Finance Committee of the
Clean Power Alliance of Southern California
Regular Meeting
Wednesday, February 28, 2024
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
Administrative Conference Room
601 Carmen Drive
Camarillo, CA 93010
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
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, Agenda Page 1 of 29
the entire Consent Agenda, or individual items in the Regular Agenda. Please refer to Policy No. 8 – Public Comment for additional information.
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ACCESSIBILITY: Meetings are accessible to people with disabilities. Individuals who need special assistance or a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting materials, should contact the Clerk of the Board at least two (2) working days before the meeting at [email protected] or (213) 713- 5995. Notification in advance of the meeting, while not required, will enable us to make reasonable arrangements to ensure accessibility to this meeting and the materials related to it.
CALL TO ORDER & ROLL CALL
GENERAL PUBLIC COMMENT
CONSENT AGENDA
1. Approve Minutes from the January 11, 2024, Finance Committee Meeting
2. Receive and File January 2024 Risk Management Team Report
3. Receive and File December 2023 and January 2024 Investment Report
4. Receive and File FY 2023-2024 Q2 Financial Report and December 2023 Financial Dashboard (Revised)
REGULAR AGENDA
5. Report from the Chief Financial Officer
COMMITTEE MEMBER COMMENTS
ADJOURN – NEXT MEETING ON MARCH 27, 2024
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 29
Staff Report – Agenda Item 1
To: Finance Committee
Subject: Approve Minutes from January 11, 2024 Finance Committee Meeting
Date: February 28, 2024
RECOMMENDATION
Approve.
ATTACHMENT
1. Minutes
Agenda Page 3 of 29
Finance Committee Item 1
MINUTES
Finance Committee of the
Clean Power Alliance of Southern California
Regular Meeting
Thursday, January 11, 2024, 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
Clean Power Alliance
Executive Conference Room
801 S. Grand Ave., Suite 400
Los Angeles, CA 90017
Claremont City Hall
Conference 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 Gladys Campos, Deputy Clerk of the Board, 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.
Agenda Page 4 of 29
Finance Committee Item 1
CONSENT AGENDA
1. Approve Minutes from the November 28, 2023, Finance Committee Meeting
2. Receive and File November and December 2023 Risk Management Team Report
3. Receive and File November 2023 CPA Investment Report
4. Receive and File October 2023 Financial Dashboard
Motion: Committee Member O’Connor, Santa Monica
Second: Committee Member Kulcsar, Carson
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 a gain of $6 million in October 2023.
Financial results were below budget primarily due to a one-time charge related to renewable electricity acquired from Southern California Edison (SCE). Mr. McNeil noted that certificates of deposits (CDs) were purchased to take advantage of higher interest rates in November. Mr. McNeil noted that due to a backlog of past due residential accounts, SCE collection activities have been slower than expected. Mr. McNeil concluded with a summary of CPA’s banking relationships.
Committee Member Zuckerman asked questions regarding the purchase of renewable energy from SCE. In response, Mr. McNeil noted that CPA purchased renewable energy from SCE through long-term contracts via that Voluntary Allocation Market Offer Process (VAMO) at a price that fluctuates each year based on market prices. In response to Committee Member Kulcsar’s questions about investments, Mr. McNeil explained that CPA began investing in CDs in November 2023; LAIF is the only other current investment partner. Mr. Bardacke clarified that the CDs were purchased from River City Bank, with which CPA has a depository relationship.
6. A. Direct Staff to Negotiate a Two-Year Extension and Amendment of its Credit Agreement with JPMorgan and B. Recommend to the Board of Directors the Approval of an Extension and Amendment of its Credit Agreement with JPMorgan Kate Freeman, Strategic Finance Manager, provided a presentation on the item.
The current credit agreement is set to expire on March 31, 2024. Ms. Freeman reviewed the advantages of maintaining a credit facility and provided a comparison between the two banks that submitted proposals, JPMorgan Chase Bank (JPM) and Royal Bank of Canada (RBC). Staff recommends moving forward with JPMorgan’s proposed agreement, which offers more savings than the current agreement and compares favorably with lines of credit provided to other CCAs.
