrued or disclosed by accounting principles generally accepted in the United States of America. c) Rates being charged to customers other than the rates as authorized by the applicable authoritative body.
d) Violations of restrictions placed on revenues as a result of bond resolution covenants such as revenue distribution or debt service funding.
22) The Clean Power Alliance of Southern California has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets nor has any asset been pledged as collateral.

23) The Clean Power Alliance of Southern California has complied with all aspects of contractual agreements that would have a material effect on the financial statement in the event of non-compliance.

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801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
24) The financial statements properly classify all funds and activities. 25) Components of net position (net investment in capital assets; restricted; and unrestricted) are properly classified and, if applicable, approved.
26) The Clean Power Alliance of Southern California has no derivative financial instruments such as contracts that could be assigned to someone else or net settled, interest rate swaps, collars or caps.
27) Provisions for uncollectible receivables, if any, have been properly identified and recorded. 28) Deposits and investments are properly classified, valued, and disclosed (including risk disclosures, collateralization agreements, valuation methods, and key inputs, as applicable). 29) Provision, when material, has been made to reduce excess or obsolete inventories to their estimated net realizable value.
30) Capital assets, including infrastructure and intangible assets, are properly capitalized, reported, and, if applicable, depreciated/amortized. Any known impairments have been recorded and disclosed.
31) The operations and rate-setting process meet the condition for the application of accounting for regulated operations as outlined in GASB No. 62. All regulatory items included in the financial statements have been approved and are being accounted for in accordance with specific action taken by the regulatory body and as such the expectation of future recovery or refund is reasonable.
32) We have appropriately disclosed the Clean Power Alliance of Southern California's policy regarding whether to first apply restricted or unrestricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position are available and have determined that net position were properly recognized under the policy. 33) We acknowledge our responsibility for the required supplementary information (RSI). The RSI is measured and presented within prescribed guidelines and the methods of measurement and presentation have not changed from those used in the prior period. We have disclosed to you any significant assumptions and interpretations underlying the measurement and presentation of the RSI.
34) Unused lines of credit, collateral pledged to secure debt and direct borrowings and private placements have been properly identified and disclosed.

Agenda Page 41 of 95
801 S. Grand Ave., Suite 400, Los Angeles, CA 90017
cleanpoweralliance.org
35) We have identified any leases or other contracts that are required to be reported as leases and are in agreement with the key assumptions used in the measurement of any lease-related assets, liabilities or deferred inflows of resources.
36) We have assessed the impact of GASB Statement No. 96, Subscription-Based Information Technology Arrangements, and have determined the impact to be immaterial. 37) The auditing standards define an annual report as “a document, or combination of documents, typically prepared on an annual basis by management or those charged with governance in accordance with law, regulation, or custom, the purpose of which is to provide owners (or similar stakeholders) with information on the entity’s operations and the financial results and financial position as set out in the financial statements.” Among other items, an annual report contains, accompanies, or incorporates by reference the financial statements and the auditors’ report thereon. We confirm that we do not prepare and have no plans to prepare an annual report that meets this definition as our annual Impact Report does not reference the auditors’ report.

Sincerely,
Clean Power Alliance of Southern
California
Signed: _______________________ Signed: ________________________ Name: David McNeil Name: Ted Bardacke
Title: Chief Financial Officer Title: Chief Executive Officer Agenda Page 42 of 95
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Client Service Team
Bethany Ryers, CPA
Partner
4807 Innovate Ln
Madison, WI 53718
United States
T +1 (608) 240 2382 | Madison
[email protected]

Ryan Theiler, CPA
Manager
4807 Innovate Ln
Madison, WI 53718
United States
T +1 (610) 240 2571
[email protected]

Agenda Page 43 of 95
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Accounting changes relevant to CPA
Future accounting standards update
GASB
Statement
Number Description
Potentially
Impacts
you Effective Date
100 Accounting Changes and Error Corrections 6/30/24
101 Compensated Absences 6/30/25
Further information on upcoming GASB pronouncements.

Revised guidance for accounting changes and error corrections GASB Statement No. 100, Accounting Changes and Error Corrections, an amendment of GASB Statement No. 62, seeks to provide more understandable, reliable, relevant, consistent and comparable information for making decisions and assessing accountability.

The standard establishes the following categories:

1. Accounting changes, which is comprised of:
a. Changes in accounting principles – result from a change from one generally accepted accounting principle to another that is justified on the basis that the newly adopted principle is preferable to the previously applied principle, or the implementation of a new pronouncement.
b. Changes in accounting estimates – occur when inputs change due to a change in circumstances, new information, or more experience. Note that the focus is on changes to the inputs used; a change in the value of an input such as an annual inflation update does not require disclosure under this standard.
c. Changes to or within the financial reporting entity – result from the addition or removal of a fund that results from the movement of continuing operations (such as moving sanitation operation from the general fund to its own separate fund), a change in a fund’s presentation as major or nonmajor, the addition or removal of a component unit (with certain exceptions), or a change in a component unit’s presentation as blended or discretely presented.

2. Error corrections – result from mathematical mistakes, mistakes in the application of accounting principles, or oversight or misuse of facts that existed at the time of the financial statements were issued (i.e., facts that could reasonably be expected to have been obtained and considered at that time).

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A summary of the reporting impact of each category is as follows:

Accounting changes
Reporting
considerations
Change in
accounting
principle Change in
estimate
Change to the
financial
reporting entity Correction of
an error
Basic financial
statement schedules:

Restate earliest
period presented Report
prospectively
Adjust current year
beginning balances
Restate earliest
period
presented
Required
supplementary
information &
supplementary
information:

Should match the financial statement presentation noted above; no adjustments to earlier periods needed
Restate all
periods
impacted
Additional
disclosures? Yes Yes Yes Yes
CPA should become familiar with the new guidance in advance of the implementation effective date.

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Two-way audit communications
As part of our audit of your financial statements, we are providing communications to you throughout the audit process. Auditing requirements provide for two-way communication and are important in assisting the auditor and you with more information relevant to the audit.

As this past audit is concluded, we use what we have learned to begin the planning process for next year’s audit. It is important that you understand the following points about the scope and timing of our next audit:
a. We address the significant risks of material misstatement, whether due to fraud or error, through our detailed audit procedures.
b. We will obtain an understanding of the five components of internal control sufficient to assess the risk of material misstatement of the financial statements whether due to error or fraud, and to design the nature, timing and extent of further audit procedures. We will obtain a sufficient understanding by performing risk assessment procedures to evaluate the design of controls relevant to an audit of financial statements and to determine whether they have been implemented. We will use such knowledge to:
• Identify types of potential misstatements.
• Consider factors that affect the risks of material misstatement. • Design tests of controls, when applicable, and substantive procedures. c. We will not express an opinion on the effectiveness of internal control over financial reporting or compliance with laws, regulations and provisions of contracts or grant programs. For audits performed in accordance with Government Auditing Standards, our report will include a paragraph that states that the purpose of the report is solely to describe the scope of testing of internal control over financial reporting and compliance and the result of that testing and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance and that the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering internal control over financial reporting and compliance. The paragraph will also state that the report is not suitable for any other purpose. d. The concept of materiality recognizes that some matters, either individually or in the aggregate, are important for fair presentation of financial statements in conformity with generally accepted accounting principles while other matters are not important. In performing the audit, we are concerned with matters that, either individually or in the aggregate, could be material to the financial statements. Our responsibility is to plan and perform the audit to obtain reasonable assurance that material misstatements, whether caused by errors or fraud, are detected.

Our audit will be performed in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards.

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We will not express an opinion on the effectiveness of internal control over financial reporting or compliance with laws, regulations, and provisions of contracts or grant programs. For audits done in accordance with Government Auditing Standards our report will include a paragraph that states that the purpose of the report is solely to describe (a) the scope of testing of internal control over financial reporting and compliance and the result of that testing and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance, (b) the scope of testing internal control over compliance for major programs and major program compliance and the result of that testing and to provide an opinion on compliance but not to provide an opinion on the effectiveness of internal control over compliance and, (c) that the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering internal control over financial reporting and compliance in considering internal control over compliance and major program compliance. The paragraph will also state that the report is not suitable for any other purpose.

