Executive Committee of the
Clean Power Alliance of Southern California
Special Meeting
Thursday, April 18, 2024
1:00 p.m.
Visit CPA’s YouTube Channel to view a Live Stream of the Meeting www.youtube.com/@CPApublicmeetings
*There may be a streaming delay of up to 90 seconds. This is a view-only live stream.
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 remotely at the following locations:
Signia by Hilton San Jose
Empire Conference Room
170 South Market St.
San Jose, CA 95113
Sheraton Grand Sacramento Hotel
1230 J Street
Sacramento, CA 95814
KC Kimpton Marlowe Hotel
25 Edwin H Land Blvd.
Cambridge, MA 02141
Los Angeles County Hall of Administration
Sybil Brand Conference Room, Room 372
500 West Temple Street
Los Angeles, CA 90012
Carson City Hall
Executive Conference Room
701 East Carson Street
Carson, CA 90745
Ojai City Hall
Conference Room
401 S Ventura St.
Ojai, CA 93023
Agoura Hills City Hall
Planning Conference Room
30001 Ladyface Court
Agoura Hills, CA 91301
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 Agenda Page 1
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.
NAVIGATING OUR AGENDA PACKETS
The meeting agenda packets are bookmarked PDFs, which display a list of agenda items to the left of the page and allow you to click to view specific items within the packet. If viewing in your browser, click the "document outline" button in the upper left corner of the screen. If the PDF is downloaded, the bookmark panel (ribbon icon) appears on the left side of the screen.
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 AND ROLL CALL
GENERAL PUBLIC COMMENT
CONSENT AGENDA
1. Approve Minutes from March 21, 2024, Executive Committee Meeting
REGULAR AGENDA
2. Oral Update from the CEO on CPA Operations
3. Review Draft Agenda for the May 2, 2024, Board of Directors Meeting
4. (a) Receive Presentation on FY 2024-25 Rates and (b) Recommend a Rate Setting Approach to the Board at its May 2, 2024 Meeting
5. Receive Presentation on FY 2024-25 Budget Priorities
COMMITTEE MEMBER COMMENTS
ADJOURN – NEXT REGULAR MEETING ON MAY 16, 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
Staff Report – Agenda Item 1
To: Executive Committee
Subject: Approve Minutes from the March 21, 2024 Executive Committee Meeting
Date: April 4, 2024
RECOMMENDATION
Approve.
ATTACHMENT
1. Minutes
Agenda Page 3
Executive Committee Item 1
MINUTES
Executive Committee of the
Clean Power Alliance of Southern California
Regular Meeting
Thursday, March 21, 2024
1:30 p.m.
Meeting videos are available on CPA's YouTube Channel.
http://www.youtube.com/@CPApublicmeetings
Committee Members participated in this meeting from the following locations:
Agoura Hills City Hall
Planning Conference Room
30001 Ladyface Court
Agoura Hills, CA 91301
CPA Office
Executive Conference Room
801 S. Grand Ave., Suite 400
Los Angeles, CA 90017
Beverly Hills City Hall
Council Office, 4th Floor
455 N. Rexford Drive
Beverly Hills, 90210
Camarillo City Hall
Office of the Mayor
601 Carmen Drive
Camarillo, CA 93010
Ventura County Government Center
Channel Islands Conference Room, 4th Fl
Hall of Administration
800 South Victoria Avenue
Ventura, CA 93009
Carson City Hall
Executive Conference Room
701 East Carson Street
Carson, CA 90745
Los Angeles County Hall of Administration
Sybil Brand Conference Room, Room 372
500 West Temple Street
Los Angeles, CA 90012
Ojai City Hall
Conference Room
401 S Ventura St.
Ojai, CA 93023
Hilton San Francisco Union Square
333 O’Farrell Street
San Francisco, CA 94102
South Bay Cities Council of Governments
Conference Room
2355 Crenshaw Blvd., Suite 125
Torrance, CA 90501
CALL TO ORDER & ROLL CALL
Chair Gold called the meeting to order at 1:30 p.m. and Gabriela Monzon, Clerk of the Board, conducted roll call. Chair-Elect Klein Lopez presided over the meeting.
Roll Call
Agoura Hills Deborah Klein Lopez Committee Member Remote Beverly Hills Julian Gold Chair Remote
Camarillo Susan Santangelo Committee Member Remote
Carson Cedric Hicks Committee Member Remote
Hawthorne Alex Monteiro Committee Member Present
Agenda Page 4
Executive Committee Item 1
Los Angeles County Rita Kampalath Alternate Remote
Ojai Betsy Stix Committee Member Remote
Sierra Madre Robert Parkhurst Committee Member Remote
South Pasadena Diana Mahmud Immediate Past Chair Present Ventura County Vianey Lopez Vice Chair Absent
All votes are unanimous unless otherwise stated.
GENERAL PUBLIC COMMENT
There was no public comment.
CONSENT AGENDA
1. Approve Minutes from February 15, 2024, Executive Committee Meeting Motion: Committee Member Mahmud, South Pasadena
Second: Committee Member Gold, Beverly Hills
Vote: The consent agenda was approved by a roll call vote
REGULAR AGENDA
2. Oral Update from the CEO on CPA Operations
Ted Bardacke, Chief Executive Officer, reported that the CPUC has certified CPA’s expansion plan for the cities of La Cañada Flintridge, Lynwood, and Port Hueneme, bringing CPA’s service to 38 cities and almost 1.1 million customers.