In response to Committee Member Kulcsar’s question about any new contract language terms, Ms. Freeman explained that new contract language relates to the fee reduction, the extension of the term, and debt service compliance covenant.
Committee Member Newman asked about any advantage to being rated by both Agenda Page 5 of 29
Finance Committee Item 1
credit rating agencies, S&P and Moody’s; Mr. McNeil clarified there was no advantage.
Motion: Committee Member Newman, Thousand Oaks
Second: Committee Member Zuckerman, Rolling Hills Estates Vote: Item 6 was approved by a roll call vote.
7. Recommend to the Board of Directors that Staff be Authorized to Invest CPA Funds in the California Asset Management Program
David McNeil, Chief Financial Officer, presented the CAMP Investment Proposal.
Mr. McNeil summarized CPA’s current investments. CPA is looking for opportunities to invest at higher rates due to reaching the 30% cap in CDs. Mr.
McNeil described CAMP’s investment pools as having low risk and high-quality financial securities, flexibility to move money, and better returns. There are two methods of investing in CAMP, either as a member of the JPA or as an investor; staff will consult with the Executive Committee to determine the manner in which CPA should invest in CAMP. However, staff requests that the committee recommend to the Board that CPA invest funds in CAMP.
The Committee supported the investment.
Motion: Committee Member Calaycay, Claremont
Second: Committee Member Zuckerman, Rolling Hills Estates Vote: Item 7 was approved by a roll call vote.
COMMITTEE MEMBER COMMENTS
None.
ADJOURN
Committee Chair Santangelo adjourned the meeting at 11:36 a.m.
Agenda Page 6 of 29
Staff Report – Agenda Item 2
To: Finance Committee
From: Lyon Hardgrave, Director, Energy Risk Management
Approved By: Ted Bardacke, Chief Executive Officer
David McNeil, Chief Financial Officer
Subject: Receive and File January 2024 Risk Management Team Report Date: February 28, 2024
January 2024 RMT REPORT
Key Actions
• Reviewed the counterparty credit exposure summary
• Reviewed October 2023 day-ahead load forecast performance • Reviewed December 2023 market performance
• Reviewed energy positions and approved 2024-2028 hedges for monthly RFO • Reviewed positions for Resource Adequacy (RA), RPS and Carbon-Free energy • products (CF)
• Update provided on 2023 Long Term PPA deliveries
• Reviewed the 2025-2027 slice of day RA position
• Reviewed Energy Risk Management Policy (ERMP) compliance for RA, REC, CF, and energy
• Reviewed January 2024 CRR Allocations
• Reviewed and approved the Negative REC Price Strategy Policy Compliance
Policy Deviation Required Action
In December 2023, the
second quarter (April to
June) Energy Hedge
Position increased above
the maximum second
quarter hedge limit
starting in 2027 and
continuing in the second
None.
The policy deviations arise from CPA continuing to enter into long term contracts for renewable energy consistent with its objective to reduce exposure to the short-term renewable energy market. The deviations occur during
the second quarter because electricity consumption by
CPA customers is projected to be at its lowest level in this quarter. The deviations are expected to resolve
Agenda Page 7 of 29
Finance Committee Item 2
quarter of each year
through the end of the
measurement window in
2033.
themselves as the electricity production period nears and the corresponding policy hedge limit maximums increase
above the level of energy hedges under contract.
During the 2024 ERMP review, staff will consider
proposing an amendment to the ERMP, increasing the
maximum hedge limit in the second quarter of years that are four and more years in the future to eliminate policy deviations caused by load and generation patterns
specific to the second quarter.
ATTACHMENT
None.
Agenda Page 8 of 29
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 December 2023 and January 2024 Investment Report
Date: February 28, 2024
RECOMMENDATION
Receive and File December 2023 and January 2024 Investment Reports.
ATTACHMENTS
1. December 2023 Investment Report
2. January 2024 Investment Report
Agenda Page 9 of 29
Agenda Page 10 of 29
Agenda Page 11 of 29
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 FY 2023-24 Q2 Financial Report and December 2023 Financial Dashboard
Date: February 28, 2024
RECOMMENDATION
Receive and File.