We are very interested in your views regarding certain matters. Those matters are listed here:
a. We typically will communicate with your top level of management unless you tell us otherwise. b. We understand that the governing board has the responsibility to oversee the strategic direction of your organization, as well as the overall accountability of the entity. Management has the responsibility for achieving the objectives of the entity. c. We need to know your views about your organization’s objectives and strategies, and the related business risks that may result in material misstatements. d. We anticipate that CPA will receive an unmodified opinion on its financial statements. e. Which matters do you consider warrant particular attention during the audit, and are there any areas where you request additional procedures to be undertaken? f. Have you had any significant communications with regulators or grantor agencies? g. Are there other matters that you believe are relevant to the audit of the financial statements? Also, is there anything that we need to know about the attitudes, awareness and actions of the governing body concerning:
a. The entity’s internal control and its importance in the entity, including how those charged with governance oversee the effectiveness of internal control? b. The detection or the possibility of fraud?
We also need to know if you have taken actions in response to developments in financial reporting, laws, accounting standards, governance practices, or other related matters, or in response to previous communications with us.

With regard to the timing of our audit, here is some general information. If necessary, we may do preliminary financial audit work during the month of May. Our final financial fieldwork is scheduled during late summer to best coincide with your readiness and report deadlines. After fieldwork, we wrap up our financial audit procedures at our office and may issue drafts of our report for your review. Final copies of our report and other communications are issued after approval by your staff. This is typically 6-12 weeks after final fieldwork, but may vary depending on a number of factors.

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Keep in mind that while this communication may assist us with planning the scope and timing of the audit, it does not change the auditor’s sole responsibility to determine the overall audit strategy and the audit plan, including the nature, timing and extent of procedures necessary to obtain sufficient appropriate audit evidence.

We realize that you may have questions on what this all means, or wish to provide other feedback. We welcome the opportunity to hear from you.

Agenda Page 48 of 95

CLEAN POWER ALLIANCE OF SOUTHERN

CALIFORNIA
Basic Financial Statements with Independent
Auditors’ Report
Agenda Page 49 of 95
For the Fiscal Years Ended June 30, 2023 and 2022

TABLE OF CONTENTS
Independent Auditors' Report ………………………………………………………... 1 Management's Discussion and Analysis (Unaudited) ………………………………… 3 Basic Financial Statements:

Statements of Net Position …………………………………………………… 13
Statements of Revenues, Expenses and Changes in Net Position …................ 14 Statements of Cash Flows …………………………………………………… 15
Notes to the Basic Financial Statements ……………………………………. 17 Agenda Page 50 of 95
Independent Auditors' Report
To the Board of Directors of
Clean Power Alliance of Southern California
Opinion
We have audited the accompanying financial statements of Clean Power Alliance of Southern California (CPA), as of and for the years ended June 30, 2023 and 2022, and the related notes to the financial statements, which collectively comprise the CPA's basic financial statements as listed in the table of contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of CPA as of June 30, 2023 and 2022, and the changes in financial position and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the CPA and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; and for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the CPA's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

Auditors' Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2020 Baker Tilly US, LLP Agenda Page
1 51 of 95
In performing an audit in accordance with GAAS, we:
 Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the CPA's internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
 Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the CPA's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings and certain internal control-related matters that we identified during the audit.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, as listed in the table of contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Madison, Wisconsin
October 17, 2023
Agenda Page
2 52 of 95

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
YEARS ENDED JUNE 30, 2023 AND 2022
3 The Management's Discussion and Analysis section provides an overview of Clean Power Alliance of Southern California's (CPA) financial activities as of and for the fiscal years ending June 30, 2023 and 2022. The information presented here should be considered in conjunction with the audited financial statements.

Contents of this Report
This report is divided into the following sections:
 Management's Discussion and Analysis.
 The Basic Financial Statements, including:
o The Statements of Net Position which include all of CPA's assets, liabilities, and net position and provide information about the nature and amount of resources and obligations at a specific point in time.
o The Statements of Revenues, Expenses, and Changes in Net Position which report all of CPA's revenue and expenses for the years shown.
o The Statements of Cash Flows which report the cash provided and used by operating activities, as well as other sources and uses, such as non-capital financing activities.
o Notes to the Basic Financial Statements, which provide additional details and information related to the Basic Financial Statements.

Agenda Page 53 of 95

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
YEARS ENDED JUNE 30, 2023 AND 2022
4 MANAGEMENT’S DISCUSSION AND ANALYSIS
Agenda Page 54 of 95

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
YEARS ENDED JUNE 30, 2023 AND 2022
5 BACKGROUND
CPA was formed pursuant to California Assembly Bill 117 which enables communities to purchase power on behalf of their residents and businesses and creates retail choices for electric generation services.

CPA, formerly Los Angeles Community Choice Energy (LACCE), was created as a California Joint Powers Authority on June 27, 2017. CPA was established to study, promote, develop, conduct, operate, and manage energy programs in Southern California. The parties to CPA's Joint Powers Agreement consist of local governments whose governing bodies elect to join CPA.

Governed by a board of directors (Board) made up of elected officials from each of the parties to the JPA, CPA has the authority to set rates for the services it furnishes, incur indebtedness, and issue bonds or other obligations. CPA acquires electricity from commercial suppliers and delivers it through existing physical infrastructure and equipment managed by the California Independent System Operator (CAISO) and Southern California Edison (SCE).

Pursuant to the Public Utilities Code, when parties join CPA, all electricity customers in its jurisdiction, except for customers served under California's Direct Access Program, automatically become default customers of CPA for electric power generation, provided that customers are given the option to "opt-out".

CPA began operations by serving approximately 1,800 municipal and commercial accounts in February 2018. In June 2018, it enrolled approximately 28,000 municipal and commercial accounts. In February 2019, CPA enrolled approximately 900,000 residential customer accounts.

In May 2019, CPA enrolled approximately 100,000 commercial accounts. CPA enrolled approximately 4,000 residential and commercial accounts from Westlake Village in June 2020. In March 2024, CPA will enroll approximately 38,000 additional accounts from three jurisdictions that joined the JPA in late 2022.

CPA's goal is to provide customers with competitively priced and affordable electricity with high renewable energy content and low greenhouse gas emissions. Currently, CPA offers its customers three electricity services to choose from: Lean Power, Clean Power, and 100% Green Power. Lean Power provides 40% clean power (20-25% renewable and 15-20% carbon-free energy content); Clean Power provides at least 50% clean power (50% renewable and up to 20% additional carbon-free energy content) and 100% Green Power provides 100% renewable energy content.

Financial Reporting
CPA presents its financial statements as a governmental enterprise fund under the economic resources measurement focus and accrual basis of accounting, in accordance with Generally Accepted Accounting Principles (GAAP) for proprietary funds, as prescribed by the Governmental Accounting Standards Board (GASB).

Agenda Page 55 of 95

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
YEARS ENDED JUNE 30, 2023 AND 2022
6 FINANCIAL HIGHLIGHTS
The following table summarizes CPA's assets, liabilities, deferred inflows of resources, and net position for the fiscal years (FY) ending June 30.
* FY 2020-21 financial results are “restated” to reflect the implementation of GASB 87 consistent with generally accepted accounting principles.

Current Assets
Current assets were approximately $407,408,000 at the end of FY 2022-23 and were mostly comprised of $132,787,000 of cash and cash equivalents, $123,259,000 of accounts receivable, $87,230,000 of accrued revenue, $46,153,000 of prepaid expenses and $15,951,000 in deposits.

Current assets were approximately $248,919,000 at the end of FY 2021-22 and were mostly comprised of $54,538,000 of cash and cash equivalents, $96,571,000 of accounts receivable, $55,497,000 of accrued revenue, $7,659,000 of other receivables, $6,138,000 of prepaid expenses and $26,116,000 in deposits.

Total current assets increased as of June 30, 2023, compared to the prior year, particularly cash, prepaids, accrual revenue, and accounts receivable. Cash increased year over year primarily due to operating surpluses and reduced collateral posting required by the CAISO. Prepaids increased compared to the prior year mainly due to the prepayments required pursuant to Resource Adequacy contracts. Accounts receivable increased primarily due to the retail sales increase resulting from rate increases in July 2022 and April 2023, more jurisdictions converting to the 100% Green rate, and the suspension by SCE of disconnections and late payments penalties applied to residential accounts receiving funding under the California Arrearage Payment Program.