The CPUC also released a proposed decision regarding the DAC solar programs, affecting CPA’s Power Share program; CPA was awarded more capacity and may add 1,500 more customers to its program. Mr. Bardacke also discussed Assembly Bill 1852, the Sun Storage Rebate Program, and current federal lobbying efforts related to a request for $1.4 million for the Power Ready program. Staff is planning to include a proposal in CPA’s 2024-2025 budget to hire a federal lobbyist.
3. Review Draft Agenda for the April 4, 2024, Board of Directors Meeting Mr. Bardacke reviewed the consent agenda items, including the Community Advisory Committee appointment, a contract to enhance CPA’s Energy Trading and Risk Management (ETRM) system, upcoming Power Purchase Agreements for rooftop solar, and CalCCA collaboration efforts.
Items on the Regular Agenda include a presentation on Rates, Committee Chair appointments, and the Executive Committee at-large nomination period.
4. Receive Presentation on FY 2024-25 Rates Outlook
Karen Schmidt, Director of Rates and Strategy, described the three parameters that will be informing the 2024-2025 rate-setting process: the price spread among CPA’s rate products, competitiveness related to SCE’s generation rates, and the need to build financial reserves while continuing to fund local customer programs.
Agenda Page 5
Executive Committee Item 1
Mr. Bardacke noted that the Community Advisory Committee supports Scenario 3, which sets the 2025-2026 Clean Renewable Energy Product Content at 25 percent while maintaining low GHG levels. Cost and availability of renewable energy is a significant challenge. Staff requests that the Executive Committee provide direction regarding the target scenario related to budget and rate-setting to develop rate options. Staff projects that CPA will return to its current product content levels in 2027 assuming all projects come online. L.A. County CARE customers will be delayed in transitioning to 100% Green until the first quarter of 2027. Staff is working with Vice Chair Horvath’s office to develop an alternative benefit for those customers. Mr. Bardacke reviewed the FY 2024-2025 product price differentials, comparing various levels of renewable energy, noting that differentials generally widen as more carbon-free and less renewables are used. As competition for renewable energy increases, the cost of hydroelectric power is increasing, so there may be adjustments to these calculations. Ms. Schmidt presented on the competitive landscape involving SCE and CPA rates, stating that SCE’s fluctuating delivery and generation rates have not negatively impacted CPA’s competitive position. Staff will come back to the Executive Committee with a range of rate-setting approaches and budget priorities based on feedback.
Committee Member Mahmud asked whether the product differentials chart reflected FY 2025-2026 projections or a later period, and Mr. Bardacke responded that State regulation requires product content to run on a calendar year cycle, so staff has to look at targets for the calendar year 2025 and 2026 to conduct rate setting. In response to Committee Member Mahmud’s inquiry about the delay of 100% Green for some L.A. County CARE customers, staff clarified the delay affects only CARE customers in unincorporated LA County; more than 80 percent of unincorporated L.A. County’s load is already on 100% Green. In response to Committee Member Hicks’s question about Scenarios 3 and 4, Mr. Bardacke noted that Scenario 4 may not be achievable because it relies on an abundance of rain to generate hydroelectric energy. Scenario 3 would set a 25% minimum target of renewable energy and Scenario 4 would be at a minimum of zero percent renewable energy, but both would be within the same 50%GHG-free component.
Chair Gold remarked that flexibility is important to achieve as much renewable energy as possible; Mr. Bardacke agreed, adding that flexibility in rates is necessary to ensure there is enough revenue to purchase renewable energy, should hydroelectric prices increase or not be available. Committee Member Mahmud commented that it’s more cost-effective to have staff procure renewable energy before there’s a lack of hydroelectric power on the market. Committee Members indicated their support for Scenario 3.
CLOSED SESSION
5. CONFERENCE WITH LEGAL COUNSEL—ANTICIPATED LITIGATION Significant exposure to litigation pursuant to paragraph (2) of subdivision (d) of Section 54956.9: 2
Chair Klein Lopez stated there was nothing to report from Closed Session.
COMMITTEE MEMBER COMMENTS
Committee Member Mahmud made farewell remarks and expressed pride in the agency’s success, thanked Board Members and staff, and acknowledged the leadership of outgoing Agenda Page 6
Executive Committee Item 1
Chair Gold and of incoming Chair Klein Lopez. Committee Members expressed thanks for her leadership and continued involvement with CPA.
ADJOURN
Chair Klein Lopez adjourned the meeting at 3:26 p.m.
Agenda Page 7
Staff Report – Agenda Item 2
To: Executive Committee
From: Ted Bardacke, Chief Executive Officer
Subject: Oral Update from the Chief Executive Officer on CPA Operations Date: April 18, 2024
The CEO will provide an oral update on CPA operations.
Agenda Page 8
Staff Report – Agenda Item 3
To: Executive Committee
From: Ted Bardacke, Chief Executive Officer
Subject: Review Draft Agenda for the May 2, 2024 Board of Directors Meeting
Date: April 18, 2024
Staff will provide an overview of the proposed agenda items for the May 2, 2024 Board of Directors meeting for review and feedback from the Executive Committee. The draft Board agenda is attached to this staff report. Information on the main items for Board consideration is provided below.
CONSENT AGENDA
The following items are recommended for inclusion on the Consent Agenda of the May Board meeting.
Community Advisory Committee Appointment & Reappointments As per the CPA Bylaws (Article 8, Section 5), the two-year term of service for current CAC members will expire at the end of April. Staff reached out to all current CAC members, notifying them of the term expirations, and inquired if they would like to be considered for re-appointment to the CAC. All CAC members responded, and nine of the eleven current CAC members requested to be re-appointed. Two representatives (one from the Ventura/West L.A. County region and one from the Gateway Cities region) are unable to continue on the CAC and elected to resign.