ATTACHMENTS
1. December 2023 Financial Dashboard
2. FY 2023-24 Q2 Financial Statements
Agenda Page 12 of 29
Revised
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
Dec
2023
Financial Dashboard
Note: Numbers may not sum up due to rounding.
Active Accounts
1,007,478
Participation Rate
93.3%
YTD Sales Volume
5,701 GWh
Dec Volume
839 GWh
Agr/Oth Com-Lg
22%
Com-Sm
30%
Res
46%
In December 2023, CPA recorded an operating gain of $9.4 million, 60% or $14.1 million less than the budgeted operating gain of $23.6 million. CPA's service area experienced warmer than normal weather in December 2023 which reduced electric heating use and fewer cloudy days than normal which increased behind the meter solar production. These conditions resulted in revenue that was 11% below budget for the month.
For the year-to-date (YTD) CPA recorded net income of $51.8 million, 51% or $54.2 million below budget.
CPA’s financial results were negatively impacted by cooler than normal temperatures in late summer and early fall and warmer than normal temperatures in December 2023, which reduced revenues and resulted in losses on certain energy hedges. YTD results were also negatively impacted by an increase in October of the CPUC’s 2023 Renewable Energy Market Price Benchmark (MPB), which is used to calculate certain renewable energy purchase costs in calendar year of 2023. Absent the MPB adjustment, the YTD cost of energy would have been $715 million or 2% below budget. YTD operating costs were 23% below budget due to lower than budgeted spending on general and administrative expenses, customer programs and other services, and the non-utilization of contingencies.
As of December 31, 2023, CPA had unrestricted cash, cash equivalents, and investments of $240.9 million, and $159.853 million available in its bank line of credit representing 118 Days Liquidity on Hand.
CPA is financially sound and in compliance with its bank and other credit covenants.
Agenda Page 13 of 29
2023 2022
Current assets
Cash and cash equivalents $ 200,966,884 $ 49,457,464
Accounts receivable, net of allowance 143,049,005 114,647,063 Accrued revenue 75,149,613 53,579,027
Other receivables 2,915,486 20,717,137
Prepaid expenses 2,231,976 4,869,439
Deposits 15,195,259 34,849,518
Investments 40,000,000 -
Restricted cash 1,200,000 2,400,000
Total current assets 480,708,225 280,519,647
Noncurrent assets
Capital assets, net of depreciation 703,152 653,517
Intangible - right-to-use lease asset 2,010,289 2,393,197 Deposits 88,875 88,875
Total noncurrent assets 2,802,316 3,135,589
Total assets $ 483,510,541 $ 283,655,236
Current liabilities
Accounts payable $ 2,678,412 $ 4,245,080
Accrued cost of electricity 178,265,605 134,730,208
Other accrued liabilities 3,114,561 2,748,289
User taxes and energy surcharges due to other governments 10,812,496 8,045,585 Security deposits from energy suppliers 3,145,500 297,915 Unearned program funds 4,218,633 3,094,669
Lease liability, current 414,926 380,430
Counterparty collateral deposit 116,640 -
Total current liabilities 202,766,772 153,542,177
Noncurrent liabilities
Supplier security deposits 2,440,060 3,132,849
Lease liability, noncurrent 2,045,635 2,460,561
Accrued Retention Incentive-N/C 261,561 -
Total noncurrent liabilities 4,747,257 5,593,410
Total liabilities $ 207,514,029 $ 159,135,587
Investment in capital assets $ 252,880 $ 205,723
Restricted for collateral 1,200,000 2,400,000
Unrestricted 274,543,632 121,913,926
Total net position $ 275,996,512 $ 124,519,649
NET POSITION
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENT OF NET POSITION
AS OF DECEMBER 31, 2023 AND 2022
ASSETS
LIABILITIES
Revised
Agenda Page 14 of 29
2023 2022
OPERATING REVENUES
Electricity sales, net $ 813,632,690 $ 608,016,496
Other revenue 813,169 1,197,332
Total operating revenues 814,445,859 609,213,828
OPERATING EXPENSES
Cost of electricity 742,637,969 609,676,090