Agenda Page 56 of 95

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
YEARS ENDED JUNE 30, 2023 AND 2022
7 Total current assets increased as of June 30, 2022, compared to the prior year, particularly deposits, accounts receivable, and other receivables. Deposits increased year over year primarily due to increased collateral posting amounts required by the CAISO. Accounts receivable increased year over year primarily due to a rate increase that went into effect in July 2021 and increased retail electricity use in May and June 2022 as compared to May and June 2021. Other receivables increased primarily due to payments from energy suppliers under the netting provisions of power purchase agreements.

Noncurrent Assets
Noncurrent assets decreased as of June 30, 2023, compared to the prior year mainly due to the amortizing of the intangible office lease asset and the depreciation expenses. Noncurrent assets decreased as of June 30, 2022, compared to the prior year primarily as a result of amortizing the intangible office lease asset.

Current Liabilities
Current liabilities consist mostly of the costs of electricity delivered to customers that are not yet due to be paid by CPA to its suppliers. Other components include trade accounts payable, taxes and surcharges due to governments, and various other accrued liabilities. Unearned program funds represent funds for customer programs received from the CPUC and not yet spent.

Total current liabilities increased as of June 30, 2023, compared to the prior year, mainly due to the increase in the cost of energy accrual resulting from higher resource adequacy and renewable energy costs.

Total current liabilities decreased as of June 30, 2022, compared to the prior year, primarily as a result of a decrease in security deposits from energy suppliers. Security deposits from energy suppliers decreased as a result of reduced collateral requirements arising from energy supply agreements.

Noncurrent Liabilities
Noncurrent liabilities decreased as of June 30, 2023, from the prior year primarily as a result of a decrease in supplier security deposits pursuant to energy supply agreements.

Noncurrent liabilities decreased as of June 30, 2022, from the prior year primarily as a result of the decrease in lease liability due to the reclass per GASB 87, offset by increased supplier security deposits pursuant to energy supply agreements.

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YEARS ENDED JUNE 30, 2023 AND 2022
8 Revenues and Expenses
The following table summarizes CPA’s results of operations for the years ending June 30:

Total Income
Operating revenues arise from electricity sales to customers and funding to support CPA’s Power Share program. CPA reports electricity revenues, net of an allowance for uncollectable accounts, as described in the Notes to the Financial Statements.

Operating revenues increased to approximately $1,167,777,000 in FY 2022-23 from $867,481,000 in FY 2021-22. Revenue increased primarily as a result of increases in retail electricity rates that occurred in July 2022 and April 2023.

Operating revenues increased in FY 2021-22 from the prior year as a result of an increase in retail electricity rates that occurred in July 2021.

Year-over-year changes in interest income reflect changes in interest rates and average cash balances in interest-earning accounts.

Total Expenses
Operating expenses include the cost of electricity and electric capacity used to serve CPA’s customers and meet its regulatory obligations, charges and credits levied by the CAISO, contracts with service providers, staff compensation and general and administrative expenses. Non-operating expenses consist primarily of interest and other expenses associated with borrowing agreements.

Operating expenses increased to $1,088,599,000 in FY2022-23 from $799,921,000 in FY 2021-

22. The increase is mainly due to increased prices for certain products in the energy markets. CPA purchases its energy supply from various resources in order to reduce market risk and maintain a balanced, renewable energy portfolio. Contract service costs increased year-over-year as CPA implemented more customer programs and incentives and performed more community outreach.

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CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
YEARS ENDED JUNE 30, 2023 AND 2022
9 Staffing and general and administrative costs increased year over year as CPA hired additional staff and built out its operating capabilities.

Electricity costs and other operating expenses increased in FY 2021-22 from the prior year primarily as a result of the increased energy costs, contract services and staff costs.

Change in Net Position
The change in net position represents the difference between total income and total expenses in a given fiscal year.

CPA’s net position increased by $80,294,000 in FY 2022-23. CPA’s net position increased by $67,045,000 in FY 2021-22 and by $27,622,000 in FY 2020-21.

CPA had a higher increase in net position in FY 2022-23 as compared to FY 2021-22 due to increased electricity sales resulting primarily from rate increases and higher interest income offset by the increased costs for energy, staffing, and customer programs.

CPA had a higher increase in net position in FY 2021-22 as compared to the prior year due to increased electricity sales, offset by smaller increases in the cost of electricity and operating expenses.

PURCHASE COMMITMENTS AND ECONOMIC OUTLOOK
During the normal course of business, CPA enters into various agreements, including renewable energy agreements, energy storage agreements, and other power purchase agreements to purchase power and electric capacity (Resource Adequacy). CPA enters into power purchase agreements and energy supply agreements in order to comply with state law and voluntary targets for renewable and greenhouse gas (GHG) free products. California law established a Renewable Portfolio Standard (RPS) that requires load-serving entities, such as CPA, to gradually increase the amount of renewable energy they deliver to their customers.

In October 2015, the California Governor signed Senate Bill (SB) 350, the Clean Energy and Pollution Reduction Act of 2015, into law. SB 350 became effective January 1, 2016, and increases the amount of renewable energy that must be delivered by most load-serving entities, including CPA, to their customers from 33% of their total annual retail sales by the end of the 2017-2020 compliance period, to 50% of their total annual retail sales by the end of the 2028-2030 compliance period, and in each three-year compliance period thereafter, unless changed by legislative action.

In September 2018, the California Governor signed SB 100, the 100 Percent Clean Energy Act of 2018, into law. SB 100 increases the amount of renewable energy that must be delivered to customers by most load-serving entities, including CPA, by 60% of their annual retail sales by the end of the 2028-2030 compliance period. SB 100 also further establishes as state policy that eligible renewable energy resources and zero-carbon resources supply 100 percent of all retail Agenda Page 59 of 95

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
YEARS ENDED JUNE 30, 2023 AND 2022
10 sales of electricity to California end-use customers and 100 percent of electricity procured to serve all state agencies by December 31, 2045.

SB 100 provides compliance flexibility and waiver mechanisms, including increased flexibility to apply excess renewable energy procurement in one compliance period to future compliance periods. SB 350 requires that for the 2021-24 compliance period, at least 65% of the procurement a retail seller, such as CPA, counts toward the renewable portfolio standard requirement of each compliance period shall be from its contracts of ten years or more in duration.

In September 2022, California Governor Newsom signed SB1020. SB 1020 adds interim targets to the policy framework originally established in SB 100 to require renewable energy and zero-carbon resources to supply 90% of all retail electricity sales by 2035 and 95% of all retail electricity sales by 2040. The inclusion of interim targets will ensure that the state makes steady and accountable progress toward the full decarbonization of California’s electricity grid.

CPA enters into long-term purchase agreements to bring new solar, wind, and other renewable energy generating facilities online, to meet its regulatory RPS and GHG-free targets, to accomplish its mission of providing renewable energy, reducing greenhouse gas emissions, serving its customers, and managing energy market risks. CPA enters into energy storage agreements to meet its obligations under the Resource Adequacy program administered by the CPUC and to better manage energy market risk. CPA manages risks associated with these commitments by aligning purchase commitments with the expected demand for electricity and assuring diversity of technologies, geographical locations, and suppliers.

Commitments under power purchase agreements increased to $8.8 billion as of June 30, 2023, from $5.33 billion as of June 30, 2022, consistent with CPA’s Board-approved Energy Risk Management Policy.

Due to the economic impact of the COVID-19 pandemic, many utility customers have accrued significant energy debt and faced potential energy service disconnection if delinquent account balances are not resolved.

In response to the energy debt Californians are facing, the State Budget Act of 2021 appropriated $1 billion from the federal American Rescue Plan Act of 2021 to support the establishment of the California Arrearage Payment Program (2021 CAPP). 2021 CAPP was designed to provide financial assistance to active and inactive residential and commercial customer accounts reflecting delinquent balances incurred during the COVID-19 pandemic relief period. CPA customers received approximately $15.8 million of 2021 CAPP funding in early 2022.

The State Budget Act of 2022 appropriated additional funds for CAPP (2022 CAPP) and extended the eligibility period to cover retail bills for active residential customers issued between March 4, 2020, and December 31, 2021. CPA customers received approximately $10.4 million of 2022 CAPP funding in early 2023.