Staff will recommend the re-appointment of the nine current CAC members who would like to continue and the appointment of one new member to fill the remaining open seat Agenda Page 9
Executive Committee Item 3
in the West/Unincorporated Ventura County region (Ojai, Oxnard, Unincorporated Ventura County, and City of Ventura).
Staff is currently soliciting interest from new candidates for the current vacancies in the Unincorporated Los Angeles County region and the San Gabriel Valley region and for the new vacancies in the Gateway Cities region and Ventura/West L.A. County region.
Arlington Contract Amendment
Staff is in the process of negotiating an amendment to its long-term Power Purchase Agreement with the Arlington Solar + Storage project to clarify certain contract provisions related to contract settlements. Should the negotiation be successful, the amendment may be presented to the Board for consideration.
PPA Valuation and RFO Administration Services Contract
Staff will propose a contract with a vendor to assist with administering CPA’s 2024 Clean Energy and Reliability Request for Offers (RFO). A Task Order solicitation was issued on March 11, 2024 and responses were due on March 27, 2024. This contract is expected to be substantially similar to the 2023 contract for similar services for CPA’s 2023 Clean Energy and Reliability RFO.
Service Providers for Future Energy Prepay Transactions Staff will present a project timeline to structure and prepare for CPA’s next potential energy prepay transactions. Staff are proposing the execution of 2-3 new prepay bond issuances by April 1, 2025, and have conducted competitive solicitation processes for the service providers necessary to structure the prepay transactions. At the May 2 Board meeting, staff intends to recommend the following service providers:
• California Community Choice Financing Authority (CCCFA) to serve as the Bond Issuer and program administrator.
• Municipal Capital Markets, Inc. (MCM) to serve as CPA’s municipal financial advisor (MFA). MCM will support the structuring and execution of CPA’s next prepay transactions.
Agenda Page 10
Executive Committee Item 3
• Chapman & Cutler (Chapman) as Prepay Counsel. Chapman will advise CPA on legal matters relating to the prepay transactions and assist with contract negotiation and documentation.
These are the same service providers that supported CPA on its previous two prepay transactions,
Staff has identified candidate banks capable of serving as the Underwriter & Prepaid Supplier to execute the transactions. If Q3 2024, staff anticipates presenting the Board with an Underwriter & Prepaid Supplier selection, a set of energy prepay contracts, and a resolution with recommended energy cost savings parameters for up to three energy prepay transactions.
REGULAR AGENDA
The following items are recommended for inclusion on the Regular Agenda of the May Board meeting.
Election of Executive Committee At-Large Positions
At the April 4th Board meeting, Board Chair Klein Lopez opened the nomination period for CPA’s three At-Large Executive Committee positions, two representing L.A. County Members and one representing Ventura County members. Two-year terms will begin on July 1, 2024, and expire on June 30, 2026.
The nomination period for the At-Large positions of the Executive Committee will close on Friday, April 19, 2024. As of April 12, the following nominations had been received:
Los Angeles County:
• Jeff Maloney, Alhambra
• Michael Cao, Arcadia
• Alex Monteiro, Hawthorne
Ventura County:
• Betsy Stix, Ojai
Agenda Page 11
Executive Committee Item 3
The Clerk of the Board will verify that nominees meet all the eligibility criteria. Both the L.A. County At-Large positions and the Ventura County At-Large position must be elected by Regular Directors representing jurisdictions in their respective counties. Alternate Directors may not vote in the election of At-Large Executive Committee positions. The election mechanics will be determined when the final nominee list is established.
2024 Rates Approach (Action)
This item will be subject to a separate presentation to the Executive Committee.
Approval of Power Purchase Agreement(s)
Staff is in the process of negotiating several long-term contracts from the 2023 Clean Energy and Reliability RFO from the shortlist approved by the Energy Committee and additional bilateral offers. Should these negotiations be successful, up to four PPAs may be presented for consideration at the May Board meeting.
Adopt Support Position on Assembly Bill 1176
AB 1176, authored by Assemblymember Rick Zbur and sponsored by ClimatePlan, would enact the Local Electrification Planning Act. This Act would require cities and counties, no later than January 1, 2028, to prepare and adopt a specific plan to identify the following goals:
1) Opportunities to expand electric vehicle charging and infrastructure to meet their respective needs;
2) Opportunities to advance building decarbonization in new and existing buildings; 3) Opportunities to expand zero-emission and renewable distributed energy resources including rooftop solar, community solar, microgrid and battery storage; 4) and in coordination with relevant load serving entities, identification of opportunities to advance grid infrastructure upgrades where they are needed.
The bill’s goals around vehicle and building electrification preparedness are aligned with the goals outlined 3d, 3c, 3d, 3f, and 5d in CPA’s Policy Platform, and CPA has previously supported similar bills that advance electrification through planning. However, while none of CPA’s member agencies have currently taken a position on this bill, the new Agenda Page 12
Executive Committee Item 3
requirements for local governments may be difficult for some smaller cities and therefore staff determined that it should be brought to the full Board for a vote.
The Legislative & Regulatory Committee advised staff to take a Support position on the bill, and to connect interested CPA member agencies to organizations that assist cities and counties in writing local Climate Action Plans or electrification plans, such as the California Air Resources Board.
This item was on the consent agenda at the April Board meeting but was pulled for separate discussion and then was deferred due to time constraints.
FY 2024/25 Budget Priorities (Info)
This item will be subject to a separate presentation to the Executive Committee.
ATTACHMENT
1. Draft May 2, 2024 Board of Directors Agenda
Agenda Page 13
Executive Committee Item 3
Board of Directors of the
Clean Power Alliance of Southern California
Regular Meeting
Thursday, May 2, 2024
2:00 p.m.
