April 18, 2024
MINUTES
Executive Committee of the
Clean Power Alliance of Southern California
Special Meeting
Thursday, April 18, 2024
1:00 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
KC Kimpton Marlowe Hotel
25 Edwin H. Land Blvd.
Cambridge, MA 02141
Sheraton Grand Sacramento Hotel
1230 J Street
Sacramento, CA 95814
Signia by Hilton San Jose
Empire Conference Room
170 South Market St.
San Jose, CA 95113
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
Roll Call
Agoura Hills Deborah Klein Lopez Chair Remote
Beverly Hills Julian Gold Committee Member Remote
Camarillo Susan Santangelo Committee Member Remote
Carson Cedric Hicks Committee Member Remote
Hawthorne Alex Monteiro Committee Member Remote
Los Angeles County Lindsey Horvath Vice Chair Remote
Ojai Betsy Stix Committee Member Remote
Sierra Madre Robert Parkhurst Committee Member Remote
Ventura County Vianey Lopez Vice Chair Remote
*All votes are unanimous unless otherwise stated.
GENERAL PUBLIC COMMENT
There was no public comment.
April 18, 2024
CONSENT AGENDA
1. Approve Minutes from March 21, 2024, Executive Committee Meeting Motion: Committee Member Gold, Beverly Hills
Second: Committee Member Hicks, Carson
Vote: The consent agenda was approved by a roll call vote
REGULAR AGENDA
2. Oral Update from the CEO on CPA Operations
Ted Bardacke, CEO, provided an update on the Board retreat.
3. Review Draft Agenda for the May 2, 2024, Board of Directors Meeting Mr. Bardacke discussed the draft agenda. The consent agenda includes appointments to the Community Advisory Committee, a contract amendment with Arlington, and two contract items. The regular agenda includes the election of new Executive Committee at-large positions, discussion of a rates approach, approval of power purchase agreements and review of budget priorities.
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
Karen Schmidt, Director of Rates and Strategy, provided a presentation on the item. The four components to the recommendation are product pricing differentials, total bill comparison levels for residential and small business rates, updating subset rates, and the rate approach for the new member communities.
Considerations for the FY 2045-25 rates include competitiveness with SCE, CPA’s reserve goals, and the price spread between CPA’s three retail rate products:
Lean, Clean, 100% Green. The new product content targets are based on Scenario 3, which are the most achievable. Ms. Schmidt presented a timeline of the process.
Ms. Schmidt presented a competitiveness comparison between CPA and SCE total bills and how rate changes would impact financial reserves, with Low, Medium, and High Reserve projections. The competitiveness comparisons are related to financial metrics such as contributions to net position, reserve percentage, and Days Liquidity on Hand. CPA’s customer total bills are expected to increase due to SCE’s increasing delivery rates. Subset rates comprise less than 1% of CPA large commercial and agricultural customers and staff recommends rate-setting based on the current cost of service. Staff also recommends that new member communities’ total bill comparisons and reserve targets be set at the same level as all other communities. New CPA members starting service in October 2025 will start at SCE’s 2024 vintage PCIA rates. Ms.
Schmidt also reviewed proposed rate pilots for FY 2024-25, including EV charging incentives for customers and a discounted rate option to retain large commercial and industrial customers.
Committee Member Parkhurst asked about the impact of the CPUC’s fixed charges decision on rates and possible increases for subset customers. Mr.
Bardacke explained that it will impact the delivery side of customer bills so there is no impact to either CPA rate setting or bill comparisons. Committee Member Hicks asked about reserve targets; Mr. Bardacke noted the target is 40%, adding that
April 18, 2024
CPA would be above 30% in both the High and Medium reserve levels. Only the Low reserve scenario would present a risk to meeting reserve targets. Committee Member Hicks expressed support for the Medium Reserve option to prevent sharp increases in energy costs for residents. Chair Klein Lopez expressed support for the Medium Reserve scenario as a way to offer customers a lower rate product option than SCE. Committee Member Parkhurst stated his support for the High Reserve scenario as it would create a larger reserve cushion, especially at a time when procuring energy is challenging. Vice Chair Horvath stated support for the Medium Reserve scenario because it strikes a balance between building reserves, being competitive, and considers all member communities as CPA develops its rates.
Staff discussed CPA’s financial stability in the event it faces significant volatility in the energy market. David McNeil, Chief Financial Officer, noted that staff will be working on modeling to develop a contingency amount for budget purposes, taking into consideration the unprecedented adverse market events happening in the California energy industry and the large range of uncertainty in the marketplace.