CPA’s allowance for uncollectable accounts as of June 30, 2022, was adjusted to reflect the 2022 CAPP payment. Management believes that the allowance for uncollectable accounts provides a Agenda Page 60 of 95

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
YEARS ENDED JUNE 30, 2023 AND 2022
11 conservative estimate of customer non-payments and that CPA’s cash flow, and gross margins are sufficient to manage slower customer payments. Management intends to continue its conservative use of financial resources and expects to generate ongoing operating surpluses in future years.

REQUEST FOR INFORMATION
This financial report is designed to provide CPA’s customers, creditors, and other stakeholders with a general overview of the organization’s finances and to demonstrate CPA’s accountability for the funds under its stewardship.

Please address any questions about this report or requests for additional financial information to the Chief Financial Officer, 801 S. Grand Avenue, Suite 400, Los Angeles, CA 90017.

Agenda Page 61 of 95
12 BASIC FINANCIAL STATEMENTS
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STATEMENTS OF NET POSITION
YEARS ENDED JUNE 30, 2023 AND 2022
The accompanying notes are an integral part of these financial statements. 13 Agenda Page 63 of 95

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

STATEMENTS OF REVENUES, EXPENSES

AND CHANGES INNET POSITION
YEARS ENDED JUNE 30, 2023 AND 2022
The accompanying notes are an integral part of these financial statements. 14 Agenda Page 64 of 95

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2023 AND 2022
The accompanying notes are an integral part of these financial statements. 15 Agenda Page 65 of 95

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2023 AND 2022
The accompanying notes are an integral part of these financial statements. 16 Agenda Page 66 of 95

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
17 1. REPORTING ENTITY
Clean Power Alliance of Southern California (CPA) is a joint powers authority created on June 27, 2017. As of June 30, 2023, parties to its Joint Powers Agreement consist of the following local governments:

* Hermosa Beach, Monrovia, and Santa Paula are official members of the JPA as of March 2023, though customers in those jurisdictions won’t begin CPA service until March 1, 2024.

CPA is separate from and derives no ongoing financial support from its members. CPA is governed by a Board of Directors whose membership is comprised of elected officials representing the parties.

CPA’s mission is to provide cost-competitive electric services, reduce electric sector greenhouse gas emissions, stimulate renewable energy development, implement distributed energy resources, promote energy efficiency and demand reduction programs, and sustain long-term rate stability for residents and businesses through local control. CPA provides electric service to retail customers as a Community Choice Aggregation Program under the California Public Utilities Code (CPUC) Section 366.2.

Electricity is acquired from commercial suppliers and delivered through existing physical infrastructure and equipment managed by Southern California Edison (SCE).

Counties Cities
Los Angeles Agoura Hills Ojai
Ventura Alhambra Oxnard
Arcadia Paramont
Beverly Hills Redondo Beach
Calabasas Rolling Hills Estates
Carson Santa Monica
Camarillo Santa Paula *
Claremont Sierra Madre
Culver City Simi Valley
Downey South Pasadena
Hawaiian Gardens Temple City
Hawthorne Thousand Oaks
Hermosa Beach * Ventura
Malibu West Hollywood
Manhattan Beach Westlake Village
Monrovia * Whittier
Moorpark
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NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
18 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING
CPA’s financial statements are prepared in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements.

CPA’s operations are accounted for as a governmental enterprise fund and are reported using the economic resources measurement focus and the accrual basis of accounting – similar to business enterprises. Accordingly, revenues are recognized when they are earned, and expenses are recognized at the time liabilities are incurred. Enterprise fund-type operating statements present increases (revenues) and decreases (expenses) in total net position. Reported net position is segregated into three categories – investment in capital assets, restricted, and unrestricted.

When both restricted and unrestricted resources are available for use, it is CPA’s policy to use restricted resources first, then unrestricted resources as they are needed.

CASH AND CASH EQUIVALENTS
For purposes of the Statements of Cash Flows, CPA defines cash and cash equivalents to include cash on hand, demand deposits, and short-term investments. As of June 30, 2023 and 2022, cash and cash equivalents were held in various interest-earning and non-interest-earning accounts at River City Bank and in the California Local Agency Investment Fund (LAIF). Amounts restricted pursuant to security and lending agreements are included as cash and cash equivalents on the Statement of Cash Flows.

PREPAID EXPENSES AND DEPOSITS
Contracts to purchase energy may require CPA to provide the supplier with advance payments or security deposits. Deposits consist of collateral deposits required by CAISO and security deposits held by suppliers as required under certain energy contracts entered by CPA. Deposits are generally held for the term of the contract and are classified as current or noncurrent assets depending on the length of time the deposits will be outstanding.

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CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
19 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

CAPITAL ASSETS AND DEPRECIATION
CPA’s policy is to capitalize furniture and equipment valued over $5,000 that is expected to be in service for over one year. Depreciation is computed according to the straight-line method over estimated useful lives of three years for electronic equipment and seven years for furniture.

Leasehold improvements are depreciated over the shorter of 1) the useful life of the leasehold improvement, or 2) the remaining years of the lease.

LEASE ASSETS AND LIABILITIES
CPA recognizes an asset and liability when it enters certain leasing arrangements. The leased assets are amortized over the term of the leases. The lease liabilities are established at the present value of payments expected to be paid to the lessors during the terms of the lease.

SECURITY DEPOSITS FROM ENERGY SUPPLIERS
Various energy contracts entered into by CPA require the supplier to provide CPA with a security deposit. These deposits are generally held for the term of the contract or until the completion of certain benchmarks. Deposits are classified as current or noncurrent depending on the length of time the deposits will be held.

UNEARNED PROGRAM FUNDS
CPA received PowerShare program funding from the California Public Utility Commission. The amount represents funds received by CPA, but not yet spent on the PowerShare program-specific expenses.

NET POSITION
Net position is presented in the following components:

Investment in capital assets: This component of net position consists of capital assets, lease assets, net of accumulated depreciation and amortization, and is reduced by outstanding borrowings that are attributable to the acquisition, construction, or improvement of those assets.

CPA did not have any outstanding borrowings as of June 30, 2023, and 2022 attributable to those assets.

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NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
20 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Restricted: This component of net position consists of net assets subject to external constraints on their use imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or constraints imposed by law through constitutional provisions or enabling legislation.

Unrestricted: This component of net position consists of net position that does not meet the definition of “investment in capital assets” or “restricted.”

OPERATING AND NON-OPERATING REVENUE
Operating revenues include revenues derived from the provision of electricity to retail customers and program revenue earned from the delivery of program activities. Electricity sales are reported net of changes to the allowance for uncollectable accounts. Other revenue consists of revenue that is not related to sales of electricity to CPA customers.

Interest income is considered “non-operating revenue.”

REVENUE RECOGNITION
CPA recognizes revenue on an accrual basis. This includes invoices issued to customers during the reporting period and electricity estimated to have been delivered but not yet billed.

Management estimates that a portion of the billed amounts will be uncollectible. Accordingly, an allowance for uncollectible accounts has been recorded.

OPERATING AND NONOPERATING EXPENSES
Operating expenses include the cost of sales and services, administrative expenses, and depreciation on capital assets and amortization of right-to-use lease assets. Expenses not meeting this definition are reported as non-operating expenses.

ELECTRICAL POWER PURCHASED
During the normal course of business, CPA purchases electrical power from numerous suppliers.

Electricity costs include the cost of energy and capacity arising from bilateral contracts with energy suppliers as well as wholesale sales and generation credits, and load and other charges arising from CPA’s participation in the CAISO’s centralized market. The cost of electricity and capacity is recognized as “Cost of Electricity” in the Statements of Revenues, Expenses and Changes in Net Position. To comply with the State of California’s Renewable Portfolio Standards (RPS) and other product content targets, CPA acquires RPS-eligible renewable energy evidenced by Renewable Energy Certificates (Certificates) recognized by the Western Renewable Energy Agenda Page 70 of 95

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
21 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Generation Information System (WREGIS). CPA obtains Certificates with the intent to retire them and does not sell or build surpluses of Certificates with a profit motive. CPA purchases capacity commitments from qualifying generators to comply with the California Energy Commission’s Resource Adequacy Program. The goals of the Resource Adequacy Program are to provide sufficient resources to the CAISO to ensure the safe and reliable operation of the grid in real-time and to provide appropriate incentives for the siting and construction of new resources needed for reliability in the future. CPA complies with external mandates and self-imposed benchmarks.