CALL TO ORDER AND PLEDGE OF ALLEGIANCE
ROLL CALL
GENERAL PUBLIC COMMENT
CLOSED SESSION
1. CONFERENCE WITH LEGAL COUNSEL—ANTICIPATED LITIGATION Exposure to litigation pursuant to paragraph (2) or (3) of subdivision (d) of Section 54956.9: 1
CONSENT AGENDA
2. Approve Minutes from April 4, 2024, Board of Directors Meeting
3. Approve Appointment(s) & Reappointments to the Community Advisory Committee
4. Approve Amendment to Power Purchase Agreement with Arlington II
5. Approve PPA Valuation and RFO Administration Services Contract
6. Approve Service Providers for Future Energy Prepay Transactions
7. Receive and File Bill Positions May 2024 Monthly Report
8. Receive and File Monthly Community Advisory Committee Report
REGULAR AGENDA
Election Item
9. Election of Executive Committee At-Large Positions for the July 2024 - June 2026 Term Action Items
10. FY 2024/25 Rates Approach
11. Approve Power Purchase Agreements
12. Approve Support Position on Assembly Bill 1176
Information Item
13. FY 2024/25 Budget Priorities
COMMITTEE CHAIR UPDATES
MANAGEMENT REPORT
BOARD MEMBER COMMENTS
REPORT FROM THE CHAIR
ADJOURN – NEXT MEETING ON JUNE 6, 2024
Agenda Page 14
Staff Report – Agenda Item 4
To: Executive Committee
From: Karen Schmidt, Director, Rates & Strategy
Approved By: Ted Bardacke, Chief Executive Officer
Matt Langer, Chief Operating Officer
Subject: Receive Presentation on FY 2024-25 Rates and Recommend a Rate Setting Approach to the Board at its May 2, 2024 Meeting Date: April 18, 2024
RECOMMENDATION
(a) Receive presentation on FY 2024-25 Rates and (b) recommend a rate setting approach to the Board of Directors at its May 2, 2024 meeting, as specified in the attached presentation.
ATTACHMENTS
1. FY 2024-25 Rates Presentation
Agenda Page 15
FY 2024/25
Rate Setting Options
April 18, 2024
Agenda Page 16
Summary
Staff requests that the Executive Committee recommend a rate setting approach to the Board at its May 2 meeting.
The rate setting approach will guide the FY 2024-25 rates to be adopted by the Board at its June 6 meeting
Staff recommend:
Product pricing differentials: Set the product price differential between 100% Green and Clean to 4% and the differential between 100% Green and Lean to 5% (no change from FY2023-24) Total Bill comparison levels: Select total bill comparison levels for residential and small business rates to support competitiveness and financial goals (see options on slide 9) Update subset rates: Update streetlighting, pumping and agriculture, and large commercial and industrial subset rates to reflect current COS (see slide 11) and based on the recommended Reserve Scenario Rate approach for new member communities: Maintain total bill comparisons for member communities that began service in 2024 at the same FY 2024/25 levels as those adopted for existing communities Agenda Page 17
November 2023 – May 2024 (Staff) – FY 2024/25 rate planning; cost of service study, energy cost projections, load forecasting, and budgeting (ongoing) November 2, 2023 (Board) – First Look at 2024 PCIA and SCE Rates April 4, 2024 (Board) – FY 2024/25 Rates Outlook
April 18, 2024 (Executive Committee) – Recommend FY 2024/25 Rates Approach to Board May 2, 2024 (Board) – Request approval of FY 2024/25 Rate Setting Approach May 16, 2024 (Community Advisory Committee) – FY 2024/25 Rate Setting Approach May 16, 2024 (Executive Committee) – Proposed FY 2024/25 Rates June 6, 2024 (Board) – Request approval of Proposed FY 2024/25 Rates 3 FY 2024/25 Rates Process
Agenda Page 18
Considerations for FY 24/25 Rates
The options presented today are based on a consensus for rate product content discussed at the April Board meeting. The new product content targets maintain CPA’s overall preference for renewables, keep the 100% Green product intact, allow for competitive rates, and are the most achievable/realistic (Scenario 3) Key considerations for the FY 24/25 rate options include:
1. Price spread between CPA’s three retail rate products (Lean, Clean, 100% Green) based on the renewable and carbon-free energy content of each along with current market conditions/prices
2. Competitiveness with SCE. SCE reduced generation rates in January 2024 and will do so again in June, putting downward pressure on CPA generation rates
3. Reserve goals aimed at maintaining and growing CPA’s financial strength and stability SCE’s June 1 rates will be finalized in late May. The rates submitted to the Board for approval in June will be based on the actual SCE rates and the rate approach the Board selects in May
Staff are updating financial projections which will impact projected financial metrics Agenda Page 19
FY 24/25 Reserve Target
CPA’s Board adopted a Reserve Policy to enable CPA to satisfy working capital requirements, procure energy at competitive rates, adhere to contractual covenants, obtain and maintain an investment grade credit rating, cover unanticipated expenditures, and support rate stability
The Reserve Policy sets a minimum target of 30% and maximum target of 50% of total operating budget expenses, and a goal of at least 120 days liquidity on hand (DLOH) CPA has steadily grown its reserves and liquidity and expects to just meet the minimum reserve target by the end of the current fiscal year
o Progress toward the reserve target has been slower than expected but strong liquidity metrics contributed significantly to CPA’s achievement of an investment-grade credit rating in September 2023 Making progress towards the midpoint reserve target of 40% by the end of FY 24/25 would strengthen CPA’s ability to weather continued market volatility while enabling CPA to continue expanding customer programs and offering stable and competitive rates
5 Agenda Page 20
FY 24/25 Rate Approach
Recommendations
• Product differentials
• Total Bill comparison
levels
• Subset rates
• Rate approach for new
communities
6 Agenda Page 21
Product Differentials
CPA’s Cost of Service (COS) analysis projects minimal change in the product price differential between Lean/Clean and 100% Green Power
o The increased cost of short-term renewable energy has the largest impact on 100% Green, but the cost of carbon-free power is also rising with growing demand and supply uncertainties Staff recommends keeping the FY 24/25 price differential between 100% Green and Clean at 4% and the differential between 100% Green and Lean to 5%, assuming the following product content:
o 100% Green: 100% renewables
o Clean Power: 50% clean energy with 25% from renewables and 25% carbon-free from large hydropower o Lean Power: 40% clean energy from carbon-free large hydropower 7 Energy Product FY 2020-21 FY 2022-23 FY 2023-24 FY 2024/25 Proposed Lean 0% 0% 0% 0%
Clean +1% +1% +1% +1%
100% Green +10% +4% +5% +5%
Product Price Differentials (Total bill,* Compared to Lean Power) *Product differentials based on projected CPA cost of service and average total customer bills.