Contract services 10,220,112 9,369,926
Staff compensation 8,476,909 5,930,953
General and administration 1,321,704 1,119,257
Total operating expenses 762,656,694 626,096,226
Operating income (loss) 51,789,165 (16,882,397)
NONOPERATING REVENUES (EXPENSES)
Interest income 3,010,977 520,945
Interest and related expenses (320,230) (336,877)
Interest expense - lease (30,920) (35,251)
Total nonoperating revenues (expenses) 2,659,827 148,818 CHANGE IN NET POSITION 54,448,992 (16,733,580)
Net position at beginning of period 221,547,520 141,253,228 Net position at end of period $ 275,996,512 $ 124,519,648
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
FOR SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
Agenda Page 15 of 29
2023 2022
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Net operating income (loss) $ 51,789,165 $ (16,882,397) Adjustments to reconcile operating income to net
cash provided (used) by operating activities
Depreciation expense 105,422 110,866
Amortization expense 191,454 191,454
Revenue adjusted for allowance for uncollectible accounts 18,606,127 10,601,906 (Increase) decrease in:
Accounts receivable (38,396,078) (28,678,197)
Other receivables (2,087,070) (13,057,672)
Accrued revenue 12,080,051 1,917,764
Prepaid expenses 43,920,873 1,268,965
Deposits 756,047 (8,733,988)
Increase (decrease) in:
Accounts payable (4,330,550) (281,235)
Energy market settlements payable 2,617,484 11,928,247
Accrued cost of electricity 15,662,236 39,172,754
Other accrued liabilities 575,856 355,205
User taxes due to other governments 2,241,639 2,019,228 Supplier security deposits 2,241,000 (4,486,736)
Unearned program funds (133,851) (409,364)
Counterparty collateral deposit 116,640 -
Net cash provided (used) by operating activities 105,956,444 (4,963,200)
CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES
Loan proceeds - 60,000,000
Principal payments on loan - (60,000,000)
Interest and related expense payments (294,247) (347,372) Net cash provided (used) by non-capital
financing activities (294,247) (347,372)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments to acquire capital assets (263,602) (90,125)
Payments on lease (for both principal and interest) (229,567) (200,456) Net cash provided (used) by capital and related financing activities (493,169) (290,581)
CASH FLOWS FROM INVESTING ACTIVITIES
Investments (40,000,000)
Interest income received 3,010,977 520,945
Net cash provided (used) by investing activities (36,989,023) 520,945 Net change in cash and cash equivalents 68,180,005 (5,080,207) Cash and cash equivalents at beginning of period 133,986,879 56,937,672 Cash and cash equivalents at end of period $ 202,166,884 $ 51,857,464 Reconciliation to the Statement of Net Position
Cash and cash equivalents (unrestricted) $ 200,966,884 $ 49,457,464 Restricted cash 1,200,000 2,400,000
Cash and cash equivalents $ 202,166,884 $ 51,857,464
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
STATEMENT OF CASH FLOWS
FOR SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
Agenda Page 16 of 29
2023/24 YTD
Budget
2023/24 YTD
Actual
2023/24 YTD
Budget Variance
(Under) Over
2023/24 YTD
Actual / Budget
% 2023/24 Budget
2023/24
Remaining
Budget
2023/24
Remaining
Budget %
Operating revenues
Revenue - electricity, net $ 861,337,804 $ 813,632,690 $ (47,705,114) 94% 1,576,284,820 $ $ 762,652,131 48% Other revenues 1,591,709 813,169 (778,540) 51% 3,238,179 2,425,011 75% Total operating revenues 862,929,513 814,445,859 (48,483,654) 94% 1,579,523,000 765,077,141 48% Energy costs
Energy procurement 731,106,137 742,637,969 11,531,832 102% 1,243,338,000 500,700,031 40% Total energy costs 731,106,137 742,637,969 11,531,832 102% 1,243,338,000 500,700,031 40% Operating revenues less energy costs 131,823,375 71,807,890 (60,015,485) 54% 336,185,000 264,377,110 79% Operating Expenditures