STAFFING COSTS
CPA pays employees semi-monthly and fully pays its obligations for health benefits and contributions to its defined contribution retirement plan each month. CPA is not obligated to provide post-employment healthcare or other fringe benefits and, accordingly, no related liability is recorded in these financial statements. CPA provides compensated time off, and the related liability is recorded in these financial statements.

INCOME TAXES
CPA is a Joint Powers Authority (JPA) under the provisions of the California Government Code and is not subject to federal or state income or franchise taxes.

USER TAXES AND ENERGY SURCHARGES DUE TO OTHER GOVERNMENTS CPA is required by governmental authorities to collect and remit user taxes on certain customer sales. These taxes do not constitute revenues or expenses to CPA.

ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

RECLASSIFICATIONS
Certain amounts in the prior-year financial statements have been reclassified for comparative purposes to conform to the presentation of the current-year financial statements.

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CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
22 3. CASH AND CASH EQUIVALENTS
As of June 30, 2023, CPA maintains its cash in both interest-earning and non-interest-earning bank accounts with River City Bank and in the California Local Agency Investment Fund (LAIF).

Cash balances are subject to the Local Agency Security Program (LASP) administered by the California Department of Financial Protection and Innovation (DFPI) pursuant to California Government Code, Section 53630 through 53686. The LASP is designed to protect government agency deposits and requires banks holding agency deposits to collateralize deposits in excess of $250,000 with highly rated government securities and/or a letter of credit issued by the Federal Home Loan Deposit Corporation (FHLDC) in amounts equal to 110% and 105% of agency deposits, respectively. Government securities collateralizing agency deposits are required to be held by third-party trust companies with legal and regulatory obligations to the DFPI. The DFPI is the beneficiary of FHLDC letters of credit collateralizing agency deposits. CPA’s Board-approved Investment Policy requires that when managing funds, CPA’s primary objectives, in the following order of importance, shall be to (1) safeguard the principal of the funds, (2) meet the liquidity needs of CPA, and (3) achieve a return on investment on funds in CPA’s control.

Risk is monitored on an ongoing basis.

CPA maintains cash with LAIF, managed by the State Treasurer, for the purpose of increasing interest earnings through pooled investment activities. These funds are not registered with the Securities and Exchange Commission but are required to be invested according to the California Government Code. Participants in the pool include voluntary and involuntary participants, such as special districts and school districts for which there are legal provisions regarding their investments. The Local Investment Advisory Board (LIAB) has oversight responsibility for LAIF. LIAB consists of four members as designated by state statute.

FAIR VALUE MEASUREMENT
GASB Statement No. 72, Fair Value Measurement and Application, sets forth the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs.

In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. CPA’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. Deposits and withdrawals from LAIF are made on the basis of $1 which is substantially equal to fair value.

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CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
23 3. CASH AND CASH EQUIVALENTS (continued)
As of June 30, 2023 and 2022, CPA held no individual investments subject to classification under the fair value hierarchy.

CUSTODIAL CREDIT RISK
Custodial credit risk for deposits is that in the event of a bank failure, CPA’s deposits may not be returned to it. CPA’s policy is that deposits be insured by the FDIC. CPA maintains cash in bank accounts, which at times may exceed federally insured limits. Bank accounts are guaranteed by the FDIC up to $250,000. CPA has not experienced any such losses in its deposit accounts.

CPA manages custodial credit risk for bank deposits during the normal course of business and is consistent with its Investment Policy.

Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, CPA would not be able to recover the value of the investment or collateral securities that are in possession of an outside party. Investment securities are exposed to custodial credit risk if the securities are uninsured, are not registered in CPA’s name, and are held by the counterparty. CPA does not believe it is exposed to significant custodial credit risk arising from its investments in LAIF.

4. ACCOUNTS RECEIVABLE
Accounts receivable were as follows:

The majority of account collections occur within the first few months following customer invoicing. CPA estimates that a portion of the billed amounts will not be collected. The allowance for uncollectible accounts at the end of a period includes amounts billed during the current and prior fiscal years.

The State Budget Act of 2022 appropriated additional funds from the federal American Rescue Plan Act to support the establishment of the California Arrearage Payment Program (CAPP 2022) and extended the eligibility period to cover electricity bills for active residential customers issued between March 4, 2020, and December 31, 2021. CPA’s active residential customers received a total of $10.4 million of 2022 CAPP funding in 2023. The allowance for uncollectable accounts as of June 30, 2022, was adjusted to reflect the 2022 CAPP payment.

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CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
24 5. LEASE
In June 2017, GASB issued a new standard related to leases, which was codified into GASB Statement No. 87, Leases. GASB 87 establishes a single model for lease accounting based on the principle that leases are financings of the right-to-use an underlying asset. It requires government entity lessees to recognize lease obligations as lease liabilities and intangible right-to-use lease assets on the Statement of Net Position, and lease payments will reduce the lease liability and flow through the Statement of Activities as amortization expense and interest expense. A corresponding lease asset is recorded in the Statement of Net Position, which will be amortized over the lease term.

In FY2021-2022, CPA adopted the provisions of GASB Statement No 87. As such CPA recognized a lease obligation and a right-to-use asset for agreements whereby CPA obtained the right to the present service capacity of underlying assets and the right to determine the nature and manner of underlying assets’ use for a period of one year or greater. Below is a description of these lease arrangements:

Property Lease
CPA entered into an agreement to lease approximately 11,000 square feet of office space in Los Angeles, California for 8 years, commencing in March 2021. Monthly base rent payments are approximately $32,000 in the first year of the lease and are subject to 3% annual rent escalations on each anniversary of lease commencement. The lease expires in February 2029. CPA also pays a pro-rata share of operating expenses and property taxes, which are not included in the measurement of the lease liability as they are variable in nature. The Company paid $20,000 and $7,000 in FY2022-23 and FY2021-2022, respectively, for those variable costs.

As of June 30, 2023, the Company has reported $2,202,000 in right-of-use (ROU) intangible assets, net of amortization, and $2,659,000 in lease liabilities related to this agreement.

Amortization expense was $383,000 and Interest Expense was $68,000 for the right to use the office space during the fiscal year.

As of June 30, 2022, the Company has reported $2,585,000 in ROU intangible assets, net of amortization, and $3,006,000 in lease liabilities related to this agreement. Amortization expense was $383,000 and Interest Expense was $85,000 for the right to use the office space during the fiscal year.

Intangible ROU assets and ROU liabilities are recognized based on the present value of future lease payments over the lease term at the commencement date. As the lease does not provide an implicit rate, an incremental borrowing rate of 2.4% was used based on the information available at the adoption of GASB 87 in determining the present value of future payments.

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NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
25 5. LEASE (continued)
CPA has the option to extend the lease for two additional years. The table below represents the future lease principal and interest payments under this agreement.

Storage Contract Arrangements
In providing electricity to its customers, CPA has entered into four energy storage agreements which achieved commercial operation as of June 2023. Through these agreements, CPA obtains the right to control certain aspects of the nature and manner and use of the underlying facilities.

The monthly payments made by CPA are variable and based on the performance of the underlying assets including the plant’s available capacity, operating charging efficiency, and the seller’s responsiveness to CPA’s charging and discharge instructions. The variable payments under energy storage agreements are recognized as part of the cost of energy on the Statement of Revenues, Expenses, and Changes in Net Position.

Variable payments for the energy storage agreements totaled approximately $32,023,000 and $7,799,000 in FY 2022-23 and FY 2021-22, respectively.

6. CAPITAL ASSETS
Capital asset activities for the years ended June 30, 2023 and 2022, were as follows:

Year ended June 30, Principal Interest Total
2024 403,141 $ 59,437 $ 462,578 $
2025 426,955 49,501 476,456
2026 451,767 38,982 490,749
2027 477,612 27,860 505,472
2028 504,535 16,101 520,636
2029 395,199 3,998 399,197
$ 195,879 2,659,209 $ 2,855,088 $
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NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
26 6. CAPITAL ASSETS (continued)
Depreciation and amortization expenses are included under general and administration on the Statements of Revenues, Expenses and Changes in Net Position.