Agenda Page 22
Current bill comparisons to SCE
CPA bill comparisons to SCE have fluctuated with SCE rate changes in October, January, and March, but have consistently remained better than the competitive targets set by the Board last June
Based on SCE’s projected June 2024 rate change, total bill comparisons would remain within historic competitive ranges at current CPA rates, though results would be uneven across PCIA vintages and customer classes
8 *Comparisons are based on representative 2018 PCIA vintage rate schedules, average customer usage and load profiles for the specified rate class based on CPA rates as of July 1, 2023. Individual customer comparisons vary by specific rate schedule and customer usage.
Rate Class
Comparison to SCE Rates as of March 2024 Comparison to Projected SCE Rates, June 2024 Lean PowerClean Power 100% Green
Power Lean Power
Clean Power 100% Green
Power
Residential -2.9% -2.0% +1.7% -0.2% +0.7% +4.4%
Residential CARE -4.3% -2.9% -2.9% -0.3% +1.1% +1.1%
Small Business -2.3% -1.4% +2.4% +0.7% +1.7% +5.4%
Total Bill Comparisons to SCE at Current CPA Rates*
Agenda Page 23
FY24/25 total bill comparison options
The options offer a range of potential outcomes for CPA’s competitiveness, financial and rate stability objectives
9 Scenario
Residential/Small Business
Rate Comparison to SCE* Estimated Financial Metrics at End-FY25 Lean Power Clean
Power
100% Green
Power
Contribution to
Net Position Reserve %
Days Liquidity
on Hand
(DLOH)
FY 23/24 Year-end
(Projected) -0.2% - 0.7% 0.7% - 1.7% 4.4% - 5.4% $197M – $219M 31% - 33% 121 – 129 Low Reserve -2.0% -1.0% +3.0% $32M - $90M 29% - 35% 109 – 132 Medium Reserve -1.0% 0% +4.0% $69M - $128M 31% - 37% 117 – 140 High Reserve
(Similar to current rates) 0% +1.0% +5.0% $106M - $165M 33% - 40% 124 – 148 FY 2024/25 Rate Scenarios
*Comparisons are total bill comparisons based on representative 2018 PCIA vintage rate schedules, average customer usage, and load profiles for each specified rate class, and projected SCE rates as of June 1, 2024. Individual customer comparisons vary by specific rate schedule and customer usage.The ranges shown in the Financial Metrics columns reflect continued volatility in markets and weather extremes and the need to increase contingency in energy costs. The ranges will narrow through the spring as forecasts are updated and additional months of actual FY23/24 results are tallied.
Agenda Page 24
Total Bill Comparison Ranges – Residential
Projected Residential Customer Total Bill Comparisons – FY 24/25 Rate Scenarios* Scenario SCE base
Average Monthly Bill Comparison to SCE
Lean Clean 100% Green Lean Clean 100% Green
March 2024 SCE rates $189 $184 $186 $193 -2.9% -2.0% 1.7% Low Reserve $191 $187 $189 $196 -2.0% -1.0% 3.0%
Medium Reserve $191 $189 $191 $198 -1.0% 0.0% 4.0%
High Reserve $191 $191 $192 $200 0.0% 1.0% 5.0%
Residential bill comparisons will be competitive with SCE under all scenarios based on current SCE rates
SCE’s June 1 rate change is expected to increase delivery charges and decrease SCE generation rates, putting competitive pressure on CPA generation rates *Comparisons are based on representative 2018 PCIA vintage rate schedules, average customer usage and load profiles for each rate class and projected SCE rates as of June 1, 2024. Individual customer comparisons vary by specific rate schedule and customer usage.
Agenda Page 25
Subset Rates
Subset Rate Total Bill Comparisons – FY 24/25 Rate Scenarios* Rate Schedule
Low Reserve Scenario Medium Reserve Scenario High Reserve Scenario Lean Clean 100% Green Lean Clean 100% Green Lean Clean 100% Green TOU-GS-3-D 1.4% 2.5% 6.7% 2.6% 3.7% 7.9% 3.9% 4.9% 9.1% TOU-8-D-SEC 2.1% 3.2% 7.6% 3.4% 4.5% 8.8% 4.6% 5.7% 10.1% TOU-PA-2-D -0.6% 0.5% 4.9% 0.7% 1.8% 6.2% 2.0% 3.1% 7.5% TOU-PA-3-D 0.2% 1.3% 5.8% 1.5% 2.6% 7.1% 2.8% 4.0% 8.5% LS-1 18.0% 19.2% 24.2% 19.4% 20.7% 25.7% 20.9% 22.1% 27.2% Large commercial and industrial, pumping and ag, and streetlighting rates, referred to internally as “subset rates,” have been based on Cost of Service since 2019; less than 9,900 or 1% of CPA customers are on subset rates.