Staffing 9,614,000 8,476,909 (1,137,091) 88% 20,072,000 11,595,091 58% Technical services 899,225 651,163 (248,062) 72% 1,809,000 1,157,837 64% Legal services 526,990 315,702 (211,288) 60% 1,054,000 738,298 70% Other professional services 1,148,980 495,167 (653,813) 43% 1,975,000 1,479,833 75% Communications and outreach 1,089,840 755,401 (334,439) 69% 2,157,000 1,401,599 65% Mailers 796,440 456,536 (339,905) 57% 1,023,000 566,465 55% Billing data manager 5,587,660 5,357,069 (230,591) 96% 11,262,000 5,904,931 52% SCE services 1,056,150 1,053,676 (2,474) 100% 2,165,000 1,111,324 51% Customer programs 2,987,980 1,135,399 (1,852,581) 38% 9,643,000 8,507,601 88% General and administrations 2,133,044 1,321,704 (811,340) 62% 4,501,000 3,179,296 71% Total operating expenditures 25,840,309 20,018,725 (5,821,584) 77% 55,661,000 35,642,275 64% Operating income 105,983,066 51,789,165 (54,193,901) 49% 280,524,000 228,734,835 82% Non-operating revenues (expenditures)
Interest income 1,472,430 3,010,977 1,538,547 204% 4,314,000 1,303,023 30% Finance and interest expense (958,210) (351,150) 607,060 37% (1,563,000) (1,211,850) 78% Total non-operating revenues (expenditures) 514,220 2,659,827 2,145,607 517% 2,751,000 91,173 3% Change in net position 106,497,286 54,448,992 (52,048,294) 51% 283,275,000 228,826,008 81% Other uses
Capital outlay 189,000 263,602 74,602 139% 378,000 114,398 30% Depreciation and Amortization (361,310) (296,876) 64,434 82% (719,000) (422,124) 59% Total other uses (172,310) (33,275) 139,035 19% (341,000) (307,725) 90% Change in fund balance $ 106,669,596 $ 54,482,267 $ (52,187,330) 51% $ 283,616,000 $ 229,133,733 81%
CLEAN POWER ALLIANCE OF SOUTHERN CALIFORNIA
BUDGETARY COMPARISON SCHEDULE
FOR SIX MONTHS ENDED DECEMBER 31, 2023
Agenda Page 17 of 29
Note Dec-22 Mar-23 Jun-23 Sep-23 Dec-23
1 Working Capital 126,977,470 109,673,582 224,117,857 231,661,922 277,941,452 2 Current Ratio 1.8 1.7 2.2 1.8 2.4
3 Days Sales Outstanding 34 33 39 34 32
4 Equity 124,519,649 107,148,653 221,547,520 228,949,840 275,996,512 5 Equity to Assets % 44% 39% 54% 45% 57%
6 Adjusted Unrestricted Cash 46,324,615 91,975,742 129,442,319 210,880,080 235,264,684 7 Available Line of Credit 79,853,000 79,853,000 159,853,000 159,853,000 159,853,000 8 Total Liquidity 126,177,615 171,828,742 289,295,319 370,733,080 395,117,684 9 Days Liquidity on Hand (TTM) 48 59 97 114 118
10 Gross Margin -0.1% -1% 10% 3% 9%
11 Net Margin -3% -4% 7% 2% 7%
Percentage Change from Prior Quarter
Working Capital -30% -14% 104% 3% 20%
Current Ratio 0% -8% 33% -17% 29%
Days Sales Outstanding -9% -4% 17% -13% -5%
Equity -10% -14% 107% 3% 21%
Equity to Assets % 28% -11% 39% -17% 28%
Adjusted Unrestricted Cash -52% 99% 41% 63% 12%
Available Line of Credit 100% 0% 100% 0% 0%
Total Liquidity -7% 36% 68% 28% 7%
Days Liquidity on Hand (TTM) -14% 25% 64% 18% 3%
Note Description Note Description
1 Current Assets less Current Liabilities 7 Total Line of Credit less Borrowing and Letters of Credit 2 Current Assets divided by Current Liabilities 8 Sum of Available Cash and Line of Credit 3 Accounts receivable divided by Sales divided by 365 9 Total Liquidity divided by trailing 12 month expenses divided by 365 4 Net Position plus Fiscal Stabilization Fund 10 Operating revenue less energy cost divided by operating revenue 5 Equity (Net Position + FSF) divided by Total Assets 11 Change in net position divided by operating revenue 6 Unrestricted cash and cash equivalents less supplier deposits Select Financial Indicators
-
50 100
150
200
250
300
350
400 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Millions ($)
Fiscal Quarter
Financial Indicators
Working Capital Equity Total Liquidity
Agenda Page 18 of 29
Staff Report – Agenda Item 5
To: Finance Committee
From: David McNeil, Chief Financial Officer
Subject: Report from the Chief Financial Officer
Date: February 28, 2024
The CFO will provide an update on quarterly financial results.