7. DEBT
County of Los Angeles Funding Agreement
In August 2017, CPA and the County of Los Angeles executed a memorandum of understanding (MOU) to provide a non-interest-bearing loan to CPA in an amount not to exceed $10 million to be repaid on June 30, 2018. In April 2018, the County’s Board of Supervisors approved an extension of the repayment term of the loan to June 30, 2020. In August 2018, the County’s Board of Supervisors approved a further extension of repayment of the loan to September 30, 2020. The purpose of the loan was to investigate the feasibility of implementing a community choice aggregation program as well as to provide for other working capital needs. In September 2020 CPA repaid the outstanding loan balance of $9,945,750 to the County of Los Angeles. As of June 30, 2021, there was no outstanding loan balance under the MOU.

In August 2021, CPA and the County of Los Angeles entered into a Funding Agreement under which the County of Los Angeles provided a loan of $30 million to CPA, and the loan plus applicable interest was repaid in FY 2021-22. As of June 30, 2022, there was no outstanding loan balance under the Funding Agreement.

River City Bank Credit Facility
In August 2018 CPA entered into a $20 million Credit Agreement with River City Bank. The Credit Agreement is a revolving credit facility that CPA uses to provide letters of credit and to borrow funds to provide working capital. The Credit Agreement expired in August 2019.

In April 2019 CPA entered into the First Amendment to the Credit Agreement with River City Bank (First Amendment). The First Amendment increased the available credit facility amount from $20 million to $37 million, extended the term of the agreement through March 31, 2021, and reduced the borrowing rate and collateral posting obligation.

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NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
27 7. DEBT (continued)
In April 2021 CPA entered into the Amended and Restated Credit Agreement with River City Bank (Restated Credit Agreement). The Restated Credit Agreement renewed the $37 million credit facility and extended the term to March 31, 2022. This Restated Credit Agreement was terminated in September 2021 pursuant to entering a new credit agreement with JP Morgan Chase Bank.

JP Morgan Chase Bank Credit Facility
In September 2021, CPA entered into an $80 million Revolving Credit Agreement with JP Morgan Chase and terminated its $37 million Restated Credit Agreement with River City Bank.

The Revolving Credit Agreement provides a revolving borrowing and letter of credit facility which can be used for working capital purposes and to post collateral.

In September 2022, CPA drew $60 million on its $80 million JP Morgan Chase credit facility.

CPA repaid $20 million of the loan in September 2022, and an additional $40 million was repaid in October 2022.

In January 2023, CPA drew $35 million on its $80 million JP Morgan credit facility and repaid it in the same month. As of June 30, 2023, CPA had no loans outstanding under the credit facility and is in compliance with credit covenants.

In June 2023, CPA amended the credit agreement with JP Morgan to increase the size of the facility to $160 million and extend the expiry of the agreement from October 31, 2023 to March 31, 2024. CPA intends to arrange a new bank credit facility to replace its current facility effective April 1, 2024.

Loan principal activity and balances were as follows for the following direct borrowings:

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CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
28 8. DEFINED CONTRIBUTION RETIREMENT PLAN
The Clean Power Alliance of Southern California Plan (Plan) is a defined contribution retirement plan established by CPA to provide benefits at retirement to its employees. The Plan is administered by Nationwide Retirement Solutions. Currently, the employer contribution is 6% of the employee’s salary plus an additional 4% employer match contribution, for a maximum annual employer contribution to the Plan equal to 10% of the employee’s salary. As of June 30, 2023, there were 63 plan members. CPA contributed $994,000 and $675,000 during the years ended June 30, 2023 and 2022, respectively. Plan provisions and contribution requirements are established and may be amended by the Board of Directors.

9. RISK MANAGEMENT
CPA is exposed to various insurable risks of loss related to torts; theft of, damage to, and destruction of assets; and errors and omissions. During the year, CPA purchased insurance policies from investment-grade commercial carriers to mitigate risks that include those associated with earthquakes, theft, general liability, errors and omissions, and property damage. Settled claims have not exceeded the CPA’s commercial liability in any of the past four years. There were no significant reductions in coverage compared to the prior year.

On July 12, 2018, CPA’s Board adopted the Energy Risk Management Policy (ERMP). The ERMP establishes CPA’s Energy Risk Program and applies to all power procurements and related business activities that may impact the risk profile of CPA. The ERMP documents the framework by which CPA’s staff and consultants will identify and quantify risk, develop and execute procurement strategies, develop controls and oversight monitor, and measure and report on the effectiveness of the CPA’s Energy Risk Program. Risks covered by the ERMP include market price risk, credit risk, volumetric risk, operational risk, opt-out risk, legislative and regulatory risk, and other risks arising from operating as a Community Choice Aggregation and participating in California energy markets. The Board approved updates to the ERMP in July 2019, July 2020, July 2021, and July 2022.

CPA maintains other risk management policies, procedures, and systems that help mitigate and manage credit, liquidity, financial, regulatory, and other risks not covered by the ERMP.

Credit guidelines include a preference for transacting with investment-grade counterparties, evaluating counterparties’ financial condition, and assigning credit limits as applicable. These credit limits are established based on risk and return considerations under terms customarily available in the industry. In addition, CPA enters into netting arrangements whenever possible and where appropriate obtains collateral and other performance assurances from counterparties.

Agenda Page 78 of 95

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
29 10. PURCHASE COMMITMENTS

POWER AND ELECTRIC CAPACITY
In the ordinary course of business, CPA enters into various power purchase and energy storage agreements in order to acquire renewable and other energy and electric capacity. The price and volume of purchased power may be fixed or variable. Variable pricing is generally based on the market price of electricity at the date of delivery. Variable volume is generally associated with contracts to purchase energy from as-available resources such as solar, wind and hydro-electric facilities.

CPA enters into power purchase and energy storage agreements in order to comply with state law and elective targets for renewable and greenhouse gas (GHG) free products and to ensure stable and competitive electric rates for its customers.

The following table represents the expected, undiscounted, contractual commitments for energy storage, power, and electric capacity outstanding as of June 30, 2023:

The totals are rounded to the nearest hundredth.

As of June 30, 2023, CPA had non-cancellable contractual commitments to contract and professional service providers through August 31, 2026, for services yet to be performed. Fees associated with these contracts are based on volumetric activity and are expected to be approximately $4.2 million.

Year ended June 30,
2024 1,038,393,000 $
2025 738,052,000 $
2026 644,306,000 $
2027 567,226,000 $
2028 499,751,000 $
2029 -44 5,313,260,000 $
$ 8,800,988,000
Agenda Page 79 of 95

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
30 11. JOINT VENTURE
In July 2022, CPA’s Board of Directors authorized CPA to join California Community Choice Financing Authority (CCCFA) as a Founding Member. CPA joined CCCFA in September 2022 and participates in the Joint Powers Agreement with CCCFA along with Central Coast Community Energy, East Bay Community Energy, Marin Clean Energy, Pioneer Community Energy and Silicon Valley Clean Energy.

CCCFA was formed as a conduit issuer to assist its members by undertaking the financing or refinancing of energy prepayments that can be financed with tax-advantaged bonds on behalf of one or more of the members by, among other things, issuing or incurring bonds and entering into related contracts with its members. No debt, liability, or obligation of CCCFA is considered a debt, liability, or obligation of any member of CCCFA. Any debt or liability incurred by CCCFA on behalf of a member to prepay for renewable energy is not a debt or liability of that member.

Furthermore, the assets of CCCFA in the form of prepaid energy or reserves held by the respective bond trustees for any prepayment transaction undertaken on behalf of a member do not constitute an asset or reserve of that member.

In February 2023, CCCFA issued a first set of bonds on behalf of CPA in the par amount of $998,780,000 and in June 2023 issued a second set of bonds on behalf of CPA in the par amount of $958,290,000. The proceeds were used to finance energy purchases that will flow to CPA over a term of 30 years. CPA will purchase energy from CCCFA in the same manner as CPA purchases energy from other suppliers. The outstanding purchase commitments related to these financings are included in Note 10.

Each member of CCCFA is responsible for paying an equal portion of CCCFA’s general and administrative operating costs as determined by its board. During the year ending June 2023, CPA contributed approximately $68,000 to CCCFA to assist in its operating activities.