Total bill comparisons for subset rates have improved since 2019 *Comparisons are based on representative 2018 PCIA vintage rate schedules, average customer usage and load profiles for each specified rate class and SCE rates as of March 1, 2023. Individual customer comparisons vary by specific rate schedule and customer usage.
Agenda Page 26
New member community rate approach
Customers in Hermosa Beach, Monrovia, and Santa Paula were placed on SCE’s 2023 vintage PCIA rates when CPA began service in March 2024. Together these new communities represent approximately 4% of CPA’s annual electricity consumption In June 2023 the Board approved setting bill comparisons for new member communities at the same level as existing communities in FY 23/24 even though their PCIA vintage rates were slightly different
Staff recommends continuing to set total bill comparisons for these three communities at the levels set for FY 24/25 for all other communities
o The spread between 2018 and 2023 vintage PCIA rates increased in January 2024; under the Midpoint and High Reserve scenarios the new communities would continue to cover their Cost of Service The communities of La Cañada Flintridge, Lynwood and Port Hueneme will begin service in October 2025 and will be placed on SCE’s 2024 vintage PCIA rates o Staff will bring a recommended rate approach for these communities later in 2024 to help inform those communities’ selection of a preferred energy option in Q1 2025 12 Agenda Page 27
Staff are evaluating potential rate pilots for FY 24/25:
o Residential TOU-D-PRIME Super-Off-Peak TOU option to provide price signals to customers to charge EVs during the day when electricity is cheapest and cleanest o Discounted rate contract option to retain large commercial and industrial customers with attractive loads in exchange for multi-year commitment to remain with CPA o Hourly dynamic rates to promote load shifting when electricity is most expensive and dirtiest for customers with automated smart devices and energy systems The proposed FY 24/25 budget will include funding for pilot rate design, customer incentives, and customer marketing, education and outreach
Staff will bring the PRIME option to the Board for approval as part of the overall June rate package.
The other two pilot rates will be proposed to the Board if and when they are deemed ready and appropriate
13 Proposed FY 24/25 Rate Pilots
Agenda Page 28
Product pricing differentials: Set the product price differential between 100% Green and Clean to 4% and the differential between 100% Green and Lean to 5% (no change from FY2023-24) Total Bill comparison levels: Select total bill comparison levels for residential and small business rates to support competitiveness and financial goals
Update subset rates: Update streetlighting, pumping and ag, and large commercial and industrial subset rates to reflect current COS (as reflected in slide 11) and applying the recommended Reserve Scenario Rate approach for new member communities: Maintain total bill comparisons for member communities that began service in 2024 at the same FY 2024/25 levels as those adopted for existing communities 14 Recap: FY 24/25 Rate Approach Recommendations
Scenario Lean Power Clean Power 100% Green Power
Low Reserve -2.0% -1.0% +3.0%
Medium Reserve -1.0% 0% +4.0%
High Reserve 0% +1.0% +5.0%
FY 2024/25 Rate Scenarios – Residential/Small Business Total Bill Comparisons to SCE* *Comparisons are based on representative 2018 PCIA vintage rate schedules, average customer usage and load profiles for each rate class, and projected SCE rates as of June 1, 2024. Individual customer comparisons vary by specific rate schedule and customer usage.
Agenda Page 29
Next Steps
Today staff request that the Executive Committee recommend a FY 2024/25 rate setting approach to the Board
Staff will present options and ask the Board to approve a FY 2024/25 rate approach at the May Board meeting.
Final rate setting will take place at the June Board meeting along with adoption of the FY 2024/25 budget
o This rate setting is will follow the rate approach adopted at the May Board meeting based on actual SCE June 2024 rates
CPA’s financial projections will be updated prior to the May and June Board meetings so the ranges for contribution to net position and days of liquidity on hand will narrow by the time of final rate and budget approval Agenda Page 30
Questions
Agenda Page 31
Appendix
Agenda Page 32
Total Bill Comparison Ranges –
Small Business
Small Business Customer Total Bill Comparisons – FY 24/25 Rate Scenarios Scenario SCE base
Average Monthly Bill Comparison to SCE
Lean Clean 100% Green Lean Clean 100% Green
March 2024 rates $277 $271 $274 $284 -2.3% -1.4% 2.4%
Low Reserve $277 $272 $275 $286 -2.0% -1.0% 3.0%
Midpoint Reserve $277 $275 $277 $289 -1.0% 0.0% 4.0%
High Reserve $277 $277 $280 $291 0.0% 1.0% 5.0%
*Comparisons are based on representative 2018 PCIA vintage rate schedules, average customer usage and load profiles for each specified rate class and SCE rates as of March 1, 2023. Individual customer comparisons vary by specific rate schedule and customer usage.
Agenda Page 33
Staff Report – Agenda Item 5
To: Executive Committee
From: David McNeil, Chief Financial Officer
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Receive Presentation on FY 2024-25 Budget Priorities Date: April 18, 2024
Staff will provide a presentation on the item.