ATTACHMENT
1. FY 2023-24 Financial Performance and Outlook
Agenda Page 19 of 29
FY 2023/24 Financial Performance
and Outlook
February 28, 2024
Agenda Page 20 of 29
Summary of YTD Financial Results
CPA recorded a net gain of $51.8 million through the first six months of FY 2023-24, up from a $16.7 million loss in the first six months of FY 2022-23. Over the past 12 months CPA more than doubled its net position which increased from $125 million as of December 31, 2022 to $275 million as of December 31, 2023.
CPA net income for the year to date (YTD) was $54.2 million below budgeted net income of $106 million. The following factors impacted YTD results:
• Revenue was $814.4 million, $48.5 million or 6% lower than budget • Cost of energy was $742.6 million, $11.5 million or 2% higher than budget • Operating costs were $20 million or 23% lower than Budget As of December 31, 2023, CPA had unrestricted cash, cash equivalents, and investments of $240.9 million and $159.853 million available in its bank line of credit representing 118 Days Liquidity on Hand.
CPA is in sound financial health and in compliance with its bank and other credit covenants.
2 Agenda Page 21 of 29
YTD Monthly Income Statement and Budget to Actual
Comparison - Summary (GAAP)
3 Rows A-F represent a summary of CPA’s income statement.
Rows G-L represent a summary of Income Statement results minus Budgeted results for the applicable line item
Income Statement Jul 23 Aug 23 Sep 23 Oct 23 Nov 23 Dec 23 YTD A Energy Revenues 160,289,000 181,363,000 141,798,000 123,198,000 100,442,000 107,356,000 814,446,000 B Cost of Energy 144,080,000 170,787,000 152,084,000 113,180,000 67,902,000 94,606,000 742,639,000 C Net Energy Revenue 16,209,000 10,576,000 (10,286,000) 10,018,000 32,540,000 12,750,000 71,807,000 D Operating Expenses 3,168,000 3,314,000 3,540,000 3,536,000 3,145,000 3,316,000 20,019,000 E Non Operating Revenues (Expenses) 251,000 259,000 415,000 427,000 447,000 861,000 2,660,000 F Net Income (GAAP) 13,292,000 7,521,000 (13,411,000) 6,909,000 29,842,000 10,295,000 54,448,000 Budget to Actual Jul 23 Aug 23 Sep 23 Oct 23 Nov 23 Dec 23 YTD G Energy Revenues (7,781,000) (974,000) (19,798,000) 3,044,000 (10,103,000) (12,872,000) (48,484,000) H Cost of Energy 3,518,000 7,064,000 (12,589,000) 19,654,000 (8,268,000) 2,154,000 11,533,000 I Net Energy Revenue (11,299,000) (8,038,000) (7,208,000) (16,610,000) (1,835,000) (15,026,000) (60,016,000) J Operating Expenses (1,130,000) (926,000) (713,000) (1,049,000) (1,096,000) (908,000) (5,822,000) K Non Operating Revenues (Expenses) 146,000 137,000 449,000 437,000 212,000 764,000 2,145,000 L Net Income (10,023,000) (6,975,000) (6,046,000) (15,124,000) (527,000) (13,354,000) (52,049,000) Agenda Page 22 of 29
Revenue Analysis
• CPA experienced cooler weather conditions through much of the 2nd half of 2023 and in particular during the months of August, September, and November 2023.
