Memorandum
To: Clean Power Alliance Executive Committee
From: Ted Bardacke, Chief Executive Officer
Subject: Draft Agenda for the July 11, 2024 Board of Directors Meeting Information on the main items for Board consideration is provided below. Please contact me if you have any questions or comments on the Draft Agenda and/or specific items.
CONSENT AGENDA
The following items are recommended for inclusion on the Consent Agenda of the July Board meeting.
Energy Risk Management Policy Amendments
In its annual review of CPA’s Energy Risk Management Policy (ERMP), staff will seek approval of revisions to the ERMP that reflect CPA’s operating goals, the evolution of CPA’s energy portfolio, and market changes that require updates to risk management policy and practices, including:
• Raising the maximum hedge limits for transactions in Q2 for years four or more in the future from 70% to 90%, aligning with CPA's goal of securing long-term renewable energy contracts.1
• Adjusting CPA’s Resource Adequacy purchasing and maximum hedge requirements to reflect changes to the California Public Utility Commission’s RA Program, and the need for a planning buffer to address uncertainty arising from supply agreements and future year RA obligations required by the CPUC. 1 Under the current ERMP, CPA has been “overhedged” in Q2s beginning in 2027 and has consistently reported this policy deviation to the Board and Finance/Energy Committees since it emerged late last year after the execution of the SunZia PPA.
• Clarifying the process for amending Board-approved long-term contracts by refining the definitions of those amendments that are minor/non-core and can continue to be approved by the Chief Executive Officer or Chief Operating Officer.
Material changes will continue to require Board approval. • Clarifying that financial reporting provided in Quarterly Financial Report does not need to be duplicated in the Quarterly Report of Risk Management Team. This clarification will ensure that CPA reporting is streamlined and duplicative information is avoided in already lengthy board packs.
These updates aim to enhance CPA's procurement flexibility and support its strategic objectives in renewable energy procurement, risk management, ERMP reporting and contract alteration procedures. This item will be discussed in detail at the June 26 meeting of the Energy Committee, and staff will seek a recommendation from the Energy Committee to the Board of Directors on the proposed amendments.2 Interconnection Consultant Task Order
With grid interconnection becoming a key competitive feature of procuring for long-term renewable energy and energy storage resources, staff is in the process of negotiating a contract with a consultant to provide technical support services for engineering and interconnection analysis for the 2024 Clean Energy and Reliability RFO and ongoing support for the administration of CPA’s portfolio of long-term power purchase agreements. Should the negotiations be successful, the contract will be presented to the Board for consideration.
Approval of Power Purchase Agreement Amendment(s)
Staff is in the process of negotiating amendments to its long-term Power Purchase Agreements for the Beverly and the San Gabriel projects. Both projects are local rooftop solar facilities under CPA’s Power Share program and are currently under development. 2 The ERMP requires CPA representatives, including the Board, to sign on an annual basis and/or upon any revision, an acknowledgement of their responsibilities, duties, obligations, and compliance under the ERMP. Once ERMP amendments are approved, staff will request that the Board complete their annual acknowledgement forms via a subsequent communication from the Clerk of the Board.
The amendments would extend the Guaranteed Commercial Operation Date by approximately six months and extend the period that the Seller can pay liquidated damages prior to achieving commercial operation. Should the negotiations be successful, the amendments will be presented to the Board for consideration.
Amendment to Media Buying Contract with Bloom Ads
In October of Fiscal Year 2023-24, CPA contracted with Bloom Ads Global Media Group for a not-to-exceed (NTE) amount of $250,000 for media buying, research and planning to support program marketing, customer recruitment, and growth of CPA’s brand awareness. In April 2024, the Board approved a $100,000 increase to that NTE that allowed for the addition of TV streaming into our media buying mix.
For FY 2024-25, staff will be requesting an amendment to Bloom’s contract to a) increase the contract amount by $1.7 million to ensure alignment with the media buying costs outlined in the approved FY 2024-25 marketing budget and b) extend the contract term to June 30, 2025 to better align with our fiscal cycle and budget planning. The increased NTE amount is accounted for in the Board-approved FY 2024-25 budget.
REGULAR AGENDA
The following items are recommended for inclusion on the Regular Agenda of the July Board meeting.
Prepay Transaction Authorizations
Following the successful completion of CPA’s first two energy prepayment financings in 2023, staff are planning for one to three additional prepay transactions that would occur later in 2024 and/or early 2025, subject to favorable market conditions.
Staff plan to recommend authorizations to support the structuring and execution of prepay transactions with any or all of following three Underwriters & Prepaid Suppliers:
1. Goldman Sachs (“GS”) and its subsidiary, J. Aron (“J. Aron”)
2. Morgan Stanley (“MS”)
3. Royal Bank of Canada (“RBC”)
Obtaining authorization to complete up to three bond transactions with each of the above banks is intended to i) realize significant cost savings on CPA’s renewable energy contracts ii) take advantage of currently favorable market conditions iii) ensure that CPA receives best available pricing and terms from the most experienced and well-regarded Underwriters & Prepaid Suppliers in the market.
To seek Board Authorization, Resolution(s) authorizing up to three bond issuances with each of the three Underwriters & Prepaid Suppliers (nine bond issuances in total, though three bond issuances in total across all Underwriters & Prepaid Suppliers will be the maximum allowed) will be presented to the Board for consideration. The Resolution(s) will encompass the following approvals or authorizations for each of the three Underwriters & Prepaid Suppliers:
1. Parameters under which prepay transactions can be completed a. Prepay bonds will be limited obligations of CCCFA, not obligations of CPA b. Principal for each bond will not exceed $1.5 billion c. Staff are authorized to complete up to three prepaid bond transactions with each Underwriter & Prepaid Supplier
d. The minimum “Monthly Discount Percentage” (i.e., cost savings), as determined at the initial Bond Pricing Date and any future Repricing Dates, shall be set at the maximum level permitted by tax counsel e. CCCFA’s total costs of issuance shall not exceed 1.25% of the amount of bond proceeds
2. Proposed CPA documents or ‘Form Of’ documents including:
a. Clean Energy Purchase Contract
b. Operational Services Agreement
c. Form of Limited Assignment Agreement
d. Letter Agreement re: Limited Assignment Agreement
e. PPA Payment Custodial Agreement
f. Other documents as necessary
3. Direction to CCCFA to make payments to service providers for issuance costs out of bond proceeds.
Staff plan to discuss future prepay transactions in detail with the Finance Committee at its June 26 meeting.
ATTACHMENT
1. Draft July 11, 2024 Board of Directors Agenda
Board of Directors of the
Clean Power Alliance of Southern California
Regular Meeting
Thursday, July 11, 2024
2:00 p.m.
CALL TO ORDER AND PLEDGE OF ALLEGIANCE
ROLL CALL
GENERAL PUBLIC COMMENT
CONSENT AGENDA
1. Approve Minutes from June 6, 2024, Board of Directors Meeting
2. Adopt Resolution No. X to Approve Energy Risk Management Policy Amendments
3. Approve Interconnection Consultant Task Order
4. Approve Power Purchase Agreement Amendment(s)
5. Approve Amendment to Media Buying Contract with Bloom Ads
6. Receive and File Bill Positions July 2024 Monthly Report
7. Receive and File Monthly Community Advisory Committee Report
REGULAR AGENDA
Action Items
8. Prepay Transaction Authorization
COMMITTEE CHAIR UPDATES
MANAGEMENT REPORT
BOARD MEMBER COMMENTS
REPORT FROM THE CHAIR
ADJOURN – NO MEETING IN AUGUST. NEXT MEETING ON SEPTEMBER 5, 2024