Matt Langer, Chief Operating Officer, added that every year, except in 2021, CPA was able to offer one product with a discounted rate, and opined that the Medium Reserve scenario will likely maintain the ability to offer a lower cost option.
Committee Member Gold stated support for the High Reserve option, noting that the reserve balance is currently 40% lower than projected. He commented that lowering CPA’s rates when SCE is increasing its transmission rates would mean subsidizing SCE’s increases, and CPA’s rates should not be tied to SCE’s.
Committee Member Gold noted that keeping subset rates based on cost of service under the High Reserve scenario would make a significant difference in building reserves. Committee Member Monteiro expressed support for the High Reserve option, pointing out the $1 and $2 difference between the Medium and High customer bills. Committee Members Santangelo, Stix, and Vice Chair Lopez also agreed that the High Reserve would make a small difference for ratepayers but would make a significant impact in CPA reserves.
In response to Vice Chair Horvath’s inquiry about marketing the High reserve scenario, staff responded that the Lean product would be marketed as a parity rate. Even as CPA works to separate itself from SCE, customers always want to know how CPA’s rates compare to SCE’s. It’s helpful to be able to offer a money-saving option when a customer is considering opting out, especially as rates increase. Vice Chair Horvath stated that the discussion at the full Board will determine the focus of the organization, whether to offer options that appeal to diverse communities or more narrowly focused on clean energy and higher reserves. Vice Chair Horvath opined that the Medium Reserve option makes sense financially and maintains diversity in rates for customers. Committee member Monteiro inquired whether CPA could adopt the Medium Reserve for a six-month period, then switch to the High Reserve option if needed. Mr. Bardacke noted that while it can be done, CPA prefers to do one rate setting a year. Committee Member Hicks added that it’s important to provide clean energy at an affordable rate, and specifically, Carson residents were sold on CPA because their bills would not substantially increase. Committee Member Parkhurst asked about the Lean product content comparisons to SCE. Mr. Bardacke explained that the Lean product will not have renewables in 2025 and GHG levels may be at parity with SCE. Committee Member Parkhurst noted that the Lean and Clean products are
April 18, 2024
carbon-free even if they don’t include renewables and stated that customers will pay slightly more but receive a product that is 30% or more renewables. Chair Klein Lopez expressed support for the Medium Reserve option because CPA is not in a delicate financial situation and reserves are building in a positive trend.
CPA will be under a lot of scrutiny with new customers and it’s meaningful to have a rate option lower than SCE.
Motion: Committee Member Monteiro, Hawthorne
Second: Committee Member Hicks, Carson
Vote: The staff recommendations in Item 4 were approved by roll call vote, with 5 votes for the High Reserve option and 4 votes for the Medium Reserve option.
After the vote, staff introduced the idea of making adjustments to the Medium Reserve rate option, and after discussion, the Committee reached unanimous consensus to put forward to the Board a recommendation for the Medium Reserve option offering Lean at 1% less, Clean at 0% or parity, and 100% Green at 5% more. Mr. Bardacke noted that staff would need to run new calculations related to this proposal with regard to the reserve target.
5. Receive Presentation on FY 2024-25 Budget Priorities Ted Bardacke, CEO, presented the budget process and FY 2024/25 operational priorities that include achieving financial targets, meeting renewable procurement and GHG emissions targets, helping individual customers reduce their bills, investing in communications and marketing to reach customers, and attracting and retaining high-quality CPA staff. Operating expenses are projected to increase about 20%, driven mostly by increased spending on customer programs, communications, and staffing. Managing CPA’s $1.4 billion of annual energy costs requires investment in software and systems licensing and implementation, as well as highly trained staff. Mr. Bardacke presented information about two new customer programs: Managed Electric Vehicle Charging and Efficient Cooling for CARE Customers. Mr. Bardacke also reviewed the Marketing and Communications and staffing budgets. Overall, CPA has been successful with employee retention.
Vice Chair Horvath praised the staff retention program and expressed excitement for the two new incentive programs related to efficient cooling and for EV charging.
Regarding communications, she encouraged staff to pursue earned media and continue outreach about CPA’s successes. Chair Klein Lopez recognized that CPA is in a strong position and staff has done a good job retaining employees and minimizing the volatility in the industry. She remarked that the budget presentation demonstrates CPA is expanding its programs and outreach, which is vital to its mission.
COMMITTEE MEMBER COMMENTS
There were no committee member comments.
ADJOURN
Chair Klein Lopez adjourned the meeting at 2:52 p.m.