• Commercial load (not shown), which is less impacted by heat and air conditioning (AC) use remained within historical norms. Residential load, which is more influenced by temperature and AC use was well below projections and CPAs’ recent experience as described in the following chart. 4 Budget to Actual Jul 23 Aug 23 Sep 23 Oct 23 Nov 23 Dec 23 YTD Energy Revenues (7,781,000) (974,000) (19,798,000) 3,044,000 (10,103,000) (12,872,000) (48,484,000) Energy Revenue (Actual/Budget) % -4.9% -0.5% -14.0% 2.5% -10.1% -12.0% -6.0% Agenda Page 23 of 29
Expense Analysis
• CPA recorded a $27.6 million charge in the first half of FY 2023/24 arising from an increase to the 2023 Market Price Benchmark (MPB) as calculated by the California Public Utilities Commission. This benchmark is used to calculate certain 2023 vintage renewable energy costs acquired by CPA through the Voluntary Allocation and Market Offer (VAMO) process • Absent the MPB adjustment, the cost of energy would have been $16.1 million under budget (see row I above) for the YTD and net income would have been $39.8 million under budget 5 Income Statement (Adjusted)
FY2022 - 2023
VAMO Adjustment Jul 23 Aug 23 Sep 23 Oct 23 Nov 23 Dec 23 FY2023-24 Total Total A Energy Revenues (Adjusted) 160,289,000 181,363,000 141,798,000 123,198,000 100,442,000 107,356,000 814,446,000 814,446,000 B Cost of Energy (Adjusted) 144,080,000 170,787,000 152,084,000 90,381,000 65,549,000 92,098,000 714,979,000 714,979,000 C 2023 Market Price Bechmark 12,247,500 2,687,000 2,842,500 2,588,000 2,434,000 2,353,000 2,508,000 15,412,500 27,660,000 D Net Energy Revenue (Adjusted) (12,247,500) 13,522,000 7,733,500 (12,874,000) 30,383,000 32,540,000 12,750,000 84,054,500 71,807,000 E Operating Expenses 3,168,000 3,314,000 3,540,000 3,536,000 3,145,000 3,316,000 20,019,000 20,019,000 F Non Operating Revenues (Expenses) 251,000 259,000 415,000 427,000 447,000 861,000 2,660,000 2,660,000 G Net Income (Adjusted) (12,247,500) 10,605,000 4,678,500 (15,999,000) 27,274,000 29,842,000 10,295,000 66,695,500 54,448,000 Budget to Actual (Adjusted)
FY2022 - 2023
VAMO Adjustment Jul 23 Aug 23 Sep 23 Oct 23 Nov 23 Dec 23 FY2023-24 Total Total H Energy Revenues (Adjusted) (7,781,000) (974,000) (19,798,000) 3,044,000 (10,103,000) (12,872,000) (48,484,000) (48,484,000) I Cost of Energy (Adjusted) (B+C) 12,247,500 3,518,000 7,064,000 (12,589,000) (3,144,000) (10,620,000) (355,000) (16,126,000) (3,878,500) J Net Energy Revenue (Adjusted) (12,247,500) (11,299,000) (8,038,000) (7,209,000) 6,188,000 517,000 (12,517,000) (32,358,000) (44,605,500) K Operating Expenses (1,130,000) (926,000) (713,000) (1,049,000) (1,096,000) (908,000) (5,822,000) (5,822,000) L Non Operating Revenues (Expenses) 146,000 137,000 449,000 437,000 212,000 764,000 2,145,000 2,145,000 M Net Income (Adjusted) (12,247,500) (12,710,000) (9,817,000) (8,634,000) 5,240,000 (527,000) (13,354,000) (39,802,000) (52,049,500) Agenda Page 24 of 29
September 2022 & 2023 Comparison
6 CPA was hedged for September 2022 and 2023 expected load consistent with the Energy Risk Management Policy
In September 2022 CPA experienced a significant heat event resulting in additional load and wholesale costs. In September 2023 CPA experienced historically cool weather conditions resulting in lower electricity usage and wholesale costs.