ATTACHMENTS
1. FY 2024-252 Budget Priorities Presentation
Agenda Page 34
FY 2024/25 Budget Priorities and Operating
Expense Highlights
April 18, 2024
Agenda Page 35
FY 2024/25 Budget Process
January – April 2024 (Staff) – FY 2024/25 Goal Setting, Departmental Budgeting, Rate Design Planning, Energy Cost Projections & Consolidated Budget Planning (ongoing) April 18, 2024 (Executive Committee) – Budget Priorities April 24, 2024 (Finance Committee) – Budget Priorities & Draft FY 2024/25 Operating Expenses Budget May 2, 2024 (Board) – Budget Priorities
May 16, 2024 (Community Advisory Committee) – Budget Priorities and Draft FY 2024/25 Budget May 16, 2024 (Executive Committee) – Draft FY 2024/25 Budget May 22, 2024 (Finance Committee) – Draft FY 2024/25 Budget June 6, 2024 (Board) – Proposed FY 2024/25 Budget
2 Agenda Page 36
2024/2025 Operational Priorities
1. Achieve financial targets, including
progress toward maximum reserve
requirement
2. Meet renewable procurement and GHG
emissions targets
3. Invest in and support development of
high-performing and diverse staff
4. Comply with or surpass all regulatory and
legal obligations
5. Deliver impactful customer programs
6. Increase customer awareness while
maintaining customer participation rates
3 7. Lead and shape regulatory and policy
discussions on reliability and
affordability
8. Streamline processes and leverage
technology for efficiency and
productivity
9. Develop and track organization-wide
DEI metrics
10. Cultivate next generation of Board
leadership
11. Prepare for future growth and new
market opportunities and challenges
Agenda Page 37
Operating Expense Context
4 CPA manages ~$1.4 billion of annual energy costs representing over 95% of total costs.
In addition, CPA contracts for and operationalizes long-term renewable and storage projects involving billions of dollars of financial commitments Energy market volatility and risks remain high amidst constrained renewable/low-carbon energy supply and increasing frequency of extreme weather events As the 3rd largest LSE in CAISO and the largest supplier of green energy in the country, CPA faces significant regulatory, political and PR risks and opportunities CPA can help mitigate rising electricity bills by appropriately managing these risks and pursue its decarbonization mission by developing and delivering customer programs that save customers money and reduce peak load
Agenda Page 38
FY 2024/25 Operating Expenses Overview
5 Operating expenses represent ~4.6% of total costs. Almost one-fourth of operating expenses are fixed by regulatory, contractual, or policy obligations
Over the past 12 months, CPA has added staff capacity across the organization (18 new/15 net), reducing staff turnover and consultant spend while improving performance and organizational capacity Operating expenses are projected to increase $11.75 million, or ~21% (~17% inflation adjusted), driven mostly by increasing spending on customer programs, communications and staffing. All other operating expense items increase by ~$2.2 million or 9.2%
General & Administrative is projected to increase ~$1.3 million, or 29% driven by a 65% increase in software and systems licensing and implementation costs Expanding customer programs, supported by effective marketing and communications, is an organizational priority and can help reduce individual customer bills. Consolidating the benefits of staffing progress is dependent on continuing to invest in staff retention and talent acquisition CPA has limited ability to impact rates in the short term through adjustments to operating expenses but can increase impact and reduce risk through these investments Agenda Page 39
Notable Budget
Increase Areas
Agenda Page 40
Two New Customer Programs
Managed Electric Vehicle Charging
Challenge: EV charging is expected to have a
significant impact on CPA’s load, increasing from
2% of CPA load in 2023 to 12.5% by 2030 and
35% by 2040. (See Slide 17). Much of this load
is currently in high price/high GHG hours of the
day
Opportunity: Supporting customers to optimize
their charging around low-cost TOU periods can
reduce costs for customers and CPA
Program approach: Incentivize customers to
shift their EV charging to off-peak times
leveraging car telematics and combine with
offering new rate EV-dominant rates
Efficient Cooling for CARE Customers
Challenge: Extreme heat poses significant risk
of heat-related illness, however the cost to install
air conditioning (or operate inefficient AC) is
prohibitive low-income households and/or
property owners who rent to them
Opportunity: Increasing access to energy-efficient air conditioning promotes public health and decreases the cost of installation and/or
operation
Program approach: Provide tenants and
landlords access to reduced cost equipment or
incentives to add efficient air conditioning
7 $1.9 million projected in FY 2024/25 for these two programs Agenda Page 41
Customer Programs Budget Detail
8 Launch Year Funding Source Staffing Customer Programs Communications Mailers Data Manager Total % of Total Reimbursable costs /
3rd party Funding
Customer Program
Expenses, Net
100% Reimbursable
Workforce Development 2020 PPA Developers 305,000 305,000 2% 305,000 - Power Share/Community Solar (CPUC) 2021 CPUC 412,000 2,482,000 41,000 16,000 72,000 3,023,000 19% 3,023,000 - Leverage State Resources
Electric Vehicle Charging (CALeVIP LA & Ventura) 2021 453,000 453,000 3% - 453,000 Strategic with long-term ROI or community benefits potential Power Response/Demand Response 2019 1,059,000 573,000 53,000 1,685,000 11% - 1,685,000 Power Ready/Backup Power 2021 375,000 12,000 387,000 2% - 387,000 Reach Code Program 2023 292,000 292,000 2% - 292,000