CCCFA was created on June 25, 2021, and its financial statements of CCCFA are available online at http://www.cccfa.org/keydocuments.html.

12. FUTURE GASB PRONOUNCEMENTS
The requirements of the following GASB Statements are effective for future fiscal years ending after June 30, 2023:

GASB has approved GASB Statement No. 100, Accounting Changes and Error corrections – An Amendment of GASB Statement No. 62 and GASB Statement No. 101, Compensated Absences When they become effective, the application of these standards may result in restating of these financial statements. Management is evaluating the effects of these new pronouncements.

Agenda Page 80 of 95

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

NOTES TO THE BASIC FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2023 AND 2022
31 13. SUBSEQUENT EVENTS
On September 27, S&P Global Ratings issued CPA an Investment Grade Credit Rating of “A-“ with a Stable Outlook. This rating is considered Middle Investment Grade, four notches above the lowest Investment Grade Rating (BBB-) and seven notches below the highest Investment Grade Rating (AAA). This rating is a significant milestone for CPA and management believes it will have a positive impact on CPA’s relationships with energy suppliers.

Agenda Page 81 of 95

CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA

BUDGETARY COMPARISON SCHEDULE
JULY 1, 2022 THROUGH JUNE 30, 2023
2022/23 YTD Amended
Budget Variance
(Under) Over
2022/23 YTD Amended
Budget Variance %
(Under) Over
2022/23 YTD
Amended Budget
2022/23 YTD
Actual
2022/23 Annual
Amended Budget
2022/23 Remaining
Amended Budget
2022/23 Remaining
Amended Budget %
Operating revenues
Revenue - electricity, net
Other revenues
$ 1,182,869,000
2,742,000
1,185,611,000
$ 1,165,886,425
1,890,831
1,167,777,256
$ (16,982,575)
(851,169)
(17,833,744)
99%
69%
98%
$ 1,182,869,000
2,742,000
1,185,611,000
$ 16,982,575
851,169
17,833,744
1%
31%
Total operating revenues 2%
Energy costs
Energy procurement
Total energy costs
1,056,282,000
1,056,282,000
1,053,915,579
1,053,915,579
(2,366,421)
(2,366,421)
100%
100%
1,056,282,000
1,056,282,000
2,366,421
2,366,421
0%
0%
Operating revenues less energy costs 129,329,000 113,861,678 (15,467,322) 88% 129,329,000 15,467,322 12% Operating Expenditures
Staffing
Technical services
Legal services
Other professional services
Communications and outreach
Mailers
Billing data manager
SCE services
13,976,000
1,436,000
1,243,000
1,902,000
2,018,000
1,346,000
10,518,000
2,116,000
4,663,000
5,877,000
45,095,000
13,285,796
1,227,478
689,605
726,159
1,019,769
617,507
10,476,663
2,306,466
1,815,630
2,518,280
34,683,353
(690,204)
(208,522)
(553,395)
(1,175,841)
(998,230)
(728,493)
(41,337)
95%
85%
55%
38%
51%
46%
100%
109%
39%
43%
77%
13,976,000
1,436,000
1,243,000
1,902,000
2,018,000
1,346,000
10,518,000
2,116,000
4,663,000
5,877,000
45,095,000
690,204
208,522
553,395
1,175,841
998,230
728,493
5%
15%
45%
62%
49%
54%
0%
-9%
61%
57%
23%
41,337
190,466 (190,466)
2,847,370
3,358,720
10,411,647
Customer programs
General and administrations
Total operating expenditures
(2,847,370)
(3,358,720)
(10,411,647)
Operating income 84,234,000 79,178,325 (5,055,676) 94% 84,234,000 5,055,676 6% Non-operating revenues (expenditures)
Interest income 486,000
(732,000)
-
1,770,273
(653,566)
(739)
1,284,273
78,434
364%
89%
0%
486,000
(732,000)
(1,284,273)
(78,434)
739
Finance and interest expense
Other Income and Expense
11%
(739) 0%
Total non-operating revenues (expenditures) (246,000) 1,115,968 1,361,968 (246,000) (1,361,968) 554% Change in net position 83,988,000 80,294,292 (3,693,707) 96% 83,988,000 3,693,708 4% Other uses
Capital outlay
Depreciation and Amortization
Total other uses
225,000
(622,000)
(397,000)
84,385,000
78,404
(601,579)
(523,175)
80,817,468
(146,596)
20,421
(126,175)
(3,567,532)
35%
97%
132%
96%
225,000
(622,000)
(397,000)
84,385,000
146,596
(20,421)
126,175
65%
3%
Change in fund balance $ $ $ $ $ 3,567,532 4%
Agenda Page 82 of 95
Presentation of
FY 2022-23 Financial Results
October 25, 2023
Agenda Page 83 of 95
Summary
CPA received a “clean” audit opinion of its FY 2022-23 financial results from its Auditor, Baker Tilly
CPA increased its net position and liquidity by $80.3 million and $162.8 million respectively bringing Days Liquidity on Hand to 97 days and the Reserve Percentage (Net position plus Fiscal Stabilization Fund / Annual Expenses) to 20% CPA’s FY 2022-23 financial results benefited from the following:
• An increase in retail rates on July 1, 2022 and April 1, 2023 • Rising interest rates which allowed CPA to earn more interest income • $10.4 million of California Arrearage Payment Program (2022 CAPP) funds which reduced eligible past due accounts receivable in early January 2023 • An increase of the line of credit with JP Morgan from $80 million to $160 million Agenda Page 84 of 95
2 Summary - Continued
CPA financial results were negatively impacted by:
• A heat wave in September 2022
• Gas and energy price shocks in December 2022 and January 2023, • Higher than budgeted renewable energy costs
• Costs incurred in the FY 2022/23 arising from prior years • Cooler than normal weather in the spring of 2023 which reduced electricity consumption and revenue
CPA was within budget limits for all budget expense line items with the exception of SCE service expenses ($190 thousand, or 9% over amended budget).

Agenda Page 85 of 95
3 Balance Sheet Components, as of June 30:
4 A B C D E F
2023 % Total 2022 % Total % Change
1 Current assets
2 Cash and cash equivalents $ 132,786,879 32.4% 54,537,672 $ 21.6% 143% 3 Accounts receivable, net of allowance 123,259,054 30.0% 96,570,771 38.3% 28% 4 Accrued revenue 87,229,664 21.3% 55,496,791 22.0% 57% 5 Other receivables 0.2% 7,659,464 828,416 3.0% -89%
6 Prepaid expenses 46,152,849 11.3% 6,138,404 2.4% 652% 7 Deposits 15,951,306 3.9% 26,115,529 10.4% -39%
8 Restricted cash 1,200,000 0.3% 2,400,000 1.0% -50%
9 Total current assets 407,408,168 99.3% 248,918,632 98.7% 64% 10 Noncurrent assets
11 Capital assets, net of depreciation 0.1% 674,257 544,973 0.3% -19% 12 Intangible - right-to-use lease asset 2,201,743 0.5% 2,584,651 1.0% -15% 13 Deposits 0.0% 88,875 0.0% 88,875 0%
14 Total noncurrent assets 2,835,591 0.7% 3,347,784 1.3% -15% 15 Total assets $ 410,243,759 100% 252,266,416 $ 100% 63% ASSETS
Agenda Page 86 of 95
Balance Sheet Components, as of June 30:
5 A B C D E F
2023 % Total 2022 % Total % Change
16 Current liabilities
17 Accounts payable $ 7,008,961 3.7% 4,526,315 $ 4.1% 55% 18 Accrued cost of electricity 159,985,884 84.8% 83,629,207 75.3% 91% 19 Other accrued liabilities 2,774,283 1.5% 2,403,579 2.2% 15% 20 User taxes and energy surcharges due to other governments 8,570,857 4.5% 6,026,358 5.4% 42% 21 Security deposits from energy suppliers 194,700 0.1% 1,013,500 0.9% -81% 22 Unearned program funds 4,352,484 2.3% 3,504,033 3.2% 24% 23 Lease liability, current 403,141 0.2% 346,988 0.3% 16% 24 Total current liabilities 183,290,311 97.1% 101,449,979 91.4% 81% 25 Noncurrent liabilities
26 Supplier security deposits 3,149,860 1.7% 6,904,000 6.2% -54% 27 Lease liability, noncurrent 2,256,068 1.2% 2,659,209 2.4% -15% 28 Total noncurrent liabilities 5,405,928 2.9% 9,563,209 8.6% -43% 29 Total liabilities $ 188,696,239 100% 111,013,188 $ 100% 70%