Adjusted losses and the deviation from budget was much higher in September 2022 as compared to September 2023 reflecting higher costs and greater downside risks associated with heat waves as compared to cooler weather conditions Agenda Page 25 of 29
September 2024 Scenario Analysis
7 Hedging to a higher hedge % reduces the variability of outcomes providing greater protection against market shocks
• September 2021: normal weather – variability is low
• September 2022: extreme heat wave in early September – the variability of outcomes is high with more hedges providing greater protection
• September 2023: very cool weather results in lower than expected net income, with greater hedge % resulting in worse results. However, in the cool weather scenario the variability of outcomes is much lower than 2022 ($6.8m in 2023 compared to $16.6 million in 2022) September 2024 - Scenario Analysis
Difference from Average Net Income (in $ millions)
2021 2022 2023
80% 13.0 -37.8 -19.0
90% 13.5 -32.0 -16.9
100% 14.0 -26.3 -14.3
110% 14.5 -21.2 -12.2
High Low Difference 1.5 16.6 6.8
Weather Year
Hedge %
Agenda Page 26 of 29
FY 2023-24 Financial Outlook
Staff recently updated CPA's financial projections and expect to make a significant contribution to the net position in FY 2023/24, albeit below budget Budget to actual performance in the 2nd half of the fiscal year:
• Will be negatively impacted by an upward revision to the 2024 vintage Market Price Benchmark. Staff plan to implement a new Market Price Benchmark forecasting model for use in the FY 2024/25 Budget cycle
• May be impacted by market and weather-related events
Staff will consider the need for an amendment to the 2023/24 budget to address higher energy costs as part of its annual budget review process 8 Agenda Page 27 of 29
Thank You! Questions?
Agenda Page 28 of 29
Budget to Actual Analysis
10 Energy costs were higher than budget due
to the increase in 2023 Market Price
Benchmark
Operating expenses were lower than
budget primarily because of:
• lower spending in general administrative
expenses,
• lower spending in customer programs
• the performance of services later in the
year than budgeted, and
• the non-utilization of contingencies
2023/24 YTD
Budget
2023/24 YTD
Actual
2023/24 YTD
Budget Variance
(Under) Over
2023/24 YTD
Actual /
Budget %
Operating revenues
Revenue - electricity, net $ 861,337,804 $ 813,632,690 $ (47,705,114) 94% Other revenues 1,591,709 813,169 (778,540) 51%
Total operating revenues 862,929,513 814,445,859 (48,483,654) 94% Energy costs
Energy procurement 731,106,137 742,637,969 11,531,832 102% Total energy costs 731,106,137 742,637,969 11,531,832 102% Operating revenues less energy costs 131,823,375 71,807,890 (60,015,485) 54% Operating Expenditures
Staffing 9,614,000 8,476,909 (1,137,091) 88%
Technical services 899,225 651,163 (248,062) 72%
Legal services 526,990 315,702 (211,288) 60%
Other professional services 1,148,980 495,167 (653,813) 43% Communications and outreach 1,089,840 755,401 (334,439) 69% Mailers 796,440 456,536 (339,905) 57%
Billing data manager 5,587,660 5,357,069 (230,591) 96%
SCE services 1,056,150 1,053,676 (2,474) 100%
Customer programs 2,987,980 1,135,399 (1,852,581) 38%
General and administrations 2,133,044 1,321,704 (811,340) 62% Total operating expenditures 25,840,309 20,018,725 (5,821,584) 77% Operating income 105,983,066 51,789,165 (54,193,901) 49% Non-operating revenues (expenditures)
Interest income 1,472,430 3,010,977 1,538,547 204%
Finance and interest expense (958,210) (351,150) 607,060 37% Total non-operating revenues (expenditures) 514,220 2,659,827 2,145,607 517% Change in net position 106,497,286 54,448,992 (52,048,294) 51% Other uses
Capital outlay 189,000 263,602 74,602 139%
Depreciation and Amortization (361,310) (296,876) 64,434 82% Total other uses (172,310) (33,275) 139,035 19%
Change in fund balance $ 106,669,596 $ 54,482,267 $ (52,187,330) 51% Agenda Page 29 of 29