Energy Advisor 2024 292,000 370,000 27,000 689,000 4% - 689,000 Energized Communities 2024 2,825,000 20,000 2,845,000 18% - 2,845,000 Sun Storage Rebate 2024 1,750,000 320,000 7,000 2,077,000 13% - 2,077,000 Low to Moderate Income Solar & Storage 2025 1,050,000 263,000 27,000 1,340,000 9% - 1,340,000 Hard to Reach EV Technical Assistance 2025 425,000 44,000 469,000 3% - 469,000 Managed EV Charging New 400,000 273,000 673,000 4% - 673,000 Efficient Cooling for Low Income Customers New 1,500,000 23,000 1,523,000 10% - 1,523,000 Total 412,000 13,208,000 1,939,000 130,000 72,000 15,761,000 100% 3,328,000 12,433,000 Cost Center Budget
Agenda Page 42
Marketing & Communications Budget Detail
9 Marketing & Communications Budget FY 2023/24 FY 2024/25 Difference
in $
Difference
in %
Advertising 613,000 1,919,000 1,306,000 213%
Communication Consultants 888,000 1,428,000 540,000 61% Sponsorships 140,000 135,000 (5,000) -4%
Website 227,000 216,000 (11,000) -5%
Communication - Others 30,000 - (30,000) -100%
Special Events 126,000 45,000 (81,000) -64%
CBO Grants 30,000 50,000 20,000 67%
Marketing & Communications - Total 2,054,000 3,793,000 1,739,000 85% Marketing & Communications to support Programs
Reach Code Technical Assistance 10,000 - (10,000) -100% EV Charger Rebate (Program closed to new applicants) 13,000 - (13,000) -100% Workforce Development 10,000 - (10,000) -100%
Others 92,000 - (92,000) -100%
Energized Communities 15,000 20,000 5,000 33%
Power Share (CPUC Funding) 101,000 41,000 (60,000) -59% Power Ready 25,000 12,000 (13,000) -52%
Power Response 285,000 573,000 288,000 101%
Sun Storage Rebate 10,000 320,000 310,000 3100%
Low to Moderate Income Solar & Storage - 263,000 263,000 0% Energy Advisor - 370,000 370,000 0%
Hard to Reach EV Technical Assistance - 44,000 44,000 0% Efficient Cooling for Low Income Customers - 23,000 23,000 0% Managed EV Charging - 273,000 273,000 0%
Total Marketing & Communications to support Programs 561,000 1,939,000 1,378,000 246% Total Non-Programs Marketing & Communications 1,493,000 1,854,000 361,000 24% * *
* i.e: Branding, Media, Social Media, Sponsorships, Web, etc.
Increased spending to support
programs, including
advertising, drives large
budget increase
Branding efforts (plus hiring of
PR manager) complements
customer acquisition activities
and program spending and
increases activities with media
and key stakeholders
Agenda Page 43
Staffing - Context
10 2023/24: Budgeted headcount of 79. Current headcount = 77 (see slide 15 for current org chart) Turnover rates are improving
Jan 2021 to March 2022 – Hired 35/Net gain of 14
April 2022 to March 2023 – Hired 20/Net gain of 14
April 2023 to March 2024 - Hired 18/Net gain of 15
Initial budget shows 20% budget increase in staffing costs. 61% of increase is due to full year impact of this year’s new hires, plus next year’s COLA and other retention efforts. Growth rate in staffing budget is decelerating
Budgeting 7 new positions in FY 2024/25 (down from 9 in FY 2023/24). New positions address growth in customer programs, communications, energy contracting, data and systems and accounting areas. (see slide 16 for details)
Adding a contingency for new positions starting in calendar year 2025 Agenda Page 44
Initial Staffing Budget Projection
11 Initial budget projects staffing costs to increase 20%, increasing from 1.3% of total revenue in FY2023/24 to a still industry-leading 1.5% of revenue in the upcoming year.
See slide 14 for detailed comparison of CCA budgets
CPA Budget
Budget Budget Budget Budget
FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25
51% 41% 44% 20%
FY 2024/25 Staffing Cost Detail Amount ($) % of Increase FY 2023/24 Budget 20,072,000
Full Year Impact New Hires 605,000 15%
COLA 845,000 21%
Merit 958,000 24%
Retention Incentive 39,000 1%
New Positions 1,249,000 31%
Contingency 308,000 8%
YOY net $$ Increase 4,004,000 100%
% of YOY Increase
FY 2024/25 Budget Total 24,076,000 20%
Staffing Budget Breakdown Staffing Budget Growth Rates Over Time Agenda Page 45
Operating expenses are less than 5% of total costs
Increases to operating costs are driven by increases in programs/communications, staffing and software/technology costs
Staffing cost increases are decelerating but consolidating the benefits of staffing progress is dependent on continuing to invest in staff retention and talent acquisition CPA can help mitigate rising electricity bills by developing and delivering customer programs that save customers money and reduce peak load CPA continues to compare favorably with other CCAs on operating and staffing expenses (see slide 14)
12 Summary
Agenda Page 46
Questions?
Agenda Page 47
Select CCA Metrics and Comparisons
CPA’s metrics for operating expenses and staffing costs compare favorably with industry averages 14 Agenda Page 48
15 Agenda Page 49
Current Staff Headcount with Proposed Positions
Department Current Positions Proposed New Positions Total Executive (including Board Office) 7
(one open)
0 7
Legal 3 0 3
Coms & Marketing 8 2 10
Customer Care 3 1 4
Customer Programs 7 1 8
Data & Systems 6 1 7
Finance (including Accounting, FP&A, Load Forecasting, Risk Management, Strategi Initiatives, Treasury)
12 (one open)
1 13
Government Affairs 5 0 5
Operations (including Non-Energy Procurement, Strategic Accounts) 3 0 3 People & Culture/Admin 4 0 4
Power Supply 14 1 15
Rates & Strategy 3 0 3
Regulatory Affairs 4 0 4
Unallocated (mid-year hires based on need) - Up to 4 TBD Total 79 7-11 86-90
Agenda Page 50
Forecast Electric Vehicle Load (MWh and % of CPA Load)
17 Agenda Page 51