LIABILITIES
Agenda Page 87 of 95
6 Balance Sheet Components, as of June 30:

A B C D E F
2023 % Total 2022 % Total % Change
30 Fiscal Stabilization Fund - -
31 Investment in capital assets $ 0.04% 252,712 87,507 $ 0.18% -65% 32 Restricted for collateral 1,200,000 0.54% 2,400,000 1.70% -50% 33 Unrestricted 220,260,013 99.42% 138,600,516 98.12% 59% 34 Total net position $ 221,547,520 100.00% 141,253,228 $ 100.00% 57%

NET POSITION

DEFERRED INFLOWS OF RESOURCES
Agenda Page 88 of 95
Select Financial Indicators
Working capital, equity and available cash increased largely as a result of the increase in net position. Days Liquidity on Hand increased from 58 to 97 days as a result of an increase in cash and increase in the bank line of credit The current ratio and margins fell slightly as a result of rising electricity costs 7 Jun-23 Jun-22 % Change Description
Working Capital 224,117,857 147,468,653 52% Current Assets less Current Liabilities Current Ratio 2.2 2.5 -9% Current Assets divided by Current Liabilities Days Sales Outstanding 39 41 -5% Accounts receivable divided by Sales divided by 365 Equity 221,547,520 141,253,228 57% Net Position plus Fiscal Stabilization Fund Equity to Assets % 54% 56% Equity (Net Position + FSF) divided by Total Assets Available Cash 129,442,319 46,620,172 178% Unrestricted cash and cash equivalents less supplier deposits Available Line of Credit 159,853,000 79,853,000 100% Total Line of Credit less Borrowing and Letters of Credit Total Liquidity 289,295,319 126,473,172 129% Sum of Available Cash and Line of Credit Days Liquidity on Hand (TTM) 97 58 67% Total Liquidity divided by trailing 12 month expenses divided by 365 Gross Margin 10% 11% Operating revenue less energy cost divided by operating revenue Net Margin 7% 8% Change in net position divided by operating revenue Reserve % 20% 18% Net Position plus Fiscal Stabilization Fund divided by total operating expenses Agenda Page 89 of 95
Budget to Actual Analysis
Electricity revenue was in line with the Amended Budget.

Other revenues arise primarily from funding received through the California Public Utilities Commission (CPUC) to offset Power Share Program costs 8 A B C D E F
2022/23 YTD
Amended Budget
2022/23 YTD
Budget
2022/23 YTD
Actual
2022/23 YTD Base
Budget Variance
(Under) Over
2022/23 YTD Base
Variance %
(Under) Over
Operating revenues
1 Revenue - electricity, net $ 1,182,869,000 $ 1,110,781,000 $ 1,165,886,425 $ 55,105,425 5% 2 Other revenues 2,742,000 2,742,000 1,890,831 (851,169) -31% 3 Total operating revenues 1,185,611,000 1,113,523,000 1,167,777,256 54,254,256 5% Agenda Page 90 of 95
Budget to Actual Analysis
Energy procurement costs were in-line the Amended Budget. Results were negatively impacted by the September 2022 heat wave, gas and energy price shocks in December 2022 and January 2023, higher than budgeted renewable energy costs, and an accrued but yet to be assessed Resource Adequacy compliance penalty.

Operating revenue less energy costs (gross margin) was $15.5 million or 12% below the Amended Budget and $129 million or 53% below the Base Budget 9 A B C D E F
2022/23 YTD
Amended Budget
2022/23 YTD
Budget
2022/23 YTD
Actual
2022/23 YTD Base
Budget Variance
(Under) Over
2022/23 YTD Base
Variance %
(Under) Over
Energy costs
4 Energy procurement 1,056,282,000 870,533,000 1,053,915,579 183,382,579 21% 5 Total energy costs 1,056,282,000 870,533,000 1,053,915,579 183,382,579 21% 6 Operating revenues less energy costs 129,329,000 242,990,000 113,861,678 (129,128,322) -53% Agenda Page 91 of 95
Budget to Actual Analysis
Operating expenses were 23% under the Base Budget due primarily to non-utilization of contingencies, conservative use of funds, the performance of services later in the year than budgeted, and lower staffing costs
CPA was within budget limits for all budget expense line items with the exception of SCE service expenses ($190 thousand, or 9% over amended budget). 10 A B C D E F
2022/23 YTD
Amended Budget
2022/23 YTD
Budget
2022/23 YTD
Actual
2022/23 YTD Base
Budget Variance
(Under) Over
2022/23 YTD Base
Variance %
(Under) Over
Operating Expenditures
7 Staffing 13,976,000 13,976,000 13,285,796 (690,204) -5% 8 Technical services 1,436,000 1,436,000 1,227,478 (208,522) -15% 9 Legal services 1,243,000 1,243,000 689,605 (553,395) -45% 10 Other professional services 1,902,000 1,902,000 726,159 (1,175,841) -62% 11 Communications and outreach 2,018,000 2,018,000 1,019,769 (998,230) -49% 12 Mailers 1,346,000 1,346,000 617,507 (728,493) -54%
13 Billing data manager 10,518,000 10,474,000 10,476,663 2,663 0% 14 SCE services 2,116,000 2,116,000 2,306,466 190,466 9% 15 Customer programs 4,663,000 4,663,000 1,815,630 (2,847,370) -61% 16 General and administrations 5,877,000 5,877,000 2,518,280 (3,358,720) -57% 17 Total operating expenditures 45,095,000 45,051,000 34,683,353 (10,367,647) -23% 18 Operating income 84,234,000 197,939,000 79,178,325 (118,760,676) -60% Agenda Page 92 of 95
Budget to Actual Analysis
Finance and interest expenses exceeded budget due to the utilization of the line of credit during and after the heat wave in September 2022 and energy price spikes in December 2022 and January 2023.

Interest income exceeded the budget due to higher interest rates and larger cash balances than budgeted.
11 A B C D E F
2022/23 YTD
Amended Budget
2022/23 YTD
Budget
2022/23 YTD
Actual
2022/23 YTD Base
Budget Variance
(Under) Over
2022/23 YTD Base
Variance %
(Under) Over
Non-operating revenues (expenditures)
19 Interest income 486,000 486,000 1,770,273 1,284,273 264% 20 Finance and interest expense (732,000) (562,000) (653,566) (91,566) 16% 21 Other Income and Expense - - (739) (739) 0%
22 Total non-operating revenues (expenditures) (246,000) (76,000) 1,115,968 1,191,968 23 Change in net position 83,988,000 197,863,000 80,294,292 (117,568,708) -59% Other uses
24 Capital outlay 225,000 225,000 78,404 (146,596) -65% 25 Depreciation and Amortization (622,000) (622,000) (601,579) 20,421 -3% 26 Total other uses (397,000) (397,000) (523,175) (126,175) 32% 27 Change in fund balance $ 84,385,000 $ 198,260,000 $ 80,817,468 $ (117,442,532) -59% Agenda Page 93 of 95
Thank You! Questions?
Agenda Page 94 of 95
Budget to Actual Analysis Detail
Other professional services were 62% under base budget due to $300,000 collection services that were not utilized and lower than budgeted IT services and accounting support services Communications and outreach and Customer Programs were 49% and 61% under the base budget mainly due to customer programs expenses such as, CalEVIP, Green Leader, Building Codes, and Workforce Development, being incurred more slowly than budgeted. The completion of CPA’s enrollment goal for PowerShare earlier than budgeted reduced communications costs by approximately $600,000
Mailers was 54% under base budget mainly due to fewer than budgeted NEM true-up letters and checks
General and administrations were 57% under base budget mainly due to a budgeted $2 million surety bond expense that was unused
Overall, operating expenses were 23% under the Base Budget Agenda Page 95 of 95
13

Clean Power Alliance Finance CommitteeOctober 25, 2023

Clean Power Alliance Finance Committee
October 25, 2023